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EXHIBIT 10.5
EXECUTIVE EMPLOYMENT
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 ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, a Texas resident ("Executive").
WHEREAS, Executive is currently employed by the Company as
Vice-President.
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 Vice-President. Executive shall have responsibility for operational
and engineering functions of the Company and such other duties as may be
assigned by the Chief Executive Officer pursuant to the Company's by-laws.
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
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EXECUTIVE EMPLOYMENT AGREEMENT
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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 executives of the
Company, provided that such stock incentive plans shall require the approval of
a majority of the Outside Directors.
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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.
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 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
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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.
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.
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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 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.
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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.
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
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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 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
▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
If to Executive: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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.
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
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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:
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title:
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EXECUTIVE EMPLOYMENT AGREEMENT