EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 4th day of December, 1998
by and between Energy BioSystems Corporation, a Delaware corporation (the
"Company"), and Xxxxx X. Xxxxxxxxxx, Ph.D. ("Employee").
W I T N E S S E T H :
WHEREAS, the Company wishes to employ Employee and Employee wishes
to be employed by the Company on the terms and subject to the conditions set
forth below;
NOW, THEREFORE, in consideration of the foregoing recital and of the
mutual covenants herein set forth, the Company and Employee hereby agree as
follows:
1. EMPLOYMENT. Effective as of January 1, 1999 (the "Effective
Date"), the Company hereby employs Employee as its Executive
Vice President and Chief Operating Officer and Employee
accepts such employment, for the compensation and on the terms
and subject to the conditions herein set forth.
2. COMPENSATION. The Company shall pay Employee an initial
monthly salary of $15,416.67 in accordance with the Company's
normal pay practices, which monthly salary shall be increased
(assuming continued employment and good performance) to
$16,666.67 effective on the date that is six months after the
Effective Date. Employee's salary shall be reviewed no less
than annually and from time to time changed (but not to be
decreased to an amount below Employee's initial monthly
salary) at the discretion of the Board of Directors of the
Company. Employee shall also be entitled to all rights and
benefits for which he shall be eligible under group insurance
and other fringe benefits which may be in force from time to
time (including any profit-sharing, option or other incentive
compensation plan either Company-wide or specific to the
Employee) and provided to the Company's employees generally.
3. DUTIES. Prior to the termination hereof, Employee agrees to
devote his full time and attention to the service of the
Company and, in furtherance thereof, to use his best efforts
and to perform his duties as the Company's Executive Vice
President and Chief Operating Officer and such other duties as
may be assigned to him from time to time by or under authority
of the Board of Directors of the Company. Employee agrees that
he will not undertake any other employment, consulting
services or business venture during the period of his
employment hereunder, unless the Company, by action of the
Board, shall consent thereto in writing. The foregoing shall
not be construed as preventing Employee from engaging in such
personal and business investment activities as are essentially
passive in nature and do not conflict with or adversely affect
in any material respect the performance or discharge of
Employee's duties and responsibilities hereunder.
4. TERM AND TERMINATION.
4.1 The term of this Agreement shall commence on the Effective
Date and continue, unless earlier terminated as hereinafter
provided, until December 31, 2001; provided that the term of
this Agreement will automatically renew on December 31, 2001
and December 31 of each subsequent year during which this
Agreement remains in effect (a "Renewal Date") unless the
Company or Employee has delivered written notice of
non-renewal to the other party at least six (6) months prior
to the relevant Renewal Date.
4.2 This Agreement shall terminate automatically on the death of
Employee.
4.3 The Company shall have the right to terminate Employee's
employment for cause by giving notice in writing to Employee.
As used herein, the term "cause" shall mean (i) dishonesty;
(ii) conviction of any crime other than misdemeanors or minor
traffic violations; (iii) material breach of any provision of
this Agreement; (iv) commission of any action or omission to
take any action in bad faith and to the detriment of the
Company; or (v) willful refusal or failure of Employee to obey
the lawful directions of the Board of Directors of the
Company.
4.4 The Company shall have the right to terminate Employee's
employment in the event of complete disability by giving
notice in writing to Employee. As used herein, the term
"complete disability" shall mean the inability of Employee,
due to illness or injury, to perform his duties hereunder for
a period of 180 consecutive days.
4.5 The foregoing notwithstanding, the Company may terminate
Employee's employment for whatever reason it deems appropriate
by one month's prior notice in writing, subject to the
Company's obligation to pay Employee the severance
compensation specified in Section 4.9.
4.6 Employee shall have the right to terminate Employee's
employment at any time following the occurrence of a Change in
Control, as defined below, if Employee's duties or
responsibilities are materially reduced in connection with or
following the Change in Control from those in effect
immediately prior to the Change in Control, except in
connection with the termination of Employee's employment
pursuant to Sections 4.2, 4.3, 4.4, 4.5 or 4.7. For purposes
of this Agreement, a "Change in Control" shall be deemed to
have occurred if:
(i) any individual, entity or group (within
the meaning of Section 13(d) or 14(d)(2) of the
Securities and Exchange Act of 1934) shall become
(directly or indirectly) the "beneficial owner"
(within the meaning of Rule 13d-3 promulgated under
such Act) of more than 50% of the combined voting
power of the then outstanding securities of the
Company entitled to vote generally in the election of
directors ("Voting Power"); or
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(ii) the Company's stockholders shall
approve a merger or consolidation, sale or
disposition of all or substantially all of the
Company's assets or a plan of liquidation or
dissolution of the Company, other than (A) a merger
or consolidation in which the voting securities of
the Company outstanding immediately prior thereto
will become (by operation of law), or are to be
converted into, voting securities of the surviving
corporation or its parent corporation that,
immediately after such merger or consolidation, (x)
are owned by the same person or entity or persons or
entities that owned the voting securities of the
Company immediately prior thereto and (y) possess at
least 75% of the Voting Power held by the voting
securities of the surviving corporation or its parent
corporation, or (B) a merger or consolidation
effected to implement a recapitalization of the
Company (or similar transaction) in which no person
acquires more than 50% of the Voting Power.
