EXHIBIT 10.38
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") dated as of August 1, 2000
(the "Effective Date"), is entered between Probex Corp. (the "Company") and
Xxxxxxx X. Xxxxxxxx (the "Executive").
WHEREAS, the Company and the Executive wish to enter into an employment
agreement whereby the Executive will be employed by the Company in accordance
with the terms and conditions stated below;
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
EMPLOYMENT, DUTIES AND RESPONSIBILITIES
1.1 Employment. The Executive shall serve as the President and Chief
Executive Officer of the Company. The Company will also use its best efforts to
assure the Executive's continued service on the Board of Directors of the
Company. The Executive hereby accepts such employment. The Executive agrees to
devote substantially all of his time and efforts to promoting the interests of
the Company.
1.2 Duties and Responsibilities. Subject to the supervision of and
direction by the Board of Directors of the Company, the Executive shall (a)
perform such duties as are customarily associated with the position of President
and Chief Executive Officer, and (b) be responsible, together with other senior
executives of the Company, for the implementation of the operating plan and
budget of the Company.
1.3 Base of Operation. The Executive's principal base of operation for the
performance of his duties and responsibilities under this Agreement shall be the
offices of the Company in Dallas, Texas.
ARTICLE II
COMPENSATION AND EXPENSES
2.1 Salary and Benefits. As compensation and consideration for the
performance by the Executive of his obligations under this Agreement, the
Executive shall be entitled to the following:
(a) The Company shall pay the Executive a base salary, payable in
accordance with the ordinary payment procedures of the Company and subject to
such withholdings and other ordinary employee deductions as may be required by
law. The total base salary paid to the Executive for the first year shall be
$180,000. The base salary to be paid the Executive for subsequent years shall be
reviewed by the Company on an annual basis, but in no event shall such base
salary be less than $180,000 per annum.
(b) The Executive shall participate in the annual cash bonus plan
maintained by the Company, subject to the goals and criteria established by the
Company from time to time. Executive's target bonus opportunity for each fiscal
year for satisfaction of goals for such fiscal year shall be 65 percent of
Executive's base salary. In the event Executive significantly exceeds annual
goals for any fiscal year, he may receive cash bonus in greater amounts. For the
year 2000, the Company shall pay the Executive, subject to meeting targets set
out in the plan, a bonus based on a plan to be adopted by the Company's board as
soon as reasonably possible.
(c) The Executive shall participate in such retirement, pension,
health, and medical insurance plans, and in such other employee benefit plans
and programs as may be maintained from time to time by the Company for the
benefit of the employees of the Company, in each case to the extent and in such
manner available to other executive officers of the Company and subject to the
terms and provisions of such plans or programs.
2.2 Expenses. The Company will reimburse the Executive for reasonable
business-related expenses incurred by him in connection with the performance of
his duties hereunder during the Term subject, however, to the Company's policies
relating to business-related expenses as in effect from time to time during the
Term. The Company will reimburse the Executive, in accordance with the Company's
relocation policy, for all reasonable and normal direct out-of-pocket costs
related to relocating his permanent residence from Houston to Dallas, Texas,
"grossed up" to the greater amount so that the net benefit to Executive after
taxes equals his actual costs relating to such relocation. Also the Company will
reimburse Executive for direct, out-of-pocket temporary living expenses in
accordance with Company policies up to a maximum of $2,000 per month until his
physical location is complete, up to a period of four months from his effective
date of hire, "grossed up" to the greater amount so that the net benefit to
Executive after taxes equals his actual costs.
