EXHIBIT 10.4
EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT (this "Agreement"), effective as of the 5th day
of November, 1999 (the "Effective Date"), by and between CellStar Ltd. (the
"Employer"), CellStar Corporation, a Delaware corporation and parent company of
Employer ("Parent"), and Xxxxxx X. Xxxxx (the "Employee").
R E C I T A L S
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WHEREAS, Employer desires to obtain the benefit of the services of Employee
as an employee of Employer for the period of time provided in this Agreement;
and
WHEREAS, Employee desires to render services for Employer on the terms and
conditions hereinafter provided; and
WHEREAS, Employer desires that Employee be able to participate in Parent's
stock option and incentive compensation plans; and
WHEREAS, the Compensation Committee of the Board of Directors of Parent
deems it advisable and in the best interests of Parent and Employer to enter
into this Employment Agreement with Employee;
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereby agree as follows:
ARTICLE I
Employment
1.1 Employment. Effective on the Effective Date the Employer shall employ
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the Employee and the Employee shall accept employment by the Employer for the
period and upon the terms and conditions contained in this Agreement.
1.2 Term. The term of this Agreement shall commence on the Effective Date
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and shall end on November 30, 2003 (the "Original Term"), unless earlier
terminated as provided herein (the period from the Effective Date to November
30, 2003, or to the date of such earlier termination, as applicable, is
hereinafter referred to as the "Term"). At the expiration of the Original Term,
this Agreement shall automatically be renewed on a year to year basis unless
notice of any decision not to renew this Agreement is given by the Employer or
the Employee at least thirty (30) days prior to the expiration of the Original
Term or any such one year term or unless earlier terminated as provided herein.
1.3 Position and Duties.
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(a) Position. During the Term, the Employee shall serve as Senior
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Vice President and Chief Financial Officer of Employer, with authority,
duties and responsibilities consistent with such position, and shall
perform such other services for Employer, Parent and their affiliated
entities consistent with such position as may be reasonably assigned to him
from time to time by senior management and/or the boards of directors of
Employer and/or Parent. In such position, Employee shall be responsible for
accounting, internal and external financial reporting, tax, treasury, risk
and working capital management, financial and acquisition analysis,
investments, and all other financial matters. During the Term, Employee
shall, if so elected or appointed, also accept election or appointment, and
serve, as an officer and/or director of Employer or any of its affiliated
entities and perform the duties appropriate thereto, without additional
compensation other than as set forth herein. Employee's actions hereunder
shall at all times be subject to the direction of the senior management and
the boards of directors of Employer and Parent.
(b) Commitment. During the Term, the Employee shall devote
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substantially all of his business time, energy, skill and best efforts to
the performance of his duties hereunder in a manner that will faithfully
and diligently further the business and interests of Employer, Parent and
their affiliated entities. Subject to the foregoing, the Employee may serve
in any capacity with any civic, educational or charitable organization;
provided that such activities and services do not interfere or conflict
with the performance of his duties hereunder. Employee shall comply with
policies, standards and regulations established from time to time by senior
management and/or the boards of directors of Employer and Parent.
1.4 Compensation.
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(a) Base Salary. Subject to Section 1.4(c) below, beginning on the
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Effective Date, Employer shall pay the Employee as compensation an
aggregate salary ("Base Salary") of $350,000 per year during the Term, or
such greater amount as shall be approved in accordance with the policies of
Employer and/or Parent, as applicable. The Base Salary for each year shall
be paid by Employer in accordance with the regular payroll practices of
Employer.
(b) Annual Incentive Payment. Each year during the Term, the Employee
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shall be eligible to participate in an annual incentive plan approved by
the Compensation Committee of Parent's Board of Directors. Subject to any
required approvals of the Compensation Committee of the Board of Directors
of Parent and subject to achievement of specified goals (the "Goals"), for
the fiscal year ending in November 1999, Employee will be eligible to earn
a pro rated annual incentive payment at the 50% target level (i.e., 50% of
his base salary earned during such fiscal year), which incentive payment
may be less than such target level or up to two times such target level.
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(c) Withholding. With respect to any compensation received by
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Employee with respect to Employee's services for Employer or any of its
affiliates, Employer will deduct such withholding and other payroll taxes
as are required to be withheld by Employer under applicable law.
(d) Stock Options. Parent will recommend to the Compensation
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Committee of the Board of Directors of Parent that Employee be granted a
stock option (the "Option") entitling him to purchase 150,000 shares of
Parent's common stock at the reported market closing sales price thereof on
the date of grant. The Option shall become exercisable by the Employee at
the rate of 25% of the shares covered thereby per year, beginning on the
first anniversary of the Effective Date in accordance with the terms of the
Parent's 1993 Amended and Restated Long Term Incentive Plan. The Option
shall contain such additional terms as are set forth in Parent's 1993
Amended and Restated Long Term Incentive Plan and as are established by the
Compensation Committee of the Board of Directors of Parent. Employee shall
be entitled to annual consideration for future grants in amounts (if any)
and on terms and conditions to be determined by the Compensation Committee
of the Board of Directors.
