10.4 Employment Agreement with Xx. Xxxx X. Xxxx
Employment Agreement
EMPLOYMENT AGREEMENT dated as of July 1, 1999 by and between ENOVA
HOLDINGS, INC., a Nevada corporation, PEGO SYSTEMS, INC., a California
corporation, (collectively referred to as the "Company") and Xx. Xxxx X. Xxxx
(the "Executive).
WHEREAS, the Company is in the business of environmental consulting and
the manufacturing of certain related environmental products (the "Business");
WHEREAS, the Executive is an experienced executive in the Business; and
WHEREAS, the Company and the Executive desire to establish an
employment relationship with each other.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. Employment. The Company agrees that the Company shall employ the Executive,
and the Executive accepts employment with the Company, on the terms and
conditions set forth herein.
2. Term. The term of employment (the "Employment Term") under this Agreement
shall commence as of the date hereof and continue, subject to the terms and
conditions of this Agreement, for a period of thirty-six (36) months from
such date.
3. Position. The Company shall employ the Executive for the Employment Term as
its Chairman of the Board to perform when and where necessary such duties
relating to the overall operation of the Company as may from time to time
be assigned to the Chairman by the Board of Directors. The Executive agrees
to accept such employment and to devote his best efforts in and to the
faithful performance of his duties hereunder to the exclusion of all other
employment, subject to the general direction and control of the Board of
Directors of the Company. The parties agree that Executive shall not be
required to relocate.
Elected to Board. The Company shall use its best efforts to cause the
Executive to be elected to the Board of Directors of the Company at the
next Annual Meeting of Shareholders of the Company.
4. Compensation.
a. In consideration of the services to be rendered by the Executive for
his duties pursuant to Section 3 of this Agreement, including, without
limitation, any services rendered by the Executive as a director,
officer or employee of the Company or of any of its subsidiaries,
divisions or affiliated companies, and in full payment for the due and
faithful performance of said services, the Company shall pay the
Executive and the Executive agrees to accept a salary at the rate of
$120,000, per year (the "Base Compensation"). In case the executive
does not take compensation in cash, the Company will issue restricted
common shares for compensation earned, calculated at the closing price
on January 1, discounted by 50%, for the year compensation is earned.
b. Payments to the Executive of his Base Compensation hereunder shall be
made periodically on the dates established by the Company for payment
of other executive employees, but not less frequently than once a
month. All payments under this agreement shall be subject to all
deductions and withholdings as required by law.
c. The Executive shall be entitled to reimbursement for reasonable
expenses incurred by him in connection with his employment hereunder,
upon the presentation of proper vouchers therefore in accordance with
the usual procedures of the Company. Such expenses shall not exceed
$1,000 per month without the authorization of the Board.
d. The Executive shall be entitled to participate in and receive medical
and dental benefits for the Executive and his dependent at the
Company's expense, in accordance with the provisions of the Company's
benefits plan or program currently in effect. The Company will provide
the Executive (i) a life insurance policy in the amount of $1,000,000;
(ii) three weeks vacation benefit annually; (iii) a long-term and
short-term disability coverage in accordance with the provisions of
any of the Company's employee benefit plans or programs now or
hereafter in effect, to the same extent that employees of the Company
in positions similar to that of the Executive have the right to
participate in such plans and programs.
e. The Executive shall be entitled during the Employment Term to an
automobile allowance equal to $650 per month.
The Executive shall be entitled during the Employment Term to receive
membership dues for business and professional associations. Such
expenses shall not exceed $2,500 annually without the authorization of
the Board.
5. Termination. The employment of the Executive may be terminated by the
Company upon the occurrence of any of the following events:
a. Subject to Section 7(a) below, the Company may terminate such
employment at any time without good cause upon written notice to the
Executive;
b. Such employment shall terminate automatically on the death of the
Executive;
c. The Company may terminate Executive's employment at any time for any
reason or no reason upon giving a written notice to the Executive. In
such event, the Company shall pay to Executive an amount equal to six
months Base Compensation. For purposes of this Agreement "good cause"
shall include the following circumstances:
i. If there is a repeated and demonstrable failure on the part of
the Executive to perform material duties of Executive's
management position in a competent manner and where the Executive
fails to substantially remedy the failure within a reasonable
period of time after receiving written notice of such failure
from the Company (three written notices shall be sufficient to
establish "repeated and demonstrable" failure);
ii. If the Executive is convicted of a criminal offense;
iii. If the Executive or any member of his or his spouse's family
makes any personal profit at the expense of the Company without
prior written consent of the Company.
iv. If the Executive fails to fully observe the fiduciary duties
appropriate to his position; and
v. If the Executive disobeys reasonable instructions given in the
course of employment by the Board of Directors of the Company
that are not inconsistent with the Executive's management
position and not remedied by the Executive within a reasonable
period of time, after receiving written notice of such
disobedience. A "reasonable period of time" shall be determined
in good faith by the Board (with the Executive not voting, if
Executive is then a member of the Board), but in no event shall
such period be more than thirty (30) days.
d. The Executive may terminate his employment hereunder upon thirty days
written notice to the Company.
