EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 21st day of May 1991, by and between
Eco-Soil Systems, Inc., a Nebraska corporation (the "Corporation"), and Xxxxxxx
X. Xxxxx, of San Diego County, California, (hereinafter called "Employee"),
W I T N E S S E T H:
WHEREAS, the Corporation desires to employ the Employee as its Chairman
of the Board and Chief Executive Officer in accordance with the following terms,
conditions and provisions; and
WHEREAS, the Employee desires to perform such services for the
Corporation, all in accordance with the following terms, conditions and
provisions;
WHEREAS, Employee has purchased 183,199 shares of the Corporation's
stock;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, it is agreed as follows:
Section 1. Employment and Duties. The Corporation hereby employs
Employee, and Employee hereby accepts employment as the Corporation's Chairman
of the Board and Chief Executive Officer ("CEO") to perform the duties of
managing the Corporation, subject always to the control and direction of the
Board of Directors of the Corporation (the "Board of Directors"). Employee shall
devote his full time and best efforts to the performance of services hereunder
and to the advancement of the Corporation's business and affairs.
1.1 Employee will serve as Chairman of the Company's Board and
Directors and as such will have one vote on all issues put before the Board.
1.2 Employee shall also perform such other duties, including
administrative duties, in connection with the Corporation's business as shall
from time to time be assigned to him by the Board of Directors.
1.3 Employee, as CEO, shall hire, terminate and set the terms of
employment for all personnel of the Corporation, except other Officers.
1.4 Employee, as CEO, shall select marketing strategy, including, but
not limited to, establishing and expanding marketing and sales of the
Corporation's products and services and setting prices and discounts to
customers.
1.5 Employee, as CEO, shall, subject to review and approval by the
Board of Directors, supervise and make recommendations to the Board of Directors
with respect to the financial affairs of the Corporation, including, but not
limited to, designating the bank or depository of the Corporation's funds and
the borrowing of money. An annual budget and business plan, including a cash
flow and capital expenditure plan, will be prepared under Employee's supervision
and submitted to the Board of Directors prior to the beginning of each fiscal
year for the Board's review and approval.
1.6 Employee, as CEO, shall establish and maintain operating
procedures, including, but not limited to, setting policies and procedures for
the development of the Corporation's products and services, establishing working
hours and establishing policy and procedures for other personnel matters and
establishing policy and procedures for the sale of the Corporation's products.
Section 2. Compensation. Employee shall receive as compensation for the
full and faithful performance of his obligations hereunder, including the
performance of services as an officer, director or member of any committee of
the Board of Directors, a salary, the amount of which shall be determined from
time to time by the Board of Directors, but the Employee's annual salary shall
not be less than $75,000 payable in equal installments twice (2) per month. In
addition to such salary, the Corporation, in the sole discretion of its Board of
Directors, may pay to the Employee bonus compensation. In addition, Employee
will be paid an automobile allowance of $500/month.
Section 3. Term. This Agreement shall commence and become effective on
March 1, 1991, and, unless sooner terminated as provided in Section 12, shall
end on December 31, 1998. The first year of employment under the term hereof
shall end on February 28, 1992, and each subsequent year of employment under the
term hereof shall commence on March 1 and end on the following February 28
within said term.
Employee agrees that until the Company receives the proceeds from the
sale of additional shares of common stock or other securities, that payments of
his salary and other benefits will be deferred. Once the Company elects to break
escrow and receives the proceeds of the "new investment", employee will be paid
the deferred compensation that is due and will begin to be paid on a timely,
normal basis his monthly salary. However, in no event will more than three (3)
months of the employee's salary be deferred and paid after the offering is
completed.
Section 4. Stock Option. That pursuant to a certain Consulting
Agreement dated the 13th of May, 1991, and pursuant to the Nonqualified Stock
Option Agreement by and between the Company and Employee attached hereto and
incorporated herein the Employee shall be granted a stock option to purchase
shares of the Company's common stock on the terms and conditions set forth in
said Nonqualified Stock Option Agreement.
