1
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
This Agreement is made as of the 30th day of June, 1998, by and between
Probex Corporation, a Colorado corporation (the "Company"), acting on its own
behalf and on behalf of its successors and assigns and Xxxxxx Xxxxxx, a Texas
resident ("Executive").
WHEREAS, Executive is currently employed by the Company as Chief
Executive Officer.
WHEREAS, the Company believes that retention of Executive as a key
employee of the Company is an important factor in the continued success of the
business of the Company.
WHEREAS, the Company desires that Executive agree to remain in the
employ of the Company for an extended period.
WHEREAS, Executive is willing to make a commitment to remain in the
employ of the Company for such extended period upon the terms and conditions set
forth in this Agreement,
NOW, THEREFORE, for and in consideration of the mutual promises
contained herein, the sufficiency of which is hereby acknowledged, the Company
and Executive agree as follows:
1. TERM OF EMPLOYMENT
1.1 Term of Employment for purposes of this Agreement shall mean the
period of time commencing on the date hereof and ending twenty-four (24) months
thereafter (unless sooner terminated pursuant to this Agreement).
1.2 At the end of the Term of Employment, the employment of the
Executive will again be "at will", unless otherwise agreed to in writing by a
majority of the members of the Board of Directors of the Company (the "Board")
who are not employees or officers (or affiliates, associates, or relatives of
such employees or officers) of the Company (the "Outside Directors").
2. EMPLOYMENT
2.1 The Company agrees to employ Executive during the Term of
Employment and Executive agrees to accept such employment.
2.2 At the commencement of the Term of Employment, Executive shall be
employed as Chief Executive Officer. Executive, subject to the control of the
Board of Directors, shall have general supervision, direction and control of the
business and officers of the Company and such other duties as may be assigned by
the Board of Directors.
1
EXECUTIVE EMPLOYMENT AGREEMENT
2
2.3 Except as may otherwise be approved in advance by the Board, and
except during vacation periods and reasonable periods of absence due to
sickness, personal injury or other disability, Executive shall devote his full
time throughout the Term of Employment to the services required of him
hereunder. Executive shall render his services exclusively to the Company during
the Term of Employment, and shall use his best efforts, judgment and energy, to
improve and advance the business and interests of the Company in a manner
consistent with the duties of his position, provided, however, that Executive
may conduct such other activities during the Term of Employment as he deems
appropriate and consistent with his duties hereunder, including serving as a
director of other companies and engaging in civic and social responsibilities.
3. COMPENSATION AND BENEFITS
3.1 Base Salary. During the Term of Employment, Executive shall
receive a base salary of at least a monthly rate of $5,417, payable in
installments in accordance with the Company's customary payroll practices, but
no less frequently than monthly. Upon the consummation of the first financing of
an operating plant of the Company, Executive's base salary shall be increased to
at least $7,500 per month. Upon the successful commencement of continuous
operations of the Company's first operating plant, Executive's base salary shall
be increased to at least $10,000 per month. All compensation paid to Executive
under this Agreement shall be subject to any and all payroll and withholding
deductions as are required by the law of any applicable jurisdiction (state,
federal or otherwise) with taxing authority with respect to such compensation.
3.2 Annual Bonus. During the Term of Employment, Executive shall
receive, in addition to a base salary, annual bonuses, provided that the annual
bonus program pursuant to which Executive shall receive such annual bonuses
shall require the approval of a majority of the Outside Directors.
3.3 Incentive Savings and retirement plans. In addition to base salary
and annual bonuses payable as provided above, Executive shall be entitled to
participate during the Term of Employment in all incentive, savings and
retirement plans and programs applicable to other senior executives of the
Company, provided that such incentive, savings and retirement plans and programs
shall require the approval of a majority of the Outside Directors.
3.4 Employee Welfare Benefit Plans. During the Term of Employment,
Executive and/or Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans
provided by the Company to the extent permitted by law, provided that such
welfare benefit plans shall require the approval of a majority of the Outside
Directors.
