Exhibit 10.42
EXECUTIVE OFFICER
EMPLOYMENT AGREEMENT
THIS EXECUTIVE OFFICER EMPLOYMENT AGREEMENT (the "Agreement") is made
and entered into this 23rd day of April, 2003 (the "Effective Date") by and
between UNIVERSAL ELECTRONICS INC. (the "Employer") and XXXX X. XXXXXX
("Executive").
RECITALS:
WHEREAS, the Employer is presently headquartered in Cypress,
California, and is engaged in the business of developing and marketing easy to
use, pre-programmed universal remote control products primarily for home video
and audio entertainment equipment and home security and home automation devices;
and
WHEREAS, on August 27, 2000, Executive and Employer entered into that
certain Executive Officer Employment Agreement (the "Prior Executive Employment
Agreement"), and the Prior Executive Employment Agreement is set to expire on
September 30, 2003 and the parties wish to extend such date to April 30, 2006;
and
WHEREAS, Employer wishes to continue the employment of Executive as one
of its key executives and avail itself of Executive's expertise, experience and
capability in Employer's business as its Chairman of the Board and Chief
Executive Officer to perform those duties and assume those responsibilities as
set forth in this Agreement and as identified and outlined in Employer's Amended
and Restated By-Laws, and to undertake such other duties and to assume such
other responsibilities commensurate with Executive's designated position(s) as
may be reasonably assigned to Executive from time to time by the Board of
Directors of Employer; and
WHEREAS, Executive hereby accepts such offer of continued employment
and extension of term and desires to be employed by the Employer subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein, and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
1. EMPLOYMENT
Subject to all of the terms and conditions of this Agreement, effective
on the Effective Date , Employer hereby employs Executive and Executive hereby
accepts such employment with Employer.
2. TITLE, AUTHORITY AND DUTIES
(a) TITLE(S) AND POSITION(S). On the Effective Date of
this Agreement, Executive shall be employed in the position(s) of and
shall have the title(s) of Chairman of the Board
62
and Chief Executive Officer of Employer. Until this Agreement is
terminated as provided herein, Executive will continue to occupy such
position(s) and hold such title(s) until Employer and Executive shall
mutually agree in writing to change any such position(s) and title(s).
(b) AUTHORITY AND DUTIES. Executive will, during the term
of this Agreement, and subject to Board of Director oversight, be
responsible for all aspects of Employer's business. In addition,
Executive shall perform those duties and assume those responsibilities
as set forth in this Agreement and as identified and outlined in
Employer's Amended and Restated By-Laws, as amended as of the date of
this Agreement, and undertake such other duties and assume such other
responsibilities commensurate with Executive's designated position(s)
as may be reasonably assigned to Executive from time to time by the
Board of Directors of Employer.
(c) EXCLUSIVE SERVICES AND EFFORTS OF EXECUTIVE. During
the term of this Agreement, Executive shall serve the Employer, under
the direction of Board of Directors of Employer, and shall faithfully,
diligently, competently and, to the best of his ability, exclusively
devote his full business time, energy and attention (unless otherwise
agreed to by the parties) to the business of the Employer and to the
promotion of its interest. Executive recognizes that Employer's
organization, business and relationship with clients, prospective
clients and others having business dealings with Employer are and will
be the sole property of Employer and Executive shall have no separate
interests or rights with respect thereto, except as an employee of
Employer. Executive may own less than a five percent (5%) interest in a
supplier, client, or competitor of Employer if the supplier, client, or
competitor is a publicly traded company.
(d) OTHER ACTIVITIES AND INTERESTS. Employer shall be
entitled to all of the benefits, emoluments, profits, discoveries or
other issues arising from, incident to and related to any and all work,
services and advice of Executive to Employer in carrying out his duties
and responsibilities hereunder. Executive shall not, without the
written consent of Employer, directly or indirectly, render services to
or for any person, firm, corporation or other entity or organization,
whether or not in exchange for compensation, regardless of the form in
which such compensation, if any, is paid and whether or not it is paid
directly or indirectly to him if the rendering of such service would
interfere with the performance of his duties and responsibilities to
Employer hereunder. Notwithstanding the foregoing sentence, Executive
may spend time and attention to personal investment and community
activity matters and such other personal matters consistent with
Employer's policies and procedures set forth within Employer's policy
manual in effect from time to time which are equally applicable to all
of Employer's executive employees, so long as the spending of such time
and attention does not substantially interfere with the performance of
his duties and responsibilities to Employer hereunder.
