EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into effective as of the 1st day of July, 1998,
between VALUESTAR CORPORATION, a Colorado publicly traded corporation and/or its
operating subsidiary (the "Company"), and Xxxxx Xxxxx ("Employee").
Employee, in consideration of the covenants and agreements hereinafter
contained, agrees as follows with respect to the employment of the Company of
Employee and Employee's future business activities.
1. Employment: Term of Employment. The Company hereby employs Employee and
Employee hereby accepts such employment upon the terms and conditions
hereinafter set forth. Subject to the provisions for termination as hereinafter
provided, Employee's term of employment by the Company shall be from the date of
this Agreement until June 30, 2001, and said employment shall continue after
such date until either party shall deliver written notice to the other party
hereto to the effect that the employment hereunder shall terminate thirty (30)
days from the giving of such notice. This Agreement will supersede all prior
written and oral agreements entered into by and between Company and Employee
concerning employment other than any and all outstanding stock option, stock
warrant and stock agreements. These include but are not limited to two
agreements dated May 10, 1995 and other agreements dated August 2, 1995,
December 9, 1997 and March 4, 1998.
2. Services to be Rendered by Employee. Employee shall be subject to the
direction of the Board of Directors, or a duly authorized committee thereof and
his duties shall be those generally vested in the office of President and Chief
Executive Officer for the Company and he shall have such other powers and duties
as may be reasonably prescribed by the Board of Directors, or a duly authorized
committee thereof, and shall perform such duties as from time to time may be
decided upon by the Board of Directors, or a duly authorized committee thereof,
of the Company, including but not limited to, speaking for and promoting the
sale of the Company's services and products as public spokesman both in print,
television ads and other media.
The Company shall have the non-exclusive right to use Employee's name, picture
or other likeness and biographical material concerning him, in connection with
advertising, promotion and publicizing the Company and its activities, so long
as this Agreement is in effect (and for a reasonable period, not to exceed one
year, thereafter to utilize expendable materials and supplies). The Company
shall have the right to use non-expendable media thereafter at its discretion
(e.g. historical media, media productions for consumers and businesses, etc.).
Such use shall be fair and not misleading or unflattering and when practical
indicate Employee is not affiliated with the Company. Employee shall be allowed
to review and approve all such uses prior to initial use or publication.
The Employee agrees that he will serve the Company faithfully, diligently,
competently and to the best of his abilities, devoting all his business time,
efforts, energy, skills and attention to the activities of the Company and the
promotion of its interests. Employee shall not serve as an officer or director
or similar capacity with any other entity except with the prior consent of the
Company.
3. Compensation.
(a) For the services to be rendered by Employee during his employment by the
Company, the Company shall pay Employee a Base Salary of One Hundred Twenty
Thousand Dollars ($120,000) per annum during the term of this Agreement,
prorated for any partial period and paid in conformity with the Company's normal
payroll period. Employee's salary shall be reviewed by the Board of Directors,
or a duly authorized committee thereof, from time to time in its discretion, and
Employee will receive such salary increases, if any, as the Board of Directors,
or a duly authorized committee thereof, in their sole discretion determines.
(b) Employee shall be shall be eligible for bonuses, at such time and in such
amounts as shall be determined at the discretion of the Board of Directors, or a
duly authorized committee thereof, based on its assessment of Employee's
performance of his duties and on the financial performance of the Company.
(c) The Employee's place of employment shall be considered Alameda County,
California (or other mutually agreed upon location).
(d) Employee shall be entitled to participate in and receive benefits under the
Company's executive benefit plans as in effect from time to time, including,
medical insurance, sick leave, and vacation time, subject to and on a basis
consistent with the
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terms, conditions and overall administration of such plans and Company policies.
Should this Agreement be terminated for any reason, Employee shall have the
option, to the extent allowable by the policies, to continue any insurance in
force by taking over the payment of the premiums for Employee and his family.
(e) The Company shall pay or reimburse Employee for all expenses normally
reimbursed by the Company and reasonably incurred by him in furtherance of his
duties hereunder and authorized by the Company, including without limitation,
expenses for entertainment, traveling, meals, hotel accommodations,
out-of-pocket home office expenses and the like upon submission by him of
vouchers or an itemized list thereof as the Company; may from time to time adopt
and authorize, and as may be required in order to permit such payments as proper
deductions to the Company under the Internal Revenue Code of 1986 and the rules
and regulations adopted pursuant thereto now or hereafter in effect.
