EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into effective as of November 9, 1998 by and
between INTELLICELL CORP., a Delaware corporation (the "EMPLOYER" or the
"COMPANY"), and Xxx Xxxxx (the "EMPLOYEE").
W I T N E S S E T H:
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WHEREAS, the Employee is currently the Company's Chairman of the Board
("CHAIRMAN"), President and Chief Executive Officer under an agreement expiring
in December 1999;
WHEREAS, the Employer desires to continue to employ the Employee as its
Chairman and President and to be assured of his services as such on the terms
and conditions hereinafter set forth; and
WHEREAS, the Employee is willing to accept such employment on such terms
and conditions; and
WHEREAS, the Employee and Employer desire to enter into an agreement that
will supersede any previous employment agreements;
WHEREAS, the Company considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Company and its shareholders, and the Company recognizes that
the existence of a possible change in control of the Company causes uncertainty
among management which may result in the possible departure or distraction of
members of management to the detriment of the Company and its shareholders.
WHEREAS, the Employee desires assurance that he will be protected against
the financial impact in the event of the unexpected termination of the Employee.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and intending to be legally bound hereby, the Employer
and the Employee hereby agree as follows:
1. Term. Employer hereby agrees to continue to employ Employee, and
Employee hereby agrees to continue to serve Employer for a three-year period
commencing on November 16, 1998 (the "EFFECTIVE DATE") (such period being herein
referred to as the "INITIAL TERM," and any year commencing on the Effective Date
or any anniversary of the Effective Date being hereinafter referred to as an
"EMPLOYMENT YEAR"). After the Initial Term, this Agreement shall be renewable
automatically for successive one year periods (each such period being referred
to as a "RENEWAL TERM"), unless, more than thirty days prior to the expiration
of the Initial Term
or any Renewal Term, the Employee or the Company gives written notice that
employment will not be renewed.
2. Employee Duties.
(a) During the term of this Agreement, the Employee shall serve as the
Employer's Chairman and President. The Employee recognizes and
acknowledges that the senior most executive officer of the Company is
the Chief Executive Officer of the Company.
(b) The Employee shall devote such attention and knowledge in
furtherance of the business and activities of the Company as necessary
to adequately perform his duties. The principal place of performance by
the Employee of his duties hereunder shall be the Company's principal
executive offices, in the greater metropolitan area of Los Angeles,
California, although the Employee may be required to travel outside of
such area, for reasonable periods for an officer in Employee's position,
in connection with the business of the Company.
(c) The Employee shall be entitled to manage and direct his own personal
investments and business affairs, to participate in such charitable and
public interest activities as he may deem appropriate, and to serve on
other boards of directors (with the reasonable approval of the Board),
all and to the extent that such activities do not significantly conflict
with his obligations to the Company.
3. Compensation.
(a) During the term of this Agreement, the Employer shall pay the
Employee a salary (the "SALARY") of no less than $72,000 per annum in
respect of each Employment Year, payable in equal installments
semi-monthly, or at such other times as may mutually be agreed upon
between the Employer and the Employee. Such Salary may be increased from
time to time at the discretion of the Board.
(b) In addition to the foregoing, the Employee shall be entitled to
bonuses and such other compensation in the form of cash, stock, stock
options or other property or rights as may from time to time be awarded
to him by the Board during or in respect of his employment hereunder.
4. Benefits.
(a) During the term of this Agreement, the Employee shall have the right
to receive or participate in all benefits and plans, which the Company
may from time to time institute during such period for its employees and
for which the Employee is eligible. Nothing paid to the Employee under
any plan or arrangement presently in effect or made available in the
future shall be deemed to be in lieu of the Salary or any other
obligation payable to the Employee pursuant to this Agreement.
(b) During the term of this Agreement, the Employee will be entitled to
no less then 4 weeks vacation per year and such number of paid holidays,
personal days, and sick leave days in
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each calendar year as are determined by the Company from time to time.