(e) Payment and Reimbursement of Expenses. During the Term, Employer
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shall pay or reimburse the Employee for all reasonable travel and other
expenses incurred by the Employee in performing his obligations under this
Agreement in accordance with the policies and procedures of Employer or
Parent, provided that the Employee properly accounts therefor in accordance
with the regular policies of Employer or Parent, as applicable.
(f) Fringe Benefits and Perquisites. During the Term, the Employee
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shall be entitled to participate in or receive benefits under any stock
purchase, profit-sharing, pension, retirement, paid time off, life,
medical, dental, disability or other plan or arrangement made generally
available by Employer or Parent to employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such
plans and arrangements. Employee shall be credited with 10 years of service
with the Employer as of the Effective Date for purposes of determining
eligibility and vesting for paid time off and short-term disability
benefits.
(g) Relocation Expenses. The Employee acknowledges and agrees that he
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will relocate his primary residence to the Dallas/Fort Worth area in order
to perform his duties and responsibilities under this Agreement. In
connection with such relocation:
(i) The Employer agrees to reimburse the Employee for the
reasonable costs of temporary corporate housing in the Dallas/Fort
Worth area for a 120 day period starting on the Effective Date.
(ii) The Employer agrees to reimburse Employee for the cost of
Employee's trips home to Houston on a bi-weekly basis for 120 day
period starting
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on the Effective Date. Reimbursable expenses include round trip coach
air fare and any reasonable out-of-pocket expenses (i.e., airport
parking).
(iii) The Employer shall reimburse Employee for the cost of two
(2) house hunting trips for members of the Employee's immediate
family. Reimbursable expenses include round trip coach air fare,
automobile rental, reasonable costs for meals, lodging (if needed) and
other reasonable out-of-pocket expenses.
(iv) The Employer shall reimburse Employee for all normal and
customary costs associated with the sale of Employee's current
residence, including broker's fees not to exceed 6%.
(v) The Employer shall reimburse Employee for all normal and
customary costs associated with the purchase of a residence in the
Dallas/Fort Worth area, including but not limited to survey fees, loan
origination fees, title insurance and attorneys fees.
(vi) The Employer shall reimburse Employee for all normal and
customary moving costs for household goods from Houston, Texas to the
Dallas/Fort Worth area.
(vii) The Employer shall reimburse Employee for all reasonable
and customary out-of-pocket travel expenses incurred by Employee and
his immediate family during the actual relocation from Houston, Texas
to the Dallas/Fort Worth area.
All amounts reimbursed pursuant to this subsection shall be grossed up
for all applicable taxes.
1.5 Termination.
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(a) Disability. Employer may terminate this Agreement for Disability.
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"Disability" shall exist if, because of ill health or physical or mental
disability, the Employee shall have been unable to perform his duties under
this Agreement, with reasonable accommodation by the Employer, as
determined in good faith by Parent's Board of Directors or a committee
thereof, for a period of 180 consecutive days, or if, in any 12-month
period, the Employee shall have been unable or shall have failed to perform
his duties for a period of 270 or more business days, irrespective of
whether or not such days are consecutive.
(b) Cause. Employer may terminate the Employee's employment for
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Cause. Termination for "Cause" shall mean termination because of the
Employee's (i) continued unsatisfactory job performance after written
warning has been issued identifying deficiencies, (ii) misconduct that
causes or is likely to cause material economic harm to
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Employer, Parent or their affiliated entities or that brings or is likely
to bring material discredit to the reputation of Employer, Parent or any of
their affiliated entities, as determined by the Board of Directors of
Parent in good faith, (iii) failure to substantially follow directions of
senior management or the boards of directors of Employer or Parent that are
consistent with his duties under this Agreement, provided that no act, or
failure to act, on the Employee's part shall be deemed to constitute Cause
unless done, or omitted to be done, by the Employee not in good faith and
without reasonable belief that the Employee's act, or failure to act, was
in or not opposed to the best interest of Employer, (iv) conviction of, or
entry of a pleading of guilty or nolo contendre to, any crime involving
moral turpitude or entry of an order duly issued by any federal or state
regulatory agency having jurisdiction in the matter permanently prohibiting
Employee from participating in the conduct of the affairs of Employer,
Parent or their affiliated entities, or (v) any other material breach of
any provision of this Agreement. Items (i), (ii), (iii) and (v) of this
subsection shall not constitute Cause unless Employer or Parent notified
the Employee thereof in writing, specifying in reasonable detail the basis
therefor and stating that it is grounds for Cause. Furthermore, if the
Employee's actions are curable, items (i), (ii), (iii) and (v) of this
subsection shall not constitute Cause unless the Employee fails to cure
such matter within 30 days after such notice is sent or given under this
Agreement. It is understood that "Cause" shall not include a failure to
perform due to a Disability.
(c) Without Cause. During the Term, Employer may terminate the
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Employee's employment Without Cause, subject to the provisions of
subsection 1.6(c) (Termination Without Cause or for Company Breach).