3.5 Stock Incentive Plans. During the Term of Employment, Executive
shall be eligible for participation in such other stock incentive plans (which,
by way of example only, may include, stock option plans, stock appreciation
rights plans, restricted stock plans, cheap stock plans, stock swap plans, and
performance share plans), if any, available to other senior
2
EXECUTIVE EMPLOYMENT AGREEMENT
3
executives of the Company, provided that such stock incentive plans shall
require the approval of a majority of the Outside Directors.
3.6 Expenses. During the Term of Employment, Executive shall be
entitled to receive prompt reimbursement for all reasonable business expenses
incurred in the performance of his employment by the Company in accordance with
the policies and procedures of the Company.
3.7 Vacation. During the Term of Employment, Executive shall be
entitled to paid vacation in accordance with the vacation policy of the Company.
Executive will also be entitled to carry over or be paid for any unutilized paid
vacation time due to Executive from prior years in accordance with such policy.
3.8 Comity. During the Term of Employment, if the Company shall enter
into any employment agreement with any other person with provisions more
beneficial to such other person than those contained in this Agreement, then
Executive shall be entitled to receive such beneficial provisions to the same
extent as granted in such employment agreement, provided that, if the Company
enters into an employment agreement with a person who is not employed by the
Company as of the Effective Date and such employment agreement contains a
provision relating to severance which is more beneficial to such person than the
severance provision of this Agreement, Executive shall be entitled to receive
such beneficial severance provision only with the consent of the Board of
Directors.
4. TERMINATION OF EMPLOYMENT
4.1 Termination by the Company for Cause. The Company may terminate
Executive's employment for Cause without thereby giving rise to a breach of this
Agreement solely as a result of such termination. "Cause" means the commission
of an act of fraud, theft or dishonesty against the Company; arrest or
conviction for any felony; arrest or conviction for any misdemeanor involving
moral turpitude which might, in the Company's sole discretion, cause
embarrassment to the Company; willful or repeated tardiness or absenteeism;
substance abuse; insubordination; self-dealing; willful or repeated violation of
Company policy, willful or repeated non-performance or substandard performance
of duties; or violation of any state or federal laws, rules or regulation in
connection with or during performance of work. If Executive's employment is
terminated for Cause, the Company shall pay Executive his base salary accrued
through the date of such termination whereupon the Company shall have no further
obligations to Executive under this Agreement.
4.2 Termination by the Company without Cause. The Company may terminate
Executive's employment hereunder without Cause at any time upon thirty (30) days
notice to Executive without thereby giving rise to a breach of this Agreement
solely as a result of such termination. In the event of receipt of such notice,
Executive may immediately terminate Executive's employment and elect to receive
his base salary accrued through the date of termination plus a severance benefit
equal to the per diem rate of base salary multiplied by the number of calendar
days between the date Executive elects to immediately terminate Executive's
3
EXECUTIVE EMPLOYMENT AGREEMENT
4
employment and the date sixty (60) days after receipt of the Company's notice of
termination without Cause.
4.3 Termination by Executive for Good Reason. Executive's employment
may be terminated by Executive for "Good Reason" without thereby giving rise to
a breach of this Agreement solely as a result of such termination. For purposes
of this Agreement "Good Reason" means (i) Executive's compensation or benefits
are materially reduced; (ii) the Company reduces the potential earnings of
Executive under any performance-based bonus or incentive plan of the Company as
the Company may elect to offer Executive; (iii) any purchaser, assign, surviving
corporation, or successor of the Company or its business or assets (whether by
acquisition, merger, liquidation, consolidation, reorganization, sale or
transfer of assets or business, or otherwise) fails or refuses to expressly
assume in writing this Agreement and all of the duties and obligations of the
Company hereunder; or (iv) the Company breaches any of the provisions of this
Agreement. Executive shall not be entitled to terminate for Good Reason by
reason of an isolated, insubstantial and inadvertent action taken or failure not
occurring in bad faith and which is remedied by the Company promptly after
receipt of written notice thereof given by Executive. In the event of
termination of his employment by Executive for Good Reason pursuant to this
Paragraph 4.3, the Company shall pay Executive his base salary accrued through
the date of termination plus a severance benefit equal to the per diem rate of
base salary multiplied by sixty (60) days, whereupon, Executive shall be
relieved of his obligations under Paragraph 2 and the Company shall have no
further obligations to Executive under this Agreement.