4.7 The foregoing notwithstanding, Employee shall have the right
to terminate Employee's employment for whatever reason
Employee deems appropriate by one month's prior notice in
writing.
4.8 In the event of termination of Employee's employment pursuant
to Sections 4.2, 4.3, 4.4 or 4.7 hereof, the Company shall pay
Employee his salary at the then current rate up to the date of
such termination, and Employee shall be entitled to no further
compensation hereunder.
4.9 In the event of termination of Employee's employment pursuant
to Sections 4.5 or 4.6 hereof, the Company shall pay Employee
severance compensation for a period of twelve (12) months from
the date of such termination.
5. NONDISCLOSURE; INVENTIONS; NON-COMPETITION.
5.1 For the purposes of this Agreement the terms set forth below
shall have the following meanings:
5.1.1 CONFIDENTIAL INFORMATION. That secret proprietary information
of the Company of whatever kind or nature disclosed to
Employee or known by Employee (whether or not invented,
discovered or developed by Employee). Such proprietary
information shall include information relating to the design,
manufacture and application of the Company's products,
know-how and research and development relating to the
Company's products, sources of supply and material, operating
and other cost data, lists of present, past or prospective
customers, customer proposals, and price lists and data
relating to pricing of the Company's products or services, any
of which information is not generally known in the industry,
and shall specifically include, without limitation, all
information contained in manuals, memoranda, formulae,
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plans, drawings and designs, specifications, supply sources,
and records of the Company.
5.1.2 CONCEPTS AND IDEAS. Those concepts and ideas known to Employee
relating to the Company's activities and products.
5.1.3 INVENTIONS. Those discoveries and developments, whether or not
patentable, relating to the Company's activities and products
(whether made by Employee acting alone or in conjunction with
others) made on or after the date on which Employee was first
employed by the Company in any capacity and prior to three
years after the termination of Employee's employment with the
Company. The term "Invention" shall also include any other
discovery or development made by Employee on or after the date
on which Employee was first employed by the Company in any
capacity and prior to the termination of this Agreement,
except for any invention or discovery for which no equipment,
supplies, facility, or trade secret information of the Company
was used and which was developed entirely on the Employee's
own time and (i) which does not relate (a) to the business of
the Company, or (b) to the Company's actual or demonstrably
anticipated research or development, or (ii) which does not
result from any work performed by the Employee for the
Company. Such term shall not be limited to the meaning of
"invention" under the United States patent laws. Listed below
by descriptive title for purposes of identification are all
inventions made by Employee prior to the date on which
Employee was first employed by the Company in any capacity
which he considers to be his property and which are hereby
excluded from this Agreement:
NONE
5.2 All Inventions and all Concepts and Ideas shall be the
property of and are hereby assigned to the Company free of any
reserved or other rights of any kind on the part of Employee
in respect thereof.
5.3 Employee will promptly make full disclosure of any such
Inventions and Concepts and Ideas to the Company. Further,
Employee will, at the Company's cost and expense, promptly
execute formal applications for patents and also do all other
acts and things (including, among others, the execution and
delivery of instruments of further assurance or confirmation)
deemed by the Company to be necessary or desirable at any time
or times in order to effect the full assignment to the Company
of Employee's right and title to such Inventions and Concepts
and Ideas, without, during the term of this Agreement, further
compensation beyond Employee's agreed salary. Employee further
understands that the absence of a request by the Company for
information, or for the making of an oath, or for the
execution of any document, shall in no way be construed to
constitute a waiver of the Company's rights under this
Agreement.
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5.4 Except as required by Employee's duties hereunder, Employee
will not, directly or indirectly, use, publish, disseminate or
otherwise disclose any Confidential Information, Concepts and
Ideas or Inventions relating to the past, present or planned
business of the Company without the prior written consent of
the Company, unless any such items are, prior to such
disclosure, part of the written public knowledge or become
part of the written public knowledge through no fault of
Employee or are disclosed to Employee by a third party having
the right to do so.
