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Exhibit 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into
as of the 1st day of December, 1999, by and between Mobility Electronics, Inc.,
a Delaware corporation ("Employer"), and Xxxxxxx X. Xxxx ("Employee").
W I T N E S S E T H:
WHEREAS, Employer desires to employ Employee as provided herein, and
Employee desires to accept such employment; and
WHEREAS, Employee shall, as an employee of Employer, have access to
confidential information with respect to Employer and its affiliates;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Employment. Employer hereby employs Employee and Employee
hereby accepts employment with Employer upon the terms and conditions
hereinafter set forth.
2. Duties. Subject to the power of the Board of Directors of
Employer (the "Board") to elect and remove officers, Employee shall serve
Employer as an Executive Vice President of Employer, and shall perform,
faithfully and diligently, the services and functions relating to such office or
otherwise reasonably incident to such office as may be designated from time to
time by the Board or the Chief Executive Officer of Employer. As such, Employee
shall report directly to the Chief Executive Officer of Employer. Employee shall
be based in Scottsdale, Arizona, but shall have duties and responsibilities at
and/or with respect to each location at which Employer or any of its
subsidiaries conducts the Business (as hereinafter defined) and shall travel as
reasonably required by his duties under this Agreement. Employee shall devote
his full time, attention, energies and business efforts to his duties hereunder
and to the promotion of the business and interests of Employer and its
subsidiaries as is customary for an executive vice president of a company of
like-size in a service business; provided, however, that Employee may
participate in other business ventures as long a such participation does not
interfere with Employee's duties hereunder (including those contained in this
sentence).
3. Term. The term of this Agreement shall commence as of the date
hereof and shall continue, unless earlier terminated pursuant to Section 7
below, for a period of two (2) years thereafter (the "Initial Term"); provided,
however, that the term of this Agreement shall thereafter
Employment Agreement- Xxxxxxx X. Xxxx Page 1
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be renewed on a year-to-year basis thereafter (each, a "Renewal Term"), unless
either party gives written notice to the other party, at least ninety (90) days
prior to the end of the then current term, of such party's desire to terminate
this Agreement at the end of the then current term. The Initial Term and any
Renewal Term(s) are sometimes collectively referred to herein as the "Term".
4. Compensation. As compensation for his services rendered under
this Agreement, during the Term Employee shall be entitled to receive the
following:
(a) Salary. Employee shall be paid a salary as provided
in Exhibit A (the "Salary").
(b) Bonus. Employee shall also be entitled to receive
bonuses as provided in Exhibit A.
(c) Stock Options. As of the date hereof, Employer shall
execute and deliver to Employee a Stock Option Agreement, the form of
which is attached hereto as Exhibit B-1. In addition, Employer and
Employee agree to amend that certain Option Agreement, dated as of
August 23, 1996, by and between Employer and Employee as provided in
Exhibit B-2 attached hereto.
(d) Purchase of Stock. On the date hereof, Employer shall
sell to Employee, and Employee shall purchase from Employer 50,000
shares of Series C Preferred Stock, par value $0.01 per share (the
"Series C Preferred Stock"), at a purchase price of $6.00 per share,
and for no additional consideration, Employer shall issue to Employee a
warrant to purchase 100,000 shares of the common stock, par value $0.01
per share, of the Company, at an exercise price of $0.01 per share (the
"Warrant"). In consideration therefore, on the date hereof, Employee
shall: execute and deliver to Employer: (i) a promissory note, in the
form attached hereto as Exhibit C-1; (ii) a Pledge Agreement, in the
form attached hereto as Exhibit C-2; and (iii) five (5) stock powers,
executed in blank, and in the form attached hereto as Exhibit C-3; and
(iv) one warrant assignment, executed in blank, and in the form
attached hereto as Exhibit C-4.
(e) Benefits. Employee shall also be entitled to receive
such group benefits as Employer may provide to its other employees at
comparable salaries and responsibilities to those of Employee. In
addition, Employee shall be entitled to receive the benefits set forth
on Exhibit A.
(f) Expenses. Employer shall reimburse Employee for all
reasonable out-of-pocket travel and other expenses incurred by Employee
in rendering services required under this Agreement upon submission of
a detailed statement and reasonable documentation.
