MOBILITY ELECTRONICS INC
EMPLOYMENT AGREEMENT - CHARLES R. MOLLO
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>d07918exv10w3.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT - CHARLES R. MOLLO
<TEXT>
<PAGE>
                                                                    EXHIBIT 10.3


                              EMPLOYMENT AGREEMENT



         This Employment Agreement (this "Agreement") is made and entered into
as of June 1, 2003, by and between Mobility Electronics, Inc., a Delaware
corporation ("Employer"), and Charles R. Mollo ("Employee"). This Agreement
supersedes and replaces all other employment agreements between Employer and
Employee, including, without limitation, the Prior Agreement (as defined in
Section 12 below)

                                   WITNESSETH:

         WHEREAS, Employee is currently the Chief Executive Officer and
President of Employer, and Employee and Employer are parties to the Prior
Agreement; and

         WHEREAS, Employer desires to replace the Prior Agreement with this
Agreement;

         NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

         1. Employment. Employer hereby employs Employee and Employee hereby
accepts employment with Employer upon the terms and conditions hereinafter set
forth.

         2. Duties. Subject to the power of the Board of Directors of Employer
(the "Board") to elect and remove officers, Employee shall serve Employer as
Chief Executive Officer and President of Employer, and shall perform, faithfully
and diligently, the services and functions relating to such office or otherwise
reasonably incident to such office as may be designated from time to time by the
Board. As such, Employee shall report directly to the Board. Employee shall be
based in Scottsdale, Arizona, but shall have duties and responsibilities at
and/or with respect to each location at which Employer or any of its
subsidiaries conducts the Business (as hereinafter defined) and shall travel as
reasonably required by his duties under this Agreement. Employee shall devote
his full time, attention, energies and business efforts to his duties hereunder
and to the promotion of the business and interests of Employer and its
subsidiaries as is customary for a Chief Executive Officer and President of a
company of like-size in a comparable business; provided, however, that Employee
may participate in other business ventures as long a such participation does not
interfere with Employee's duties hereunder (including those contained in this
sentence).

         3. Term. The term of this Agreement shall commence as of the date
hereof and shall continue, unless earlier terminated pursuant to Section 7
below, until June 1, 2005 (the "Initial Term"); provided, however, that the term
of this Agreement shall thereafter be renewed on a year-to-year basis thereafter
(each, a "Renewal Term"), unless either party gives written notice to the other
party, at least ninety (90) days prior to the end of the then current term, of
such party's desire to terminate this Agreement at the end of the then current
term. The Initial Term and any Renewal Term(s) are sometimes collectively
referred to herein as the "Term".


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         4. Compensation. As compensation for his services rendered under this
Agreement, during the Term Employee shall be entitled to receive the following:

                  (a) Salary. Employee shall be paid a salary as provided in
Exhibit A (the "Salary").

                  (b) Bonus. Employee shall also be entitled to receive bonuses
as provided in Exhibit A.

                  (c) Stock Options. Employee shall also be entitled to receive
grants of stock options as may be determined by the Board from time to time.

                  (d) Benefits. Employee shall also be entitled to receive such
group benefits as Employer may provide to its other employees at comparable
salaries and responsibilities to those of Employee. In addition, Employee shall
be entitled to receive the benefits set forth on Exhibit A.

                  (e) Expenses. Employer shall reimburse Employee for the
expenses identified on Exhibit A and for all reasonable out-of-pocket travel and
other expenses incurred by Employee in rendering services required under this
Agreement upon submission of a detailed statement and reasonable documentation.

         5. Confidentiality.

                  (a) Acknowledgment of Proprietary Interest. Employee
recognizes the proprietary interest of Employer and its affiliates in any Trade
Secrets (as hereinafter defined) of Employer and its affiliates. Employee
acknowledges and agrees that any and all Trade Secrets currently known by
Employee or learned by Employee during the course of his engagement by Employer
or otherwise, whether developed by Employee alone or in conjunction with others
or otherwise, shall be and are the property of Employer and its affiliates.
Employee further acknowledges and understands that his disclosure of any Trade
Secrets may result in irreparable injury and damage to Employer and its
affiliates. As used herein, "Trade Secrets" means all confidential and
proprietary information of Employer and its affiliates, now owned or hereafter
acquired, including, without limitation, information derived from reports,
investigations, experiments, research, work in progress, drawing, designs,
plans, proposals, codes, marketing and sales programs, client lists, client
mailing lists, financial projections, cost summaries, pricing formula, and all
other concepts, ideas, materials, or information prepared or performed for or by
Employer or its affiliates and information related to the business, products or
sales of Employer or its affiliates, or any of their respective customers, other
than information which is otherwise publicly available.