6. Payments on Termination; Change of Control. Upon termination of the
Executive's employment for any reason, the Company shall pay to the
Executive, or if the termination is as a result of the death of the
Executive, to his personal representative, any accrued but previously
unpaid Basic Compensation prorated to the effective date of such
termination.
In the event the Company terminates the Executive's employment without good
cause, the Company shall make severance payments equal to and in the same
manner as the Executive's Basic Compensation in effect at the time of such
termination for the remaining term of this Employment Agreement. To the
extent Executive receives compensation from any form of employment after
such termination for any part of the period during which termination
payments are being made to the Executive by the Company, Executive shall
immediately so inform the Company, and the termination payment payable
pursuant to this subparagraph will be reduced at the rate of $0.75 for each
dollar of compensation so received by the Executive.
In the event the Company terminates the Executive's employment with good
cause in the first year, the severance amount would be equal to Executive's
base salary for 12 months; if Executive's employment is terminated in the
second year, the severance amount will be equal to his base salary for 18
months; and if Executive's employment has been in effect for longer than
two years, the severance amount will equal 24 months of base pay at the
time of termination. In addition, the Company shall provide and Executive
shall receive (i) his base salary accrued through the date of termination;
(ii) all accrued vacation pay and accrued bonuses, if any, to date of
termination; (iii) any bonus which would have been paid but for the
termination, prorated through the date of termination, based upon Company's
performance and in accordance with the terms, provisions and conditions of
any Company incentive bonus plan in which Executive may be designated a
participant; (iv) for a period of 12 months after the date of termination,
at the Company's expense, coverage to Executive under the Company's life
insurance and disability insurance policies; coverage to Executive and his
dependents medical and dental insurance under the Company's health plan; if
any of the Company's medical and dental, life insurance, or disability
insurance plans are not continued or if Executive is not eligible for
coverage hereunder because of the termination of his employment, the
Company shall pay the amount required for Executive to obtain equivalent
coverage; (v) reasonable outplacement services; (vi) office, secretarial
support, and access to equipment and supplies for a period of six (6)
months after termination. Also upon termination of employment by the
Company without good cause, all equity options, restricted equity grants
and similar rights held by the Executive with respect to securities of the
Company shall automatically become vested and shall become immediately
exercisable.
7. Covenant Not to Compete.
a. The Executive agrees that during the Employment Term, he will not,
directly or indirectly, have any ownership interest of five percent or
more in a corporation, firm, trust, association or other entity that
is in competition with the Company.
The Executive shall not, during the Employment Term and at any time
within one year after the termination his employment with Company by
the Executive or by the Company with cause, in any manner, engage or
become interested in (as owner, stockholder, partner, director,
officer, employee, consultant or otherwise) any business which is
competitive with the business conducted by the Company or any of its
affiliates at the time of the termination of his employment hereunder.
This Section 8 shall not apply if the Company terminates Executive's
employment without cause. The Executive's ownership of less than five
percent of the stock of a publicly owned company, which competes, with
the Company shall not be considered a violation of the provisions of
this Section 8(b).
b. Without limiting the rights of the Company hereunder, the parties
agree that in the event the Executive violates (in other than a
willful violation) any of the provisions of the Section 8, the Company
may give the Executive 30 days notice of such violation and
opportunity to cure it; in the event the violation is not cured within
such 30-day period, such violation will be grounds for termination of
this Agreement and the Executive's employment hereunder for cause, in
addition to any other remedies available to the Company. It is
expressly understood that the limitations contained in this Section 8
shall be in addition to, and not in substitution of, any provisions of
a separate non-competition agreement entered into between the
Executive and the Company. To the extent any provision herein is not
consistent with such non-competition agreement, the terms and
provisions of the non-competition agreement shall apply.
8. Inventions.
a. For purposes of the Agreement, "Invention" shall mean any and all
machines, apparatuses, compositions of matter, methods, know-how,
processes, designs, configurations, uses, ideas, concepts, or writings
of any kind, discovered, conceived, developed, made, or produced, or
any improvements to them, and shall include, but not be limited to the
definition of an invention contained in the United Sates Patent Laws.
b. The Executive understands and agrees that all Inventions, or
trademarks or copyrights relating thereto, which reasonably relate to
the business of the Company and which are conceived or made by him
during his employment by the Company either alone or with others, are
the sole and exclusive property of the Company. The Executive
understands and agrees that all Inventions, trademarks, or copyrights
described above in this Section 9(a) are the sole and exclusive
property of the Company whether or not they are conceived or made
during regular working hours.
c. The Executive agrees that he will disclose promptly and in writing to
the Company all Inventions within the scope of this Agreement, whether
he considers them to be patentable or not, which he, either alone or
with others, conceives or makes (whether or not during regular working
hours). The Executive hereby assigns and agrees to assign all his
right, title, and interest in and to those Inventions that relate to
the business of the Company and agrees not to disclose any of these to
others without the written consent of the Company, except as required
by the conditions of his employment.