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5. Confidentiality.
(a) Acknowledgment of Proprietary Interest. Employee
recognizes the proprietary interest of Employer and its affiliates in
any Trade Secrets (as hereinafter defined) of Employer and its
affiliates. Employee acknowledges and agrees that any and all Trade
Secrets currently known by Employee or learned by Employee during the
course of his engagement by Employer or otherwise, whether developed by
Employee alone or in conjunction with others or otherwise, shall be and
are the property of Employer and its affiliates. Employee further
acknowledges and understands that his disclosure of any Trade Secrets
may result in irreparable injury and damage to Employer and its
affiliates. As used herein, "Trade Secrets" means all confidential and
proprietary information of Employer and its affiliates, now owned or
hereafter acquired, including, without limitation, information derived
from reports, investigations, experiments, research, work in progress,
drawing, designs, plans, proposals, codes, marketing and sales
programs, client lists, client mailing lists, financial projections,
cost summaries, pricing formula, and all other concepts, ideas,
materials, or information prepared or performed for or by Employer or
its affiliates and information related to the business, products or
sales of Employer or its affiliates, or any of their respective
customers, other than information which is otherwise publicly
available.
(b) Covenant Not-to-Divulge Trade Secrets. Employee
acknowledges and agrees that Employer and its affiliates are entitled
to prevent the disclosure of Trade Secrets. As a portion of the
consideration for the employment of Employee and for the compensation
being paid to Employee by Employer, Employee agrees at all times during
the Term and for a period of five (5) years thereafter to hold in
strict confidence and not to intentionally disclose (except for such
disclosures as are required by law, in which case, Employee agrees to
give Employer notice thereof prior to making any such disclosure) or
allow to be disclosed to any person, firm or corporation, other than to
persons engaged by Employer and its affiliates to further the business
of Employer and its affiliates, and not to use except in the pursuit of
the business of Employer and its affiliates, the Trade Secrets, without
the prior written consent of Employer, including Trade Secrets
developed by Employee.
(c) Return of Materials at Termination. In the event of
any termination or cessation of his employment with Employer for any
reason whatsoever, Employee will promptly deliver to Employer all
documents, data and other information pertaining to Trade Secrets.
Employee shall not take any documents or other information, of whatever
type and in whatever form, or any reproduction or excerpt thereof,
containing or pertaining to any Trade Secrets.
(d) Competition During and After Employment. Employee
agrees that during the Term and for a period of one year thereafter,
neither Employee, nor any of his affiliates, will directly or
indirectly act as an investor, principal, member, partner, officer,
director, employee, consultant, shareholder, lender, or agent of any
entity which is engaged in any
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business of the same nature as, or in competition with, the business
conducted by Employer and its subsidiaries during the Term (the
"Business") within the World; provided, however, that this Section 5(d)
shall not prohibit Employee or any of his affiliates from purchasing or
holding an aggregate equity interest of not more than 1% in any
business in competition with the Business being conducted by Employer
and its subsidiaries. Notwithstanding anything in this Agreement to the
contrary, Employer may, at its option, elect to extend the term of this
paragraph 5(d) for a period of one extra year after the termination of
this Agreement (i.e., for a total of two (2) years following such
termination), by written notice to Employee at least ninety (90) days
prior to the expiration of the original one-year period following such
termination, in which event Employee shall be entitled to receive,
within ten (10) days following Employer's election, an amount equal to
Employee's annual Salary at the time of such termination.
6. Prohibition on Disparaging Remarks. Employee shall,
from the date of this Agreement forward, refrain from making disparaging,
negative or other similar remarks concerning Employer or any of its affiliates
to any third party. Similarly, Employer and its affiliates shall from the date
of this Agreement forward, refrain from making disparaging, negative or other
similar remarks concerning Employee to any third party.
7. Termination. This Agreement and the employment
relationship created hereby shall terminate upon the occurrence of any of the
following events (each, a "Termination Event"):
(a) The expiration of the Term as set forth in Section 3
above;
(b) The death of Employee;
(c) The Disability (as hereinafter defined) of Employee;
(d) Written notice to Employee from Employer of
termination for Just Cause (as hereinafter defined);
(e) Written notice to Employee from Employer of
termination for any reason other than Just Cause;
(f) Written notice to Employer from Employee of
termination for any reason other than Constructive Termination (as
hereinafter defined); or
(g) Written notice to Employer from Employee of
termination for Constructive Termination.
