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Exhibit 10.25
AMENDMENT
OF
SERVICES & OPTION AGREEMENT
This Agreement is between W. Xxxx Xxxxxx ("Xxxxxx"), Monument Investors
Limited Partnership ("Monument") as successor to Xxxxxxxx X. Xxxxxx and the
estate of Xxxx X. Xxxxxx ("Bartols"), and Rockford Corporation, an Arizona
corporation ("Rockford"). Xxxxxx, Monument, and Rockford agree as follows:
1 RECITALS.
1.1 Rockford Business. Rockford manufactures and distributes high
quality car and professional audio products under various brand
names including "Rockford-Fosgate", "Hafler Professional", "Rockford
Acoustic Designs", and "Connecting Punch".
1.2 Prior Agreement. Suttle, Bartols, and Rockford were parties to a
Services and Option Agreement, and Xxxxxx, Monument and Rockford are
parties to the Amendment and Renewal of Services and Option
Agreement effective as of August 1, 1995 (the "Prior Agreement")
under which Xxxxxx holds options to purchase up to 185,000 shares of
Rockford common stock from Monument (the "Prior Options"). Bartols
assigned their shares of Rockford to Monument and Monument has
assumed Bartols' obligations under the Prior Agreement and Prior
Options. The Prior Agreement was for the period August 1, 1992,
through August 1, 1995.
1.3 Monument's Ownership. Monument, an Arizona limited partnership
formed for the benefit of members of the Bartols' family (the
"Family"), owns a majority of the issued and outstanding shares of
Rockford common stock. Monument together with the Family will own
35.45% of Rockford's fully diluted stock issue assuming (a)
conversion of all of the outstanding Rockford debentures, (b)
exercise of all outstanding Rockford stock options and warrants
(including the Prior Options), and (c) vesting of all "stock grants"
outstanding prior to the date of this Agreement.
1.4 Xxxxxx Services to Rockford. Xxxxxx has made himself available to
perform certain services under the Contract between Xxxxxxxx, Xxxxx
& Goldress, Inc. ("3G") and Rockford (the "Contract"), a copy of
which is attached as Exhibit A.
1.5 Stock Option. Monument desires to amend and extend the Prior Options
as consideration for (1) Xxxxxx'x agreement to provide services to
Rockford under the Contract and (2) Xxxxxx'x undertaking of the
obligations provided in this Agreement.
1.6 Rockford Participation. Rockford is a party to this Agreement in
order to consent to the grant of the option, to permit it to enforce
Xxxxxx'x obligations under this Agreement, and to permit it to
withhold shares purchased by Xxxxxx for the purpose of paying any
required withholding taxes.
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2 XXXXXX SERVICES.
2.1 Xxxxxx Services. Xxxxxx will serve as Director, President and CEO of
Rockford (or in another capacity agreed by Xxxxxx, Monument, and
Rockford) on a "full time" basis pursuant to the terms of the
Employment Agreement. In consideration of such services, the parties
agree that (1) all references in the Prior Agreement to the Contract
will, beginning on the date of this Amendment, be deemed to refer in
addition to the Employment Agreement and (2) the requirements in the
Prior Agreement that Xxxxxx provide services to Rockford under the
Contract will be satisfied by Xxxxxx'x providing of service to
Rockford under the Employment Agreement.
2.2 Definition of "Full Time". "full time" means that Xxxxxx will devote
four out of five business days (averaged in each month) tohis
services for Rockford including work at Rockford's headquarters,
work for Rockford in the field, and travel time on Rockford's
behalf. Periods of vacation and sick leave permitted under this
Agreement do not count in determining whether Xxxxxx has worked
"full time".
2.3 Service to 3 G and its Clients. Xxxxxx is a "partners" in, and plans
to continue his affiliation with, 3G. Xxxxxx will not take on any
Interim Management assignments for 3G. Subject to the non-
competition obligation established in this Agreement and the time
limitation set forth above, Xxxxxx may (a) perform advisory and
assessment services on behalf of 3G for its clients, (b) continue as
a director of Image Carpets, and (c) advise former clients who seek
his advise.