3. TERM OF EMPLOYMENT AND TERMINATION
(a) TERM. Unless earlier terminated as provided herein,
the term of this Agreement shall commence at the start of business on
the Effective Date of this Agreement and shall continue through the end
of business on April 30, 2006 (the "Initial Term"). Unless
63
terminated by either party by giving the other party written notice of
an intent not to renew this Agreement at least one hundred twenty (120)
days prior to the end of the Initial Term or any successive one (1)
year term, this Agreement shall automatically extend for one (1)
additional year after the Initial Term and then again for a one (1)
year term after each successive year.
(b) TERMINATION.
(i) BY EMPLOYER FOR JUST CAUSE. Employer may
terminate the employment of Executive under this Agreement for
Just Cause (as defined herein) at any time upon delivery of
written notice to him setting forth, in reasonable
specificity, such Just Cause. For purposes of this Agreement,
and particularly this subsection 3(b)(i), "Just Cause" shall
mean:
(1) The continued failure by or refusal
of Executive to substantially perform his duties and
responsibilities as set forth herein; or
(2) Executive's indictment for,
conviction of or a guilty plea to a felony or any
crime involving moral turpitude, whether or not
affecting the Employer; or
(3) The engagement by Executive in
personal illegal conduct which, in the reasonable
judgment of Employer, by association with him, is
materially and demonstrably injurious to the property
and/or business of Employer; or
(4) Any material breach by Executive of
the terms and conditions contained herein, including
without limitation, those certain confidentiality
provisions set forth in Section 16; or
(5) The commission of any act opposed
to the best interests of Employer for which Executive
would not be entitled to indemnification under
Employer's Restated Certificate of Incorporation and
Amended and Restated By-Laws, each as amended as of
the date of this Agreement; or
(6) The failure by Executive to protect
the best interests of Employer through Executive's
gross neglect of duty.
(ii) BY EXECUTIVE FOR GOOD REASON. Executive may
terminate his employment with Employer under this Agreement
for Good Reason (as defined herein) at any time upon delivery
of written notice to Employer setting forth, in reasonable
specificity, such Good Reason(s). For purposes of this
Agreement, and particularly this subsection 3(b)(ii), "Good
Reason" shall mean:
(1) The attempted discontinuance or
reduction in Executive's "Base Cash Salary" (as
defined herein);
64
(2) The attempted discontinuance or
reduction in Executive's bonuses and/or incentive
compensation award opportunities under plans or
programs applicable to him, unless such
discontinuance or reduction is a result of Employer's
policy applied equally to all executive employees of
Employer; or
(3) The attempted discontinuance or
reduction in Executive's stock option and/or stock
award opportunities under plans or programs
applicable to him, unless such discontinuance or
reduction is a result of Employer's policy applied
equally to all executive employees of Employer; or
(4) The attempted discontinuance or
reduction in Executive's perquisites from those
historically provided him during his tenure with the
Employer and generally applicable to executive
employees of Employer; or
(5) The relocation of Executive to an
office (other than Employer's current headquarters)
located more than fifty (50) miles from his then
current office location; or
(6) The significant reduction in
Executive's responsibilities and status within the
Employer or change in his title(s) or position(s); or
(7) Any change in Executive's
position(s) and title(s), as set forth in Section
2(a), to which Executive has not agreed in writing;
or
(8) The attempted discontinuance of
Executive's participation in any benefit plans
maintained by Employer unless such plans are
discontinued by reason of law or loss of tax
deductibility to the Employer with respect to the
contributions to or payments under such plans, or are
discontinued as a matter of the Employer's policy
applied equally to all participants; or
(9) The attempted reduction of
Executive's paid vacation to less than that as
provided in this Agreement; or
(10) The failure by Employer to obtain