2.3 Stock Compensation. As compensation and consideration for the
performance by the Executive of his obligations under this Agreement, the
Executive shall be entitled to the following:
Stock Options. The Company has awarded to the Executive options to
purchase an aggregate 1,000,000 Shares of the Company's Common Stock (the
"Options") as follows: (i) 829,930 non-qualified stock options at an
exercise price of $2.20 per share, and (ii) 170,070 incentive stock
options at an exercise price of $2.9375 per share, in each case subject to
the shareholders of the Company approving the amendment to increase the
shares available under the Company's Omnibus Stock Option Plan. The
Options will become effective upon the Effective Date of hire. Vesting of
the Options will be as follows: twenty percent (20%) of the shares vest
upon the Effective Date, and twenty percent (20%) of the shares vest in
each of the next four years on the anniversary of the Effective Date.
Executive shall be eligible to participate in the Company's stock option
grant program. The Compensation Committee of the Board of Directors
periodically makes option grants to key executives under the Company's
Omnibus Stock Option Plan, subject to shareholder approval designating
shares to the Plan. If grants are made under the Plan to
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other key executives, Executive will receive grants also in amounts and on
terms commensurate with his position.
2.4 Continuing Health Insurance. Following the termination of the
Executive's employment (i) by the Company for other than Cause, as hereinafter
defined, (ii) by the Executive for Good Reason or following a Change of Control
and an Executive Termination Event, as hereinafter defined, or (iii) by reason
of disability under Section 5.3 hereof, the Company shall continue to provide
the Executive such Company-provided group health insurance coverage as is in
effect with respect to the Executive at the time of such termination until the
earlier of (a) the date on which the Executive obtains other employment
providing Executive similar benefits, or (b) the date which is the later of the
date of death of Executive or Executive's spouse and (c) the date that is twenty
four (24) months following the date of the termination of the Executive's
employment.
ARTICLE III
TERMINATION
3.1 Termination by the Company. The Company shall have the right to
terminate the Executive's employment at any time with or without "Cause". For
purposes of this Agreement, "CAUSE" shall mean that, prior to any termination
the Executive shall have committed: (i) an act of fraud, embezzlement, theft, or
any other act constituting a felony, involving moral turpitude or causing
material harm, financial or otherwise, to the Company; (ii) a demonstrably
intentional and deliberate act or failure to act (other than as a result of
incapacity due to physical or mental illness) which is committed in bad faith by
the Executive, which causes or can be expected to cause material financial
injury to the Company; or (iii)(a) an intentional and material breach of this
Agreement or (b) a material breach of this Agreement resulting from the gross
negligence of Executive that, in either event, causes material harm to the
Company and is not cured by the Executive within 30 days after written notice
from the Board of Directors specifying the breach and requesting a cure. For
purposes of this Agreement, no act, or failure to act, on the part of the
Executive shall be deemed "intentional" if it was due primarily to an error in
judgment or negligence, but shall be deemed "intentional" only if done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that his action or omission was in, or not opposed to, the best interest
of the Company. Notwithstanding the foregoing, the Executive shall not be deemed
to have been terminated for "Cause" hereunder unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the Board then in office at a
meeting of the Board of Directors called and held for such purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with his counsel, to be heard before the Board), finding that, in the
good faith opinion of the Board, the Executive had committed an act set forth
above and specifying the particulars thereof in detail. Nothing herein shall
limit the right of the Executive or his beneficiaries to contest the validity or
propriety of any such determination.
3.2 Death. In the event the Executive dies during his employment under
this Agreement shall automatically terminate, such termination to be effective
on the date of the Executive's death.
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3.3 Disability. In the event that the Executive shall suffer a disability
which shall have prevented him from performing satisfactorily his obligations
hereunder for a period of at least 120 consecutive days, the Company shall have
the right to terminate this Agreement.