2.4 Executive Secretary. Xxxxxx will employ (at Rockford's expense) a
Confidential or Executive Secretary to assist him in the performance
of his duties for Rockford.
2.5 Xxxxxx Compensation and Benefits. Xxxxxx will be compensated
exclusively by 3G for his services to Rockford and will not receive
compensation directly from Rockford. Xxxxxx will not participate in
any Rockford employee benefit plans except as otherwise agreed by
Rockford and Xxxxxx, but may take reasonable vacations (consistent
with the needs of Rockford" business) and sick leaves (when he is
actually incapacitated). Xxxxxx acknowledges that Rockford is paying
compensation directly to 3G pursuant to the Contract.
2.6 Indemnification. Xxxxxx will be indemnified and held harmless by
Rockford from any damages, costs, and expenses resulting from his
services to Rockford. Neither Monument nor the Family will have any
responsibility for such indemnification and Xxxxxx will look solely
to Rockford under the Contract if he has any claim for
indemnification.
3 OPTION AMENDMENT. Monument amends and extends the Prior Option so that
Xxxxxx has the right to purchase up to 185,000 shares of Rockford common
stock at the following prices during the following terms:
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Price Term
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$1.59 per share on or before August 1, 1995
$1.95 per share on or before August 1, 1999
$3.00 per share on or before August 1, 2002
This amends to Prior Option by adding the right to purchase shares during the
period after August 1, 1999, and before August 1, 2002. The Prior Option as
amended is referred to in this Agreement as the "Option".
3.1 Qualification to Purchase. In order to exercise the Option (a)
Xxxxxx must be an "accredited investor" on the dates of exercise and
must give investment representation reasonably satisfactory to
Monument and Rockford or (b) Xxxxxx must provide other evidence
reasonably satisfactory to Rockford that a proposed exercise is
exempt from registration under, and otherwise complies with,
applicable federal and state securities laws.
3.2 Vesting and Exercise. The prior Option provided a vesting period
before Xxxxxx was permitted to exercise. The vesting period was
completed on August 1, 1995, and Xxxxxx may exercise the Option at
any time before expiration.
3.3 Expiration. The Option expires and may not be exercise after the
earliest of the following dates:
(a) August 1, 2002,
(b) 24 months after the day Rockford common stock becomes publicly
traded,
(c) 24 months after the day Rockford is merged into or acquired by
any publicly owned corporation and Rockford common stock is
exchanged for securities that are publicly traded,
(d) 150 days after Xxxxxx'x death, or
(e) upon any attempted or purported assignment of the Options
other than an assignment to a trust for the benefit of Xxxxxx
or members of his family.
3.4 Adjustment of Number of Shares. The number of shares subject to the
Option, will be adjusted upwards or downwards to reflect all stock
dividends, stock splits, reverse splits, mergers, consolidations,
recapitalizations and corporate adjustments effected by Rockford
between the date of this Agreement and the date of any option
exercise.
3.5 Notice of Exercise and Payment for Shares. Xxxxxx must give Monument
and Rockford written notice of his intention to exercise the Option
not less than 10 nor more than 90 days before the date on which he
intends to exercise his options (the
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"Exercise Date" or "Closing Date"). The notice must state the
Closing Date and the number of shares to be purchased. the notice
creates a binding obligation on Xxxxxx to purchase the specified
number of shares on the Closing Date. Monument must deliver the
shares, and Xxxxxx must pay for them in cash, on the Closing Date.
