EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made effective as of the
1st day of September, 1999 (the "Commencement Date"), by and between U S
LIQUIDS INC., a Delaware corporation (the "Corporation"), and Xxxxx X.
Xxxxxxxxx XX (the "Employee").
WITNESSETH:
WHEREAS, the Corporation desires to employ the Employee upon the terms
and conditions herein set forth; and
WHEREAS, the Employee desires to be so employed upon such terms and
conditions;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree as follows:
1. EMPLOYMENT. The Corporation shall employ the Employee, and the
Employee shall serve, as Vice President and Controller of the Corporation on the
terms set forth herein.
2. DUTIES AND RESPONSIBILITIES.
2.1 AS VICE PRESIDENT AND CONTROLLER. As Vice President and
Controller, the Employee shall have overall responsibility for management of the
Corporation's accounting functions. The Employee shall report directly to the
Chief Financial Officer of the Corporation and shall perform such duties as are
commensurate with his positions as Vice President and Controller. The Employee's
place of employment shall be in the Houston, Texas metropolitan area, subject to
travel necessary for the performance of his duties hereunder. The Corporation
shall provide to the Employee adequate office facilities and staff commensurate
with his position to enable him to perform his duties hereunder.
2.2 EXTENT OF SERVICES. The Employee shall devote such of his
time as is necessary to fully and properly carry out his duties and
responsibilities. However, this Agreement shall not prohibit the Employee from
engaging in other activities, whether for family, recreation, investment, civic,
charity, or other purposes, so long as those activities do not unduly interfere
with the ability of the Employee to carry out his duties and responsibilities
hereunder and so long as they are not inconsistent or competitive with the
interests of the Corporation.
2.3 DUTY OF LOYALTY. The Employee recognizes that he owes a
duty of loyalty and good faith to the Corporation (including any subsidiary
thereof) and agrees that during the term of this Agreement he will not take
advantage of any corporate opportunity of the Corporation, engage in
self-dealing with the Corporation, sell or disclose any confidential or
proprietary
information of the Corporation, or have or obtain any material economic
interest in any entity or arrangement which is competitive with the business
of the Corporation or engage in any activities which are competitive with the
business of the Corporation, without first disclosing all facts and details
relating thereto to the Board of Directors and obtaining the approval of the
Board of Directors.
3. COMPENSATION.
3.1 BASE SALARY. The Corporation shall pay to the Employee for
the services to be rendered by the Employee hereunder a base salary (the "Base
Salary") at the rate of $115,000 per year, payable in equal installments
(subject to withholding tax) in accordance with the Corporation's regular
payroll schedule, which as of the date of this Agreement is bi-weekly on
Fridays. Such Base Salary as in effect from time to time may be increased
annually or more often as determined by the Compensation Committee of the Board
of Directors in its sole discretion. However, the Base Salary payable to the
Employee from time to time hereunder shall not be decreased.
3.2 INCENTIVE COMPENSATION. Each calendar year during the term
of this Agreement, the Corporation will adopt an incentive compensation plan for
certain of its executive employees, including the Employee. This incentive
compensation plan will provide for incentive bonus compensation ("Incentive
Compensation") to be paid to the Employee based upon the performance of the
Employee and the results of the Corporation's business and operations. The
parties agree that the Employee's potential Incentive Compensation for the 2000
calendar year shall not exceed fifty percent of the Employee's Base Salary. For
subsequent calendar years, the ceiling on the Employee's Incentive Compensation
shall be reevaluated by the Compensation Committee of the Board of Directors and
may be increased to reflect the Employee's performance and his contribution to
the overall success of the Company.
4. BENEFITS.
4.1 EXECUTIVE BENEFITS GENERALLY. The Employee shall be
entitled to participate in and receive benefits from any insurance, medical,
dental, health and accident, hospitalization, disability, stock purchase,
defined benefit, defined contribution, or other employee benefit plan of the
Corporation which may be in effect at any time during the course of his
employment with the Corporation and which is generally available to executives
of the Corporation (these being referred to as the Employee's "Executive
Benefits").
4.2 AUTOMOBILE. If and at such time that it becomes the
policy of the Corporation to provide automobiles or an automobile allowance
to the Corporation's senior executives for their use in connection with the
Corporation's business, the Corporation shall provide such an automobile or
an automobile allowance to the Employee in accordance with such policy.