                  (b) Covenant Not-to-Divulge Trade Secrets. Employee
acknowledges and agrees that Employer and its affiliates are entitled to prevent
the disclosure of Trade Secrets. As a portion of the consideration for the
employment of Employee and for the compensation being paid to Employee by
Employer, Employee agrees at all times during the Term and for a period of five
(5) years thereafter to hold in strict confidence and not to intentionally
disclose (except for such disclosures as are required by law, in which case,
Employee agrees to give Employer notice thereof prior to making any such
disclosure) or allow to be disclosed to any person, firm or


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corporation, other than to persons engaged by Employer and its affiliates to
further the business of Employer and its affiliates, and not to use except in
the pursuit of the business of Employer and its affiliates, the Trade Secrets,
without the prior written consent of Employer, including Trade Secrets developed
by Employee.

                  (c) Return of Materials at Termination. In the event of any
termination or cessation of his employment with Employer for any reason
whatsoever, Employee will promptly deliver to Employer all documents, data and
other information pertaining to Trade Secrets. Employee shall not take any
documents or other information, of whatever type and in whatever form, or any
reproduction or excerpt thereof, containing or pertaining to any Trade Secrets.

                  (d) Competition During and After Employment. Employee agrees
that during the Term and for a period of one year thereafter, neither Employee,
nor any of his affiliates, will directly or indirectly act as an investor,
principal, member, partner, officer, director, employee, consultant,
shareholder, lender, or agent of any entity which is engaged in any business of
the same nature as, or in competition with, the business conducted by Employer
and its subsidiaries during the Term (the "Business") within the World;
provided, however, that: (i) this Section 5(d) shall not prohibit Employee or
any of his affiliates from purchasing or holding an aggregate equity interest of
not more than 1% in any business in competition with the Business being
conducted by Employer and its subsidiaries; (ii) this Section 5(d) shall not
apply if a termination occurs pursuant to subpart (e) of the first paragraph of
Section 7 below; or (iii) this Section 5(d) shall not apply if a termination of
Employee's employment occurs and the conditions of Section 8(a) below have been
satisfied.

         6. Prohibition on Disparaging Remarks. Employee shall, from the date of
this Agreement forward, refrain from making disparaging, negative or other
similar remarks concerning Employer or any of its affiliates to any third party.
Similarly, Employer and its affiliates shall from the date of this Agreement
forward, refrain from making disparaging, negative or other similar remarks
concerning Employee to any third party.

         7. Termination. This Agreement and the employment relationship created
hereby shall terminate upon the occurrence of any of the following events (each,
a "Termination Event"):

                  (a) The expiration of the Term as set forth in Section 3
above;

                  (b) The death of Employee;

                  (c) The Disability (as hereinafter defined) of Employee;

                  (d) Written notice to Employee from Employer of termination
for Just Cause (as hereinafter defined);

                  (e) Written notice to Employee from Employer of termination
for any reason other than subparts (a), (b), (c) or (d) above;

                  (f) Written notice to Employer from Employee of termination
for any reason other than Constructive Termination (as hereinafter defined); or


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                  (g) Written notice to Employer from Employee of termination
for Constructive Termination.

         In the event of the termination of Employee's employment pursuant to
(a), (b), (c), (d) or (f) above, then Employee shall be entitled to only the
compensation earned by Employee as of, and payable for the period prior to, the
date of such Termination Event. In the event of the termination of Employee's
employment pursuant to (e) or (g) above, then Employee shall be entitled to
continue to receive the Salary for a period of six (6) months following the date
of termination. Notwithstanding anything to the contrary in this Agreement, the
provisions of Sections 5 and 6 above shall survive any termination, for whatever
reason, of Employee's employment under this Agreement.

