Exhibit 10.6

 

Employment Agreement with Wayne R. Holbrook

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EMPLOYMENT AGREEMENT – Wayne R. Holbrook

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made by and between Royal
BodyCare, Inc. (“Employer”) located at 2301 Crown Court, Irving, Texas 75038 and
Wayne R. Holbrook (“Employee”), residing at 3809 Fox Glen Dr., Irving, Texas
75062.

 

The parties to this Agreement declare that:

 

The Employer is engaged in, among other businesses, the international
distribution of nutritional supplements and personal care products through the
network marketing distribution model, and the distribution of wound care and
oncology care products.

 

The Employee is willing to be employed by the Employer, and the Employer is
willing to employ the Employee, on the terms, covenants, and conditions set
forth in this Agreement.

 

In consideration of the mutual promises set forth in this Agreement, the
Employer and the Employee agree as follows:

 

Section 1. Effective Date. The Effective Date of this Agreement shall be January
1, 2004.

 

Section 2. Employment Title and Duties. The Employer shall employ the Employee
in the capacity of President. In this capacity, Employee shall have the
responsibility to perform all duties that are customarily performed by one
holding that position in other, same, or similar businesses or enterprises as
that engaged by Employer. The Employee’s shall be responsible for the Employer’s
network marketing business and operations conducted in the US, Canada and all
other international territories, whether operations are conducted through a
license agreement, or through an entity owned by or affiliated with the
Employer. The Employee shall not be responsible for the Employer’s manufacturing
operations, research and development operations, or the business or operations
of MPM Medical, Inc. A diagram of the Employee’s functional responsibility is
attached as Exhibit A. The Employee accepts this employment, subject to the
general supervision and pursuant to the orders and direction of the Employer.
The Employee shall also render such other and unrelated services and duties as
may be assigned from time to time by the Employer.

 

Section 3. Compensation of the Employee. The Employer shall pay the Employee in
full payment for the Employee’s services under this Agreement, the following
compensation:

 

  a. Annual Base Salary. Employee’s annual base salary shall be Two Hundred
Fifty Thousand Dollars ($250,000) per year payable bi-weekly in twenty-six (26)
equal payments.

 

  b. Incentive Bonus. Employee shall be paid a cash incentive bonus as described
in Exhibit B.

 

  c. Uniform Benefits. Employee shall receive uniform benefits as set forth in
Employer’s manual for executive employees, such benefits to include but not be
limited to personal time off, holidays, retirement benefits and health insurance
benefits. EMPLOYER RESERVES THE RIGHT UNILATERALLY TO AMEND ANY AND ALL PARTS OF
THE EMPLOYER’S MANUAL FOR EXECUTIVE EMPLOYEES AT ITS SOLE DISCRETION.

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Employment Agreement – Wayne R. Holbrook

Page 2

 

Section 4. Best Efforts of the Employee. The Employee agrees to perform all of
the duties pursuant to the express and implicit terms of this Agreement to the
reasonable satisfaction of the Employer. The Employee further agrees to perform
such duties faithfully and to the best of his ability, talent, and experience.

 

Section 5. Place of Employment. The Employee shall render such duties at 2301
Crown Court, Irving, Texas 75038 and at such other places as the Employer shall
in good faith require or as the interest, needs, business, or opportunity of the
Employer shall require.

 

Section 6. Non-Competition with the Employer during the Term of Employment. The
Employee shall devote all his time, attention, knowledge, and skills solely to
the business and interest of the Employer, and the Employer shall be entitled to
all of the benefits and profits arising from the work of the Employee. The
Employee shall not, during the term of this Agreement, be interested directly or
indirectly, in any manner, as partner, officer, director, shareholder, advisor,
employee, or in any other capacity in any other business similar to the
Employer’s business or any allied trade. However, nothing contained in this
section shall prevent or limit the right of the Employee from investing in the
capital stock or other securities of any corporation whose stock or securities
are publicly owned and traded on any public exchange, nor shall anything
contained in this section prevent or limit the Employee from investing in real
estate.