(f) All amounts payable or which become payable under any provision of this
Agreement will be subject to any deductions authorized in writing by Employee
and any deductions and withholdings required by law.
(g) The Company shall pay costs of and use of an automobile primarily for
business use on terms as approved by the Board of Directors, or a duly
authorized committee thereof, from time to time. Employee shall pay reasonable
amounts for personal use as required under the Internal Revenue Code of 1986 and
the rules and regulations adopted pursuant thereto now or hereafter in effect.
4. Indemnification.
(a) If, after the date of the commencement of the Employment Period, the
Employee is made a party or is threatened to be made a party to any action, suit
or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he is or was an officer of the Company
or is or was serving at the request of the Company as a director, officer,
member, employee or agent of another corporation or partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether or not the basis of such Proceeding is an alleged act or failure
to act in an official capacity as a director, officer, member, employee or
agent, he shall be indemnified and held harmless by the Company to the fullest
extent authorized by Colorado law, as the same exists or may hereafter be
amended, against all expense, liability and loss (including, without limitation,
attorneys' fees, judgments, fines and amounts paid or to be paid in settlement)
reasonably incurred or suffered by the Employee in connection therewith,
including, without limitation, payment of expenses incurred in defending a
Proceeding prior to the final disposition of such Proceeding (subject to receipt
of an undertaking by the Employee to repay such amount if it shall ultimately be
determined that the Employee is not entitled to be indemnified by the Company
under Colorado law), and such indemnification shall continue as to the Employee
even if he has ceased to be an officer, member, employee or agent of the Company
or other enterprise and shall inure to the benefit of his heirs, executors and
administrators.
(b) The right of indemnification and the payment of expenses incurred in
defending a Proceeding in advance of its final disposition conferred in this
Section 4 shall not be exclusive of any other right that the Employee may have
or hereafter may acquire under any statute, provision of the Certificate of
Incorporation or Bylaws of the Company, agreement, vote of shareholders or
disinterested directors or otherwise.
5. Termination of Employment.
(a) The Company shall have the right at its option to terminate the employment
of Employee hereunder by giving written notice thereof to the Employee in the
event of any of the following:
(1) The Company may terminate this Agreement at any time with good
cause, as determined by the Board of Directors of the Company, or a
duly authorized committee thereof, acting in good faith and upon
reasonable grounds, whereupon all compensation to Employee shall cease
as of the effective date of termination. As used in this paragraph, the
term "good cause" shall mean (i) dishonesty by Employee detrimental to
the best interests of the Company, (ii) continuing inattention to or
neglect of the duties to be performed by Employee, (iii) willful
disloyalty of Employee to Company, (iv) engaging in any substantiated
act involving moral turpitude (v) conviction by a court of competent
jurisdiction of Employee in any fraud or felony, (vi) engaging in any
act which, in each case, subjects, or if generally known would subject,
the Company to gross public ridicule or gross embarrassment, (vii)
willful failure or refusal to perform such duties as may be relegated
to Employee commensurate with Employee's position, (viii) the imparting
of any material confidential information by Employee in violation of
this Agreement, or (ix) any breach of this Agreement by Employee.
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(2) If the Company gives Employee thirty days advance written notice of
termination of employment.
(3) If the Employee dies during the term of employment, the Employee's
employment hereunder and Employee's compensation and other rights under
this Agreement and as an employee of the Company (except as to
compensation and rights accrued prior thereto and except as expressly
provided in the next succeeding sentence) shall terminate thirty (30)
days following the date of death. In such event, the Company shall pay
to the Employee's designated executor or administrator of the
Employee's estate, all compensations and benefits accrued which would
otherwise be payable to the Employee through the thirtieth (30) day
following the date of death. Indemnification rights endure as provided
for in Section 4.