an assumption of Employer's obligations under this
Agreement by any assignee of or successor to
Employer, regardless of whether such entity becomes a
successor to Employer as a result of merger,
consolidation, sale of assets of Employer or other
form of reorganization; or
(11) The occurrence of any of the items
set forth in paragraphs (1) through (10) of this
subsection 3(b)(ii), if, in the reasonable
determination by the Executive, such occurrence
happens as a result of and within the shorter of six
(6) months or the remaining term of this Agreement
following a "Change in Control" (as such term is
defined below). For the purposes of this Agreement, a
"Change in Control" shall be deemed to occur when and
only when the first of the following events occurs:
65
a. Any "person" or "group"
(as such terms are used in Sections 3(a),
3(d), and 14(d) of the Securities Exchange
Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the
"1934 Act"), other than (i) a trustee or
other fiduciary holding securities under any
employee benefit plan of the Corporation or
any of its subsidiaries or (ii) a
corporation owned directly or indirectly by
the stockholders of the Corporation in
substantially the same proportions as their
ownership of stock in the Corporation, is or
becomes the "beneficial owner" (as defined
in Rule 13d-3 under the 1934 Act)), directly
or indirectly, of securities of the
Corporation representing 20% or more of the
total voting power of the then outstanding
securities of the Corporation entitled to
vote generally in the election of directors
(the "Voting Stock"); or
b. Individuals who are
members of the Incumbent Board, cease to
constitute a majority of the Board of
Directors of the Corporation. The term
"Incumbent Board" shall mean (i) the members
of the Board of Directors on the effective
date of this Agreement, and (ii) any
individual who becomes a member of the Board
of Directors after the effective date of
this Agreement, if his or her election or
nomination for election as a director was
approved by the affirmative vote of a
majority of the then Incumbent Board; or
c. (i) The merger or
consolidation of the Corporation with any
other corporation or entity, other than a
merger or consolidation which would result
in the Voting Stock outstanding immediately
prior thereto continuing to represent
(either by remaining outstanding or by being
converted into voting securities of the
surviving entity) at least 80% of the total
voting power represented by the Voting Stock
or the voting securities of such surviving
entity outstanding immediately after such
merger or consolidation, (ii) the sale,
transfer or disposition of all or
substantially all of the Corporation's
assets to any other corporation or entity,
or (iii) the dissolution or liquidation of
the Corporation.
(iii) AUTOMATICALLY IN ACCORDANCE WITH SUBSECTION
3(A). In addition to the rights to terminate this Agreement as
set forth in subsections 3(b)(i) and 3(b)(ii), this Agreement
may also terminate automatically in accordance with subsection
3(a).
(iv) DISAGREEMENTS. Any disagreement concerning
whether there has been Just Cause for termination by Employer
or Good Reason for termination by Executive will be resolved
by binding arbitration in accordance with the provisions of
Section 18 of this Agreement.
(C) EFFECT OF TERMINATION. Upon termination of
Executive's employment with Employer:
66
(i) BY EMPLOYER FOR JUST CAUSE. Executive shall
not be entitled to receive payment of any salary, bonus,
expenses, or other benefits beyond the date of termination
and, subject to this subsection 3(c)(i), Section 17, and
Executive's agreement to repay, without set off, all amounts
due Employer for monies loaned Executive as set forth in
Section 19, this Agreement shall become null and void
effective as of the date of termination and Employer and
Executive shall have no further obligation hereunder toward
the other except for the payment of salary, bonus, vacation,
expenses and benefits, if any, which have accrued but remain
unpaid prior to and as of the termination date.
(ii) BY EXECUTIVE FOR GOOD REASON.
(1) Employer shall pay to Executive
salary, bonus, vacation, expenses, and benefits,
which have accrued but remain unpaid prior to and as
of the termination date, within the time period for
such payment specified by the laws of the state of
California.
