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.
3. 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).
c. 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.
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: /s/ Xx. Xxxx X. Xxxx
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Xx. Xxxx X. Xxxx