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Termination "Without Cause" shall mean termination of the Employee's
employment by Employer other than termination for Cause or for Disability.
(d) Company Breach. The Employee may terminate his employment
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hereunder for Company Breach. For purposes of this Agreement a "Company
Breach" shall be deemed to occur in the event of a material breach of this
Agreement by Employer or Parent; provided, however, that the Employee shall
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not be entitled to terminate for Company Breach unless the Employee
notifies Employer thereof in writing, specifying in reasonable detail the
basis therefor and stating that it is grounds for Company Breach, and
unless Employer fails to cure such Company Breach within 30 days after such
notice is sent or given under this Agreement. For purposes of this
Agreement, a material breach by Employer or Parent shall include, without
limitation, (i) the material reduction without his consent of the title,
authority, duties or responsibilities that the Employee has on the
Effective Date, (ii) the reduction in the Employee's annual base salary as
in effect on the Effective Date, (iii) if the Employee's eligibility for a
bonus in any fiscal year (provided that all performance standards
established for him have been achieved) shall be, in terms of a percentage
of base salary, any amount less than the percentage of base salary
established for the Chief Executive Officer of Parent for such fiscal year,
(iv) if the Employee's eligibility for bonus in any fiscal year shall be
based on performance standards that are materially greater or different
than those established for the Chief Executive Officer of Parent, or (v)
the relocation of the Employer's
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principal office, or the Employee's own office location as assigned to him
by Employer, to a location more than 50 miles from the present location of
Employer's principal office.
(e) Change in Control. The Employee may terminate his employment
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hereunder within 12 months of a Change in Control (defined below):
(i) "Change in Control" shall mean any of the following:
(1) any consolidation or merger of Parent in which Parent
is not the continuing or surviving corporation or pursuant to
which shares of Parent's common stock would be converted into
cash, securities or other property, other than a merger of Parent
in which the holders of Parent common stock immediately prior to
the merger have the same proportionate ownership of common stock
of the surviving corporation immediately after the merger;
(2) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of Parent;
(3) any approval by the stockholders of Parent of any plan
or proposal for the liquidation or dissolution of Parent;
(4) the cessation of control (by virtue of their not
constituting a majority of directors) of Parent's Board of
Directors by the individuals (the "Continuing Directors") who (x)
at the date of this Agreement were directors or (y) become
directors after the date of this Agreement and whose election or
nomination for election by Parent's stockholders, was approved by
a vote of at least two-thirds of the directors then in office who
were directors at the date of this Agreement or whose election or
nomination for election was previously so approved); or
(5) (A) the acquisition of beneficial ownership
("Beneficial Ownership"), within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), of an aggregate of 15% or more of the voting power of
Parent's outstanding voting securities by any person or group (as
such term is used in Rule 13d-5 under the Exchange Act) who
Beneficially Owned less than 10% of the voting power of Parent's
outstanding voting securities on the Effective Date of this
Agreement, (B) the acquisition of Beneficial Ownership of an
additional 5% of the voting power of Parent's outstanding voting
securities by any person or group who Beneficially Owned at least
10% of the voting power of Parent's outstanding voting securities
on the Effective Date of this agreement, or (C) the execution
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by Parent and a stockholder of a contract that by its terms
grants such stockholder (in its, hers or his capacity as a
stockholder) or such stockholder's Affiliate (as defined in Rule
405 promulgated under the Securities Act of 1933 (an
"Affiliate")) including, without limitation, such stockholder's
nominee to Parent's Board of Directors (in its, hers or his
capacity as an Affiliate of such stockholder), the right to veto
or block decisions or actions of Parent's Board of Directors;
provided, however, that notwithstanding the foregoing, the events
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events described in items (A), (B) or (C) above shall not
constitute a Change in Control hereunder if the acquiror is (aa)
Xxxx X. Xxxxxxxxx or his Affiliates, (bb) a trustee or other
fiduciary holding securities under an employee benefit plan of
Employer, Parent or one of their affiliated entities and acting
in such capacity, (cc) a corporation owned, directly or
indirectly, by the stockholders of Parent in substantially the
same proportions as their ownership of voting securities of
Parent or (dd) a person or group meeting the requirements of
clauses (i) and (ii) of Rule 13d-1(b)(1) under the Exchange Act
or (ee) in the case of an acquisition described in items (A) or
(B) above (but not in the case of an acquisition described in
item (C) above), any other person whose acquisition of shares of
voting securities is approved in advance by a majority of the
Continuing Directors; provided further, however that none of the
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following shall constitute a Change in Control: (aa) the right of
the holders of any voting securities of Parent to vote as a class
on any matter or (bb) any vote required of disinterested or
unaffiliated directors or stockholders including, without
limitation, pursuant to Section 144 of the Delaware General
Corporation Law or Rule 16b-3 promulgated pursuant to the
Exchange Act.
(6) subject to applicable law, in a Chapter 11 bankruptcy
proceeding, the appointment of a trustee or the conversion of a
case involving Parent to a case under Chapter 7.