(2) In addition to such amounts under
subsection 3(c)(ii)(1) above, Executive shall be paid
by Employer in a lump sum within twenty (20) business
days of such termination, an amount that is equal to
the sum of the following:
(A) The amount equivalent to
salary payments for eighteen (18) months
(twenty-four (24) months if such termination
is pursuant to subsection 3(b)(ii)(11)), at
that rate of pay which is not less than
Executive's rate of Base Cash Salary in
effect immediately prior to the effective
date of such termination (without regard to
any attempted reduction or discontinuance of
such salary); and
(B) The amount equivalent to
eighteen (18) months (twenty-four (24)
months if such termination is pursuant to
subsection 3(b)(ii)(11)), multiplied by the
greater of (i) the monthly rate of the bonus
payment for the bonus period in the year
immediately prior to Executive's termination
date or (ii) the estimated amount of the
bonus for the period which includes
Executive's termination date (without regard
to any attempted reduction or discontinuance
of such bonus).
(3) In addition to such amounts under
subsections 3(c)(ii)(1) and 3(c)(ii)(2) above,
Executive shall also receive, (i) in cash, the value
of the incentive compensation (including, but not
limited to, employer contributions to the Universal
Electronics Inc. 401(K) and Profit Sharing Plan) and
(ii) the rights to receive grants of stock options
and stock awards to which he would have been entitled
under all incentive compensation and stock option and
stock award plans maintained by Employer if Executive
had remained in the employ of Employer for eighteen
(18) months (twenty-four (24) months if such
termination is pursuant to subsection 3(b)(ii)(11)),
(without regard to any attempted reduction or
discontinuance of such incentive compensation).
67
The amount of such payment and/or grants shall be
determined as of the date of termination and shall be
paid and/or issued as promptly as practicable and in
no event later than thirty (30) days after such
termination.
(4) Employer shall also maintain in
full force and effect for the Executive's continued
benefit (and, to the extent applicable, the continued
benefit of her dependents) all of the employee
benefits (including, not limited to, coverage under
any medical and insurance plans, programs or
arrangements) to which he would have been entitled
under all employee benefit plans, programs or
arrangements maintained by Employer if Executive had
remained in the employ of Employer for eighteen (18)
months (twenty-four (24) months if such termination
is pursuant to subsection 3(b)(ii)(11)), (without
regard to any attempted reduction or discontinuance
of such benefits), or if such continuation is not
possible under the terms and provisions of such
plans, programs or arrangements, Employer shall
arrange to provide benefits at least equal to those
which Executive (and, to the extent applicable, his
dependents) would have been entitled to receive if he
had remained a participant in such plans, programs or
for such eighteen (18) month period (twenty-four (24)
months, if such termination is pursuant to subsection
3(b)(ii)(11)) )),(without regard to any attempted
reduction or discontinuance of such benefits)..
(5) Subject to this subsection
3(c)(ii), Section 17, and Executive's agreement to
repay, without set off, all amounts due Employer for
monies loaned Executive as set forth in Section 19,
this Agreement shall become null and void effective
as of the date of termination and Employer and
Executive shall have no further obligation hereunder
toward the other.
(iii) PURSUANT TO SUBSECTION 3(b)(iii). Executive
acknowledges and agrees that in the event that this Agreement
terminates in accordance with subsection 3(b)(iii), that
Employer and Executive shall have no further obligation
hereunder toward the other except (1) for the payment of
salary, bonus, vacation, expenses and benefits, if any, which
have accrued but remain unpaid prior to and as of the
termination date, (2) as set forth in Section 17, and (3) for
Executive's agreement to repay, without set off, all amounts
due Employer for monies loaned Executive as set forth in
Section 19.
(iv) SUBMISSION OF RESIGNATIONS BY EXECUTIVE.