         For purposes of this Section 7 the following terms of the following
meanings:

                  "Constructive Termination" shall mean: (a) a material
         reduction in Employee's duties and responsibilities without Employee's
         consent; (b) if Employee is terminated as the Chief Executive Officer
         of Employer; (c) any breach by Employer of any of the material terms
         of, or the failure to perform any material covenant contained in this
         Agreement and following written notice thereof from Employee to
         Employer, Employer does not cure such breach or failure within fifteen
         (15) days thereafter; provided, however, that Employer will not be
         entitled to cure any such breach or failure more than one time in any
         consecutive three month period; (d) a required relocation by Employee
         from the Phoenix, Arizona metroplex; or (e) a reduction in Employee's
         Salary without Employee's prior written consent.

                  "Disability" of Employee shall mean his inability, because of
         mental or physical illness or incapacity, to perform his duties under
         this Agreement for a continuous period of 90 consecutive days or for
         any 120 days out of a 360-day period. In the event of any disagreement
         between Employer and Employee regarding the existence or non-existence
         of any such disability, upon written request from either party to the
         other, Employer and Employee or his legal guardian or duly authorized
         attorney-in-fact (if he is not legally competent) shall each designate
         one Arizona licensed physician and the two physicians so designated
         shall designate a third. All three physicians so appointed shall
         personally examine Employee, and the decision of a majority of such
         panel of physicians shall determine whether such disability exists.
         Employee hereby authorizes the disclosure and release to Employer of
         such determination and all supporting medical records, and both parties
         hereby agree to be bound by such determination.

                  "Just Cause" shall mean: (a) the commission by Employee of any
         act involving moral turpitude or the commission by Employee of any act
         or the suffering by Employee of any occurrence or state of facts, which
         renders Employee incapable of performing his duties under this
         Agreement (other than Disability), or adversely affects or could be
         expected to adversely affect Employer's business reputation; (b)
         Employee's being convicted of a felony; (c)


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         any breach by Employee of any of the material terms of, or the failure
         to perform any material covenant contained in, this Agreement and
         following written notice thereof from Employer to Employee, Employee
         does not cure such breach or failure within fifteen (15) days
         thereafter; provided, however, that Employee will not be entitled to
         cure any breach or failure under this subclause (c) more than one time
         in any consecutive six month period; or (d) the violation by Employee
         of reasonable and appropriate instructions or policies established by
         Employer which have been communicated to Employee with respect to the
         operation of their businesses and affairs or Employee's failure to
         carry out the reasonable instructions of the Board and following
         written notice thereof from Employer to Employee, Employee does not
         cure any such violation or failure within fifteen (15) days thereafter;
         provided, however, that Employee will not be entitled to cure any
         violation or failure under this subclause (d) more than one time in any
         consecutive six month period.

         8. Change in Control.

                  (a) Termination Payment. Notwithstanding anything to the
contrary contained in Section 7 above, if Employee's employment with Employer is
terminated by: (i) Employer by reason of subpart (e) of the first paragraph of
Section 7 above; or (ii) Employee by reason of subpart (g) of the first
paragraph of Section 7 above, and, in either case, such termination occurred
within two (2) years following a Change In Control (as defined in subparagraph
(b) below) (a "Triggering Event"), then, in either event, Employee shall be
entitled to receive a lump-sum payment equal to: (y) Employee's then current
annual salary, plus (z) an amount equal to Employee's maximum bonus for the
applicable year (assuming for such purposes, that 100% of the targets were
achieved).

         In addition, following the occurrence of a Triggering Event: (i)
Employer shall continue to provide coverage to Employee under the health plans
that the Company has in effect following the Triggering Event to the same extent
as such coverage is provided to other executive officers of Employer (provided,
however, if Employer's health insurance plan excludes the continued
participation of Employee or any of his dependents or beneficiaries, then
Employer shall arrange to provide to Employee or such eligible dependents or
beneficiaries substantially similar benefits) until the later of: (y) Employee's
employment with another company which provides health insurance generally to its
employees; or (z) the fifth anniversary of the date of the Triggering Event; and
(ii) all stock options held by Employee shall become immediately and fully
vested and exercisable and all shares of restricted stock issued to Employee
under any benefit plan shall become immediately and fully vested and not subject
to restriction, and the term of any stock option, at the option of Employee,
shall be extended to the maximum term under the applicable stock option
agreement (with any such extended stock option that is an incentive stock option
being deemed to be automatically changed to a non-qualified stock option).