3.6 Taxes and Cancellation of Shares. Xxxxxx acknowledges that, as an
independent contractor, upon exercise of the options he may become
subject to (and is solely responsible for) payment of tax on the
excess of the fair market value of the shares purchased over the
option exercise price. Rockford may become entitled to a deduction
in the same amount pursuant to provision of the Internal Revenue
Code of 1986 and Internal Revenue Service ("IRS") regulations
thereunder (the "Code") that attribute to Rockford the options
granted by Monument. Rockford may elect to cancel (from the shares
presented by Monument for transfer to Xxxxxx pursuant to an option
exercise) up to that percentage of shares that is equal to the
maximum marginal rate of taxes Xxxxxx would be required by the Code
to pay to the IRS upon exercise of the options; Rockford will then
pay the fair market value of any canceled shares to the IRS for
Xxxxxx'x account. At the time of any exercise Xxxxxx may pay the
cash value attributed to the canceled shares to Rockford and
Rockford will then transfer to Xxxxxx all the shares presented for
transfer. Rockford will make an election to cancel shares only upon
advise of its professional advisors that such action is necessary to
protect its deduction (and then only in the amount required by the
Code); such an election will not constitute an admission by either
Xxxxxx or Rockford that Xxxxxx is an employee of Rockford and Xxxxxx
will at all times be an independent contractor to Rockford.
4 ELECTION OF DIRECTORS. Monument and Xxxxxx will vote as Directors and
shareholders of Rockford (to the extent they are OR become Directors or
shareholders) so as to set the number of Directors at 5 and to elect Xxxx
X. Xxxxx, Xxxxxxxx Xxxxxx, Xxxxxxxx X. Xxxxxx, Xxxx X. Xxxxxx, and Xxxxxx
to serve as Directors (or such other number of directors and candidates as
they agree upon).
5 OWNERSHIP OF WORKS. All ideas, artworks, compositions, conceptions, and
materials ('Works") prepared by Xxxxxx during the term of his engagement
for Rockford, pursuant to this Agreement and the Contract, and usable in
Rockford's business will be the property of Rockford. Xxxxxx assigns to
Rockford all of Xxxxxx'x right, copyright, title and interest in such
Works. Xxxxxx will not use, or transfer to others, any Works other than in
connection with Rockford's business or with Rockford's written consent;
provided that Rockford grants Xxxxxx a non-exclusive right to use the
Works personally in any activity that is not competitive with Rockford.
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6 CONFIDENTIAL INFORMATION. During and after the term of Xxxxxx'x engagement
pursuant to this Agreement and the Contract, Xxxxxx will keep
confidential, and will not reproduce, copy or disclose to any other person
or firm, any trade secrets or other proprietary or confidential
information of Rockford or about its business ("Confidential
Information'). Xxxxxx will not, during or after the term of this
Agreement, use (either alone or with others), disclose to any person, or
encourage anyone else to disclose, any Confidential Information except
within the scope of Xxxxxx'x duties and responsibilities for Rockford or
with, Rockford's consent.
7 RETURN OF ROCKFORD DOCUMENTS. Upon termination of Xxxxxx'x engagement
pursuant to this Agreement and the Contract, Xxxxxx will return to
Rockford all records and documents of or pertaining to Rockford
(including, but not limited to, customer, distributor, and supplier lists,
names, or addresses) and will not make, retain, or give to any other
person any copy or extract of any such record or document. "Record"
includes, but is not limited to, information stored on computer.
8 NON-COMPETE AND SOLICITATION. During the term of Xxxxxx'x engagement for
Rockford pursuant to this Agreement and the Contract, and for 2 years
thereafter, Xxxxxx will not engage in, plan for, organize, work for,
acquire an ownership interest in, or assist, directly or indirectly, any
business that competes with Rockford in the United States or elsewhere.
During and after the term of Xxxxxx'x engagement for Rockford pursuant to
this Agreement and the Contract, Xxxxxx will not solicit, or assist others
to solicit, any customers, distributors, suppliers, or employees of
Rockford who did business or agreed to do business with Rockford at any
time before or during the term of Xxxxxx'x engagement for Rockford
pursuant to this Agreement and the Contract.
If this section is deemed unreasonable as to time or scope by any court or
arbitrator, then such court or arbitrator is directed to modify this section
as to time or scope, or both, so that this section is reasonable and to then
enforce this section as modified. Xxxxxx acknowledges and agrees that the
market for Rockford's product is limited and international in scope, so that
any competitive activities in violation of this section would cause -material
harm to Rockford and Monument.