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4.3 REIMBURSEMENT OF EXPENSES. The Corporation shall reimburse
the Employee for all reasonable and ordinary expenses incurred by him on behalf
of the Corporation in the course of his duties hereunder upon the presentation
by the Employee of appropriate documentation substantiating the amount of and
purpose for which such expenses were incurred.
4.4 VACATIONS. The Employee shall be entitled to three (3)
weeks of paid vacation in each calendar year (to be prorated for any calendar
year during which the Employee is employed by the Corporation for less than the
full calendar year), which vacation shall be taken at times consistent with the
performance by the Employee of his obligations hereunder. Any vacation time not
fully used by the Employee in any one (1) calendar year may be carried over for
one (1) additional calendar year. If any such vacation time is carried over to a
subsequent calendar year, then any vacation time taken in the subsequent
calendar year shall be applied first against the carryover vacation time from
the prior calendar year.
5. DISABILITY OR DEATH. In the event the Employee incurs a disability,
which for purposes of this Agreement shall mean any mental or physical illness,
injury, or condition which results in the Employee being unable to fulfill his
duties under this Agreement on a regular basis, then the Corporation shall
nevertheless continue to provide to the Employee during such period or periods
of disability all compensation and benefits under this Agreement, except that,
during any one (1) calendar year the Corporation shall not be required to pay
the Base Salary or Incentive Compensation of the Employee for periods of
disability in excess of 180 days in total.
6. NONCOMPETITION DURING EMPLOYMENT. During the term of his employment
by the Corporation, the Employee shall not, directly or indirectly, engage in
any business competitive with that of the Corporation; provided, however, that
the foregoing shall not be deemed to prevent the Employee from investing in
securities of any company having a class of securities which is publicly traded,
so long as such investment holdings do not, in the aggregate, constitute more
than 5% of any class of such company's securities.
7. TERM OF EMPLOYMENT AND RIGHTS UPON TERMINATION OF EMPLOYMENT.
7.1 TERM AND SCHEDULED TERMINATION DATE. The term of
Employee's employment hereunder shall begin on the Commencement Date and shall
continue for a term of three (3) years from the Commencement Date (this date of
termination of his employment being referred to as the "Scheduled Termination
Date"). However, as of each anniversary date of the Commencement Date, the
Scheduled Termination Date shall automatically be extended for a successive
one-year period of time, unless more than ninety (90) days prior to the
occurrence of such anniversary date, either party gives notice to the other that
such Scheduled Termination Date shall not thereafter be so extended. If any such
notice is given, then the Scheduled Termination Date hereof shall not be
automatically extended upon the future occurrence of any such anniversary date.
Following the Scheduled Termination Date, the Employee shall not be entitled to
earn any further compensation or benefits under this Agreement.
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7.2 TERMINATION BY THE CORPORATION WITHOUT CAUSE.
(a) The Corporation may terminate this Agreement at any time,
without cause and for any reason, upon notice to the Employee setting
forth the date of termination (this date of termination and any other
date of termination prior to the Scheduled Termination Date is referred
to as the "Early Termination Date"). In this event, the Employee shall
be entitled to continue to receive, for a period of one (1) year after
the Early Termination Date, the same Base Salary which the Employee was
receiving at the time of such Early Termination Date (in the manner and
as described in Section 3.1) and all Executive Benefits which the
Employee was receiving or entitled to receive as of such Early
Termination Date (in the manner and as described in Section 4.1).
Further, all outstanding stock options which shall have been granted to
the Employee shall immediately become exercisable (if not already
exercisable in full) and shall continue in full force and effect.
(b) In the event the Employee suffers from a disability (as
defined in Section 5) for a period of 180 business days out of any 360
consecutive business day period, then the Corporation may at any time
no later than thirty (30) days following the end of said 360-day period
terminate the employment of the Employee without cause, by notice to
the Employee setting forth the effective Early Termination Date.
However, the Corporation shall not have the right to terminate the
employment of the Employee hereunder if, at the time the Corporation
gives notice of termination to the Employee, the Employee has then
again begun to render services for the Corporation as required
hereunder. Following an Early Termination Date because of disability,
the Employee shall be entitled to receive his Base Salary then in
effect for a period of one (1) year following his Early Termination
Date and shall be entitled to retain all of his Executive Benefits for
a period of one (1) year following his Early Termination Date. Further,
the Employee's stock options, to the extent not fully vested, would
continue to vest during the one-year period following his Early
Termination Date.
