EXHIBIT
10.1


 


EMPLOYMENT
AGREEMENT


 


This is an Employment
Agreement (Agreement) between ZOMAX
INCORPORATED, a Minnesota corporation, (hereinafter “Zomax”), and Richard D. Barnes (hereinafter “Executive”).


 


Section 1


 


DEFINITIONS


 


1.             Definitions.


 


The following capitalized
terms used in this Agreement shall be defined as follows:


 


Agreement
shall mean this Agreement between Zomax and Executive.


 


Base
Salary shall mean the annual base salary payable to Executive
pursuant to Section 3.1 hereof, and “monthly Base Salary” shall mean the Base
Salary divided by twelve (12).


 


Board
shall mean the Board of Directors of Zomax.


 


Cause
shall mean termination of the Executive’s employment with Zomax by the Board
because of (1) gross misconduct, dishonesty or disloyalty which results in
material harm to Zomax; (2) willful and material breach of this Agreement by
Executive (other than Executive’s failure to perform his duties hereunder
resulting from incapacity due to physical or mental illness as set forth in
Section 4.1c) which has not been corrected by Executive within two weeks of
receipt of notice from Zomax of the occurrence of such event; (3) conviction or
entry of a plea of guilty or nolo contendere to any felony or to any
misdemeanor involving fraud, misrepresentation or theft; or (4) the failure of
Executive to comply in all material respects with policies and procedures
adopted by the Board of Directors and committees of the Board of Directors
relating to and including, but not limited to, governance, securities trading,
corporate disclosure practices and executive annual training and
education.  No act, or failure to act, by
Executive shall be considered “willful” unless committed without good faith and
without a reasonable belief that the act or omission was in Zomax’s best
interest.


 


A Change of
Control shall be deemed to have occurred if (1) any “person” (as
such term is used in Section 13(d) and 14(d) of the Exchange Act) becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of Zomax representing 30% or more of the combined
voting power (with respect to the election of directors) of Zomax’s then
outstanding securities; (2) 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 Zomax’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; (3) the consummation of 


 





















 


a merger or consolidation of Zomax with or into any other corporation, other
than a merger or consolidation which would result in the holders of the
voting securities of Zomax outstanding immediately prior thereto continuing to
continue to hold (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 Zomax or
of such surviving entity outstanding immediately after such merger or
consolidation; or (4) the consummation of a plan of complete liquidation of
Zomax or of an agreement for the sale or disposition by Zomax of all or
substantially all of Zomax’s business or assets.


 


Change of
Control Payments shall mean any payment (including any
benefit or transfer of property) in the nature of compensation to or for the
benefit of Executive under any arrangement that is partially or entirely
contingent on a Change of Control, or is deemed to be contingent on a Change of
Control for purposes of Section 280G of the Code.  As used in this definition, the term “arrangement”
includes any agreement between Executive and Zomax and any and all of Zomax’s
salary, bonus, incentive, compensation or benefit plans, programs or
arrangements, and shall include this Agreement.


 


Code
shall mean the Internal Revenue Code of 1986, as amended from time to time.


 


Company
shall mean Zomax Incorporated, a Minnesota corporation, any subsidiaries
thereof, and any successors or assigns, including any Successor.


 


Company
Product means any product, product line or service (including
any component thereof or research to develop information useful in connection
with a product or service) that is being designed, developed, manufactured,
marketed or sold by Zomax at the time of the termination of Executive’s
employment with Zomax or with respect to which Zomax has acquired, prior to
termination of Executive’s employment, Confidential Information which it
intends to use in the design, development, manufacture, marketing or sale of a
product or service.


 


Competitive
Product means any product, product line or service (including
any component thereof or research to develop information useful in connection
with a product or service) that is being designed, developed, manufactured,
marketed or sold by anyone other than Zomax and is of the same general type,
performs similar functions, or is used for the same purposes as a Company
Product.


 


Confidential
Information means any information or compilation of
information that Executive learns or develops during the course of his
employment with Zomax that derives independent economic value from not being
generally known, or readily ascertainable by proper means, by other persons who
can obtain economic value from its disclosure or use.  It includes but is not limited to trade
secrets, inventions, discoveries, and may relate to such matters as research
and development, manufacturing processes, management systems and techniques and
sales and marketing plans and information.