Such vacation may be taken in the Employee's discretion, and at such
time or times as are not inconsistent with the reasonable business needs
of the Company.
5. Travel Expenses. All travel and other expenses incident to the rendering
of services reasonably incurred on behalf of the Company by the Employee during
the term of this Agreement shall be paid by the Employer. If any such expenses
are paid in the first instance by the Employee, the Employer shall reimburse him
therefor on presentation of appropriate receipts for any such expenses.
6. Termination. This Agreement will not be terminated by the voluntary or
involuntary dissolution of the Employer. Notwithstanding the provisions of
SECTION 1 hereof, the Employee's employment with the Employer may be earlier
terminated as follows:
(a) By action taken by the Board, the Employee may be discharged for
cause (as hereinafter defined), effective as of such time as the Board
shall determine. Upon discharge of the Employee pursuant to this SECTION
6(a), the Employer shall have no further obligation or duties to the
Employee, except for payment of Salary through the effective date of
termination, and as provided in SECTIONS 5, 7 and 8 and the Employee
shall have no further obligations or duties to the Employer, except as
provided in SECTION 8.
(b) In the event of (i) the death of the Employee or (ii) action of the
Board and the inability of the Employee, by reason of physical or mental
disability, to continue substantially to perform his duties hereunder
for a period of 180 consecutive days, during which 180 day period Salary
and any other benefits hereunder shall not be suspended or diminished.
Upon any termination of the Employee's employment under this Section
6(b), the Employer shall have no further obligations or duties to the
Employee, except as provided in SECTIONS 5, 7, 8 and 9.
(c) In the event that Employee's employment with the Employer is
terminated by action taken by the Board without cause, including the
removal of the Employee as Chairman of the Board or President or in the
event of termination of the Employee as Chairman of the Board or
President, then the Employer shall have no further obligation or duties
to Employee, except for payment of the amounts described below and as
provided in SECTIONS 5, 7, 8 and 9, and Employee shall have no further
obligations or duties to the Employer, except as provided in SECTION 8.
In the event of such termination, the Employer shall pay to the Employee
a lump sum of $500,000 which shall be payable immediately upon such
termination.
(d) In the event that the Employee's employment with the Company is
terminated upon a Constructive Involuntary Termination (as defined
below), then the Employer shall have no further obligation or duties to
Employee, except for payment of the amounts described below and as
provided in SECTIONS 5, 7, 8 and 9, and Employee shall have no further
obligations or duties to the Employer, except as provided in SECTION 8.
In the event of such termination, the Employer shall pay to the Employee
a lump sum equal to the amount due under SECTION 3(a) through the
Initial Term, which shall be payable immediately upon such
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termination.
(e) For purposes of this Agreement, the Company shall have "CAUSE" to
terminate the Employee's employment under this Agreement if the
Employee(i) by any willful action or inaction, or through gross neglect,
materially breaches any of the provisions of this Agreement or of his
employment, or (ii) engages in criminal misconduct (including
embezzlement and criminal fraud) which is materially injurious to the
Company, monetarily or otherwise.
(f) For purposes of this Agreement, the term "CONSTRUCTIVE INVOLUNTARY
TERMINATION" shall mean voluntary termination of employment by the
Employee as a result of a significant reduction or significantly adverse
change in the duties, responsibilities, reporting relationship, job
description, compensation, perquisites, office or location of employment
of the Employee without the written consent of the Employee.
(g) Upon thirty (30) days prior written notice to the Company from the
Employee for any reason.
7. Registration Rights.
(a) Demand Registration. If the stockholders of the Company fail to
approve the transactions contemplated in that certain private placement
memorandum dated November 11, 1998 at the next meeting of the
stockholders of the Company, the Employee shall have the right,
exercisable by written notice to the Employer, to have the Employer
prepare, file and use its best efforts to have declared effective by the
Securities and Exchange Commission, on one occasion, a registration
statement and such other documents, including a prospectus, as may be
necessary in the opinion of both counsel for the Employer and counsel
for the Employee, if any, in order to comply with the provisions of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), so as to
permit a public offering and sale of the shares of common stock of the
Employer held by the Employee.