(c) This Agreement shall terminate immediately upon the
Employee's death. In addition to any other compensation or benefits
payable or accrued to the benefit of the Employee as of the date of his
death, the Corporation shall pay to the Employee's executor or legal
representative an amount in cash equal to one (1) times the Employee's
Base Salary then in effect at the time of his death.
7.3 BY THE CORPORATION WITH CAUSE. The Corporation may
terminate this Agreement at any time for cause, by notice to the Employee
setting forth the Early Termination Date. The term "cause" shall mean (a) a
willful and recurring refusal of the Employee to perform his duties,
responsibilities or obligations under this Agreement, which refusal continues
for at least thirty (30) days after notice thereof is given to the Employee
by the Corporation setting forth the facts upon which the notice is based,
(b) the Employee's conviction of a felony involving moral turpitude, or (c)
the Employee's fraud regarding any material matter with respect to the
business or operations of the Corporation. Following the occurrence of the
Early Termination Date of the
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Employee for cause, then the Employee shall not be entitled to earn any further
compensation or benefits under this Agreement.
7.4 BY EMPLOYEE WITHOUT CAUSE. The Employee may terminate this
Agreement at any time, without cause and for any reason, upon notice to the
Corporation setting forth the Employee's Early Termination Date. In such event,
the Employee shall not be entitled to earn any further compensation or benefits
under this Agreement.
7.5 BY EMPLOYEE WITH CAUSE. The Employee may terminate this
Agreement at any time with cause upon notice to the Corporation setting forth
the Early Termination Date. The term "cause" shall mean a breach of this
Agreement in any material way by the Corporation, which breach is not cured
within thirty (30) days after notice of such breach to the Corporation by the
Employee setting forth the facts upon which the notice is based. In the event of
such Early Termination Date, then from the Early Termination Date until the
Scheduled Termination Date, the Employee shall be entitled to continue to
receive, the same Base Salary which the Employee was receiving at the time of
such Early Termination Date (in the manner and as described in Section 3.1) and
all Executive Benefits which the Employee was receiving or entitled to receive
as of such Early Termination Date (in the manner and as described in Section
4.1). Further, all outstanding stock options which shall have been granted to
the Employee shall become immediately exercisable (if not already exercisable in
full) and shall continue in full force and effect.
7.6 COMPENSATION, REIMBURSEMENTS, INDEMNIFICATION, AND
BENEFITS PAYABLE OR ACCRUED AS OF TERMINATION DATE. In the event this Agreement
is terminated, whether upon the Scheduled Termination Date or an Early
Termination Date, and regardless of the reason for termination, the Employee
shall be entitled to receive all compensation, reimbursements, and benefits
hereunder which were either payable to the Employee, or which had accrued to the
benefit of the Employee or which had been earned by the Employee as of the date
of termination (the "Termination Date"). Any such compensation, reimbursements,
or benefits shall be payable or provided to the Employee no less quickly than
they would have been payable or provided to the Employee had the Termination
Date not occurred. For these purposes, the Employee's compensation shall include
a pro rata portion of the Incentive Compensation payable to the Employee under
Section 3.2. Further, the Employee shall be entitled to receive any
indemnification payments that may have accrued but have not been paid or that
may thereafter become payable to the Employee pursuant to the provisions of the
Corporation's Certificate of Incorporation, Bylaws or similar policy, plan or
agreement relating to the indemnification of directors or officers of the
Corporation.
8. CHANGE OF CONTROL.
8.1 This Section 8 shall become effective, but not operative,
immediately upon the Commencement Date and shall remain in effect so long as the
Employee remains employed hereunder by the Corporation, but shall not be
operative unless and until there has been a Change
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in Control, as defined in Section 8.4 hereof. Upon such a Change in Control,
this Section 8 shall become operative immediately.
8.2 If a Change in Control occurs (i) while the Employee is
employed by the Corporation hereunder, or (ii) subsequent to the Termination
Date of the Employee's employment hereunder other than by the Corporation for
cause, or death or disability, and prior to the later of the first anniversary
of such Termination Date or the second anniversary of the Commencement Date, or
(iii) within 180 days of the Scheduled Termination Date, the Employee may, in
his sole discretion, within twelve (12) months after the date of the Change in
Control, give notice to the Corporation that he intends to elect to exercise his
rights under this Section 8 (the "Notice of Intention"). Within thirty (30) days
after the Corporation's receipt of the Notice of Intention, the Corporation
shall provide written notice to the Employee setting forth the Corporation's
computation of the amount that would be payable pursuant to Section 8.3,
accompanied by the written opinion of the Corporation's independent certified
public accountants confirming the Corporation's computation. If the Employee
takes exception to the Corporation's computation of such amount, the Employee
may (but shall not be prejudiced in this right to later contest the amount
actually paid by failure to do so) give a further written notice to the
Corporation setting forth in reasonable detail the Employee's exceptions to the
Corporation's computation, accompanied by the written opinion of the Employee's
tax advisor confirming the basis for such exceptions. Exercise by the Employee
of his rights pursuant to this Section 8 shall only be made by giving further
notice to the Corporation (the "Notice of Exercise") within six (6) months from
the date of the Notice of Intention.