(f) Without Good Reason. During the Term, the Employee may terminate
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his employment Without Good Reason upon 30 days prior written notice to
Employer of such termination, which notice may be waived by Employer in
Employer's discretion. Termination "Without Good Reason" shall mean
termination of the Employee's employment by the Employee other than
termination for Company Breach.
(g) Explanation of Termination of Employment. Any party terminating
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this Agreement shall give prompt written notice ("Notice of Termination")
to the other party hereto advising such other party of the termination of
this Agreement stating in reasonable detail the basis for such termination.
The Notice of Termination shall indicate whether termination is being made
for Cause, Without Cause or for Disability (if Employer has terminated the
Agreement) or for Company Breach, upon a Change in Control or Without Good
Reason (if the Employee has terminated the Agreement).
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(h) Date of Termination. "Date of Termination" shall mean the last
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day of Employee's employment, as determined in accordance with this Section
1.5.
1.6 Compensation Upon Termination.
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(a) During Disability. During any period that the Employee fails to
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perform his duties hereunder because of ill health or physical or mental
disability, he shall continue to receive his full salary and benefits
pursuant to Section 1.4 (Compensation) through the Date of Termination,
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after giving effect to all disability benefits received by Employee under
the terms of any applicable disability policy.
(b) Termination for Cause or Without Good Reason. If Employer shall
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terminate the Employee's employment for Cause or if the Employee shall
terminate his employment Without Good Reason, then Employer's obligation to
pay salary and benefits pursuant to Section 1.4 (Compensation) shall
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terminate, except that Employer shall pay the Employee his accrued but
unpaid salary and benefits pursuant to Section 1.4 (Compensation) through
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the Date of Termination.
(c) Termination Without Cause or for Company Breach. If Employer
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shall terminate the Employee's employment Without Cause or if the Employee
shall terminate his employment for Company Breach, then Employer shall pay
to the Employee, as severance pay in a lump sum on the 15th day following
the Date of Termination, the following amounts:
(i) his accrued but unpaid Base Salary through the Date of
Termination at the rate in effect as of the Date of Termination; and
(ii) in lieu of any further Base Salary and Annual Incentive
Payments for periods subsequent to the Date of Termination, an amount
equal to the product of (A) the sum of Employee's Base Salary at the
rate in effect as of the Date of Termination plus the amount of the
Annual Incentive Payment paid to the Employee for the preceding year
(or an annualized equivalent of the Annual Incentive Payment paid for
any shorter period) divided by 365 and (B) multiplied by the lesser of
(y) 720, or (z) the number of days from the Date of Termination to the
last day of the Original Term or the applicable renewal term, but in
no event less than 365 days.
In addition, the Employee will be entitled to a prorated portion of
any annual incentive payment earned for the fiscal year in which his
employment is terminated, if earned in accordance with the terms of its
grant.
Employee hereby acknowledges and agrees that the payments by the
Employer under this Section 1.6(c) shall be the sole and exclusive remedy
of the Employee for termination
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of Employee's employment Without Cause or by reason of a Company Breach,
and Employee hereby waives any and all other remedies under law or in
equity.
If the Employee terminates his employment for Company Breach based
upon a material reduction by Employer of the Employee's Base Salary, then
for purposes of this subsection 1.6(c) (Termination Without Cause or for
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Company Breach), the Employee's Base Salary as of the Date of Termination
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shall be deemed to be the Employee's Base Salary immediately prior to the
reduction that the Employee claims as grounds for Company Breach.
(d) Termination Upon a Change in Control. If the Employee terminates
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his employment after a Change in Control pursuant to subsection 1.5(e)
(Change in Control), then Employer shall pay to the Employee as severance
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pay and as liquidated damages (because actual damages are difficult to
ascertain), in a lump sum, in cash, within 15 days after termination, an
amount which, when combined with all payments under Section 1.6(c), equals
$100 less than three (3) times the Employee's "annualized includable
compensation for the base period" (as defined in Section 280G of the
Internal Revenue Code of 1986); provided, however, that if such lump sum
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severance payment, either alone or together with other payments or
benefits, either cash or non-cash, that the Employee has the right to
receive from Employer, including, but not limited to, accelerated vesting
or payment of any deferred compensation, options, stock appreciation rights
or any benefits payable to the Employee under any plan for the benefit of
employees, would constitute an "excess parachute payment" (as defined in
Section 280G of the Internal Revenue Code of 1986), then such lump sum
severance payment or other benefit shall be reduced to the largest amount
that will not result in receipt by the Employee of a parachute payment.
The determination of the amount of the payment described in this subsection
shall be made by Parent's independent auditors.
(e) Termination for Disability. If Employer shall terminate the
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Employee's employment for Disability, Employer's obligation to pay salary
and benefits pursuant to Section 1.4 (Compensation) shall terminate, except
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that Employer shall pay the Employee accrued but unpaid salary and benefits
pursuant to Section 1.4 (Compensation) through the Date of Termination,
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after giving effect to all disability benefits received by Employee under
the terms of any applicable disability policy.