 


Good
Reason shall mean (1) a substantial reduction in the nature
or status of Executive’s responsibilities hereunder, including if Executive
should no longer serve as Executive Vice 


 


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President and Chief Financial Officer, or report to the Chief Executive
Officer of Zomax or an ultimate parent entity; (2) a reduction by the Company
in the Executive’s Base Salary or target bonus opportunity except a reduction
may be permitted if the Company reduces the base salaries or target bonus
opportunities of its senior executives generally; (3) the failure to comply
with the Section 3.3 of this Agreement; (4) a requirement to relocate outside
of the Minneapolis area; (5) failure by Zomax to allow Executive to participate
to the full extent in all plans, programs or benefits in accordance with this
Agreement; and (6) failure by a successor to assume all of the terms and
conditions of this Agreement. 
Notwithstanding the foregoing, “Good Reason” shall be deemed to occur
only if such event enumerated in (1), (2), (3), (4) or (5) above has not been
corrected by Zomax within two weeks of receipt of notice from Executive of the
occurrence of such event, which notice shall specifically describe such event.


 


Inventions
means any inventions, discoveries, improvements, ideas or works of authorship
(whether patentable or not and including those which may be subject to copyright
protection) generated, conceived, authored or reduced to practice by Executive
alone or in conjunction with others, during or after working hours, while an
employee of Zomax, and that:


 


(i)            are
derived in whole or in part from, or use, incorporate or represent any
improvement to any Invention or trade secret of Zomax; or


 


(ii)           result
from any work Executive performs for Zomax; or


 


(iii)          use
any of Zomax’s equipment, supplies, facilities or trade secret information; or


 


(iv)          otherwise
relate to Zomax’s products or Zomax’s present or reasonably foreseeable future
research or development.


 


Term
shall mean the term of Executive’s employment under Section 2.3 below.


 


Person
shall mean an individual, partnership, corporation, estate or trust or other
entity.


 


Successor
shall be any entity acquiring substantially all of the assets of Zomax or a
corporation into which Zomax is merged or with which it is consolidated.


 


Section
2


 


EMPLOYMENT AND
TERMS OF AGREEMENT


 


2.1          Employment.  Zomax hereby agrees to employ Executive, and
Executive hereby agrees to his employment as Executive Vice President and Chief
Financial Officer of Zomax, subject to the terms and conditions of this
Agreement and shall report directly to the Chief Executive Officer.   Executive understands and agrees that he
will immediately resign from any other Zomax directorships or offices upon
termination of his employment for any reason.


 


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2.2          Duties.


 


a.             During
the term of his employment pursuant to this Agreement, Executive shall serve
Zomax faithfully and to the best of his ability and shall devote substantially
all his business and professional time, energy, and diligence to the
performance of the duties of such office and he shall perform such service and
duties in connection with the business and affairs of Zomax (i) as are
customarily incident to such office and (ii) as may reasonably be assigned or
delegated to him by the Chief Executive Officer.  Executive may engage in appropriate civic,
charitable or religious activities and devote a reasonable amount of time to
private investments or, with the consent of Zomax’s Board of Directors which
shall not be withheld unreasonably, serve on up to two (2) boards of directors
of other entities, in each case, as long as such activities and service do not
interfere or conflict with Executive’s duties and responsibilities to Zomax and
its affiliates.


 


b.             Subject
to the terms of this Agreement, Executive agrees to be subject to Zomax’s
control, rules, regulations, policies and programs.


 


2.3          Term of Employment.


 


a.             The term of this Agreement shall be effective as
of the date hereof and shall extend until terminated as expressly provided
herein.  Executive’s first effective date
of employment pursuant to this Agreement shall be August 22, 2005.


 


b.             Unless extended by mutual consent or as provided
in Section 2.3(c) below, this Agreement shall terminate on August 22, 2006, one
year after the effective date of employment (the “Initial Term”).