8.3 If the Employee gives the Notice of Exercise described in
Section 8.2 to the Corporation, the Termination Date of his employment hereunder
shall then occur; all outstanding stock options which are not then exercisable
shall immediately become exercisable in full; and the Corporation shall pay to
the Employee a lump sum amount equal to $1.00 less than three (3) times the
Employee's "base amount" (as defined by Section 280(G), Part IX, Subchapter B,
Chapter 1 of the Internal Revenue Code of 1986, as amended). The Corporation
shall, within ten (10) business days after the date of the Notice of Exercise,
deliver to the Employee its cashier's check in the amount payable pursuant to
this Section 8.3, and payment of such amount shall terminate the Employee's
rights to receive any and all other compensation, reimbursements,
indemnification, or benefits under this Agreement, other than those which are
payable to or have accrued to the Employee as described in Section 7.6.
8.4 For the purposes of this Agreement, a Change in Control
shall mean (i) a reportable change in control under the proxy rules of the
Securities and Exchange Commission, including the acquisition of a 30%
beneficial voting interest in the Corporation (other than such acquisition by
Employee or an affiliate of Employee), or (ii) a change in any calendar year of
such number of directors as constitutes a majority of the board of directors of
the Corporation, unless the election, or the nomination for election by the
Corporation's shareholders, of each new director was approved by a vote of at
least two-thirds (2/3) of the directors then in office who were directors at the
beginning of the calendar year.
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9. POST-EMPLOYMENT ACTIVITIES.
9.5 For a period of two (2) years after the Employee's
Termination Date, except for a termination subsequent to a Change in Control of
the Corporation and further except for a termination by the Employee pursuant to
Section 7.5 hereof, then the Employee shall not, directly or indirectly, engage
in any business competitive with that of the Corporation and its subsidiaries;
provided, however, that the foregoing shall not be deemed to prevent the
Employee from investing in securities which are publicly traded, so long as such
investment holdings do not, in the aggregate, constitute more than 5% of any
class of such company's securities.
9.6 The Employee acknowledges that he has been employed for
his special talents and that his leaving the employ of the Corporation would
seriously and adversely affect the business of the Corporation. In addition to
all remedies permitted by law or in equity and without limiting any injunctive
or other relief to which the Corporation may be entitled in respect of any
obligation of the Employee, the Corporation shall be entitled to injunctive
relief to enforce the provisions of Section 9.1 hereof; provided, that the
Corporation shall not be entitled to injunctive relief or any other relief with
respect to Section 9.1 hereof if at the time such relief is sought the
Corporation has been in default of any of its obligations to the Employee
pursuant to any of the terms of Sections 7.2, 7.5, or 7.6 hereof.
9.7 The Employee will not, during the period of two (2) years
after his Termination Date, except for a termination subsequent to a Change in
Control of the Corporation and further except for a termination by the Employee
pursuant to Section 7.5 hereof, either in the Employee's individual capacity or
as agent for another, hire or offer to hire or entice away any person who has
been an officer, employee, or agent of the Corporation or any of its
subsidiaries at any time during the immediately preceding year or in any other
manner persuade or attempt to persuade any of such persons to discontinue their
relationship with the Corporation or any of its subsidiaries nor divert or
attempt to divert from the Corporation or any of its subsidiaries any business
whatsoever by influencing or attempting to influence any customer or supplier of
the Corporation or any of its subsidiaries to diminish or discontinue its
business with the Corporation or such subsidiary.