(f) Employee Benefits. Employer shall maintain in full force and
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effect (to the extent consistent with past practice), for the continued
benefit of Employee and, if applicable, his wife and children, the employee
benefits set forth in subsections 1.4(f) (Fringe Benefits and Perquisites)
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through the Date of Termination (subject to the provisions of Section
1.6(e)); provided that his continued participation or, if applicable, the
participation of his wife and children, is possible under the general terms
and conditions of such plans and programs. Following the Date of
Termination, Employee and his eligible dependents shall be eligible for
continued health coverage in accordance with the terms of applicable law.
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1.7 Death of Employee. If Employee dies prior to the expiration of this
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Agreement, Employee's employment and other obligations under this Agreement
shall automatically terminate and all compensation to which Employee is or would
have been entitled hereunder (including without limitation under subsections
1.4(a) (Base Salary) and 1.4(b) (Annual Incentive Payment)) shall terminate as
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of the end of the month in which Employee's death occurs; provided, however,
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that (i) Employer shall pay to Employee's estate, as soon as practicable, a
prorated Annual Incentive Payment, if earned in accordance with Parent's annual
incentive plan; and (ii) for the balance of the month in which Employee's death
occurs, Employee's wife and children shall be entitled to receive their benefits
under Employer's group hospitalization, medical and dental plans (if any), to
the extent permitted under the terms of such plans, and thereafter Employee's
dependents shall have a right to continued health coverage in accordance with
the terms of applicable law.
ARTICLE 2
Non-Competition and Confidentiality
2.1 Training/Confidential Information. For purposes of this Article 2
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(Non-Competition and Confidentiality), the term "the Company" shall be construed
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also to include Employer, Parent and any and all Affiliates of Employer and
Parent. The Company agrees that it will provide Employee with specialized
knowledge and training regarding the business in which the Company is involved,
and will provide Employee with initial and ongoing confidential information and
trade secrets of the Company (hereinafter referred to as "Confidential
Information"). For purposes of this Agreement, Confidential Information
includes, but is not limited to:
(a) Customer lists and prospect lists developed by the Company;
(b) Information regarding the Company's customers which Employee
acquired as a result of his employment with the Employer, including but not
limited to, customer contracts, work performed for customers, customer
contacts, customer requirements and needs, data used by the Company to
formulate customer bids, customer financial information and other
information regarding the customer's business;
(c) Information regarding the Company's vendors which Employee
acquired as a result of his employment with the Employer, including but not
limited to, product and service information and other information regarding
the business activities of such vendors;
(d) Information related to the Company's business, including but not
limited to marketing strategies and plans, sales procedures, operating
policies and procedures, pricing and pricing strategies, business plans,
sales, profits, and other business and financial information of the
Company;
(e) Training materials developed by and utilized by the Company;
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(f) Any other information which Employee acquired as a result of his
employment with the Employer and which Employee has a reasonable basis to
believe the Company would not want disclosed to a business competitor or to
the general public.
(g) Information which:
(i) is proprietary to, about or created by the Company;
(ii) gives the Company some competitive advantage, the
opportunity of obtaining such advantage or the disclosure of which
could be detrimental to the interests of the Company;
(iii) is not typically disclosed to non-employees by the Company,
or otherwise is treated as confidential by the Company; or
(iv) is designated as Confidential Information by the Company or
from all the relevant circumstances should reasonably be assumed by
the Employee to be confidential to the Company.
Notwithstanding the foregoing, Confidential Information shall not include any
information that is or has become public knowledge, other than by acts by the
Employee or representatives of the Employee in violation of this Agreement.
2.2 Non-Disclosure. The Employee acknowledges, understands and agrees
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that all Confidential Information, whether developed by the Company or others or
whether developed by the Employee while carrying out the terms and provisions of
this Agreement (or previously while serving as an officer of the Company), shall
be the exclusive and confidential property of the Company and (i) shall not be
disclosed to any person (except as otherwise required by law or legal process)
other than employees of the Company and professionals engaged on behalf of the
Company, and other than disclosure in the scope of the Company's business in
accordance with the Company's policies for disclosing information, (ii) shall be
safeguarded and kept from unintentional disclosure and (iii) shall not be used
for the Employee's personal benefit. Subject to the terms of the preceding
sentence, the Employee shall not use, copy or transfer Confidential Information
other than as is necessary in carrying out his duties under this Agreement.
2.3 Return of Company Property and Information. Upon termination of
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employment, or at any earlier time as directed by Company, Employee shall
immediately deliver to Company any and all Confidential Information in
Employee's possession, any other documents or information which Employee
acquired as a result of his employment with Employer, and any copies of such
documents/information. Employee shall not retain any originals or copies of such
documents or materials related to Company's business which Employee came into
possession of or created as a result of his employment at Company. Employee
acknowledges that such information, documents and materials are the exclusive
property of Company. Upon termination of employment, or at any
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earlier time as directed by Company, Employee shall immediately deliver to
Company any property of Company in Employee's possession. Employee agrees that
should he fail to return any Company property, Company shall be entitled to
deduct from any sums otherwise due Employee (including, but not necessarily
limited to wages and expense reimbursements) the cost and/or value of any
property which Employee fails to return, up to the maximum amount allowed by
law. Employee hereby authorizes Company to deduct and/or withhold any such sums
from Employee's wages and/or other sums due Employee.