(b) Piggyback Registration. Each time the Company shall determine to
register any of its securities either for its own account or the account
of a security holder or holders exercising their respective demand
registration rights (other than pursuant to SECTION 7(a) hereof), other
than a registration relating solely to employee benefit plans, or a
registration relating solely to a Rule 145 Transaction, or a
registration on any registration form which does not permit secondary
sales, the Company will:
(i) promptly give to the Employee written notice thereof; and
(ii) use its best efforts to include in such registration (and
any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all
of the shares of common stock held by the Employee in such
registration statement.
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(c) Limitations on Resales. Notwithstanding the foregoing, the Employee
shall not sell any of his shares of common stock of the Employer
pursuant to the foregoing registration statements unless and until
Employee ceases to serve for any reason (other than for cause) as the
Chairman of the Board or President of the Employer; PROVIDED, HOWEVER,
the Employee shall continue to have the right at any time after the date
of this Agreement to sell shares of common stock of the Employer under
Rule 144 promulgated under the Securities Act in accordance with
applicable law, subject to the terms of the lock-up agreement. A form of
lock-up agreement is attached hereto as EXHIBIT 1, which the Employer
and Employee expect to be executed by them.
8. Confidentiality; Noncompetition.
(a) The Employer and the Employee acknowledge that the services to be
performed by the Employee under this Agreement are unique and
extraordinary and, as a result of such employment, the Employee will be
in possession of confidential information relating to the business
practices of the Company. For purposes of this Agreement, the term
"CONFIDENTIAL INFORMATION" shall mean any and all information (verbal
and written) relating to the Company or any of its affiliates, or any of
their respective activities, other than such information which can be
shown by the Employee to be in the public domain (such information not
being deemed to be in the public domain merely because it is embraced by
more general information which is in the public domain) other than as
the result of breach of the provisions of this Section 8(a), including,
but not limited to, information relating to: trade secrets, personnel
lists, financial information, research projects, services used, pricing,
customers, customer lists and prospects, product sourcing, marketing and
selling and servicing. The Employee agrees that he will not, during or
for a period of two years after the termination of employment, directly
or indirectly, use, communicate, disclose or disseminate to any person,
firm or corporation any confidential information regarding the clients,
customers or business practices of the Company acquired by the Employee
during his employment by Employer, without the prior written consent of
Employer; provided, however, that the Employee understands that Employee
will be prohibited from misappropriating any trade secret at any time
during or after the termination of employment.
(b) The Employee hereby agrees that he shall not, during the period of
his employment and for a period of one (1) year following such
employment, directly or indirectly, within any county (or adjacent
county) in any State within the United States or territory outside the
United States in which the Company is engaged in business during the
period of the Employee's employment or on the date of termination of the
Employee's employment, engage, have an interest in or render any
services to any business (whether as owner (other than as an owner of
less than 5% of a Company whose securities are listed on a National
Stock Exchange or Nasdaq) manager, operator, licensor, licensee, lender,
partner, stockholder, joint venturer, employee, consultant or otherwise)
directly competitive with the Company's business activities.
(c) The Employee hereby agrees that he shall not, during the period of his
employment and
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for a period of one (1) year following such employment, directly or
indirectly, take any action which constitutes an interference with or a
disruption of any of the Company's business activities including,
without limitation, the solicitations of the Company's customers, or
persons listed on the personnel lists of the Company. At no time during
the term of this Agreement, or thereafter shall the Employee, directly
or indirectly, disparage the commercial, business or financial
reputation of the Company.