3.4 Termination by the Executive for Good Reason. The Executive's
employment may be terminated by the Executive for Good Reason, by giving to the
Company 30 days advance written notice specifying the event or circumstance
which the Executive alleges constitutes Good Reason. Such notice of resignation
will take effect, if not revoked by the Executive, at the conclusion of such
thirty-day period. For purposes of this Agreement, the following circumstances
shall constitute "GOOD REASON" if not cured prior to the expiration of such
thirty-day period:
(i) the assignment to the Executive of duties that are materially
inconsistent with the Executive's position or with his authority, duties
or responsibilities as contemplated by this Agreement, or any other action
by the Company or its successor which results in a material diminution or
material adverse change in such position, authority, duties or
responsibilities;
(ii) any material breach by the Company or its successor of the
provisions of this Agreement; or
(iii) a relocation of the Executive's principal base of operation to
any location which requires Executive to increase his daily inbound
commute by more than 45 miles.
(iv) the Company's or its successors failing to provide maximum
officer and director indemnification and officers and directors insurance
covering Executive of at least $10,000,000.
3.5 Effect of Termination.
(a) In the event of termination of the Executive's employment for any
reason or by reason of the Executive's death or disability, the Company shall
pay to the Executive (or his beneficiary in the event of his death) any base
salary, bonus or other compensation earned but not paid to the Executive prior
to the effective date of such termination and, other than the circumstances of
termination by the Company for Cause or by the Executive voluntarily without
Good Reason, the pro rata amount of the annual cash bonus payable under the plan
based on the target bonus under the Executive Bonus Program for the year during
which such termination occurs, based on the number of days worked during such
year.
(b) In the event of termination of the Executive's employment (other
than a termination following an Executive Termination Event after a Change of
Control whereby Executive receives the benefits provided in Section 3.7 below,
all as hereafter defined and provided for) (i) by reason of Executive's death or
disability, (ii) by the Company other than for Cause or (iii) by the Executive
for Good Reason, the Company shall pay to the Executive, in addition to the
amounts described in Section 1.5(a) hereof, a lump sum equal to the sum of
Executive's then current base salary and target bonus for the year in which the
termination occurs and, further, all options to purchase securities of the
Company shall accelerate and
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become vested and all securities owned by Executive and subject to vesting shall
become vested and immediately transferable.
3.6 Termination Following a Change of Control.
(a) Definitions. As used herein, the following terms shall have the
following meanings:
(i) Change in Control. "Change in Control" shall mean
(1) any transaction, or series of transactions, including, but
not limited to any merger, consolidation, or reorganization, which
results when any "person" as defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) of the Exchange Act,
but excluding the Company, any subsidiary of the Company, and any
employee benefit plan sponsored or maintained by the Company or any
subsidiary of the Company, directly or indirectly, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
of securities of the Company representing more than 50% of the
combined voting power of the Company's then outstanding securities;
(2) when, during any period of 24 consecutive months the
individuals who, at the beginning of such period, constitute the
Board (the "Incumbent Directors") cease for any reason other than
death to constitute at least a majority of the Board; provided,
however, that a director who was not a director at the beginning of
such 24-month period shall be deemed to have satisfied such 24-month
requirement (and be an Incumbent Director) if such director was
elected by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent
Directors either actually (because they were directors at the
beginning of such 24-month period) or by prior operation of this
Section; or
(3) when the stockholders of the Company approve a plan of
complete liquidation of the Company; or an agreement for the sale or
disposition of substantially all the Company's assets other than a
sale of the Company's health care assets; or a merger,
consolidation, or reorganization of the Company in which
stockholders of the Company immediately prior to the transaction own
less than 50% of the combined voting power of the surviving entity.
(ii) "Termination Date" shall mean the date on which Executive's
employment with the Company is terminated.
(b) Termination by Company. Following a Change in Control, the
Executive's employment may be terminated by Company ("Company Termination
Event") and the Executive shall not be entitled to the severance benefits
provided under Section 3.7, provided that Executive's termination occurs as a
result of one or more of the following events:
(i) The Executive's death;
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(ii) The Executive's disability, provided Executive actually begins
to receive disability benefits pursuant to the long-term disability plan
in effect for senior executives of the Company immediately prior to the
Change in Control.