Upon termination of this Agreement by either Employer or
Executive as set forth herein and the receipt by Executive of
(1) all cash amounts due him as set forth herein and (2) a
written representation signed by an authorized representative
of Employer that all non-cash obligations of Employer as set
forth herein have been fulfilled or, as the case may be, have
been commenced, Executive shall immediately submit Executive's
resignation for any and all offices or directorships of
Employer and/or any and all subsidiaries and affiliates of
Employer (the "Resignation") which Resignation shall have
retroactive application and effect to such termination date;
provided however that during such time period from the
effective date of such termination to the date
68
Executive submits the Resignation, Executive acknowledges and
agrees that he does not have authority to bind Employer to any
contracts or commitments and agrees not to create any
obligation for Employer or bind or attempt to bind Employer in
any manner whatsoever. Executive also acknowledges that he
shall have no supervisory or managerial responsibility or
authority from and after the effective date of the termination
of this Agreement, regardless of whether he submits the
Resignation or not, and agrees not to involve himself in any
activities of Employer, except as may be requested by an
authorized officer of Employer.
4. TOTAL COMPENSATION
While employed under this Agreement and in consideration of the
services to be rendered by Executive pursuant hereto, Executive shall receive
the following amounts/benefits as the sole and total compensation for the
performance of his duties and obligations under this Agreement:
(a) BASE CASH SALARY. A salary at the rate of Four
Hundred Twenty Thousand Dollars (US$420,000) per annum (the "Base Cash
Salary"), which shall be deemed to accrue from day to day, payable in
accordance with Employer's standard payroll practices and procedures;
(b) BONUS. A bonus calculated in accordance with the
plans or programs established by Employer from time to time payable in
accordance with Employer's standard payroll practices and procedures;
provided that any such bonuses whenever earned and paid shall be
determined without regard to any material gains and losses which occur
outside of the scope of Employer's ordinary operating business unless
any such plans or programs explicitly include such material gains and
losses within the determination of any such bonuses;
(c) STOCK OPTIONS. Stock option grants or stock awards in
accordance with the plans or programs established by Employer from time
to time;
(d) INCENTIVE COMPENSATION. Participation in Employer's
incentive compensation plans and/or programs, including, but not
limited to, receipt of employer contributions to the Universal
Electronics Inc. 401(K) and Profit Sharing Plan and the right to
receive stock awards and to exercise stock options under Employer's
various stock option plans and/or such other plans and/or programs
which are established from time to time;
(e) BENEFITS. The benefits provided by Employer to its
executive employees generally, including without limitation, the
benefits and perquisites included under the Universal Electronics Inc.
group family health insurance program, which includes comprehensive
medical insurance, dental insurance, group disability, group life
insurance, and executive bonus (supplemental life); provided that the
benefits provided to Executive shall be no less extensive than that
provided him immediately prior to the date of this Agreement;
(f) VACATION. Four (4) weeks (twenty (20) working days)
vacation with pay, determined and carried over in accordance with the
policies and procedures set forth within
69
Employer's policy manual in effect from time to time which are equally
applicable to all of Employer's executive employees;
(g) OTHER PERQUISITES. Such other employee benefits and
perquisites that are provided by Employer to executives generally,
provided that the other perquisites provided to Executive shall be no
less extensive than the most extensive perquisites provided to any
other executive employee of the Employer;
(h) D&O INSURANCE. Director and Officer Liability
insurance in a reasonably sufficient amount;
(i) DISCRETIONARY BONUS. Such other amounts of
compensation and/or bonus which is determined by Employer from time to
time;
(j) REVIEWS. The total amount of compensation to be paid
and/or provided to Executive shall be reviewed by the Board of
Directors, or such committee thereof, of Employer as of the first day
of each calendar year while this Agreement is in force and effect. In
no event shall such review result in a reduction or discontinuance of
the amount of compensation paid and/or provided to Executive hereunder
except if such reduction or discontinuance occurs by reason of law or
loss of tax deductibility to the Employer with respect to the
contributions to such plans, or are discontinued as a matter of the
Employer's policy applied equally to all participants.