2.4 Non-Competition.
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(a) Description of Proscribed Actions. During the Term and for a
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period of 18 months thereafter (or 12 months thereafter in the event of
Termination Without Cause or for Company Breach), in consideration for the
obligations of Employer and Parent hereunder, including without limitation
their disclosure (pursuant to subsection 2.1 (Training/Confidential
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Information) above) of Confidential Information, the Employee shall not:
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(i) directly or indirectly, engage or invest in, own, manage,
operate, control or participate in the ownership, management,
operation or control of, be employed by, associated or in any manner
connected with, or render services or advice to, any Competing
Business (defined below); provided, however, that the Employee may
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invest in the securities of any enterprise (but without otherwise
participating in the activities of such enterprise) if (x) such
securities are listed on any national or regional securities exchange
or have been registered under Section 12(g) of the Exchange Act and
(y) the Employee does not beneficially own (as defined Rule 13d-3
promulgated under the Exchange Act) in excess of 5% of the outstanding
capital stock of such enterprise;
(ii) directly or indirectly, either as principal, agent,
independent contractor, consultant, director, officer, employee,
employer, advisor (whether paid or unpaid), stockholder, partner or in
any other individual or representative capacity whatsoever, either for
his own benefit or for the benefit of any other person or entity,
solicit, divert or take away any suppliers, customers or clients of
the Company or any of its Affiliates; or
(iii) directly or indirectly, either as principal, agent,
independent contractor, consultant, director, officer, employee,
employer, advisor (whether paid or unpaid), stockholder, partner or in
any other individual or representative capacity whatsoever, either for
his own benefit or for the benefit of any other person or entity,
either (i) hire, attempt to hire, contact or solicit with respect to
hiring, any employee of Employer or Parent or any Affiliate thereof,
(ii) induce or otherwise counsel, advise or encourage any employee of
Employer, Parent or any Affiliate thereof to leave the employment of
Employer, Parent or any Affiliate thereof, or (iii) induce
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any representative or agent of Employer, Parent or any Affiliate
thereof to terminate or modify its relationship with Employer, Parent
or such Affiliate.
(b) Judicial Modification. The Employee agrees that if a court of
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competent jurisdiction determines that the length of time or any other
restriction, or portion thereof, set forth in this Section 2.4 (Non-
---
Competition) is overly restrictive and unenforceable, the court may reduce
-----------
or modify such restrictions to those which it deems reasonable and
enforceable under the circumstances, and as so reduced or modified, the
parties hereto agree that the restrictions of this Section 2.4 (Non-
---
Competition) shall remain in full force and effect. The Employee further
-----------
agrees that if a court of competent jurisdiction determines that any
provision of this Section 2.4 (Non-Competition) is invalid or against
---------------
public policy, the remaining provisions of this Section 2.4 (Non-
---
Competition) and the remainder of this Agreement shall not be affected
-----------
thereby, and shall remain in full force and effect.
(c) Nature of Restrictions. The Employee acknowledges that the
----------------------
business of Employer and Parent and their Affiliates is international in
scope and that the Restrictions imposed by this Agreement are legitimate,
reasonable and necessary to protect Employer's, Parent's and their
Affiliates' investment in their businesses and the goodwill thereof. The
Employee acknowledges that the scope and duration of the restrictions
contained herein are reasonable in light of the time that the Employee has
been or will be engaged in the business of Employer, Parent and/or their
Affiliates, and the Employee's relationship with the suppliers, customers
and clients of Employer, Parent and their Affiliates. The Employee further
acknowledges that the restrictions contained herein are not burdensome to
the Employee in light of the consideration paid therefor and the other
opportunities that remain open to the Employee. Moreover, the Employee
acknowledges that he has other means available to him for the pursuit of
his livelihood.
(d) Competing Business. "Competing Business" shall mean any
------------------
individual, business, firm, company, partnership, joint venture,
organization, or other entity engaged in the wholesale distribution or
retail sales of wireless communication equipment in any domestic or
international market area in which Employer, Parent or any of their
Affiliates does business at any time during the Employee's employment with
Employer or any of its Affiliates.
2.5 Injunctive Relief. Because of the Employee's experience and
-----------------
reputation in the industries in which Employer, Parent and their Affiliates
operate, and because of the unique nature of the Confidential Information, the
Employee acknowledges, understands and agrees that Employer and Parent will
suffer immediate and irreparable harm if the Employee fails to comply with any
of his obligations under Article 2 (Non-Competition and Confidentiality) of this
-----------------------------------
Agreement, and that monetary damages will be inadequate to compensate Employer
and Parent for such breach. Accordingly, the Employee agrees that Employer and
Parent shall, in addition to any other remedies available to them at law or in
equity, be entitled to injunctive relief to enforce the terms of Article 2
13
(Non-Competition and Confidentiality), without the necessity of proving
-----------------------------------
inadequacy of legal remedies or irreparable harm.