 


c.             On and after the Initial Term, this Agreement
shall be deemed extended from year to year (“Extension Year”) unless, no later
than three (3) months prior to the end of the Initial Term or applicable
Extension Year (as the case may be), Zomax or the Executive shall have notified
the other party in writing that it or he does not elect to extend the Initial
Term or applicable Extension Year (as the case may be) past its then expiration
date.


 


Section 3


 


COMPENSATION,
BENEFITS AND OTHER ENTITLEMENTS


 


3.1          Base Salary.  As compensation for his services to Zomax and
as compensation for his confidentiality and non-competition agreements provided
in Sections 7 and 9 of this Agreement, Executive shall be paid a Base Salary of
$275,000 in bi-weekly amounts of $10,576.92. 
The Base Salary may be increased or reduced; provided, however, that
any reduction shall be permitted only if the Company reduces the base salaries
of its senior executives generally and such reduction shall not exceed
the average percentage reduction for all senior executives.  The Base Salary shall be inclusive of all
applicable income, Social Security, 


 


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and other taxes and charges that are required by law to be withheld by
Zomax or that are requested to be withheld by Executive.


 


3.2          Bonus.  In addition to the Base Salary payable to
Executive pursuant to Section 3.1 above, Executive will be eligible to receive
an annual bonus for each year of service under this Agreement.  During the Term, the bonus shall be targeted
at no less than 50% of Base Salary, unless the Company reduces the target bonus
of its senior executives generally and such reduction does not exceed
the average percentage reduction for all senior executives.  The criteria for payout of Executive’s bonus
and his target bonus opportunity for a particular year shall, subject to the
preceding sentence, be determined solely within the discretion of the Chief
Executive Officer, Board or Compensation Committee of Zomax and shall be
communicated to Executive no later than March 1 of each year.  The bonus earned by Executive, if any, will
be paid to Executive no later than March 1 of the following year.


 


3.3          Long-Term
Incentives.  Upon the first effective date of employment,
August 22, 2005, Executive shall receive an incentive stock option, under the
Company’s 2004 Equity Incentive Plan, to acquire 200,000 shares of the Company’s
Common Stock at the fair market value of such stock on such date.  Such option shall vest 50,000 shares annually
over four years and have a term of 10 years. 
In addition to this grant and to the Base Salary and bonus payable to
Executive pursuant to Sections 3.1 and 3.2, respectively, Executive will be
eligible to receive annual equity-based awards for each year of service under
this Agreement.  The Compensation
Committee in its sole discretion will determine whether to grant to Executive
any equity-based awards in a particular year and the size of such awards.  In making these determinations, the
Compensation Committee will take into account both the Company’s and Executive’s
performances, among other factors.


 


3.4          Benefits.  Executive shall be eligible to participate in
or receive benefits under all senior executive and employee benefit plans,
health plans, or arrangements, if any, made available from time to time by
Zomax to its senior executive employees as set forth in an employee manual or
otherwise, including but not limited to deferred compensation, supplemental
retirement and Section 401(k) plans, disability, life and other insurance plans
and programs, all hospitalization and health and welfare plans and programs,
and stock options, restricted share, incentive or other bonus plans.  Subject to Sections 3.2 and 3.3, Zomax
retains the right to amend, modify or terminate any of its benefits or benefit
plans during the term of Executive’s employment.


 


3.5          Miscellaneous Benefits.  Zomax shall provide Executive the following
additional benefits:


 


a.             Executive
shall be entitled to a sign-on bonus in the amount of $60,000, payable upon his
first day of employment with Zomax.


 


b.             Reimbursement
of all ordinary and necessary expenses incurred by Executive for Zomax
business;


 


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c.             Executive
agrees to be bound by the terms and conditions of the current vacation policy
that may be amended from time to time. 
On the termination of this Agreement or his employment for any reason,
Executive will be paid in cash in an amount equal to the value of unused
vacation days.  This amount will be paid
in full within five (5) days of the effective date of the termination of his
employment or this Agreement for any reason.


 


Section 4


 


TERMINATION OF
EMPLOYMENT


 


4.1          Termination.  Notwithstanding any other provision of this
Agreement to the contrary or appearing to be to the contrary, Executive’s
employment shall terminate as follows:


 


a.             By
mutual written agreement of the parties.