d. The Executive agrees that he will at any time during his employment
hereunder, or after this Employment Agreement terminates, on the
request of the Company, (i) execute specific assignments in favor of
the Company, or its nominee, of any of the Inventions covered by this
Agreement, (ii) execute all papers and perform all lawful acts the
Company considers necessary or advisable for the preparation,
application procurement, maintenance, enforcement, and defense of
patent applications and patents of the United States and foreign
countries for these Inventions, for the perfection or enforcement of
any trademarks or copyrights relating to such Inventions, and for the
transfer of any interest the Executive may have, and (iii) execute any
and all papers and lawful documents required or necessary to vest sole
right, title, and interest in the Company or its nominee of the above
Inventions, patent applications, patents, or any trademarks or
copyrights relating thereto. The Executive will, at the Company's
expense, execute all documents (including those referred to above) and
do all other acts necessary to assist in the preservation of all the
Company's interests arising under this Agreement.
9. Secrecy.
a. For purposes of this Agreement, "proprietary information" shall mean
any information relating to the business of the Company that has not
previously been publicly released by duly authorized representatives
of the Company and shall include (but shall not be limited to) Company
information encompassed in all computer code, software, notes, written
concepts, drawings, designs, plans, proposals, marketing and sales
plans, financial information, costs, pricing information, customer
information, and all methods, concepts, or ideas in or reasonably
related to the business of the Company.
b. The Executive agrees to regard and preserve as confidential all
proprietary information pertaining to the Company's business that has
been or may be obtained by the Executive prior to or during his
employment by the Company (whether before, during or after the
Employment Term hereof), whether he has such information in his memory
or in writing or other physical form. The Executive will not use for
his benefit or purposes, nor disclose to others, either during the
Employment Term or thereafter, except as required by the conditions of
his employment hereunder, any proprietary information connected with
the business or developments of the Company.
c. The Executive agrees not to remove from the premises of the Company,
except as an employee of the Company in pursuit of the business of the
Company or any of its subsidiaries, or except as specifically
permitted in writing by the Company, any document or object containing
or reflecting any proprietary information of the Company. The
Executive recognizes that all such documents and objects, whether
developed by him or by someone else, are the exclusive property of the
Company. A breach of this provision shall be considered good cause for
termination. Upon termination of his employment hereunder, for any
reason, the Executive shall forthwith deliver up to the Company all
proprietary information, including, without limitation, all lists of
customers, correspondence, accounts, records and any other documents
or property made or held by him or under his control in relation to
the business or affairs of the Company or its affiliates, and no copy
of any such proprietary information shall be retained by him.
10. Injunctive Relief. The Executive acknowledges that in the event of a breach
or threatened breach by the Executive of any of the provisions of Sections
8, 9 or 10, monetary damages will not adequately compensate the Company and
the Company shall be entitled to an injunction restraining the Executive
from the commission of such breach, in addition to any other remedies or
rights the Company may have.
11. Notices. Any notice required or permitted to be given hereunder shall be in
writing and shall be delivered by prepaid registered or certified mail,
return receipt requested. Such duly mailed notice shall be deemed given
when dispatched. The address for mailed notices shall be:
a. For the Executive:
Xx. Xxxx X. Xxxx
0000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000
b. For the Company:
Enova Holdings, Inc. and/or Pego Systems, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: The Hartcourt Companies, Inc.
0000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxx
Facsimile: (000) 000-0000
Any party may notify the other parties in writing of a change of
address by serving notice in the manner provided in this Section.
12. No Conflicting Agreements. Except as set forth herein, the Executive
represents and warrants that neither the execution and delivery of this
Agreement nor the performance of his duties hereunder violates or will
violate the provisions of any agreement to which he is a party or by which
he is bound.
13. Governing Law; Entire Agreement. This Agreement shall be construed
according to the laws of the State of California, and constitutes the
entire understanding between the parties, superseding and replacing all
prior understandings and agreements relating to employment between the
Company and the Executive and the parties shall cause such other
agreements, if any, to be terminated. This Agreement cannot be changed or
terminated except by an instrument in writing signed by each of the parties
hereto.
14. Amendments. If any provision of this Agreement or the application thereof
shall for any reason be invalid or unenforceable, such provision shall be
limited only to the extent necessary in the circumstances to make such
provision valid and enforceable and its partial or total invalidity or
unenforceability shall in any event not affect the remaining provisions of
this Agreement which shall continue in full force and effect.
IN WITNESS WHEREOF, the undersigned have duly executed and
delivered this Agreement as of the date first above written.
ENOVA HOLDINGS, INC. / PEGO SYSTEMS, INC.
By________________________________
President & CEO
EXECUTIVE:
By________________________________
Xx. Xxxx X. Xxxx