4.4 Reserved.
4.5 Death. Executive's employment hereunder shall be terminated
(without thereby giving rise to a breach of this Agreement solely as a result of
such termination) automatically upon Executive's death during the Term of
Employment. In the event of such termination, the Company shall pay to
Executive's estate within 60 days after the date of Executive's death, all
benefits and compensation accrued hereunder prior to the date of Executive's
death.
4.6 Disability. Executive's employment hereunder shall be terminated
(without thereby giving rise to a breach of this Agreement solely as a result of
such termination) automatically upon Executive's Total Disability during the
Term of Employment. In the event of such termination, the Company shall pay to
Executive within 60 days after the date of termination under this Paragraph 4.6,
all benefits and compensation accrued hereunder prior to the date of such
termination. "Total Disability" means an illness, injury or other incapacitating
condition as a result of which Executive is unable to perform the services
required to be performed under this Agreement of (i) forty-five (45) consecutive
days during the Term of Employment or (ii) a period or periods aggregating more
than sixty (60) days in any twelve (12) consecutive months. Executive shall
submit to such medical examinations as the Company may deem desirable to
determine whether a Total Disability exists.
4
EXECUTIVE EMPLOYMENT AGREEMENT
5
5. CONFIDENTIAL INFORMATION,
NON-SOLICITATION AGREEMENT AND
COVENANT NOT TO COMPETE
5.1 Non-Disclosure of Confidential Information.
5.1.1. In connection with his employment with the Company,
Executive will have access to and become acquainted with various trade secrets
and other proprietary and confidential information of the Company. "Trade
secrets and other proprietary and confidential information" include but are not
limited to the following: (1) business, pricing, marketing, and cost data; (2)
technical information regarding the Company's products; (3) secret inventions;
(4) computer software; (5) computer software documentation; (6) confidential
customer information; (7) customer and supplier lists; (8) contents of contracts
and agreements with customers; (9) customer requirements and specifications; and
(10) designs, development techniques, and other products, processes or formulae,
whether or not developed or used by Executive. Executive acknowledges that the
Company has taken steps to keep trade secrets and other proprietary and
confidential information secret, including disclosing the information only on a
need-to-know basis, labeling documents as "confidential," and keeping
confidential information in secure areas. Executive further acknowledges that
the trade secrets and other proprietary and confidential information have been
developed or acquired by the Company through expenditure of substantial time,
effort, and money and provide the Company with an advantage over competitors who
do not know or use such trade secrets and other proprietary and confidential
information.
5.1.2. In consideration for access to trade secrets and other
proprietary and confidential information, Executive agrees that he will not
directly or indirectly disclose or use for any reason whatsoever any trade
secrets and other proprietary and confidential information obtained by him by
reason of his employment with the Company, except as required to conduct the
business of the Company or as authorized by express written permission of the
Board or as otherwise required by law.
5.1.3. Executive confirms that all trade secrets and other
proprietary and confidential information, and all documents reflecting such
information, remain the exclusive property of the Company. All business records,
papers, and documents kept or made by Executive relating to the business of the
Company shall be and remains the property of the Company and shall remain in the
possession of the Company during the term of Executive's employment and at all
times thereafter. Upon the termination of his employment with the Company or
upon the request of the Company at any time, Executive shall promptly deliver to
the Company, and shall retain no copies of, any materials, records, and
documents (in whatever form or medium) made by Executive or coming into his
possession concerning the business or affairs of the Company provided that, if
at the time of termination, Executive requests retention of engineering
documents for professional liability purposes, Executive and the Company shall
enter into a mutually agreeable arrangement regarding custody and access to such
engineering documents.