 


b.             Upon
Executive’s death.


 


c.             Zomax
shall have the right to terminate Executive’s employment upon Executive’s
inability to perform the essential functions of his position due to physical or
mental disability as determined in the good faith judgment of the Chief
Executive Officer or the Board of Directors, provided such inability continues
for a period of ninety (90) consecutive days, one hundred twenty (120)
non-consecutive days in any twelve (12) month period, or longer period as may
be required by applicable law.


 


d.             Subject
to Sections 4.1(c) and 4.1(f), upon ninety (90) days’ written notice to
Executive by Zomax.


 


e.             Subject
to Sections 4.1(g) and 4.1(h), upon ninety (90) days’ written notice by
Executive to Zomax.


 


f.              Zomax
shall have the right to terminate Executive’s employment immediately for “Cause”
as defined in Section 1 above.


 


g.             Executive
shall have the right to resign from his employment immediately for “Good Reason”
as defined in Section 1 above.


 


h.             Executive
shall have the right to resign from his employment immediately for any reason
at any time during the one (1) year period after a Change of Control.


 


4.2          Payment
Upon Termination of Employment for Cause or Resignation Without Good Reason.


 


a.             If
Executive’s employment is terminated by Zomax for Cause or if Executive resigns
from his employment hereunder other than for Good Reason, then Executive shall
only be entitled to receive the “Accrued Benefits.”  For purposes of this Agreement, the 


 


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“Accrued Benefits” shall mean any accrued and unpaid Base Salary
through the termination date, any other benefits under any plan or program in
accordance with the terms of such plan or program (including any vesting
requirements) and benefits provided in accordance with customary practices of
Zomax at Executive’s expense (e.g., hospitalization and medical insurance).


 


b.             The
date of termination of Executive’s employment by Zomax under the circumstances
described in this Section 4.2 shall be effective immediately upon receipt by
Executive of written notice of termination. 
The date of resignation by Executive under the circumstances described
in this Section 4.2 shall be ninety (90) days after receipt by Zomax of written
notice of resignation.


 


4.3          Payment
Upon Termination of Employment Without Cause, Termination or Resignation for
Good Reason, Termination or Resignation Following Change of Control, and
Failure to Extend Employment Agreement.


 


a.             If
Executive’s employment is terminated Without Cause, Executive resigns from his
employment hereunder for Good Reason, or Company fails to extend this Agreement
at the end of the Initial Term or an Extension Year, Executive shall be
entitled to the Accrued Benefits and to receive the following:


 


(i)            Executive
shall receive, within thirty (30) days after such termination, resignation, or
end of the Initial Term or an Extension Year without an extension, a lump sum
payment in an amount equal to 1.125 times his Base Salary in effect on the
effective date of such termination or resignation or as of the end of the
Initial Term or Extension Year.  Zomax
shall be entitled to deduct or withhold all taxes and charges which Zomax may
be required to deduct or withhold therefrom.


 


(ii)           With
respect to any outstanding stock options, SARs, restricted stock awards,
performance share awards or other equity-based awards granted to Executive, all
restrictions shall lapse immediately and such awards shall fully vest, all
outstanding options and SARs will become exercisable immediately, and all
performance share objectives shall be deemed to have been met.


 


(iii)          Executive
and his family shall be entitled to continued participation in hospital and
medical plans and programs of Zomax at Zomax’s expense for a nine (9) month
period following such termination, resignation or end of Term subject to early
termination of participation upon Executive becoming entitled to comparable
benefits on subsequent employment.


 


(iv)          Executive
shall be entitled to payment in full, upon the effective date of termination,
of all unpaid vacation allowances.


 


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b.             If
Executive is terminated or resigns from his employment hereunder for any reason
within one (1) year after a Change of Control, Executive shall be entitled to
the Accrued Benefits and the following:


 


(i)            Executive
shall receive within thirty (30) days after such termination or resignation, a
lump sum payment in an amount equal to 1.5 times his Base Salary in effect on
the effective date of such termination or resignation.  Zomax or its successor shall be entitled to
deduct or withhold all taxes and charges which may be required to be deducted
or withheld therefrom.