(c) Executive Termination Event. If at any time during the one year
period commencing on the date of a Change in Control, the Company or Executive
terminates his employment following the occurrence of one or more of the
following events ("Executive Termination Event"), Executive shall be entitled to
the severance benefits provided in Section 3.7 below:
(i) Any termination by the Company of Executive's employment during
such one year period for any reason, other than for Cause, as a result of
Executive's death, or by reason of the Executive's disability and the
actual receipt of disability benefits; or
(ii) Termination by the Executive of his employment with the Company
at any time within one year after the Change in Control upon the
occurrence of any of the following events:
(1) The Company's failure to elect, re-elect or otherwise
maintain the Executive in the office or position in the Company
which the Executive held immediately prior to a Change in Control,
or the removal of the Executive as a Director of the Company (or any
successor thereto) if the Executive was a Director of the Company
immediately prior to the Change in Control;
(2) A significant, adverse change (increase or decrease) in
the nature or scope of the authorities, powers, functions,
responsibilities or duties attached to the position with the Company
which the Executive held immediately prior to the Change in Control,
or a reduction in the aggregate of the Executive's base pay or
annual incentive bonus opportunity in which the Executive
participated immediately prior to the Change in Control, or the
termination of the Executive's rights to any employee benefits to
which he was entitled immediately prior to the Change in Control, or
a reduction in scope or value of such benefits, without prior
written consent of the Executive, any of which is not remedied
within 10 calendar days after receipt by the Company of a written
notice from the Executive of such change, reduction, or termination,
as the case may be;
(3) The Company or its successor becomes a subsidiary of
another company and the Executive is not the President and Chief
Executive Officer of the ultimate parent company;
(4) The Company shall relocate its principal executive
offices, or require the Executive to have his principal location of
work changed, to any location which is in excess of 45 miles from
the location thereof immediately prior to the Change in Control; or
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(5) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the Company or
any successor thereto.
(d) If Executive is terminated by the Company without Cause or if
Executive terminates his employment for Good Reason within the twelve months
before the Company begins negotiations which result in a Change of Control, such
termination shall also be an Executive Termination Event and Executive shall be
entitled to the greater of a) the severance benefits he received on the earlier
termination, or b) the severance benefits provided in Section 3.7 below.
3.7 Severance Benefits. In the event Executive's employment is terminated
within one year of the date of a Change in Control as a result of an Executive
Termination Event, Executive shall be entitled to the benefits set forth below.
All amounts payable under this Section 3.7(a) (b) and (c) shall be paid to
Executive in one lump sum within 45 days after his termination of employment.
(a) The Company shall pay to Executive an amount equal to two times
his then existing base salary and two times his targeted cash bonus for the year
in which termination occurs.
(b) The Company shall pay Executive his full base salary through
Executive's Termination Date. The Company shall also pay Executive an amount
equal to the pro rata amount of the maximum target bonus award available to the
Executive under the bonus plan during the year of termination, based on the
number of days of the year elapsed prior to the Termination Date.
(c) All unvested equity, including all options and restricted stock
held by Executive, shall immediately become fully vested and exercisable.
3.8 Other Rights. A termination of the Executive's employment by the
Company pursuant to this Agreement or by the Executive shall not affect
adversely any rights which the Executive may have pursuant to any agreement,
employment contract, policy, plan, program or arrangement of the Company
providing employee benefits, which rights shall be governed by the terms of such
employee benefit plan.
ARTICLE IV
TAXES AND MISCELLANEOUS OTHER PROVISIONS
4.1 Tax Considerations. Notwithstanding anything herein to the contrary,
in the event any payments and benefits to Executive hereunder including benefits
relating to vesting of restricted stock and stock options, as provided herein or
otherwise, are determined by the Company to be subject to the tax imposed by
Section 4999 of the Code or any similar federal or state excise tax, FICA tax,
or any interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties are
hereinafter collectively referred to as the "Excise Tax"), Company shall pay to
Executive at the time of such determination or the time such interest or
penalties are incurred, an additional amount (the "Gross-Up Payment") such that
after the payment by Executive of all federal, state, or local
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income taxes, Excise Taxes, FICA tax, or other taxes (including any interest or
penalties imposed with respect thereto) imposed upon the receipt of the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed on the severance payments provided herein.