10. CONFIDENTIAL INFORMATION. The Employee shall not at any time during
the term of this Agreement or after the termination hereof directly or
indirectly divulge, furnish, use, publish or make accessible to any person or
entity any Confidential Information (as hereinafter defined). Any records of
Confidential Information prepared by the Employee or which come into Employee's
possession during this Agreement are and remain the property of the Corporation,
and upon termination of Employee's employment all such records and copies
thereof shall be either left with or returned to the Corporation. The term
"Confidential Information" shall mean information disclosed to the Employee or
known, learned, created or observed by him as a consequence of or through his
employment by the Corporation, not generally known in the relevant trade or
industry, about the Corporation's (and its subsidiaries') business activities,
products, customers, suppliers, services and
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procedures, including, but not limited to, information concerning costs, product
performance, customer requirements, advertising, sales promotion, publicity,
sales data, research, finances, accounting, methods, procedures, trade secrets,
business plans, client or supplier lists and records, potential client or
supplier lists, and client or supplier billing. Notwithstanding the foregoing,
"Confidential Information" shall not include information publicly disclosed by
the Corporation or known by the Employee other than because of his employment
with the Corporation.
11. GENERAL.
11.8 ASSIGNMENT. This Agreement shall not be assignable.
11.9 NOTICES. All notices under this Agreement shall be in
writing and shall be deemed to have been given at the time when mailed by
registered or certified mail, addressed to the address set forth below of the
party to which notice is given, or to such changed address as such party may
have fixed by notice:
TO THE CORPORATION: U S Liquids Inc.
000 X. Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
ATTN: Xxxx X. Xxxxxxxxx
TO THE EMPLOYEE: Xxxxx X. Xxxxxxxxx XX
0000 Xxxxxxxxxxx Xxxx
Xxxx, Xxxxx 00000
11.10 ENTIRE AGREEMENT. This instrument contains and
constitutes the entire agreement between and among the parties herein and
supersedes all prior agreements and understandings between the parties hereto
relating to the subject matter hereof.
11.11 APPLICABLE LAW. This Agreement shall be construed,
enforced and governed in accordance with the laws of the State of Texas.
11.12 INVALIDITY. If any provision contained in this Agreement
shall for any reason be held to be invalid, illegal, void or unenforceable in
any respect, such provision shall be deemed modified so as to constitute a
provision conforming as nearly as possible to such invalid, illegal, void or
unenforceable provision while still remaining valid and enforceable, and the
remaining terms or provisions contained herein shall not be affected thereby.
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11.13 DISPUTE RESOLUTION. Any dispute arising in any way out
of this Agreement and which cannot be resolved by good faith negotiations
between the parties within thirty (30) days after either party shall have
notified the other party in writing of its desire to arbitrate the dispute shall
be submitted to and settled through binding arbitration in accordance with the
rules of the American Arbitration Association as from time to time in effect.
The arbitration proceedings shall be conducted by a sole arbitrator who shall be
an attorney with not less than ten (10) years experience in commercial law. All
disputes or claims of the parties subject to arbitration shall be consolidated
into a single arbitration proceeding. The arbitration proceedings shall be
conducted in Houston, Texas. The award or determination of the arbitrator shall
be final and binding upon all parties and shall be subject to enforcement in any
court of competent jurisdiction. The arbitrator shall have the authority to
award costs and expenses of arbitration to either party as the arbitrator sees
fit.
11.14 BINDING EFFECT. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and their
respective heirs, executors, personal representatives and successors.
11.15 SEVERABILITY. If any provision of this Agreement shall
be held to be void or unenforceable for any reason, said provision shall be
deemed modified so as to constitute a provision conforming as nearly as possible
to said void or unenforceable provision while still remaining valid and
enforceable and the remaining terms and provisions hereof shall not be affected
thereby.
11.16 AMENDMENT AND WAIVER. This Agreement may only be amended
by a writing executed by each of the parties hereto. Any party may waive any
requirement to perform by the other party, provided that such waiver shall be in
writing and executed by the party granting the waiver. The parties agree that a
waiver by one party on one occasion shall not be deemed a waiver on any other
occasion.
11.17 OPTION TO PURCHASE STOCK. As of the Commencement Date,
the Employee shall be granted a nonqualified stock option to purchase 20,000
shares of the Corporation's common stock, par value $.01, at a price of $6.50
per share. Such option shall vest at a cumulative rate of 33_% per year, on the
first and each succeeding anniversary date of the Commencement Date. Except as
set forth herein, the terms and conditions applicable to such option shall be
those contained in the Corporation's 1996 Incentive Stock Option Plan, as
amended, the terms and conditions of which are incorporated herein by this
reference.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first above written.
U S LIQUIDS INC.
By: /s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx, Chief Financial Officer
/s/ Xxxxx X. Xxxxxxxxx XX
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Xxxxx X. Xxxxxxxxx
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