 


(ii)           With
respect to any outstanding stock options, SARs, restricted stock awards,
performance share awards or other equity-based awards granted to Executive, all
restrictions shall lapse immediately and such awards shall fully vest, all
outstanding options and SARs will become exercisable immediately, and all
performance share objectives shall be deemed to have been met.


 


(iii)          Executive
and his family shall be entitled to continued participation in hospital and
medical plans and programs of Zomax at Zomax’s expense for a twelve (12) month
period following such termination, resignation or end of Term subject to early
termination of participation upon Executive becoming entitled to comparable
benefits on subsequent employment.


 


(iv)          Executive
shall be entitled to payment in full, upon the effective date of termination,
of all unpaid vacation allowances.


 


c.             The
date of termination of Executive’s employment Without Cause shall be ninety
(90) days after receipt by Executive of written notice of termination.  The date of termination or resignation by
Executive for any reason within one (1) year after a Change of Control or
Resignation for Good Reason shall be effective immediately upon receipt by
Zomax of written notice of resignation or the date of receipt by Executive of
the termination notice.  The date of
termination of Executive’s employment for failure to extend his employment
shall be the date on which the Initial Term or Extension Year ends.


 


d.             Anything in the Agreement to the contrary
notwithstanding, if any payment or benefit of any type to or for the benefit of
Executive by Zomax, by any of its affiliates, by any person who acquires
ownership or effective control or ownership of a substantial portion of Zomax’s
assets (within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended, and the regulations thereunder (the “Code”)) or by any
affiliate of such person, whether paid or payable or distributed or
distributable pursuant to the terms of the Agreement or otherwise (the “Payments”),
would, but for this sentence, be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties with respect to such excise tax
(such excise tax, together with any such interest or penalties, are collectively
referred to as the “Excise Tax”), then such Payment(s) shall be equal to the
Greater Amount.  The “Greater Amount”
shall be either (1) the largest portion of the Payment(s) that would result 


 


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in no portion of the Payment(s) being subject
to the Excise Tax or (2) the Payment(s) in full, whichever amount after taking
into account all applicable federal, state and local taxes and the Excise Tax
(all computed at the highest applicable marginal rate), results in the
Executive’s receipt, on an after-tax basis, of the greatest amount of the
Payment(s).  If a reduction in payments
or benefits is necessary so that the Payment(s) equals the Greater Amount,
reduction shall occur in the following order unless Executive elects in writing
a different order:  reduction of cash
payments; reduction of non-cash payments.


 


4.4.         Termination
of Employment by Disability or Death.


 


a.             In
the event of termination of Executive’s employment pursuant to Section 4.1(b)
or 4.1(c), the Executive and/or his family (or Executive’s estate, as the case
may be), shall be entitled to receive from Zomax the following:


 


(i)            Executive
shall receive, within thirty (30) days after such termination, resignation, or
end of the Initial Term or Extension Year without an extension, a lump sum
payment in an amount equal to 1.125 times his Base Salary in effect on the
effective date of such termination or resignation or as of the end of the
Initial Term or Extension Year.  Zomax
shall be entitled to deduct or withhold all taxes and charges which Zomax may
be required to deduct or withhold therefrom.


 


(ii)           With
respect to any outstanding stock options, SARS, restricted stock awards,
performance share awards or other equity-based awards granted to Executive, all
restrictions shall lapse immediately and such awards shall fully vest, all
outstanding options and SARS will become exercisable immediately, and all
performance share objectives shall be deemed to have been met.


 


(iii)          Executive
and/or his family shall be entitled to continue participation in hospital and
medical plans and programs of Zomax at Zomax’s expense for an eighteen (18)
month period.  Thereafter, Zomax shall
pay to Executive and/or his family the sum of $6,000 per year to be prorated
for a partial year, during the period of disability or, if later, until
Executive reaches age 62 or would have reached age 62 if he had survived;
provided, that the first payment shall be payable on the day following the
expiration of such eighteen (18) month period and any subsequent payments shall
be payable on each anniversary of such day.