(d) For purposes of clarification, but not of limitation, the Employee
hereby acknowledges and agrees that the provisions of SECTIONS 8(b) and
(c) above shall serve as a prohibition against him, during the period
referred to therein, directly or indirectly, hiring, offering to hire,
enticing, soliciting or in any other manner persuading or attempting to
persuade any officer, employee, agent, lessor, lessee, licensor,
licensee or customer who has been previously contacted by either a
representative of the Company, including the Employee, (but only those
suppliers existing during the time of the Employee's employment by the
Company, or at the termination of his employment), to discontinue or
alter his, her or its relationship with the Company.
(e) Upon the termination of the Employee's employment for any reason
whatsoever, all documents, records, notebooks, equipment, price lists,
specifications, programs, customer and prospective customer lists and
other materials which refer or relate to any aspect of the business of
the Company which are in the possession of the Employee including all
copies thereof, shall be promptly returned to the Company.
(f) (i) The Employee agrees that all processes, technologies and
inventions ("INVENTIONS"), including new contributions, improvements,
ideas and discoveries, whether patentable or not, conceived, developed,
invented or made by him during his employment by Employer shall belong
to the Company, provided that such Inventions grew out of the Employee's
work with the Company are related in any manner to the business
(commercial or experimental) of the Company or are conceived or made on
the Company's time or with the use of the Company's facilities or
materials. The Employee shall further: (a) promptly disclose such
Inventions to the Company; (b) assign to the Company, without additional
compensation, all patent and other rights to such Inventions for the
United States and foreign countries; (c) sign all papers necessary to
carry out the foregoing; and (d) give testimony in support of his
inventorship;
(f)(ii) If any Invention is described in a patent application or is
disclosed to third parties, directly or indirectly, by the Employee
within two years after the termination of his employment by the Company,
it is to be presumed that the Invention was conceived or made during the
period of the Employee's employment by the Company; and
(f)(iii) The Employee agrees that he will not assert any rights to any
Invention as having been made or acquired by him prior to the date of
this Agreement, except for Inventions, if any, disclosed to the Company
in writing prior to the date hereof.
(g) The Company shall be the sole owner of all products and proceeds of
the Employee's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats,
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suggestions, developments, arrangements, packages, programs and other
intellectual properties that the Employee may acquire, obtain, develop
or create in connection with and during the term of the Employee's
employment hereunder, free and clear of any claims by the Employee (or
anyone claiming under the Employee) of any kind or character whatsoever
(other than the Employee's right to receive payments hereunder). The
Employee shall, at the request of the Company, execute such assignments,
certificates or other instruments as the Company may from time to time
deem necessary or desirable to evidence, establish, maintain, perfect,
protect, enforce or defend its right, or title and interest in or to any
such properties.
(h) The parties hereto hereby acknowledge and agree that (i) the Company
would be irreparably injured in the event of a breach by the Employee of
any of his obligations under this SECTION 8, (ii) monetary damages would
not be an adequate remedy for any such breach, and (iii) the Company
shall be entitled to injunctive relief, in addition to any other remedy
which it may have, in the event of any such breach.
(i) The parties hereto hereby acknowledge that, in addition to any other
remedies the Company may have under SECTION 8(H) hereof, the Company
shall have the right and remedy to require the Employee to account for
and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits (collectively, "BENEFITS") derived or
received by the Employee as the result of any transactions constituting
a breach of any of the provisions of SECTION 8, and the Employee hereby
agrees to account for and pay over such Benefits to the Company.
(j) Each of the rights and remedies enumerated in SECTION 8(h) and 8(i)
shall be independent of the other, and shall be severally enforceable,
and all of such rights and remedies shall be in addition to, and not in
lieu of, any other rights and remedies available to the Company under
law or in equity.
(k) If any provision contained in this SECTION 8 is hereafter construed
to be invalid or unenforceable, the same shall not affect the remainder
of the covenant or covenants, which shall be given full effect, without
regard to the invalid portions.