5.5 All documents, procedural manuals, guides, specifications,
plans, drawings, designs and similar materials, lists of
present, past or prospective customers, customer proposals,
invitations to submit proposals, price lists and data relating
to pricing of the Company's products and services, records,
notebooks and similar repositories of or containing
Confidential Information and Inventions, including all copies
thereof, that are or come into Employee's possession or
control by reason of Employee's employment, whether prepared
by Employee or others, are the property of the Company, will
not be used by Employee in any way adverse to the Company,
will not be removed from the Company's premises except as
Employee's normal duties require and, at the termination of
Employee's employment with the Company, will be left with or
forthwith returned by Employee to the Company.
5.6 During the term of Employee's employment with the Company and
for a period of three (3) years thereafter, Employee shall
not, individually or on behalf of or in conjunction with any
other person or entity, directly or indirectly, own, manage,
operate, control or be employed by, solicit the Company's
past, present or prospective employees or customers on behalf
of, or, otherwise participate in any manner in any
corporation, partnership, proprietorship or other business
entity which is engaged in the development or sale of
technology for the microbial desulfurization of hydrocarbons
or in any activity or development of any product directly
competitive with any of the activities engaged in or products
developed by the Company at the time of Employee's
termination; provided, however, that Employee may own not more
than 1% of the outstanding capital stock of a company in a
competitive business whose stock is publicly traded.
6. EXPENSES. Employee shall be entitled to reimbursement for
reasonable expenses incurred in the performance of services
hereunder, provided that the same are accounted for in
accordance with the Company's general requirements. In
addition, Employee shall be entitled to (i) an allowance of
$5,000 to cover Employee's reasonable costs of commuting
(including up to one round-trip airfare per week and
associated local transportation expenses) from Employee's home
in Fort Worth, Texas to the Company's offices in The
Woodlands, Texas for a period of up to five months from the
Effective Date; (ii) interim housing in the Houston, Texas
metropolitan area, selected and provided by the Company at the
Company's expense, for a period of up to five months from the
Effective Date; and (iii) reimbursement of reasonable costs
incurred by Employee and approved in advance by the Company
for
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moving household belongings from Employee's home in Fort
Worth, Texas to a home in the Houston, Texas metropolitan
area. To the extent that the Company's payment of any of the
amounts specified in the foregoing sentence constitute taxable
income to Employee for which Employee is not entitled to a
corresponding deduction for federal income tax purposes
("Expense Reimbursement Income"), the Company will pay
Employee an amount (a "Gross-Up Payment") equal to the amount
of federal income tax payable by Employee with respect to the
Expense Reimbursement Income (including, for such purposes,
the amount of the Gross-Up Payment).
7. SURVIVAL; REMEDIES. Employee's duties under sections 5.2, 5.3,
5.4, 5.5, and 5.6 of this Agreement shall survive termination
of this Agreement and Employee's employment with the Company.
Employee acknowledges that a remedy at law for any breach or
threatened breach by Employee of the provisions of this
Agreement may be inadequate and Employee therefore agrees that
the Company shall be entitled to injunctive relief in case of
any such breach or threatened breach.
8. ASSIGNMENT. This Agreement and the rights and obligations of
the parties hereto shall bind and inure to the benefit of each
of the parties hereto and shall also bind and inure to the
benefit of any successor or successors of the Company by
reorganization, merger or consolidation and any assignee of
all or substantially all of its business and properties, but,
except as to any such successor or assignee of the Company,
neither this Agreement nor any rights or benefits hereunder
may be assigned by the Company or by Employee.
9. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed for all purposes by the laws and public
policy of the State of Texas applicable to contracts executed
and wholly performed within such state.
10. SEPARABILITY. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. If,
moreover, any one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, it
shall be construed by limiting and reducing it, so as to be
enforceable to the extent compatible with the applicable law
as it shall then appear.
11. WAIVER. If either party should waive any breach of any
provision of this Agreement, he or it shall not thereby be
deemed to have waived any preceding or succeeding breach of
the same or any other provision of this Agreement. No party
shall be deemed to waive any rights hereunder unless such
waiver be in writing and signed by such party.
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12. ENTIRE AGREEMENT. The foregoing is the entire Agreement of the
parties with respect to the subject matter hereof and may not
be amended, supplemented, cancelled or discharged except by
written instrument executed by both parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day, month and year first above stated.
______________________________________
Xxxxx X. Xxxxxxxxxx, Ph.D.
ENERGY BIOSYSTEMS CORPORATION
By: __________________________________
Xxxxxxx X. Xxxxxx
Chairman of the Board, President
and Chief Executive Officer
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