Section 5. Expenses. The Corporation will reimburse Employee for
reasonable expenses and expenditures incurred by Employee from January 1, 1991,
through the term of employment of Employee in connection with and for the
benefit of the business of the Corporation according to policies promulgated
from time to time by the Board of Directors upon presentation by Employee of
appropriate substantiation for such expenses. In the event escrow is not broken
in accordance with a certain Consulting Agreement dated May 13, 1991, such
expense reimbursement shall be limited to Five Thousand and 00/100 dollars
($5,000.00).
Section 6. Employee Benefit Plans. During the term of his employment,
Employee shall be entitled to participate in any employee benefit plan or plans
established and maintained by the Corporation for its employees, in accordance
with the eligibility requirements and other terms and provisions of such plan or
plans. It being understood that the Corporation is under no obligation to
Employee to establish or maintain any employee benefit plan in which Employee
may participate, and that the terms and provisions of any employee benefits plan
of the Corporation are matters solely within the exclusive province of the Board
of Directors.
Section 7. Vacation and Time Off. Employee shall be entitled to four
(4) weeks of vacation in each year of employment under the terms of this
Agreement without reduction of salary. Unused vacation time may not be carried
over to future years of employment hereunder. In addition, the Employee shall be
entitled to such additional time off from work, without loss of compensation,
for attendance at professional meetings, conventions and educational courses in
accordance with the Corporation's general policy in this regard, as from time to
time determined by its Board of Directors.
Section 8. Insurance. Employee agrees that the Corporation, in the
discretion of its Board of Directors, may apply for and procure on its own
behalf, life insurance on the life of Employee, for the purpose of protecting
the Corporation against loss caused by the death of the Employee. Employee
agrees to submit to medical examination and to execute or deliver any
documentation reasonably required by the Corporation's insurer in order to
effectuate such insurance.
Additionally, the Corporation shall, during each year of employment,
apply for and procure on behalf of Employee, life insurance in the amount of
$200,000 on the life of Employee, for the purpose of protecting Employee's
designated beneficiaries in the event of Employee's death.
Section 9. Medical and Dental Coverage. During his employment, Employee
and family shall be entitled to any executive or other medical and dental
coverage provided by the Corporation.
Section 10. Leave of Absence. The Board of Directors may, from time to
time, grant a leave of absence to Employee. The Employee shall have no right
under this Agreement to any compensation during such period of leave of absence,
unless the Board of Directors fixes and determines an amount of compensation to
be paid to Employee during a period of leave of absence. If Employee fails to
return to active employment with Employer within fifteen (15) days after
termination of a leave of absence, Employee shall be deemed to have breached
this Agreement as of the end of said period of leave of absence.
Section 11. Sick Leave and Disability.
11.1 The Employee shall be entitled to ten (10) calendar days of sick
leave in each year of employment hereunder without loss of compensation. Unused
sick leave shall not be carried over to future years of employment under this
Agreement.
11.2 Notwithstanding any other provision of the Agreement, if Employee
is "totally disabled" (as that term is defined in Section 12) for an aggregate
of 120 calendar days in any one year of employment under the terms of this
Agreement, then the Corporation shall not be obligated to pay to Employee the
Compensation provided in this Agreement for any period of "total disability"
during such year in excess of 120 days.
Section 12. Termination. This Agreement, including the Corporation's
obligation pursuant to Section 2 hereof to pay compensation to the Employee,
shall be terminated upon the happening of any one of the following events:
(a) At any time by mutual agreement in writing between the
Corporation and the Employee;
(b) Upon the death of the Employee;
(c) At the Corporation's option, if Employee shall be "totally
disabled" for a continuous period of time in excess of nine
(9) months under the term of this Agreement. The Corporation's
said option shall be exercised by giving at least thirty (30)
days prior written notice thereof to Employee.