(4) If the Employee is unable for any reason to carry out or to perform
the duties required of him hereunder and does not resume his duties
prior to the termination date specified in the Company's written notice
of termination; provided, however, if the Employee shall fail to carry
out or to perform the duties required of him because of mental or
physical disability for a six consecutive month period during the term
hereof and following such period he is unable to perform his duties
hereunder because of mental or physical disability, as determined by
the Board of Directors of the Company, or a duly authorized committee
thereof, acting in good faith and upon reasonable grounds, he shall be
entitled to receive his then Base Salary he would otherwise be entitled
to pursuant to Paragraph 3 hereof for a period of not longer than three
(3) months after the termination of his employment pursuant to this
Paragraph 5(a) (4). If Employee shall receive any amount during the
time of any incapacity by reason of any disability insurance or any
other insurance plan, senior executive loss or income policy,
disability policy or any other plan or scheme of a like nature funded
by the Company, any payments of Base Salary or benefits of this section
may be reduced by a like amount.
(5) If this Agreement is terminated by the Company pursuant to
Paragraph 5(a)(2) hereof, then Employee shall be entitled to severance
payments equal to twelve (12) months of his then monthly Base Salary
plus a bonus payment (prorated based on progress to bonus goals, i.e.
if 30% of a revenue goal is achieved a 30% payout of the bonus is made
for that goal) within thirty (30) days after such effective termination
of Employee's employment by the Company.
(b) The Employee shall have the right at his sole option to terminate employment
hereunder under the following conditions:
(1) at any time upon thirty (30) days written notice.
(2) upon written notice by Employee to the Company within thirty (30)
days of and indicating that a change in control of the Company
("Corporate Transaction") has occurred and therefore Employee elects to
terminate as provided herein. A Corporate Transaction or other
qualifying event shall be deemed to have occurred if (i) any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company's
then outstanding securities; or (ii) the Company sells, transfers or
otherwise disposes of all or substantially all of the assets of the
Company; or (iii) a merger or acquisition in which the Company is not
the surviving entity (except for a merger into a wholly-owned
subsidiary, and except for a transaction the sole purpose of which is
to change domicile).
(3) if termination by the Employee is pursuant to 5 (b) (1) then no
severance or termination payments shall be payable. If termination is
noticed pursuant to 5 (b) (2) hereof then Employee shall be entitled to
a payment equal to the greater of the remaining months of this
Agreement multiplied by the then monthly Base Salary or twelve (12)
multiplied by the then monthly Base Salary, plus any bonus based on
prorata performance as described in Section 5 (b) (2), all payable in
one lump sum within sixty (60) days. In addition, the Employee shall be
entitled to recover legal fees and costs incurred by Employee should
the Company not make timely payment prescribed by this section and
should the Employee prevail in any action filed thereabouts.
(c) Upon termination of this Agreement, Employee shall immediately resign all
offices held with the Company and all Affiliates (any entity with a 30% or more
equity ownership by or of the Company) thereof, and, except as set forth in this
Section 5, Employee shall not be entitled to receive any termination or
severance payment or compensation for loss of office or otherwise. If Employee
fails to immediately resign as herein provided, then Employee irrevocably
appoints the Secretary of the Company in his name and on his behalf to sign any
resignation confirmation or do anything necessary or requisite to give effect to
such resignation(s). On the effective date of termination of this Agreement,
Employee will deliver to the Company, in
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a reasonable state of repair, all property and equipment of the Company, both
real and personal owned, leased or bailed to Employee and used by or in the
possession of Employee.
6. Confidential Information and Trade Secrets. Employee covenants and agrees
with the Company that Employee will not, during the term of this Agreement and
thereafter directly or indirectly use, communicate, disclose or disseminate to
anyone (except to the extent reasonably necessary for Employee to perform
Employee's duties hereunder, except as required by law or except if generally
available to the public otherwise than through use, communication, disclosure or
dissemination by Employee) any Confidential Information (as hereinafter defined)
concerning the businesses or affairs of the Company or of any of its affiliates
or subsidiaries which Employee may have acquired in the course of or as incident
to Employee's employment or prior dealings with the Company or with any of its
affiliates or subsidiaries.