ARTICLE 3
Representations and Warranties by Employee
Employee hereby represents and warrants, the same being part of the essence
of this Agreement, that, as of the Effective Date, he is not a party to any
agreement, contract or understanding, and that no facts or circumstances exist,
that would in any way restrict or prohibit him from undertaking or performing
any of his obligations under this Agreement. The foregoing representation and
warranty shall remain in effect throughout the Term.
ARTICLE 4
Indemnification
Parent agrees to indemnify, and advance expenses to, the Employee to the
extent provided in the Certificate of Incorporation and Bylaws of Parent as of
the date of this Agreement. To the extent that a change in the Delaware General
Corporation Law (whether by statute or judicial decision) permits greater
indemnification by agreement than would be afforded currently under Parent's
Certificate of Incorporation and Bylaws and this Agreement, it is the intent of
the parties hereto that the Employee shall enjoy by this Agreement the greater
benefits so afforded by such change.
ARTICLE 5
Miscellaneous
5.1 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
5.2 Indulgences, Etc. Neither the failure nor any delay on the part of
-----------------
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any right, remedy, power or privilege, nor shall any
waiver of any right, remedy, power, or privilege with respect to any occurrence
be construed as a waiver of such right, remedy, power or privilege with respect
to any other occurrence.
14
5.3 Employee's Sole Remedy. The Employee's sole remedy shall be against
----------------------
Employer or Parent for any claim, liability or obligation of any nature
whatsoever arising out of or relating to this Agreement or an alleged breach of
this Agreement or for any other claim arising out of the termination of the
Employee's employment hereunder (collectively, "Employee Claims"). The Employee
shall have no claim or right of any nature whatsoever against any of Employer's
or its Affiliates' directors, former directors, officers, former officers,
employees, former employees, stockholders, former stockholders, agents, former
agents or the independent counsel in their individual capacities arising out of
or relating to any Employee Claim. The Employee hereby releases and covenants
not to xxx any person other than Employer or Parent over any Employee Claim. The
persons described in this Section 5.3 (other than Employer, Parent and the
Employee) shall be third-party beneficiaries of this Agreement for purposes of
enforcing the terms of this Section 5.3 (Employee's Sole Remedy) against the
----------------------
Employee.
5.4 Notices. All notices, requests, demands and other communications
-------
required or permitted under this Agreement and the transactions contemplated
herein shall be in writing and shall be deemed to have been duly given, made and
received when sent by telecopy (with a copy sent by mail) or when personally
delivered or one business day after it is sent by overnight service, addressed
as set forth below:
If to the Employee:
Xxxxxx X. Xxxxx
6200 Xxxxx
Xxxxxxx, Xxxxx 00000
If to Employer or Parent:
CellStar Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Attn: General Counsel
Any party may alter the address to which communications or copies are to be sent
by giving notice of such change of address in conformity with the provisions of
this subsection for the giving of notice, which shall be effective only upon
receipt.
5.5 Provisions Separable. The provisions of this Agreement are
--------------------
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
5.6 Entire Agreement. This Agreement contains the entire understanding
----------------
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior and
15
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained, which shall be
deemed terminated effective immediately. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof. This Agreement may not be modified or amended other
than by an agreement in writing.
5.7 Headings; Index. The headings of 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.
5.8 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Texas, without giving effect to
principles of conflict of laws.
5.9 Dispute Resolution. Subject to Employer's and Parent's right to seek
------------------
injunctive relief in court as provided in Section 2.5 (Injunctive Relief) of
-----------------
this Agreement, any dispute, controversy or claim arising out of or in relation
to or connection to this Agreement, including without limitation any dispute as
to the construction, validity, interpretation, enforceability or breach of this
Agreement, shall be exclusively and finally settled by arbitration, and any
party may submit such dispute, controversy or claim, including a claim for
indemnification under this Section 5.9 (Dispute Resolution), to arbitration.
------------------
(a) Arbitrators. The arbitration shall be heard and determined by one
-----------
arbitrator, who shall be impartial and who shall be selected by mutual
agreement of the parties; provided, however, that if the dispute involves
-------- -------
more than $2,000,000, then the arbitration shall be heard and determined by
three (3) arbitrators. If three (3) arbitrators are necessary as provided
above, then (i) each side shall appoint an arbitrator of its choice within
thirty (30) days of the submission of a notice of arbitration and (ii) the
party-appointed arbitrators shall in turn appoint a presiding arbitrator of
the tribunal within thirty (30) days following the appointment of the last
party-appointed arbitrator. If (x) the parties cannot agree on the sole
arbitrator, (y) one party refuses to appoint its party-appointed arbitrator
within said thirty (30) day period or (z) the party-appointed arbitrators
cannot reach agreement on a presiding arbitrator of the tribunal, then the
appointing authority for the implementation of such procedure shall be the
Senior United States District Judge for the Northern District of Texas, who
shall appoint an independent arbitrator who does not have any financial
interest in the dispute, controversy or claim. If the Senior United States
District Judge for the Northern District of Texas refuses or fails to act
as the appointing authority within ninety (90) days after being requested
to do so, then the appointing authority shall be the Chief Executive
Officer of the American Arbitration Association, who shall appoint an
independent arbitrator who does not have any financial interest in the
dispute, controversy or claim. All decisions and awards by the arbitration
tribunal shall be made by majority vote.