 

Section 7. Restrictions on the Use of Trade Secrets and Records. During the term
of employment under this Agreement, the Employee may have access to various
trade secrets, consisting of formulas, patterns, devices, inventions, processes,
and compilations of information, records and specifications, all of which are
owned by the Employer and regularly used in the operation of the Employer’s
business. All files, records, customer lists, documents, drawings,
specifications, equipment, and similar items relating to the business of the
Employer, whether they are prepared by the Employee or come into the Employee’s
possession in any other way and whether or not they contain or constitute trade
secrets owned by the Employer, are and shall remain the exclusive property of
the Employer and shall not be removed from the premises of the Employer under
any circumstances whatsoever without the prior written consent of the Employer.
The Employee agrees not to divulge, misappropriate, or disclose any of these
trade secrets and records directly or indirectly, to any person, firm,
corporation, or other entity in any manner whatsoever, either during the term of
this Agreement or at any time thereafter except as required in the course of
employment.

 

Section 8. Term. This Agreement shall be effective for period of four (4) years
beginning on January 1, 2004 and ending on December 31, 2007. This Agreement
shall be automatically renewed for an additional one-year period upon expiration
of its initial term and each anniversary thereafter, unless terminated by either
Employer or Employee upon thirty (30) days prior written notice to the other.

 

 

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Employment Agreement – Wayne R. Holbrook

Page 3

 

Section 9. Termination.

 

  a. Definition. For purposes of this Section 9, “Change of Control” shall be
defined as follows:

 

(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than Employer’s current Chief Executive Officer, Clinton H.
Howard, becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Employer representing
fifty percent (50%) or more of the combined voting power of Employer’s then
outstanding securities;

 

(ii) as a result of, or in connection with, any tender offer or exchange offer,
merger, or other business combination (a “Transaction”), the persons who were
directors of Employer immediately before the Transaction shall cease to
constitute a majority of the Board of Directors of Employer or any successor to
Employer;

 

(iii) Employer is reorganized, merged or consolidated with another corporation
and as a result of the reorganization, merger or consolidation less than fifty
percent (50%) of the outstanding voting securities of the surviving or resulting
corporation shall then be owned in the aggregate by the former stockholders of
Employer;

 

(iv) Employer sells or disposes of all or substantially all of its assets to any
person, other corporation, or other legal entity not controlled by Employer, or
the shareholders approve a plan of complete liquidation or an agreement for the
sale or disposition of Employer in a majority; or,

 

(v) another event occurs that the Board deems to be a change in the control of
Employer.

 

  b. Non-renewal by Employer. If the Employer elects to terminate this Agreement
pursuant to the terms of Section 8, the Employee, if requested by the Employer,
shall continue to render services, and shall be paid compensation as provided in
this Agreement up to the date of termination, and shall be entitled to receive
payment for accrued, unused personal time off as provided in the Employer’s
manual for executive employees. In addition, the Employee shall continue to be
paid his base salary for a period of six (6) months following the date of
termination, less all amounts required to be held and deducted.

 

  c. Non-renewal by Employee. If the Employee elects to terminate this Agreement
pursuant to the terms of Section 8, the Employee shall continue to render
services and shall be paid compensation as provided in this Agreement up to the
date of termination. In addition, Employee shall be entitled to receive payment
for accrued, unused personal time off as provided in the Employer’s manual for
executive employees.

 

  d. Cause. If the Employee willfully breaches or habitually neglects the
performance of duties required under the terms of this Agreement (“Cause”), the
Employer may terminate this Agreement by giving written notice of termination to
the Employee without prejudice to any other remedy to which the Employer may be
entitled either at law, in equity, or under this Agreement. In this case,
Employee shall be paid compensation as provided in this Agreement up to the date
of termination, and shall be entitled to receive payment for accrued, unused
personal time off as provided in the Employer’s manual for executive employees.