 


(iv)          Executive
(or, in the event of his death, Executive’s estate or his designated
beneficiary) shall be entitled to receive benefits under any other Company plan
or program (to the extent Executive is vested) in accordance with the terms of
such plan or program.  Should Executive’s
employment terminate pursuant to Section 4.1(c), he shall be entitled to 


 


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continued contributions
under Zomax’s qualified profit sharing plan 401(k) to the extent permitted in
said Plan.


 


(v)           Executive
shall be entitled to payment in full, upon the effective date of termination,
of all unpaid vacation allowances.


 


b.             The
date of termination of Executive’s employment under the circumstances described
in this Section 4.4 shall be the date Executive’s employment is terminated
pursuant to Section 4.1(c) or the date of Executive’s death, as the case may
be.


 


5.             Legal
Fees and Expenses.  Zomax shall pay for all legal fees and
expenses incurred by Executive up to $5,000 in connection with the negotiation,
preparation, review, execution and interpretation of this Agreement and other
related documents (including any amendment of this Agreement).  Zomax shall directly pay Executive’s legal
counsel in cash within thirty (30) days of Zomax’s receipt of any applicable
invoice(s) for such legal fees and expenses.


 


Prior to a Change of
Control, if Executive is successful in seeking to obtain or enforce any right
or benefit provided by this Agreement from or against Zomax in a proceeding
before a court of competent jurisdiction or before an arbitrator or arbitration
panel, Zomax shall reimburse Executive for all reasonable legal fees and
expenses incurred by Executive in the pursuit of any employment right or
benefit.


 


If after a Change of
Control, Executive is successful in seeking to obtain or enforce any right or
benefit provided by this Agreement from or against a “Successor” of Zomax
before a court of competent jurisdiction or before an arbitrator or arbitrator
panel, Successor shall advance Executive for all reasonable legal fees and
expenses incurred by Executive in the pursuit of any employment right or
benefit.


 


6.             Assignment
of Inventions.  Executive agrees to
promptly disclose to Zomax in writing all Inventions; and all such Inventions
shall be the exclusive property of Zomax and are hereby assigned by Executive
to Zomax.  Further, Employee will, at
Zomax’s expense, give Zomax all assistance it reasonably requires to perfect,
protect, and use its rights to Inventions. 
In particular, but without limitation, Executive will sign all
documents, do all things, and supply all information that Zomax may deem
necessary or desirable to:


 


(i)            transfer
or record the transfer of his entire right, title and interest in Inventions;
and


 


(ii)           enable
Zomax to obtain patent, copyright or trademark protection for Inventions
anywhere in the world.


 


The obligations of this
Section 6 shall continue beyond the termination of employment with respect to
Inventions conceived or made by Executive during the period of his employment
and shall be binding upon assigns, executors, administrators and other legal
representatives.  For 


 


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purposes of this Agreement, any Invention relating to the business of
Zomax on which Executive files a patent application within six (6) months after
termination of employment with Zomax shall be presumed to cover Inventions
conceived by Executive during the term of his employment, subject to proof to
the contrary by good faith, written and duly corroborated records establishing
that such Invention was conceived and made following termination of employment.


 


NOTICE:  Pursuant to Minnesota Statutes § 181.78, Executive
is hereby notified that this Section 6 does not apply to any invention for
which no equipment, supplies, facility, or trade secret information of Zomax
was used and which was developed entirely on Executive’s own time, and (1)
which does not relate (a) directly to the business of Zomax or (b) to Zomax’s
actual or demonstrably anticipated research or development, or (2) which does
not result from any work performed by the employee for Zomax.


 


7.             Confidential
Information.  Executive agrees not to
directly or indirectly use or disclose Confidential Information for the benefit
of anyone other than Zomax, either during or after employment, for as long as
the information retains the characteristics of Confidential Information
described in Section 1 above.


 


8.             Return
of Documents and Property.  All
documents and tangible items provided to Executive by Zomax, or possessed by or
created by Executive for use in connection with his employment, are the
property of Zomax and shall be promptly returned to Zomax on termination of
employment together with all copies, recordings, abstracts, notes or
reproductions of any kind made from or about the documents and tangible items
or the information they contain.