                  (b) Change In Control. A "Change in Control" means the
occurrence of one or more of the following events:


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                           (i) Any person within the meaning of Section 13(d)
                  and 14(d) of the Securities Exchange Act or 1934, as amended
                  (the "Exchange Act"), other than Employer (including its
                  subsidiaries, directors or executive officers) has become the
                  beneficial owner, within the meaning of Rule 13d-3 under the
                  Exchange Act, of 50 percent or more of the combined voting
                  power of Employer's then outstanding common stock or
                  equivalent in voting power of any class or classes of
                  Employer's outstanding securities ordinarily entitled to vote
                  in elections of directors ("voting securities");

                           (ii) Shares representing 50 percent or more of the
                  combined voting power of Employer's voting securities are
                  purchased pursuant to a tender offer or exchange offer (other
                  than an offer by Employer or its subsidiaries, directors or
                  executive officers);

                           (iii) As a result of, or in connection with, any
                  tender offer or exchange offer, merger or other business
                  combination, sale of assets or contested election, or any
                  combination of the foregoing transactions (a "Transaction"),
                  the persons who were directors of Employer before the
                  Transaction shall cease to constitute a majority of the Board
                  or of any successor to Employer;

                           (iv) Following the date hereof, Employer is merged or
                  consolidated with another corporation and as a result of such
                  merger or consolidation less than 50 percent of the
                  outstanding voting securities of the surviving or resulting
                  corporation shall then be owned in the aggregate by the former
                  stockholders of Employer, other than (1) any party to such
                  merger or consolidation, or (2) any affiliates of any such
                  party; or

                           (v) Employer transfers more than 50 percent of its
                  assets, or the last of a series of transfers results in the
                  transfer of more than 50 percent of the assets of Employer, or
                  Employer transfers a business unit and/or business division
                  responsible for more than 35% of Employer's revenue for the
                  twelve-month period preceding the month in which such transfer
                  occurred, in either case, to another entity that is not
                  wholly-owned by Employer. Any determination required above in
                  this subsection (v) shall be made by the Compensation
                  Committee of the Board, as constituted immediately prior to
                  the occurrence of such event.

         9. Remedies. Employee recognizes and acknowledges that in the event of
any default in, or breach of any of, the terms, conditions or provisions of this
Agreement (either actual or threatened) by Employee, Employer's and its
affiliates remedies at law shall be inadequate. Accordingly, Employee agrees
that in such event, Employer and its affiliates shall have the right of specific
performance and/or injunctive relief in addition to any and all other remedies
and rights at law, in equity or provided herein, and such rights and remedies
shall be cumulative.

         10. Acknowledgments. Employee acknowledges and recognizes that the
enforcement of any of the provisions set forth in Section 5 and 6 above by
Employer and its affiliates will not


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interfere with Employee's ability to pursue a proper livelihood. Employee
recognizes and agrees that the enforcement of this Agreement is necessary to
ensure the preservation and continuity of the business and good will of Employer
and its affiliates.

         11. Notices. Any notices, consents, demands, requests, approvals and
other communications to be given under this Agreement by either party to the
other shall be deemed to have been duly given if given in writing and personally
delivered or sent by facsimile transmission, courier service, overnight delivery
service or by mail, registered or certified, postage prepaid with return receipt
requested, as follows:

                  If to Employer:           Mobility Electronics, Inc.
                                            17800 N. Perimeter Drive, Suite 200
                                            Scottsdale, Arizona  85255
                                            Attn: Chief Financial Officer
                                            Fax: 480/477-3639

                  If to Employee:           Charles R. Mollo

                                            -------------------------

                                            -------------------------

Notices delivered personally or by facsimile transmission, courier service or
overnight delivery shall be deemed communicated as of actual receipt; mailed
notices shall be deemed communicated as of three days after the date of mailing.

         12. Entire Agreement. This Agreement, including the Exhibits attached
hereto, contains the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written between the parties (including, without limitation, that certain
Employment Agreement, dated as of December 1, 1999, by and between Employer and
Employee (the "Prior Agreement")). No modification or amendment of any of the
terms, conditions or provisions herein may be made otherwise than by written
agreement signed by the parties hereto.