(d) At the option of either party hereunder after thirty (30) days
prior written notice given to the other party, in the event of
a breach of any term or provision of this Agreement by the
other party which has not been cured within said thirty (30)
day period.
(e) If the Corporation has "good cause" for termination of
Employee including, but not limited to, the breach of the
covenants of this Agreement or other acts which the Board of
Directors of the Corporation reasonably constitute just and
good cause for the termination of the Employee.
Section 13. Payment Due Upon Termination. If your employment is
terminated prior to the last day of February, 1993, for any reason other than
your death or disability, your employment has been terminated for "good cause"
or you have voluntarily resigned in circumstances not covered by Paragraph 14
below, then you shall be entitled to receive, at the date of termination,
severance pay equal to six (6) months of pay at your then base salary rate.
Section 14. Change in Control.
(a) If you voluntarily leave the employ of the Company within six
(6) months after any "change of control" not approved by the
affirmative vote of the "Continuing Directors" within ten (10)
days after they become aware of the events in question, you
will be entitled to receive, on the date of such termination,
severance pay equal to six (6) months of pay at your base
salary calculated at the rate in effect during the last year
of your term of employment. The normal employee benefits
maintained by the Company for its full-time employees shall be
available to you for six (6) months after such termination.
(b) For purposes of this Agreement:
1. A "change of control" will occur when (x) any person,
company or institution becomes directly or indirectly, the beneficial
owner of thirty percent (30%) or more of the common stock of the
Company, (y) the "Continuing Directors" cease for any reason to
constitute a majority of the Board of Directors of the Company, or (z)
any change in control occurs within the meaning of the proxy rules of
the Securities and Exchange Commission; provided, however, that if in
the case of an event referred to in clause (x) or (z), two thirds of
the Continuing Directors so determine, no change in control will be
deemed to have occurred.
2. The "Continuing Directors" are those members of the Board
of Directors of the of the Company on the date of this Agreement or
elected as Directors prior to the event in question.
3. Your rights under this paragraph are in lieu of your rights
under Paragraph 13 and any other rights you may have under this
Agreement. Accordingly, if you elect under Paragraph 14, you may not
receive compensation under 13 hereof.
4. The change of control definition will not apply if any
person, institution or company becomes -- with your approval -- the
beneficial owner of 30% or more of the common stock of the Company
through the sale of any additional common stock or other additional
securities of the Company.
Section 15. Total Disability. For purposes of this Agreement, Employee
shall be considered to be "totally disabled" when he is considered to be totally
disabled by any insurance company used by the Corporation to provide disability
benefits for the Employee, and Employee shall continue to be considered "totally
disabled" until such insurance company ceases to recognize him as "totally
disabled" for purposes of disability benefits. If no such disability insurance
policies are in force for the benefit of Employee, or if for any reason an
insurance company fails to make a determination of the question of whether
Employee is "totally disabled", Employee shall be considered to be "totally
disabled" if, because of mental or physical illness or other cause, he is unable
to perform the majority of his usual duties on behalf of the Corporation. The
existence of "total disability" of Employee, the date it commenced, and the date
it ceases, shall be determined by the Board of Directors and the Employee. If,
however, the parties cannot agree, then any such determination shall be made
after examination of Employee by a medial doctor selected by the Board of
Directors, and a medical doctor selected by the Employee. If the medical doctors
cannot agree, a third medical doctor shall be selected by the two doctors and
the conclusion of a majority of said doctors shall be final and binding on the
parties.
Section 16. Covenant Not to Compete. Employee hereby covenants and
agrees that during his employment with the Corporation, and for a period of one
(1) year thereafter, he should not be engaged either directly or indirectly, in
any manner or capacity, whether as an adviser, principal, agent, partner,
officer, director, employee, member of an association, or otherwise, in any
business or activity, or own beneficially, or of record, five percent (5%) or
more of the outstanding stock of any class of equity securities in any
corporation, in competition with the business or activity of the Corporation.