In the event of the termination of Employee's employment pursuant to
(a), (b), (c), (d) or (f) above, then Employee shall be entitled to only the
compensation earned by Employee as of, and
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payable for the period prior to, the date of such Termination Event. In the
event of the termination of Employee's employment pursuant to (e) or (g) above,
then Employee shall be entitled to continue to receive the Salary for the
remainder of the then applicable Term; provided however, that if such
termination occurs more than one year following the date of this Agreement, then
Employee shall be entitled to receive only the compensation earned by Employee
as of, and payable for the period prior to, the date of such Termination Event,
plus a lump-sum amount equal to three (3) months of Employee's then current
Salary. Notwithstanding anything to the contrary in this Agreement, the
provisions of Sections 5 and 6 above shall survive any termination, for whatever
reason, of Employee's employment under this Agreement.
For purposes of this Section 7 the following terms of the following
meanings:
"Constructive Termination" shall mean: (a) a material
reduction in Employee's duties and responsibilities without Employee's
consent; (b) any breach by Employer of any of the material terms of, or
the failure to perform any material covenant contained in this
Agreement and following written notice thereof from Employee to
Employer, Employer does not cure such breach or failure within fifteen
(15) days thereafter; provided, however, that Employer will not be
entitled to cure any such breach or failure more than one time in any
consecutive three month period; (c) a required relocation by Employee
from the Phoenix, Arizona metroplex; (d) if Employee no longer reports
directly to the Chief Executive Officer of Employer; or (e) a reduction
in Employee's Salary without Employee's prior written consent.
"Disability" of Employee shall mean his inability, because of
mental or physical illness or incapacity, to perform his duties under
this Agreement for a continuous period of 90 consecutive days or for
any 120 days out of a 360-day period. In the event of any disagreement
between Employer and Employee regarding the existence or non-existence
of any such disability, upon written request from either party to the
other, Employer and Employee or his legal guardian or duly authorized
attorney-in-fact (if he is not legally competent) shall each designate
one Arizona licensed physician and the two physicians so designated
shall designate a third. All three physicians so appointed shall
personally examine Employee, and the decision of a majority of such
panel of physicians shall determine whether such disability exists.
Employee hereby authorizes the disclosure and release to Employer of
such determination and all supporting medical records, and both parties
hereby agree to be bound by such determination.
"Just Cause" shall mean: (a) the commission by Employee of any
act involving moral turpitude or the commission by Employee of any act
or the suffering by Employee of any occurrence or state of facts, which
renders Employee incapable of performing his duties under this
Agreement (other than Disability), or adversely affects or could be
expected to adversely affect Employer's business reputation; (b)
Employee's being convicted of a felony; (c) any breach by Employee of
any of the material terms of, or the failure to perform any
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material covenant contained in, this Agreement and following written
notice thereof from Employer to Employee, Employee does not cure such
breach or failure within fifteen (15) days thereafter; provided,
however, that Employee will not be entitled to cure any breach or
failure under this subclause (c) more than one time in any consecutive
six month period; (d) the violation by Employee of reasonable and
appropriate instructions or policies established by Employer which have
been communicated to Employee with respect to the operation of their
businesses and affairs or Employee's failure to carry out the
reasonable instructions of the President of Employer or the Board and
following written notice thereof from Employer to Employee, Employee
does not cure any such violation or failure within fifteen (15) days
thereafter; provided, however, that Employee will not be entitled to
cure any violation or failure under this subclause (d) more than one
time in any consecutive six month period; or (e) the commission by
Employee of any act or the existence of any state of facts which would
legally justify an employer in terminating a contract of employment.
8. Change in Control; Change in Chief Executive Officer.
(a) Termination Payment. Notwithstanding anything to the
contrary contained in Section 7 above, if Employee's employment with
Employer is terminated by: (i) Employer by reason of subpart (e) of the
first paragraph of Section 7 above; or (ii) Employee by reason of
subpart (g) of the first paragraph of Section 7 above, and, in either
case, such termination occurred within two (2) years following a Change
In Control (as defined in subparagraph (b) below), then, in either
event, Employee shall be entitled to continue to receive the Salary for
the remainder of the then applicable Term plus one (1) year.