(l) If any provision contained in this SECTION 8 is found to be
unenforceable by reason of the extent, duration or scope thereof, or
otherwise, then the court making such determination shall have the right
to reduce such extent, duration, scope or other provision and in its
reduced form any such restriction shall thereafter be enforceable as
contemplated hereby.
(m) It is the intent of the parties hereto that the covenants contained
in this SECTION 8 shall be enforced to the fullest extent permissible
under the laws and public policies of each jurisdiction in which
enforcement is sought (the Employee hereby acknowledging that said
restrictions are reasonably necessary for the protection of the
Company). Accordingly, it is hereby agreed that if any of the provisions
of this SECTION 8 shall be adjudicated to be invalid or unenforceable
for any reason whatsoever, said provision shall be (only with respect to
the operation thereof in the particular jurisdiction in which such
adjudication is made) construed by limiting and reducing it so as to be
enforceable to the extent permissible, without
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invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of said provision in any other jurisdiction.
9. Indemnification. The Employer shall indemnify and hold harmless the
Employee against any and all expenses reasonably incurred by him in connection
with or arising out of (a) the defense of any action, suit or proceeding in
which he is a party, or (b) any claim asserted or threatened against him, in
either case by reason of or relating to his being or having been an employee,
officer or director of the Company, whether or not he continues to be such an
employee, officer or director at the time of incurring such expenses, except
insofar as such indemnification is prohibited by law. Such expenses shall
include, without limitation, the fees and disbursements of attorneys, amounts of
judgments and amounts of any settlements, provided that such expenses are agreed
to in advance by the Employer. The foregoing indemnification obligation is
independent of any similar obligation provided in the Employer's Certificate of
Incorporation or Bylaws, and shall apply with respect to any matters
attributable to periods prior to the Effective Date, and to matters attributable
to his employment hereunder, without regard to when asserted.
10. General. This Agreement is further governed by the following
provisions:
(a) Notices. All notices relating to this Agreement shall be in writing
and shall be either personally delivered, sent by telecopy (receipt
confirmed) or mailed by certified mail, return receipt requested, to be
delivered at such address as is indicated below, or at such other
address or to the attention of such other person as the recipient has
specified by prior written notice to the sending party.
Notice shall be effective when so personally delivered, one business
day after being sent by telecopy or five days after being mailed.
To the Employer:
Intellicell Corp.
0000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attn.: Chief Executive Officer
To the Employee:
Xx. Xxx Xxxxx
0000 Xxxxxxxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
With, in either case, a copy in the same manner to:
Xxxx & Xxxxx
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
(b) Parties in Interest. Employee may not delegate his duties or assign
his rights hereunder. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns.
(c) Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with
respect to the employment of the Employee by the Employer and contains
all of the covenants and agreements between the parties with respect to
such employment in any manner whatsoever. Any modification or
termination of this Agreement will be effective only if it is in writing
signed by the party to be charged.
(d) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
(e) Warranty. Employee hereby warrants and represents as follows:
(i) That the execution of this Agreement and the discharge of
Employee's obligations hereunder will not breach or conflict with
any other contract, agreement, or understanding between Employee
and any other party or parties.
(ii) Employee has ideas, information and know-how relating to the
type of business conducted by Employer, and Employee's disclosure
of such ideas, information and know-how to Employer will not
conflict with or violate the rights of any third party or parties.
(f) Severability. In the event that any term or condition in this
Agreement shall for any reason be held by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any
other term or condition of this Agreement, but this Agreement shall be
construed as if such invalid or illegal or unenforceable term or
condition had never been contained herein.
(g) Execution in Counterparts. This Agreement may be executed by the
parties in one or more counterparts, each of which shall be deemed to be
an original but all of which taken together shall constitute one and the
same agreement, and shall becomeeffective when one or more counterparts
has been signed by each of the parties hereto and delivered to each of
the other parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INTELLICELL CORP.
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: Executive Vice President
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: Vice President, Chief
Financial Officer
/s/ Xxx Xxxxx
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Xxx Xxxxx
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