(a) For purposes of determining whether any payments to Executive
hereunder will be subject to the Excise Tax and the amount of such Excise Tax:
(i) any other payments or benefits received or to be received by
Executive in connection with a Change in Control or the termination of
employment (whether pursuant to the terms of this Agreement or of any
other plan, arrangement or agreement with Company) shall be treated as
"parachute payments" within the meaning of Section 280G(b)(2) of the Code,
and all "excess parachute payments" within the meaning of Section
280G(b)(1) shall be treated as subject to the Excise Tax, unless in the
opinion of Xxxxxxx & Xxxxxxxxx, P.C. or other tax counsel selected by
Company and reasonably acceptable to Executive, other payments or benefits
(in whole or in part) do not constitute parachute payments under Section
280G of the Code, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered within
the meaning of Section 280G(b)(4) of the Code;
(ii) the amount of the severance payments which shall be treated as
subject to the Excise Tax shall be equal to the amount of excess parachute
payments within the meaning of Sections 280G(b)(1) and (4) (after applying
clause (a)(i), above); and
(iii) the parachute value of any noncash benefits or any deferred
payment or benefit shall be determined by Company in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
(b) If the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder at the time of termination of employment,
Executive shall repay to Company, at the time the reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction. If the Excise Tax is determined to exceed the amount taken into
account hereunder at the time of termination of employment, Company shall make
an additional Gross-Up Payment to Executive in respect of such excess at the
time the amount of such excess is finally determined. The Executive shall notify
the Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later that ten
business days after the Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30 calendar day period following the date on which it gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
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(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order to
effectively contest such claim, and
(iv) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including legal and accounting fees and additional interest and
penalties) incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax, FICA tax or
income tax (including interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this section, the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax claimed and
xxx for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis, and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
If any such claim referred to in this Section is made by the Internal Revenue
Service and the Company does not request the Executive to contest the claim
within the 30 calendar day period following notice of the claim, the Company
shall pay to the Executive the amount of any Gross-Up Payment owed to the
Executive, but not previously paid pursuant to Section 4.1(a), immediately upon
the expiration of such 30 calendar day period. If any such claim is made by the
Internal Revenue Service and the Company requests the Executive to contest such
claim, but does not advance the amount of such claim to the Executive for
purposes of such contest, the Company shall pay to the Executive the amount of
any Gross-Up Payment owed to the Executive, but not previously paid under the
provisions of Section 4.1(a), within 5 business days
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of a Final Determination of the liability of the Executive for such Excise Tax.
For purposes of this Agreement, a "Final Determination" shall be deemed to occur
with respect to a claim when (i) there is a decision, judgment, decree or other
order by any court of competent jurisdiction, which decision, judgment, decree
or other order has become final, i.e., all allowable appeals pursuant to this
section have been exhausted by either party to the action, (ii) there is a
closing agreement made under Section 7121 of the Code, or (iii) the time for
instituting a claim for refund has expired, or if a claim was filed, the time
for instituting suit with respect thereto has expired.
If, after the receipt by the Executive of an amount advanced by the Company
pursuant to this section, the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of this section) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to this section, a determination is made by the
Internal Revenue Service that the Executive is not entitled to any refund with
respect to such claim and the Company does not notify the Executive in writing
of its intent to contest such denial of refund prior to the expiration of 30
calendar days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
4.2 No Mitigation Obligation. Executive's benefits hereunder shall be
payable to him as severance pay in consideration of his services under this
Agreement. The Company hereby acknowledges that it will be difficult, and may be
impossible, for the Executive to find reasonably comparable employment following
his termination. Accordingly, the parties hereto expressly agree that the
payment of the severance benefits by the Company to the Executive in accordance
with the terms of this Agreement will be liquidated damages, and that the
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, nor shall any
profits, income, earnings or other benefits from any source whatever create any
mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise.