(b) Change In Control. A "Change In Control" will be
deemed to have occurred for purposes hereof: (i) upon the consolidation
or merger of Employer with or into another corporation or business
entity pursuant to which immediately following such merger or
consolidation, Employer's stockholders fail to hold at least a majority
of the voting stock of the surviving entity or its ultimate parent
corporation; (ii) upon the sale or other transfer in a single
transaction or a series of related transactions of all or substantially
all of the assets of Employer, except to a subsidiary of Employer; or
(iii) upon the acquisition of beneficial ownership, directly or
indirectly, by any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended) of
securities of Employer representing more than fifty percent (50%) of
the combined voting power of Employer's then outstanding voting
securities.
(c) Change in Chief Executive Officer. Employer shall
consult Employee with respect to any change in the current Chief
Executive Officer of Employer, and shall seek Employer's approval of
any new Chief Executive Officer (the "New CEO"), which approval shall
not be unreasonably withheld. If Employee does not approve of the New
CEO, Employee shall have the right to terminate this Agreement and his
employment with Employer (the "CEO Termination Event") within thirty
(30) days after the start date of the
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New CEO, by delivering a written resignation to Employer. In the event
of the occurrence of a CEO Termination Event, Employee shall be
entitled to receive only the compensation earned by Employee as of, and
payable for the period prior to, the date of such written resignation,
plus a lump-sum equal to three (3) months of Employee's then current
Salary.
9. Remedies. Employee recognizes and acknowledges that in the
event of any default in, or breach of any of, the terms, conditions or
provisions of this Agreement (either actual or threatened) by Employee,
Employer's and its affiliates remedies at law shall be inadequate. Accordingly,
Employee agrees that in such event, Employer and its affiliates shall have the
right of specific performance and/or injunctive relief in addition to any and
all other remedies and rights at law, in equity or provided herein, and such
rights and remedies shall be cumulative.
10. Acknowledgments. Employee acknowledges and recognizes that the
enforcement of any of the provisions set forth in Section 5 and 6 above by
Employer and its affiliates will not interfere with Employee's ability to pursue
a proper livelihood. Employee recognizes and agrees that the enforcement of this
Agreement is necessary to ensure the preservation and continuity of the business
and good will of Employer and its affiliates.
11. Notices. Any notices, consents, demands, requests, approvals
and other communications to be given under this Agreement by either party to the
other shall be deemed to have been duly given if given in writing and personally
delivered or sent by facsimile transmission, courier service, overnight delivery
service or by mail, registered or certified, postage prepaid with return receipt
requested, as follows:
If to Employer: Mobility Electronics, Inc.
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: President
Fax: 602/000-0000
If to Employee: Xxxxxxx X. Xxxx
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Notices delivered personally or by facsimile transmission, courier service or
overnight delivery shall be deemed communicated as of actual receipt; mailed
notices shall be deemed communicated as of three days after the date of mailing.
12. Entire Agreement. This Agreement, including the Exhibits
attached hereto, contains the entire agreement of the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral or written between the parties hereto with respect
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hereto. No modification or amendment of any of the terms, conditions or
provisions herein may be made otherwise than by written agreement signed by the
parties hereto.
13. Governing Law and Venue. THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE INTERPRETED, CONSTRUED, AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS CHOICE OF LAW
PRINCIPLES. ANY ACTION BROUGHT BY EITHER PARTY HERETO INVOLVING ENFORCEMENT,
TERMINATION, INTERPRETATION, OR MODIFICATION HEREOF, OR OTHERWISE RELATED TO
THIS AGREEMENTS IN ANY WAY SHALL BE BROUGHT IN A COURT LOCATED IN PHOENIX,
ARIZONA, AND NEITHER PARTY HERETO SHALL BE HEARD TO ASSERT THE DEFENSE OF
INCONVENIENT FORUM IN ANY SUCH ACTION.