16.1 It is understood that if Employee should breach aforesaid covenant
of non-competition, the Corporation would suffer irreparable harm for which a
recovery of money damages would be an inadequate remedy. It is therefore agreed
that the Corporation shall be entitled, as a matter of right, in any court of
competent jurisdiction, to a-mandatory injunction restraining and enjoining
Employee, pending litigation, as well as upon final determination thereof, from
attempting to violate or violating the aforesaid covenant of non-competition;
and it is further agreed that the Corporation's right to such injunction relief
shall be cumulative with and in addition to any other rights, remedies or
actions which the Corporation may have against Employee.
Section 17. Confidentiality.
17.1 Employee will in the course of his employment by the Corporation
have access to confidential or proprietary data or information of the
Corporation. Employee will not at any time divulge or communicate to any person
(other than to a person bound by confidentiality obligations to the Corporation
similar to those contained in this Agreement) or use to the detriment of the
Corporation or for the benefit of any other person of such data or information.
The provisions of this Section 17.1 shall survive employee's employment
hereunder whether by the normal expiration of that employment or otherwise. The
term "confidential or proprietary data or information" as used in this Agreement
shall mean information not generally available to the public including, without
limitation, personnel information, financial information, customer lists,
supplier lists, trade secrets, secret processes, know-how, computer data and
programs, pricing, marketing and advertising data. The Employee acknowledges and
agrees that any confidential or propriety data or information that Employee has
heretofore acquired was received in confidence and as a fiduciary with respect
to the business of the Corporation.
17.2 All written materials, records and documents made by Employee or
coming into Employee's possession during the term of employment concerning any
products, processes, information or services used, developed, investigated or
considered by the Corporation, or otherwise concerning the business or affairs
of the Corporation, shall be the sole property of the Corporation and upon
termination of Employee's employment, or upon request by the Board of Directors
during Employee's employment, Employee shall promptly deliver the same to the
Corporation. In addition, upon termination of Employee's employment, or upon
request of the Board of Directors during Employee's employment, Employee shall
deliver to the Corporation all other property of the Corporation in Employee's
possession or under Employee's control including, but not limited to, financial
statements, marketing and sales data and other document and all Employer credit
cards.
Section 18. Notice. Any notice or other communication required or
desired to be sent pursuant to this Agreement shall be in writing, and shall be
deemed to have been duly given when delivered personally or when deposed in the
mails, certified or registered, return receipt requested, and with the proper
postage prepaid, addressed as follows:
If to the Corporation: Eco-Soil Systems
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
If to the Employee: Xxxxxxx X. Xxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
or such other address as either party hereto may designate for itself or written
notice given to the other party from time to time in the manner herein and above
provided.
Section 19. Waiver. This Agreement shall not be modified or amended
except by a further written documents signed by Employee and approved by the
Board of Directors. No provisions hereof may be waived except by an Agreement in
writing signed by the waiving party. A waiver of any term or provision shall not
be construed as a waiver of any other term or provision.
Section 20. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall constitute one and the same instrument.
Section 21. Entire Agreement. This Agreement contains the entire
understanding between the parties relating to the employment of Xxxxxxx X. Xxxxx
by the Corporation, and shall not be modified or amended except in writing
signed by both of the parties hereto.
Section 22. Applicable Law. This Agreement shall be subject to and
governed by the laws of the State of Nebraska and all questions concerning the
meaning and intention of the terms of this Agreement and concerning the validity
hereof and questions relating to performance hereunder shall be adjudged and
resolved in accordance with the laws of that state.
Section 23. Binding Effect. This Agreement shall be binding upon and
inure to the benefits of the parties hereto, and their respective heirs,
successors, legal representatives and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the 21st day of May, 1991.
ECO-SOIL SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx -- President
And:
EMPLOYEE:
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