4.3 Enforcement Costs. Company is aware that, upon the occurrence of a
Change of Control, the Board of Directors or a shareholder of the Company, or
the Company's successor in interest, may then cause or attempt to cause Company
to refuse to comply with its obligations under this Agreement, or may cause or
attempt to cause Company to institute, or may institute litigation seeking to
have this Agreement declared unenforceable, or may take, or attempt to take,
other action to deny Executive the benefits intended under this Agreement. In
these circumstances, the purpose of this Agreement could be frustrated. It is
the intent of Company that Executive not be required to incur the expenses
associated with the enforcement of his rights under this Agreement by litigation
or other legal action, nor be bound to negotiate any settlement of his rights
hereunder under threat of incurring such expenses because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
Executive hereunder. Accordingly, if following a Change in Control Executive
should conclude in good faith that Company has failed to comply with any of its
obligations under this Agreement or in the event that Company or any other
person takes any action to declare this Agreement void or unenforceable, or
institutes any litigation or other legal action designed to deny, diminish or to
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recover from Executive the benefits intended to be provided to Executive
hereunder, Company irrevocably authorizes Executive from time to time to retain
legal counsel of his choice at the expense of Company to represent Executive in
connection with the initiation or defense of any litigation or other legal
action, whether by or against Company or any director, officer, stockholder or
other person affiliated with Company. The reasonable fees and expenses of
counsel selected from time to time by Executive as provided herein shall be paid
or reimbursed to Executive by Company on a regular, periodic basis upon
presentation by Executive of a statement or statements prepared by his counsel
in accordance with its customary practices. In any action involving this
Agreement, Executive shall be entitled to prejudgment interest on any amounts
found to be due him as of the date such amounts would have been payable to
Executive pursuant to this Agreement at an annual rate of interest of 10%.
ARTICLE V
EXCLUSIVITY, ETC.
5.1 Exclusivity. The Executive agrees to perform his duties,
responsibilities and obligations hereunder efficiently and to the best of his
ability. The Executive agrees that he will devote substantially all of his
working time, care and attention and best efforts to such duties,
responsibilities and obligations throughout the Term. The foregoing shall not be
interpreted to prohibit the Executive from serving as director or trustee of one
or more corporations or foundations (either for-profit or not-for-profit) other
than the Company. The Executive also agrees that he will not engage in any other
business activities, pursued for gain, profit or other pecuniary advantage, that
are competitive with the activities of the Company.
5.2 Other Business Ventures. The Executive agrees that, so long as he is
employed by the Company, he will not own, directly or indirectly, any
controlling or substantial stock or other beneficial interest in any business
enterprise which is engaged in, or competitive with, any business engaged in by
the Company. Notwithstanding the foregoing, the Executive may own, directly or
indirectly, up to 5% of the outstanding capital stock or any business having a
class of capital stock which is traded on any national stock exchange or in the
over-the-counter market.