5. ADJUSTMENTS IN CASE OF EXCESS PARACHUTE PAYMENTS
In the event that the aggregate present value (determined in accordance
with applicable federal, state and local income tax law, rules and regulations)
of all payments to be made and benefits to be provided to Executive under this
Agreement and/or under any other plan, program or arrangement maintained or
entered into by Employer or any of its subsidiaries shall result in "excess
parachute payments" to him within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), or any comparable provision of
successor legislation, which subject him to the Excise Tax under Section 4999 of
the Code or any comparable provision of successor legislation, Employer shall
pay to Executive an additional amount (the "gross-up payment") calculated so
that the net amount received by him after deduction of the Excise Tax and of all
federal, state and local income taxes upon the gross-up payment shall equal the
payments to be made and the benefits to be provided to him under this Agreement.
For purposes of determining the amount of the gross-up payment, Executive shall
be deemed to pay federal, state and local income taxes at the highest marginal
rates thereof in the calendar year in which the gross-up payment is to be made,
net of the maximum reduction in federal income taxes obtainable from deduction
of such state and local taxes. The computations required by this Section 5 shall
be made by the independent public accountants then regularly retained by
Employer, in consultation with tax counsel selected by and acceptable to
Executive. Employer shall pay all of its accountants' fees and the lesser of (i)
one-half of Executive's tax counsel's fees or (ii) $2,500.
6. REIMBURSEMENT FOR BUSINESS RELATED EXPENSES
70
Employer shall reimburse Executive for all reasonable expenses incurred
and paid by him in connection with Employer's business in accordance with
Employer's policy manual in effect from time to time.
7. INTEREST
In the event any payment to Executive under this Agreement is not paid
within five (5) business days after it is due, such payment shall thereafter
bear interest at the prime rate from time to time in effect at Bank of America,
Los Angeles, California; provided however, that this provision shall not excuse
the timely payment of such sums required by this Agreement.
8. NOTICES
WRITTEN NOTICES TO BE GIVEN UNDER THIS AGREEMENT SHALL BE PERSONALLY DELIVERED
OR SENT BY OVERNIGHT COURIER (SUCH AS FEDERAL EXPRESS, DHL OR
UPS AND THE LIKE) OR BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO THE ADDRESSES SET FORTH BELOW:
To Employer:
Universal Electronics Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn.: Corporate Secretary
With a required copy to:
Universal Electronics Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: The Board of Directors
To Executive:
Xx. Xxxx X. Xxxxxx
At his last known address as reflected in Employer's records
9. SEVERABILITY
If any one or more of the provisions contained in this Agreement shall
be invalid, illegal or unenforceable in any respect under applicable law, the
validity, legality and enforceability of the remaining provisions contained
herein shall not, in any way, be ineffective or impaired thereby.
10. GOVERNING LAW
This Agreement shall be governed by the law of the state of California
without regard to the conflicts of laws provisions of the state of California.
71
11. WAIVER
The failure of either party to insist in any one or more instances on
strict performance of any of this Agreement's provisions, or to exercise or
enforce any right, remedy or obligation under this Agreement, shall not be
construed as a waiver or relinquishment of any right, remedy or obligation, and
the right, remedy or obligation shall continue in full force and affect.
12. ENTIRE AGREEMENT AND MODIFICATION
This Agreement, together with that certain Nonrecourse Secured
Promissory Note described more fully in Section 19 of this Agreement, sets forth
the entire agreement of the parties concerning the employment of Executive by
the Employer and any oral or written statements, representations, agreements or
understandings made or entered into prior to or contemporaneously with the
execution of this Agreement, including without limitation the Prior Executive
Employment Agreement, are hereby rescinded, revoked, and rendered null and void
by the parties. This Agreement may be modified only by a written instrument duly
executed by each party hereto.
13. ASSIGNMENT
This Agreement shall be binding upon the parties hereto, their
respective heirs, personal representatives, executors, administrators,
successors and assigns. Any such assignee or successor of Employer shall, within
ten (10) business days after receipt of a written request by Executive, send to
Executive its acknowledgment and agreement that such assignee or successor
expressly assumes all of Employer's obligations under this Agreement as if such
assignee or successor was the original employer and the term "Employer" as used
herein shall include any such assignee or successor.