(b) Proceedings. Unless otherwise expressly agreed in writing by the
-----------
parties to the arbitration proceedings:
16
(i) The arbitration proceedings shall be held in Dallas,
Texas, at a site chosen by mutual agreement of the parties, or if the
parties cannot reach agreement on a location within thirty (30) days
of the appointment of the last arbitrator, then at a site chosen by
the arbitrators;
(ii) The arbitrators shall be and remain at all times wholly
independent and impartial;
(iii) The arbitration proceedings shall be conducted in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association, as amended from time to time;
(iv) Any procedural issues not determined under the arbitral
rules selected pursuant to item (iii) above shall be determined by the
law of the place of arbitration, other than those laws which would
refer the matter to another jurisdiction;
(v) The costs of the arbitration proceedings (including
attorneys' fees and costs) shall be borne in the manner determined by
the arbitrators;
(vi) The decision of the arbitrators shall be reduced to
writing; final and binding without the right of appeal; the sole and
exclusive remedy regarding any claims, counterclaims, issues or
accounting presented to the arbitrators; made and promptly paid in
United States dollars free of any deduction or offset; and any costs
or fees incident to enforcing the award shall, to the maximum extent
permitted by law, be charged against the party resisting such
enforcement;
(vii) The award shall include interest from the date of any
breach or violation of this Agreement, as determined by the arbitral
award, and from the date of the award until paid in full, at 6% per
annum; and
(viii) Judgment upon the award may be entered in any court having
jurisdiction over the person or the assets of the party owing the
judgment or application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the case may
be.
5.10 Survival. The covenants and agreements of the parties set forth in
--------
Article 2 (Non-Competition and Confidentiality), and Article 5 (Miscellaneous)
----------------------------------- -------------
are of a continuing nature and shall survive the expiration, termination or
cancellation of this Agreement, regardless of the reason therefor.
5.11 Subrogation. In the event of payment under this Agreement, Employer
-----------
and Parent shall be subrogated to the extent of such payment to all of the
rights of recovery of the Employee, who shall execute all papers required and
shall do everything that may be necessary to secure such
17
rights, including the execution of such documents necessary to enable Employer
or Parent effectively to bring suit to enforce such rights.
5.12 No Duplication of Payments. Employer and Parent shall not be liable
--------------------------
under this Agreement to make any payment in connection with any claim made
against the Employee to the extent the Employee has otherwise actually received
payment (under any insurance policy, Bylaw or otherwise) of the amounts
otherwise indemnifiable hereunder.
5.13 Binding Effect, Etc. This Agreement shall be binding upon and inure to
--------------------
the benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
or assets of Employer, Parent, spouses, heirs, and personal and legal
representatives. Employer and Parent shall require and cause any successor
(whether direct or indirect by purchase, merger, consolidation or otherwise) to
all, substantially all, or a substantial part, of their business or assets, by
written agreement in form and substance satisfactory to the Employee, expressly
to assume and agree to perform this Agreement in the same manner and to the same
extent that Employer or Parent would be required to perform if no such
succession had taken place.
5.14 Contribution. If the indemnity contained in this Agreement is
------------
unavailable or insufficient to hold the Employee harmless in a Claim for an
Indemnifiable Event, then separate from and in addition to the indemnity
provided elsewhere herein, Parent shall contribute to Expenses, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by or on behalf of the Employee in connection with such Claim in such proportion
as appropriately reflects the relative benefits received by, and fault of,
Parent on the one hand and the Employee on the other in the acts, transactions
or matters to which the Claim relates and other equitable considerations.
5.15 Parent Guaranty. Parent guarantees the payment and performance of all
---------------
obligations of Employer under this Agreement and agrees it will pay or perform
those obligations if for any reason Employer fails to do so. This guarantee is
absolute, continuing, irrevocable and not conditional or contingent. Any notice
given hereunder to either Employer or Parent will be deemed to be notice to
Parent for purposes of this guaranty.
*********
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IN WITNESS WHEREOF, Employer and Parent have caused this Agreement to be
executed by their officer/general partner thereunto duly authorized, and
Employee has signed this Agreement, as of the date first set forth above.
CELLSTAR LTD
By: National Auto Center, Inc.
General Partner
By: /s/ Xxxxxx Xxxx Xxxxxxxxx
----------------------------------------
Xxxxxx Xxxx Xxxxxxxxx
Vice President and General Counsel
CELLSTAR CORPORATION
By: /s/ Xxxxxx Xxxx Xxxxxxxxx
----------------------------------------
Xxxxxx Xxxx Xxxxxxxxx
Vice President and General Counsel
/s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx
19