5.3 Confidentiality. The Executive agrees that he will not, at any time
during or after the Term, make use of or divulge to any other person, firm or
corporation any trade or business secret, process, method or means, or any other
confidential information concerning the business or policies of the Company,
which he may have learned in connection with his employment hereunder. For
purposes of this Agreement, a "TRADE OR BUSINESS SECRET, PROCESS, METHOD OR
MEANS, OR ANY OTHER CONFIDENTIAL INFORMATION" shall mean and include written
information treated as confidential or as a trade secret by the Company. The
Executive's obligation under this Section 5.3 shall not apply to any information
which (a) is known publicly; (b) is in the public domain or hereafter enters the
public domain without the fault of the Executive; (c) is known to the Executive
prior to his receipt of such information from the Company, as evidenced by
written records of the Executive; or (d) is hereafter disclosed to the Executive
by a third party not under an obligation of confidence to the Company. 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 except as
specifically permitted in writing by the Company, any document or other object
containing or reflecting any such confidential information. The Executive
recognizes
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that all such documents and objects, whether developed by him or by someone
else, will be the sole and exclusive property of the Company. Upon termination
of his employment hereunder, the Executive shall forthwith deliver to the
Company all such confidential information, including without limitation all
lists of lessees, 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, and no copy of any such confidential
information shall be retained by him. The provisions of this Section 5.3 shall
survive any termination of this Agreement.
5.4 Noncompetition.
(a) Covenant Not to Compete. In consideration of execution of this
Agreement, in consideration of Executive's continued employment, salary, and
other benefits specified in this Agreement and in consideration of access to
trade secrets and other proprietary information of the Company, for the
Noncompetition Period (as defined below), Executive will not:
(i) Accept a position as an officer, director, employee, agent,
consultant, or representative of a Competitor. Executive acknowledges that
the Company has performed and will perform Competing Activities (as
defined below) on a nation-wide basis. Executive further acknowledges that
the definition of Prohibited Territory (as defined below) may prohibit
Executive from engaging in Competing Activities nation-wide.
(ii) Acquire or fail to dispose of any stock or other ownership
interest in any Competitor, other than investments equal to less than one
percent of the outstanding stock of any class issued by any publicly
traded company.
(iii) Undertake any Competing Activities in the Prohibited Territory
for his own account.
(iv) Directly or indirectly, whether as an employee, consultant,
independent contractor, partner, joint venturer or otherwise, (A) solicit
or induce, or in any manner attempt to solicit or induce, any person
employed by, or as agent of, the Company to terminate such person's
employment or agency, as the case may be, with the Company or (B) divert,
or attempt to divert, any person, concern, or entity from doing business
with the Company (including entering into a lease), nor will he attempt to
induce any such person, concern or entity to cease being a lessee,
customer or supplier of the Company.
Provided, however, if Executive is terminated for Cause or Executive
voluntarily terminates his employment these provisions of Section 5.4 shall not
be applicable and enforceable unless the Company pays to Executive a lump sum at
the end of his employment equal to Executive's base salary for the year
preceding the termination and his annual bonus paid for the prior year, less any
applicable tax withholdings.
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(b) Definitions.
"Noncompetition Period" means the period from the date hereof to one year
after Executive leaves the employ of the Company.
"Competing Activities" means the business of collecting, processing or
refining used oil.
"Prohibited Territory" means any area within one thousand miles of a
location in which the Company has engaged in or demonstrated an intent to engage
in Competing Activities within the twelve calendar months preceding termination
of your employment.
"Competitor" means (A) a person or entity that is engaged in Competing
Activities in the Prohibited Territory or (B) any other person or entity that,
as of the date of Executive's termination, competes directly with the Company or
any of its subsidiaries in the Prohibited Territory.
5.5 Reformation. Executive agrees that the restrictions in Paragraphs 5.4
and 5.5 are reasonable in scope and duration in light of the Company's business
and competitors. If any provision of Paragraphs 5.4 or 5.5 is held by a court or
arbitrator to be unreasonable in scope or duration, the court or arbitrator
shall, to the extent permitted by law, reform such provision so that it is
enforceable, and enforce the applicable provision as so reformed. Reformation
pursuant to this Paragraph 5.6 shall not affect any other provision of this
Agreement or render this Agreement unenforceable or void.