9 ACTIONS. Xxxxxx acknowledges that it would be difficult to determine
damages, and Rockford and Monument will not have an adequate remedy at
law, if Xxxxxx breaches this Agreement. Accordingly, if Xxxxxx breaches
this Agreement, Rockford or Monument may seek injunctive relief to enforce
this Agreement. Nothing in this section limits or excludes any and all
other rights, including rights to money damages, granted to Rockford or
Monument in law or equity,
10 SEVERABILITY. If any section of this Agreement is deemed unreasonable by a
court or arbitrator, that section is severable from the remainder of this
Agreement, which is to be enforced according to its terms irrespective of
the enforceability of the unreasonable section SO long AS enforcement is
consistent with the general intent of the parties as evidenced by this
Agreement taken as a whole.
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11 NON-ASSIGNABILITY. Xxxxxx'x obligations and rights under this Agreement
are not assignable. Xxxxxx'x options are exercisable only by Xxxxxx or by
the personal representative of his estate. Any attempted or purported
assignment of Xxxxxx'x obligations oR rights under this Agreement is a
material breach and will result in the immediate termination of the
Option.
12 ESCROW OF SHARES. Upon request by Xxxxxx, Monument will place in escrow
with a mutually acceptable third party selected by Monument (and pursuant
to documentation approved by Monument and Xxxxxx) a certificate for not
less than 185,000 shares of Rockford common stock, with four or more
signed stock powers attached, and instructions to deliver to Xxxxxx up to
185,000 shares upon proper exercise of Ms options and payment of the
option price to Monument.
13 CONFLICTS WITH CONTRACT. If there is a conflict between this Agreement and
the Contract, this Agreement will regulate the relations between Monument
and Xxxxxx and the Contract will regulate the dealings between Rockford
and 3G.
14 NOTICES. Notices under this Agreement are effective upon delivery or three
days after mailing, certified or registered mail, return receipt
requested, to the addresses stated on the signature page of this Agreement
(which may be changed by notice).
15 INTEGRATION AND AMENDMENT. This Agreement is the entire agreement of the
parties with respect to the grant of the Option and may be amended only by
a written document signed by all the parties.
16 GOVERNING LAW. Arizona law will govern this Agreement and any disputes
arising out of or related in any way to this Agreement.
17 ATTORNEYS' FEES. In any proceeding arising out of or related to this
Agreement, the prevailing party is entitled to reasonable attorneys' fees,
costs and other expenses incurred in connection with such proceeding.
18 ARBITRATION. Disputes not resolved by the parties and arising out of or
related in any way to this Agreement will be submitted to binding
arbitration in metropolitan Phoenix, Arizona, before a single arbitrator
or, if the parties cannot agree upon a single arbitrator, before a panel
of three arbitrators, one selected by each party (within 10 days after
notice of a dispute and failure to agree upon a single arbitrator) and a
third appointed by the arbitrators selected by the parties. The selection
of arbitrators and all arbitration proceedings will be in accordance with
the rules of the American Arbitration Association, as amended to the date
of the proceedings, and judgment upon the award may be entered in any
court having jurisdiction. The arbitrators will render a decision within
30 days after their appointment and may award the costs of arbitration as
they see fit.
19 EXECUTION AND EFFECTIVE DATE This Agreement is executed _______1995, and
is effective as of August 1, 1995.
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/s/
--------------------------------------------
W. Xxxx Xxxxxx
Address: 000 X. Xxxxx Xx.
Xxxxx, XX 00000
Monument Investors Limited Partnership
By /s/
--------------------------------------------
Xxxxxxxx Xxxxxx, General Partner
Address: 000 Xxxx Xxxxx
Xxxxxxx, XX 00000
Rockford Corporation
By /s/
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Xxxx X. Xxxxxx, Chairman
Address: 000 Xxxxx Xxxxx Xxxxx
Xxxxx, XX 852
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