5.1.4. Executive acknowledges and agrees that the nature of the
trade secrets and other proprietary and confidential information to which he
will be given access may make it
5
EXECUTIVE EMPLOYMENT AGREEMENT
6
impossible for him to perform in the capacity of officer, director, employee,
agent, consultant, or representative of any Competitor (as defined below)
without disclosing or utilizing the trade secrets and other proprietary and
confidential information to which he will be given access during the course of
his employment. Executive further acknowledges and agrees that the Company's
products are marketed in a highly competitive market.
5.2 Non-Solicitation Agreement.
5.2.1. Employees. Any attempt on the part of Executive to
induce others to leave the Company's employ, or any effort by Executive to
interfere with the Company's relationship with its other employees would be
harmful and damaging to the Company. Executive agrees that during the Term of
Employment and for a period of four years thereafter, Executive will not in any
way, directly or indirectly (i) induce or attempt to induce any employee of the
Company to quit employment with the Company; (ii) otherwise interfere with or
disrupt the Company's relationship with its employees; (iii) solicit, entice, or
hire away any employee of the Company; or (iv) hire or engage any employee of
the Company or any former employee of the Company whose employment with the
Company ceased less than one year before the date of such hiring or engagement.
5.2.2. Customers. Executive agrees that during the Term of
Employment and for a period of four years thereafter, Executive will not divert
or attempt to divert from the Company any business the Company had enjoyed or
solicited from its customers during the twelve months preceding the date of
termination of his employment.
5.3 Covenant Not to Compete. In consideration of execution of this
Agreement, in consideration of Executive's continued employment, salary, bonus
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, Executive will not:
(i) Accept a position as an officer, director, employee,
agent, consultant, representative of a Competitor (as defined below).
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 him 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 per cent 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.
5.4 Definitions.
5.4.1 "Noncompetition Period" means the period from the date
hereof to four years after Executive leaves the employ of the Company.
6
EXECUTIVE EMPLOYMENT AGREEMENT
7
5.4.2 "Competing Activities" means the business of refining and
re-refining used oil.
5.4.3 "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 Executive's employment.
5.4.4 "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 Remedy in the Event of Breach.
5.5.1 Without intending to limit the remedies available to the
Company, Executive acknowledges that a breach or threatened breach of any of the
covenants contained in Paragraphs 5.1 through 5.4 may result in material
irreparable injury to the Company or one of its subsidiaries for which there is
no adequate remedy at law, that it may not be possible to measure damages for
such injuries precisely, and that in the event of such a breach or threat
thereof, the Company shall be entitled to obtain a temporary restraining order,
a preliminary or permanent injunction, or other comparable provisional or
equitable relief restraining Executive from engaging in activities prohibited by
Paragraphs 5.1 through 5.4, and such other relief as may be required to enforce
specifically any of the covenants in such Sections. Executive agrees to personal
jurisdiction of any state or federal court in Dallas County, Texas in any
proceeding brought by the Company to enforce Executive's covenants under
Paragraphs 5.1 through 5.4.
5.5.2. Reserved.
5.5.3. If Executive materially breaches any of his obligations
under Paragraphs 5.1 through 5.4, in addition to any other remedies available to
Company under the Agreement, at law, or in equity, the Executive, upon
termination of his employment, shall forfeit his right to receive any further
payments described in this Agreement, including without limitation, any salary
and benefits that may be payable after the date of termination of Executive's
employment including without limitation any such benefits already received that
were prepaid prior to termination or paid after termination. To the extent any
payments and benefits already received are so forfeited, Executive shall
promptly return to the Company any payments and benefits received by Executive
after termination of his employment.
5.5.4. Nothing in this Agreement shall prevent the Company from
seeking equitable relief pursuant to this Paragraph 5.5.