         13. Governing Law and Venue. THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE INTERPRETED, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS CHOICE OF LAW PRINCIPLES.
ANY ACTION BROUGHT BY EITHER PARTY HERETO INVOLVING ENFORCEMENT, TERMINATION,
INTERPRETATION, OR MODIFICATION HEREOF, OR OTHERWISE RELATED TO THIS AGREEMENTS
IN ANY WAY SHALL BE BROUGHT IN A COURT LOCATED IN PHOENIX, ARIZONA, AND NEITHER
PARTY HERETO SHALL BE HEARD TO ASSERT THE DEFENSE OF INCONVENIENT FORUM IN ANY
SUCH ACTION.

         14. Parties Bound. This Agreement and the rights and obligations
hereunder shall be binding upon and inure to the benefit of Employer and
Employee, and their respective heirs, personal representatives, successors and
assigns. Employer shall have the right to assign this Agreement to any affiliate
or to its successors or assigns. The terms "successors" and "assigns"


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shall include any person, corporation, partnership or other entity that buys all
or substantially all of Employer's assets or all of its stock, or with which
Employer merges or consolidates. The rights, duties or benefits to Employee
hereunder are personal to him, and no such right, duty or benefit may be
assigned by him. The parties hereto acknowledge and agree that Employer's
affiliates are third-party beneficiaries of the covenants and agreements of
Employee set forth in Sections 5 and 6 above.

         15. Arbitration. Any dispute or claim arising under or with respect to
this Agreement shall be settled by arbitration in Phoenix, Arizona, pursuant to
the rules and guidelines of the American Arbitration Association - Commercial
Division. The decision of the arbitrators shall be final and binding upon
Employer and Employee, and any decision or award rendered by the arbitrators may
be entered as a judgment or order in any court having jurisdiction.

         16. Estate. If Employee dies prior to the payment of all sums owed, or
to be owed, to Employee pursuant to Section 4 above, then such sums, as they
become due, shall be paid to Employee's estate.

         17. Enforceability. If, for any reason, any provision contained in this
Agreement should be held invalid in part by a court of competent jurisdiction,
then it is the intent of each of the parties hereto that the balance of this
Agreement be enforced to the fullest extent permitted by applicable law.
Accordingly, should a court of competent jurisdiction determine that the scope
of any covenant is too broad to be enforced as written, it is the intent of each
of the parties that the court should reform such covenant to such narrower scope
as it determines enforceable.

         18. Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party.

         19. Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.

         20. Costs. If any action at law or in equity, or by reason of Section
14 above, is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which he or it may be
entitled.

         21. Affiliate; Subsidiary. An "affiliate" of any party hereto shall
mean any person controlling, controlled by or under common control with such
party. A "subsidiary" of Employer is any partnership, corporation, limited
liability company or other entity in which Employer owns an equity interest. For
purposes of this Agreement, the term "control", when used with respect to any
specified person or entity means the power to direct or cause the direction of
the management and policies of such person or entity, directly or indirectly,
whether through the ownership of voting securities of ten percent (10%) or more,
by contract, or otherwise, and the term "controlled" has the meaning correlative
to the foregoing.

         22. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument, but only one of which need be produced.


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         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

                                     MOBILITY ELECTRONICS, INC.


                                     By:  /s/ Joan W. Brubacher
                                         ---------------------------------------
                                     Title: Chief Financial Officer
                                            ------------------------------------
                                      /s/ Charles R. Mollo
                                     -------------------------------------------
                                     Charles R. Mollo



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                                    EXHIBIT A




A.  Base Salary:           Employee shall receive an annual Salary of $310,000,
                           payable bi-weekly in arrears, which annual Salary
                           shall be subject to increase from time to time as may
                           be determined by the Board.

B.  Bonus
    Compensation:          Employee shall be entitled to receive an annual
                           calendar year bonus (which shall have a minimum
                           targeted bonus of at least seventy percent (70%) of
                           Employee's then applicable annual salary), if earned,
                           pursuant to Employer's Executive Bonus Plan, as the
                           same may be in force and effect from time to time

C.  Additional
     Benefits:             Employee shall have four (4) weeks paid vacation for
                           each 12-month period during the Term.


                                       A-1

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