"Confidential Information" shall mean (a) all knowledge, information and
material concerning the Company or its business or the business of any of its
affiliates or subsidiaries that shall become known to Employee as a consequence
of Employee's relationship with the Company, (b) all information that has been
disclosed to the Company by any third party under an agreement or circumstances
requiring such information to be kept confidential, and (c) all knowledge,
information or material concerning Inventions that are, under this Agreement,
owned by Company or assigned by Employee to Company; provided, that Confidential
Information shall not include knowledge, information or material that is or
becomes generally known or available to others in businesses engaged in by the
Company or to the public (other than through unauthorized disclosure).
Confidential Information shall include without limitation (a) information of a
technical nature, such as information regarding past, present and future
research, financial data, product information, marketing plans, computer
programs (whether in source or object code form or other form and whether
contained on program listings, magnetic tape, magnetic disks, CD ROMs or other
media), logic, flow charts, specifications, documentation and ideas relating to
the activities of Company, (b) information of a business nature, such as
information regarding past, present and future client or consumer development,
strategies, procurement specifications, cost and financial data, contracts,
quotations and names of actual and prospective clients, consumers or customers,
and (c) all documents, drawings, reports, client and consumer lists, and other
physical embodiments of all such information.
"Inventions" shall mean each of the following, but only to the extent they
relate to the business of commerce conducted by the Company or its Affiliates or
are made by Employee with the equipment, supplies, facilities or trade secret
information of the Company or which result from any work performed by the
Employee for the Company: all inventions, discoveries, developments, ideas,
works, improvements, enhancements, works of authorship, products and computer
software, whether or not patentable, and anything else that is subject to or
potentially subject to the patent, copyright or trade secret laws of any
jurisdiction.
The Employee agrees that as to any Inventions made by him during the term of his
employment, solely or jointly with others, shall belong to the Company and the
Employee promises to assign such Inventions to the Company. The Employee also
agrees that the Company shall have the right to keep such Inventions as trade
secrets, if the Company chooses. The Employee agrees to assign to the Company
the Employee's rights in any other Inventions where the Company is required to
grant those rights to the United States government or any agency thereof. In
order to permit the Company to claim rights to which it may be entitled, the
Employee agrees to disclose to the Company in confidence all Inventions which
the Employee makes arising out of the Employee's employment and all patent
applications filed by the Employee within one year after the termination of his
employment. The Employee shall assist the Company in obtaining patents on all
Inventions, designs, improvements, and discoveries patentable by the Company in
the United States and in all foreign countries, and shall execute all documents
and do all things necessary to obtain letters patent, to vest the Company with
full and extensive title thereto, and to protect the same against infringement
by others.
7. Non-Competition Covenant. Employee acknowledges that Employee's services and
responsibilities are of particular significance to the Company and that
Employee's position with the Company has given and will give Employee close
knowledge of its policies and trade secrets. Since the Company is in a creative
and competitive information business, Employee's continued and exclusive service
to Company under this Agreement is of a high degree of importance.
Employee covenants and agrees with the Company that Employee will not, during
the term of this Agreement and for a period of two years after the termination
of Employee's employment hereunder in any manner, directly or indirectly, (i)
induce or attempt to influence any present or future officer, employee, lessor,
lessee, licensor or licensee of Company or its subsidiaries or its affiliates to
leave its respective employ; further, during the term described, Employee will
not be involved in or participate in a competitive company that solicits or
diverts or services any of the customers, consumers or clients that the Company
or its subsidiaries or its affiliates has or had in the one (1) year previous to
the date of termination of this Agreement,
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(ii) engage, in the state of California where the Company currently operates or
the other 49 states in America that the Company is planning to do business, in
any businesses that during the term of this Agreement is engaged in by the
Company or its subsidiaries or affiliates, and (iii) except for ownership of no
more than 1% of the capital stock, be a stockholder of any corporation, or
directly or indirectly own, manage, operate, conduct, control or participate in
the ownership, management, operation, conduct, control of, accept employment
with, or be connected in any other manner with, any business which engages in
any direct competitive activity including, without limitation, any business
which engages in rating local service and professional businesses in any
geographic region indicated in this paragraph.
8. Right to Injunctive Relief. Employee acknowledges that the remedy at law for
any breach or threatened breach by Employee of the covenants contained in
paragraphs 6 and 7 would be wholly inadequate, and therefore the Company or its
subsidiaries or its affiliates shall be entitled to preliminary and permanent
injunctive relief and specific performance thereof. Paragraphs 6 and 7
constitute independent and separable covenants that shall be enforceable
notwithstanding rights or remedies that the Company or its subsidiaries or it
affiliates may have under any other provision of this Agreement, or otherwise.