5.6 Reformation. Executive agrees that the restrictions in
Paragraphs 5.1 through 5.4 are reasonable in scope and duration in light of the
Company's business and competitors. If any provision of Paragraphs 5.1 through
5.5 is held by a court or arbitrator to be unreasonable in
7
EXECUTIVE EMPLOYMENT AGREEMENT
8
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 the Agreement or render the Agreement
unenforceable or void.
5.7 Survival. The provisions of Paragraphs 5.1 through 5.6 of this
Agreement shall survive termination of the Agreement for any reason.
6. NOTICES AND COMMUNICATIONS
6.1 All notices and other communications hereunder shall be in writing
and shall be given when hand delivered to the other party or upon receipt if
sent by registered or certified mail, return receipt requested, postage prepaid
or sent by an express delivery service (e.g. Federal Express, UPS Next Day Air)
addressed to the parties at the addresses set forth below or such other address
as either party shall have furnished to the other in writing in accordance
herewith.
If to the Company: Probex Corporation
0000 XxXxx Xx., Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
Attention: President
If to Executive: Xxxxxx Xxxxxx
000 Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
7. MISCELLANEOUS
7.1 Non-Assignability. The rights and obligations extended by the
Company to Executive under this Agreement are personal to Executive and shall
not be assignable by Executive without the prior written consent of the Company.
Without limiting the foregoing, Executive acknowledges and consents to the
assignment of this Agreement by the Company to any parent, subsidiary or
affiliate of the Company, provided that no such assignment shall change the
definition of the "Company" herein. The obligations of the Company may be
assigned to other entities who expressly assume the obligations of the Company
hereunder, but Company shall not be released from its obligations except
pursuant to the prior written consent of Executive, which shall not be
unreasonably withheld.
7.2 Non-Exclusivity of Rights. Nothing in this Agreement shall prevent
or limit any rights of Executive to receive any benefits, bonus, incentive or
other payment provided by the Company to its salaried employees prior to the
date hereof, except for such rights as Executive may have specifically waived in
writing. Amounts which are vested benefits or which Executive is otherwise
entitled to receive under any plan or program of the Company shall be payable in
accordance with the terms of such plan or program.
8
EXECUTIVE EMPLOYMENT AGREEMENT
9
7.3 Enforceability. This Agreement shall inure to the benefit of and be
enforceable by the parties hereto, and their respective heirs, personal
representatives, successors and assigns.
7.4 Applicable Law. This Agreement shall be governed by and construed
in accordance with the substantive laws of the State of Texas. The parties
hereto consent to the jurisdiction of the courts of the State of Texas.
7.5 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
7.6 Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
7.7 Amendments. This Agreement may not be amended or modified other
than by a written agreement executed by the parties hereto or their respective
heirs, representatives, successors and assigns, nor may any provision hereof be
waived except by a writing signed by the party waiving such provision.
7.8 Term. Unless earlier properly terminated by one of the parties
hereto, this Agreement shall terminate on the second anniversary of the date
hereof, except for the obligations concerning confidentiality, non-solicitation
agreements and the covenant not to compete set forth in Paragraph 5, which shall
survive the termination of this Agreement in accordance with their terms.
7.9 Execution of Agreement. This Agreement may be executed in duplicate
originals.
7.10 Entire Agreement. This Agreement contains the entire understanding
of the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company and Executive have caused this
Agreement to be executed as of the day and year first above written to become
effective upon the later of the date hereof or the date the Company successfully
conducts an Acceptance Test on crankcase used oil as defined in and pursuant to
the Convertible Loan, Warrant and Security Agreement, dated as of June 30, 1998,
by and between the Company and HSB Engineering Finance Corporation, Inc., a
Delaware corporation.
THE COMPANY EXECUTIVE
BY: /s/ Xxxx Xxxxxx /s/ Xxxxxx Xxxxxx
--------------------------- ---------------------------------
Name: XXXX XXXXXX Xxxxxx Xxxxxx
--------------------
Title: PRESIDENT
--------------------
9
EXECUTIVE EMPLOYMENT AGREEMENT