 


9.             Non-competition.  In consideration of Executive’s rights under
this Agreement, Executive agrees that, from and after the Effective Date and
continuing until the one-year anniversary of termination or cessation of
Executive’s employment with Zomax, Executive will not, alone or in any capacity
with another legal entity:


 


(i)            directly
or indirectly, own any interest in, control, be employed by or associated in a
material manner with, or render services to (including but not limited to
services in research), any person or entity (or subsidiary, subdivision,
division, or joint venture of such entity) in connection with the design,
development, manufacture, marketing, or sale of a Competitive Product that is
sold or intended for distribution or sale in any geographic area in which Zomax
actively markets, or in which, to the Executive’s knowledge acquired through
his employment with Zomax, Zomax intends to actively market, a Company Product
of the same general type or function;


 


(ii)           directly
or indirectly, solicit any of Zomax’s then current employees for the purpose of
hiring them or inducing them to leave their employment with Zomax;


 


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(iii)          directly
or indirectly, solicit, attempt to solicit, interfere, or attempt to interfere
with Zomax’s relationship with its then current customers or potential
customers (of which Executive has knowledge acquired through his employment
with Zomax), on behalf of himself or any other person or entity engaged in the
design, development, manufacture, marketing, or sale of a Competitive Product;
or


 


(iv)          directly
or indirectly design, develop, manufacture, market, or sell any Competitive
Product that is sold or intended for distribution or sale in any geographic
area in which Zomax actively markets, or in which, to the Executive’s knowledge
acquired through his employment with Zomax, Zomax intends to actively market, a
Company Product of the same general type or function.


 


In
the event that Executive receives a payment from Zomax pursuant to Section 4.3
above, the reference to the “one-year anniversary” in the first sentence of
this Section shall be changed to the “eighteen-month anniversary”.


 


Notwithstanding
the foregoing in no event shall ownership of less than four percent (4%) of the
outstanding publicly-traded equity or debt securities of any issuer or less
than four percent (4%) of the outstanding interests in a private equity fund,
mutual fund or other pooled investment account, in each case, in which the
Executive does not actively participate in the management thereof, be prohibited
by this Section 9.


 


10.          Breach
of Non-competition Provisions of this Agreement.  In addition to any other relief or remedies
afforded by law or in equity, if Executive breaches Section 10 of this
Agreement, Executive agrees that Zomax shall be entitled, as a matter of right,
to injunctive relief in any court of competent jurisdiction.  Executive recognizes and hereby admits that
irreparable damage will result to Zomax if he violates or threatens to violate
the terms of Section 10 of this Agreement. 
This Section 10 shall not preclude the granting of any other appropriate
relief including, without limitation, money damages against Executive for
breach of Section 10 of this Agreement.


 


11.          Indemnification.  The Company shall indemnify Executive, for
such expenses and liabilities, in such manner, under such circumstances, and to
such extent, as permitted by Minnesota Statutes, Section 302A.521, as now
enacted or hereafter amended.  The right
to indemnification includes the right to be paid by Zomax the expenses incurred
in defending any proceeding in advance of its final disposition.


 


Zomax agrees to provide
to the Executive director’s and officer’s liability insurance coverage that
provides the maximum coverage provided to its other officers and directors in respect
of any liabilities that might arise out of his service as a director and
officer of Zomax.  The parties recognize
and agree that determination as to the amount of such insurance that is
reasonable shall reflect not only the need to protect the Executive against
liability, but also the cost and availability of such insurance.


 


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After termination of
employment, the Executive will be available to give testimony and assistance in
connection with any future litigation or arbitration proceedings arising from
activities of Zomax during the period of his employment.  Such testimony and assistance will be
scheduled at times and locations convenient for the Executive and not
inconsistent with his health and the responsibilities that he then may have in
connection with subsequent employment or other rendering of services.  Zomax shall reimburse him for all reasonable
out-of-pocket travel and other expenses, including legal fees, incurred by him
in connection with his testimony and assistance pursuant to this Section
11.  Such fees and reimbursements shall
be paid promptly after the Executive’s submission to Zomax of statements in
such reasonable detail as to enable Zomax to make such payment.