14. INTERPRETATION OF AGREEMENT
The parties have cooperated in the drafting and preparation of this
Agreement. Therefore, the parties hereto agree that, in any construction to be
made of the Agreement the same shall not be construed against any of the parties
by reason of its drafting or the identity of its preparer. Each of the parties
hereto has carefully read this Agreement and has been given the opportunity to
have it reviewed by legal counsel and negotiate its terms.
15. SPECIFIC OBLIGATIONS OF THE EXECUTIVE
In addition to the general duties set forth herein, Executive shall use
his reasonable efforts for the benefit of Employer by whatever business
activities Employer finds reasonably appropriate to maintain and improve
Employer's standing in the community generally and among current and prospective
customers, including such entertainment for business purposes as Executive and
Employer mutually consider appropriate. Executive shall undertake business
development endeavors as reasonably directed by Employer.
16. NONDISCLOSURE AND NONAPPROPRIATION OF INFORMATION AND
NONCOMPETITION
72
(a) Executive recognizes and acknowledges that while
employed by Employer, he has and will have access to, learn, be
provided with and, in some cases, prepare and create certain
confidential, proprietary business information and/or trade secrets for
Employer, including, but not limited to, lists, files and forms, all of
which are of substantial value to Employer and its business.
Notwithstanding any other provision of this Agreement, Employer's
confidential, proprietary business information and/or trade secrets do
not include any information (i) which is in the public domain at the
time Employer discloses it to Executive; (ii) which, after Employer
discloses it to Executive, becomes part of the public domain through
publication or otherwise, other than by Executive's act; (iii) which
was in Executive's possession prior to its disclosure to Executive by
the Employer; or (iv) which Executive receives from a third party
having the right to make such disclosure, without restriction on the
disclosure or use thereof. In this connection, Executive expressly
covenants and agrees, during his employment with Employer, to:
(i) Hold in a fiduciary capacity and not reveal,
communicate, use or cause to be used for his own benefit or
divulge any trade secrets, or other proprietary right now or
hereafter owned by the Employer;
(ii) Not sell, exchange or give away, or
otherwise dispose of any trade secrets now or hereafter owned
by Employer, whether the same shall or may have been
originated or discovered by Employer or otherwise;
(iii) Not reveal, divulge or make known to any
person, firm, corporation or other entity any trade secret of
Employer, except as required to do so by law, regulation,
subpoena, or court order, provided, however, that to the
extent that Executive can, Executive shall first give written
notice to Employer so that Employer may seek an appropriate
protective order;; and
(iv) Not reveal, divulge or make known to any
person (other than his spouse, attorney, tax advisors,and/or
accountant), firm, company or corporation any of the terms of
this Agreement, unless required to do so by law, regulation,
subpoena, or court order and provided that it shall not be a
breach of this Agreement for Executive to present this
Agreement under seal to any court or arbitral tribunal called
upon to enforce it.
(b) To protect the legitimate business interests of
Employer from unfair competition by Employee, Employee expressly
covenants and agrees that during his employment with Employer and
continuing thereafter for a period of two (2) years, Employee shall
not, directly or indirectly:
(i) Solicit, interfere with or endeavor to
entice away from Employer any person, firm, company or
corporation that, at the time Employee's employment with
Employer ceased, was doing business with Employer and
accounted for ten percent (10%) or more of Employer's gross
revenue as determined by Employer's book and records; and
73
(ii) Solicit for hire, either directly or
indirectly, or hire as a result of such solicitation, any key
employee of Employer, except that Executive may hire any such
key employee so long as such hiring was made as a result of a
general solicitation of employment through typical
solicitation means, such as advertisements and the like, or
such solicitation was initiated by such key employee.
(c) Executive further covenants and agrees to return to
Employer either before or immediately upon his termination of
employment with Employer any and all written information, material or
equipment that constitutes, contains or relates to Employer's trade
secrets and which relate to Employer's business which are in
Executive's possession, custody and control, whether confidential or
not, including any and all copies thereof which may have been made by
or for Executive. Executive shall maintain no copies thereof after
termination of his employment.