If any or all of the foregoing provisions of paragraphs 6 and 7 are held to be
unenforceable for any reason whatsoever, it shall not in any way invalidate or
affect the remainder or this Agreement which shall remain in full force and
effect. If the period of time or geographical areas specified in paragraphs 6
and 7 are determined to be unreasonable in any judicial proceeding, the period
of time or areas of restriction shall be reduced so that this Agreement may be
enforced in such areas and during such period of time as shall be determined to
be reasonable.
9. Employee Acknowledgment. Employee has carefully read and considered the
provisions hereof, and having done so, agrees that restrictions set forth in
paragraphs 6, 7, and 8 (including, but not limited to, the time periods of
restrictions) are fair and reasonable and are reasonably required for the
protection of the interests of Company.
10. Severability. Each paragraph and subparagraph of this Agreement shall be
construed and considered separate and severable from the validity and
enforceability of any other provision contained in this Agreement.
11. Assignment. The rights of the Company (but not its obligations) under this
Agreement may, without the consent of the Employee, be assigned by the Company
to any parent, subsidiary, or successor of the Company; provided that such
parent, subsidiary or successor acknowledges in writing that it is also bound by
the terms and obligations of this Agreement. Except as provided in the preceding
sentence, the Company may not assign all or any of its rights, duties or
obligations hereunder without prior written consent of Employee. The Employee
may not assign all or any of his rights, duties or obligations hereunder without
the prior written consent of the Company.
12. Notices. All notices, requests, demands and other communications shall be in
writing and shall be defined to have been duly given if delivered or if mailed
by registered mail, postage prepaid:
(a) If to Employee, addressed to him at the following address as may be changed
in writing from time to time:
Xxxxx Xxxxx
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
(b) If to the Company, addressed to:
ValueStar Corporation
0000X Xxxxxxx Xxxx.
Xxxxxxx, Xxxxxxxxxx 00000
or to such other address as any party hereto may request by notice given as
aforesaid to the other parties hereto.
13. Title and Headings. Titles and headings to paragraphs hereof are for
purposes of references only and shall in no way limit, define or otherwise
affect the provisions hereof.
14. Governing Law. This Agreement is being executed and delivered and is
intended to be performed in the State of California, and shall be governed by
and construed in accordance with the laws of the State of California.
15. Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall not be necessary
in making proof of this Agreement to produce or account for more than one
original counterpart.
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16. Cumulative Rights. Each and all of the various rights, powers and remedies
of the Company and Employee in this Agreement shall be considered as cumulative,
with and in addition to any other rights, powers or remedies of the Company or
the Employee and no one of them as exclusive of the others or as exclusive of
any other rights, powers and remedies allowed by law. The exercise or partial
exercise of any right, power or remedy shall neither constitute the election
thereof nor the waiver of any other right, power or remedy. Sections 4, 6, 7 and
8 hereof shall continue in full force and effect notwithstanding the Employee's
termination of employment and the termination of this Agreement.
17. Remedies. The Employee and the Company both acknowledge that each may have
no adequate remedy at law if either violates any of the terms contained in
Sections 6, 7 and 8. In such event, either party shall have the right, in
addition to any other rights it may have, to obtain relief to restrain any
breach hereof or otherwise to specifically enforce any of the provisions hereof.
18. Waiver of Breach. The waiver by one party to this Agreement of a breach of
any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the said party .
19. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto and may be modified or amended only by a written instrument
executed by parties hereto. Effective on the date hereof, any prior employment
agreements between the Company and the Employee shall terminate.
20. Attorney's Fees. In the event that either party must institute legal action
to compel the other to comply with the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees and costs.
21. Good Faith. Each of the parties hereto agrees that he or it shall act in
good faith in all actions taken under this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
/s/XXXXX X. XXXXXX July 1, 1998
ValueStar Corporation
Xxxxx X. Xxxxxx, Treasurer and Director
/s/XXXXX XXXXX July 1, 1998
Xxxxx Xxxxx, Employee
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