ARTICLE VI
INDEMNIFICATION
The Company will indemnify the Executive to the fullest extent that would
be permitted by law (including a payment of expenses in advance of final
disposition of a proceeding) as in effect at the time of the subject act or
omission, or by the charter or by-laws of the Company as in effect at such time,
or by the terms of any indemnification agreement between the Company and the
Executive, whichever affords greatest protection to the Executive, and the
Executive shall be entitled to the protection of any insurance policies the
Company may elect to maintain generally for the benefit of its officers or,
during the Executive's service in such capacity, directors (and to the extent
the Company maintains such an insurance policy or policies, in accordance with
its or their terms to the maximum extent of the coverage available for any
company officer or director); against all costs, charges and expenses whatsoever
incurred or sustained by the Executive (including but not limited to any
judgment entered by a court of law) at the time such costs, charges and expenses
are incurred or sustained, in connection with any action, suit or proceeding to
which the Executive may be made a party by reason of his being or having been an
officer or employee of the Company, or serving as a director, officer or
employee of an affiliate of the Company, at the request of the Company. The
Executive's rights under this Section shall continue without time limit for so
long as he may be subject to any such liability, whether or not his term of
employment may have ended.
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ARTICLE VII
MISCELLANEOUS
7.1 No Set-Off. There shall be no set-off or counterclaim against, or
delay in, any payment of severance benefits by the Company to Executive provided
for in this Agreement with respect to any claim against or debt or obligation of
Executive, whether arising hereunder or otherwise except for health benefits as
provided in Section 4(c).
7.2 Benefit of Agreement; Assignment; Beneficiary. This Agreement shall
inure to the benefit of and be binding upon the Company and its successors and
assigns, including, without limitation, any entity or person which may acquire
all or substantially all of the Company's assets or business, or with or into
which the Company may be consolidated or merged and be binding upon any entity
or person which controls, or otherwise owns fifty percent or more of the equity,
of the acquiring, consolidating or merging entity or person. This Agreement
shall also inure to the benefit of, and be enforceable by, the Executive and his
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amount would still be payable to the Executive hereunder if he had continued to
live, all such amounts shall be paid in accordance with the terms of this
Agreement to the Executive's beneficiary, devisee, legatee or other designee, or
if there is no such designee, to the Executive's estate.
7.3 Notices. Any notice required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered or if sent by
telegram or telex or by registered or certified mail, postage prepaid, with
return receipt requested, addressed:
(a) in the case of the Company, Probex Corporation, 00000 Xxxx Xxxx,
Xxxxx 0000, Xxxxxx, XX 00000, attention Chief Financial Officer; and
(b) in the case of the Executive, Xxxxxxx X. Xxxxxxxx, 0000 Xxxxxx
Xxxx Xxxxx, Xxxxxx, Xxxxx 00000
7.4 Entire Agreement; Amendment. This Agreement contains the entire
agreement of the parties hereto with respect to the terms and conditions of the
Executive's employment during the Term and supersedes any and all prior
agreements and understandings, whether written or oral, between the parties
hereto with respect to compensation due for services rendered hereunder. This
Agreement may not be changed or modified except by an instrument in writing
signed by both of the parties hereto.
7.5 Waiver. The waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a continuing waiver or as a
consent to or waiver of any subsequent breach hereof.
7.6 Headings. The article and section headings herein are for convenience
of reference only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof.
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7.7 Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the internal laws of the State of Texas without
reference to the principles of conflict of laws.
7.8 Agreement to Take Actions. Each party hereto shall execute and deliver
such documents, certificates, agreements and other instruments, and shall take
such other actions, as may be reasonably necessary or desirable in order to
perform his or its obligations under this Agreement or to effectuate the
purposes hereof.
7.9 Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of the rights and obligations under this
Agreement.
7.10 Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
7.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
7.12 Corporate Authorization. The Company hereby represents that the
execution, delivery and performance by the Company of this Agreement are within
the corporate powers of the Company, and that the Chairman of its Board of
Directors has the requisite authority to bind the Company hereby.
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date first above written.
PROBEX CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Chairman of the Board
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxx
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