14. Parties Bound. This Agreement and the rights and obligations
hereunder shall be binding upon and inure to the benefit of Employer and
Employee, and their respective heirs, personal representatives, successors and
assigns. Employer shall have the right to assign this Agreement to any affiliate
or to its successors or assigns. The terms "successors" and "assigns" shall
include any person, corporation, partnership or other entity that buys all or
substantially all of Employer's assets or all of its stock, or with which
Employer merges or consolidates. The rights, duties or benefits to Employee
hereunder are personal to him, and no such right, duty or benefit may be
assigned by him. The parties hereto acknowledge and agree that Employer's
affiliates are third-party beneficiaries of the covenants and agreements of
Employee set forth in Sections 5 and 6 above.
15. Arbitration. Any dispute or claim arising under or with
respect to this Agreement shall be settled by arbitration in Phoenix, Arizona,
pursuant to the rules and guidelines of the American Arbitration Association -
Commercial Division. The decision of the arbitrators shall be final and binding
upon Employer and Employee, and any decision or award rendered by the
arbitrators may be entered as a judgment or order in any court having
jurisdiction.
16. Estate. If Employee dies prior to the payment of all sums
owed, or to be owed, to Employee pursuant to Section 4 above, then such sums, as
they become due, shall be paid to Employee's estate.
17. Enforceability. If, for any reason, any provision contained in
this Agreement should be held invalid in part by a court of competent
jurisdiction, then it is the intent of each of the parties hereto that the
balance of this Agreement be enforced to the fullest extent permitted by
applicable law. Accordingly, should a court of competent jurisdiction determine
that the scope of any covenant is too broad to be enforced as written, it is the
intent of each of the parties that the court should reform such covenant to such
narrower scope as it determines enforceable.
18. Waiver of Breach. The waiver by any party hereto of a breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by any party.
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19. Captions. The captions in this Agreement are for convenience
of reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
20. Costs. If any action at law or in equity, or by reason of
Section 14 above, is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees,
costs and necessary disbursements in addition to any other relief to which he or
it may be entitled.
21. Other Obligations. Employee represents and warrants that he is
not subject to any agreement which would be violated or breached as a direct or
indirect result of Employee executing this Agreement or Employee becoming an
employee of Employer.
22. Affiliate; Subsidiary. An "affiliate" of any party hereto
shall mean any person controlling, controlled by or under common control with
such party. A "subsidiary" of Employer is any partnership, corporation, limited
liability company or other entity in which Employer owns an equity interest. For
purposes of this Agreement, the term "control", when used with respect to any
specified person or entity means the power to direct or cause the direction of
the management and policies of such person or entity, directly or indirectly,
whether through the ownership of voting securities of ten percent (10%) or more,
by contract, or otherwise, and the term "controlled" has the meaning correlative
to the foregoing.
23. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument, but only one of which need be produced.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
MOBILITY ELECTRONICS, INC.
By: /s/ XXXXXXX X. XXXXX
---------------------------------
Xxxxxxx X. Xxxxx, President
/s/ XXXXXXX X. XXXX
---------------------------------
Xxxxxxx X. Xxxx
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EXHIBIT A
A. Base Salary: Employee shall receive an annual Salary of $180,000, payable
bi-weekly in arrears, which annual Salary shall be subject to
increase from time to time as may be determined by the Board;
but which increase must be made on each anniversary of the
date of this Agreement in the amount of at least seven percent
(7%).
B. Bonus
Compensation: Employee shall be entitled to receive a cash bonus for each
fiscal year of Employer during the Term (i.e., ended December
31 of each year) of: (i) either: (1) fifteen percent (15%) of
Employee's Salary at the end of such fiscal year based upon
Employer attaining at least ninety percent (90%) of its
budgeted gross profit margin for such fiscal year (as such
budgeted margin is approved by the Board of Directors of
Employer) (the "Budgeted Margin"); or (2) twenty-five percent
(25%) of Employee's Salary at the end of such fiscal year
based upon Employer attaining at least one hundred percent
(100%) of the Budgeted Margin for such fiscal year; plus (ii)
four-tenths of one percent (0.4%) of actual margin
contributions provided by all original equipment manufacturer
sales which consist of unique and Chip on Board sales (but not
standard product programs) and for which Employee has had
primary and direct responsibility.
C. Additional
Benefits: Employee shall have four (4) weeks paid vacation for each
12-month period during the Term.