 


12.          Effect
of Other Obligations.  It is intended
that the obligation of the parties to perform the terms of this Agreement is
unconditional and does not depend on the performance or non-performance of any
terms, duties or obligations not specifically recited in this Agreement.


 


13.          Binding
Agreement.  This Agreement shall be
binding upon, and inure to the benefit of Zomax, its successors and assigns,
but without the prior written consent of Executive, this Agreement may not be
assigned other than in connection with a merger or sale of substantially all
the assets of Zomax or similar transaction. 
The rights of the Executive hereunder to payments and benefits shall
inure to the benefit of, and be enforceable by, the Executive’s personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.


 


14.          Severability.  If the final determination of a court of
competent jurisdiction declares, after the expiration of the time within which
judicial review (if permitted) of such determination may be perfected, that any
term of provision hereof is invalid or unenforceable, (a) the remaining terms
and provisions hereof shall be unimpaired, and (b) the invalid or unenforceable
term or provision shall be deemed replaced by a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.


 


15.          Amendment;
Waiver.  This Agreement may not be
modified, amended or waived in any manner except by an instrument in writing
signed by both parties hereto.  The
waiver by either party of compliance with any provision of this Agreement by
the other party shall not operate or be construed as a waiver of any other
provision of this Agreement, or of any subsequent breach by such party of a
provision of this Agreement.


 


16.          Governing
Law.  All matters affecting this
Agreement, including the validity thereof, are to be governed by, interpreted
and construed in accordance with the laws of the State of Minnesota without
regard to the conflict of laws principles thereof.


 


17.          Notices.  Any notice hereunder by either party to the
other shall be given in writing by personal delivery or certified mail, return
receipt requested.  If addressed to
Executive, the notice shall be delivered or mailed to Executive at the address
most recently communicated in writing by Executive to Zomax, or if addressed to
Zomax, the notice shall be delivered or mailed 


 


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to Zomax at its executive offices to the attention of the Chief
Executive Officer of Zomax.  A notice
shall be deemed given, if by personal delivery, on the date of such delivery
or, if by certified mail, on the date shown on the applicable return receipt.


 


18.          Supersedes
Previous Agreements.  This Agreement
supersedes all prior or contemporaneous negotiations, commitments, agreements
and writings with respect to the subject matter hereof, all such other
negotiations, commitments, agreements and writings will have no further force
or effect, and the parties to any such other negotiation, commitment, agreement
or writing will have no further rights or obligations thereunder.


 


19.          Headings;
Construction.  The headings of
Sections and paragraphs herein are included solely for convenience of reference
and shall not control the meaning or interpretation of any of the provisions of
this Agreement.  This Agreement shall be
construed without regard to any presumption or other rule requiring
construction hereof against the party causing this Agreement to be drafted.


 


20.          Benefit.  Subject to Section 13, nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.


 


21.          Release. 
Executive understands and agrees that he will be entitled to no
severance payments under Section 4.3 and 4.4 above unless he executes and does
not rescind a release agreement in the form mutually agreed to be Zomax and
Executive and that will provide for a mutual and comprehensive release of
claims by each party against the other party, except for any of Executive’s
contractual claims (including, without limitation under this Agreement and any
equity-based award agreements) or claims for accrued benefits in favor of
Executive.


 


22.          No Mitigation.  Executive shall not be required to
mitigate the amount of any payment or benefit hereunder, nor shall any payment
or benefit be reduced by any earnings or benefits that Executive may receive
from another source.


 


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IN WITNESS WHEREOF, Zomax
has caused this Agreement to be signed by its President and Chief Executive
Officer pursuant to the authority of its Board and Executive has executed this
Agreement, effective as of August 22, 2005.


 


	
   

  	
  ZOMAX INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Anthony Angelini

  	
   

  
	
   

  	
   

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  Richard D. Barnes

  	
   

  
	
   

  	
  Richard D. Barnes

  



 


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