17. SURVIVAL OF OBLIGATIONS
In addition to those specific provisions of Section 3, which by their
express terms survive the termination of this Agreement under certain
circumstances, the terms and conditions and obligations of the parties as
contained or described in Sections 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 16, 17,
18, 19, and 20 shall survive the termination of this Agreement and,
notwithstanding such termination, shall remain fully binding on the parties
hereto.
18. ARBITRATION
Except for any claim or dispute in which equitable relief under this
Agreement is sought, any disagreement, dispute or controversy concerning whether
there has been Just Cause, Good Reason or breach of any of the terms of this
Agreement shall be settled exclusively and finally by arbitration. The
arbitration shall be administered by the American Arbitration Association in
accordance with its National Rules for the Resolution of Employment Disputes
then in effect (the "AAA Rules"). The arbitration shall be conducted in Los
Angeles, California, or in such other city as the parties to the dispute may
designate by mutual consent. The arbitral tribunal shall consist of three
arbitrators (or such lesser number as may be agreed upon by the parties)
selected according to the procedure set forth in the AAA Rules, with the
chairman of the arbitral tribunal selected in accordance with the AAA Rules.
Except as otherwise set forth in this Agreement, the fees and expenses of the
arbitral tribunal in connection with such arbitration shall be borne by the
parties to the dispute as shall be determined by the arbitral tribunal.
19. RELOCATION LOAN MADE TO EXECUTIVE
On or about April 22, 1999, Employer loaned the principal sum
of $200,000 to Executive, which loan is evidenced by that certain Nonrecourse
Secured Promissory Note signed by Executive in favor of Employer dated April 22,
1999 and notarized on April 28, 1999 (the "Note"), together with that certain
Deed of Trust with Assignment of Rents (Short Form) signed by Executive and
Executive's spouse for the benefit of Employer dated April __, 1999 and
notarized on April 28, 1999 (the "Deed"), copies of which are attached hereto as
Exhibit A. Executive represents and warrants that immediately prior to the
execution of this Agreement, he was not in default or in any
74
other way in breach of any of the terms of the Note or the Deed. Executive
hereby agrees, acknowledges and reaffirms (i) his obligations to Employer
pursuant to the Note and the Deed, (ii) that any reference made within the Note
and/or the Deed to the "Executive Employment Agreement" shall mean this
Agreement and not the Prior Executive Employment Agreement, and (iii) that
except as specifically modified by this Agreement, the Note and the Deed shall
be and remain in full force and effect in accordance with their respective terms
and Executive shall fully perform all of his obligations under the Note and the
Deed. So long as Executive is not in default or in any other way in breach of
any of the terms of the Note or the Deed, Employer shall, on each December 15
during the term of such Note and on the payment of principal of the Note, pay to
Executive an amount equal to 1.045 times the amount of interest due by Executive
under the Note as of each of such dates (the "Interest Compensation"),
regardless of whether Executive is employed by Employer on such dates. Such loan
and such Interest Compensation is in addition to all amounts to be paid and/or
reimbursed to Executive pursuant to Employer's Executive Relocation Policy
* * * * * * * * * * * * * * * *
Signatures contained on the next page
75
IN WITNESS WHEREOF, the parties have executed the Agreement as of the
Effective Date
Signed and acknowledged in UNIVERSAL ELECTRONICS INC.
the presence of:
____________________________ By:_____________________________
Corporate Secretary An Authorized Member of the
Compensation Committee of the
Board of Directors
XXXX X. XXXXXX
____________________________ ________________________________
Signature
76
EXHIBIT A
COPY OF NONRECOURSE SECURED PROMISSORY NOTE
AND
DEED OF TRUST WITH ASSIGNMENT OF RENTS (SHORT FORM)
PURSUANT TO SECTION 19
[Note: See Prior Executive Employment Agreement]
77