 

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Employment Agreement – Wayne R. Holbrook

Page 4

 

  e. Good Reason. If the Employer willfully breaches any material term of this
Agreement, or in the event of a Change of Control (collectively “Good Reason”),
Employee may terminate this Agreement by giving written notice of termination to
the Employer without prejudice to any other remedy to which the Employee may be
entitled either at law, in equity, or under this Agreement. In this case,
Employee shall be paid compensation as provided in this Agreement up to the end
of the initial term or renewal term in effect, and shall be entitled to receive
payment for accrued, unused personal time off as provided in the Employer’s
manual for executive employees. In addition, the Employee shall continue to be
paid his base salary for a period of six (6) months following the date of
termination, less all amounts required to be held and deducted.

 

  f. Death. This Agreement shall be deemed terminated as of the date of
Employee’s death. In this case, the Employer shall pay compensation as provided
in this Agreement up to the date of termination. In addition, the Employer shall
be obligated to pay Employee’s accrued, unused personal time off as provided for
terminating employee’s in the Employer’s manual for executive employees.

 

  g. Disability. Should the Employee be unable to perform his duties under this
Agreement by reason of disability for a period of ninety (90) days, Employer
shall have the right to terminate this Agreement upon written notice to
Employee. During the period that Employee fails to perform his duties as a
result of disability, the Employee shall continue to receive compensation as
provided by this Agreement to the extent Employee has accrued, unused personal
time off available. Should Employee exhaust accrued, unused personal time off
prior to a date six (6) months following the date on which Employee was
determined to be disabled, Employer will continue to pay the Employee 50% of the
Employee’s base compensation until the sooner of (i) the date on which Employee
begins to receive disability benefits under a long-term disability insurance
policy provided to Employee by or through Employer, or (ii) the date that is six
(6) months after the date on which Employee was determined to be disabled. It is
the intent of the parties hereto that, in the event Employee is disabled,
Employer’s maximum obligation for payment of accrued, unused personal time off
is a period of six (6) months.

 

  h. Early Termination by Employer. Should Employer terminate this Agreement
prior to the end of the initial term or any renewal term in effect, other than
by reason of Cause, death or disability, whether or not such termination is in
connection with or as a result of a Change of Control, Employee shall be paid
compensation as provided in this Agreement up to the end of the initial term or
renewal term in effect, and shall be entitled to receive payment for accrued,
unused personal time off as provided in the Employer’s manual for executive
employees. In addition, the Employee shall continue to be paid his base salary
for a period of six (6) months following the date of termination, less all
amounts required to be held and deducted.

 

  i. Early Termination by Employee. Should Employee terminate this Agreement
prior to the end of the initial term or any renewal term in effect, other than
for Good Reason, death or disability, Employee shall be paid compensation as
provided in this Agreement up to the date of termination, but shall not be
entitled to receive payment for any accrued, unused personal time off,
notwithstanding the provisions of the Employer’s manual for executive employees.

 

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Employment Agreement – Wayne R. Holbrook

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Section 10. Indemnity. The Employer shall indemnify the Employee and hold the
Employee harmless for any acts or decisions made by the Employee in good faith
while performing services for the Employer and will use its best efforts, as may
reasonably be required, to maintain coverage in the amount of $1,000,000 for the
Employee under an insurance policy covering the officers and directors of the
Employer against lawsuits. The Employer shall pay all expenses, including
attorney’s fees, actually and necessarily incurred by the Employee in connection
with any appeal thereon, including the cost of court settlements.

 

Section 11. Effect of Partial Invalidity. The invalidity of any portion of this
Agreement shall not affect the validity of any other provision. In the event
that any provision of this Agreement is held to be invalid, the parties agree
that the remaining provisions shall remain in full force and effect.

 

Section 12. Entire Agreement. This Agreement contains the complete Agreement
between the parties and shall supersede all other agreements, either oral or
written, between the parties. The parties stipulate that neither of them has
made any representations except as are specifically set forth in this Agreement
and each of the parties acknowledges that they have relied on their own judgment
in entering into this Agreement.

 

Section 13. Assignment. Neither party to this Agreement may assign their rights
under this Agreement unless the other party so consents to the assignment in
writing.

 

Section 14. Notices. All notices, requests, demands, and other communications
shall be in writing and shall be given by registered or certified mail, postage
prepaid, to the addresses shown on the first page of this Agreement, or to such
subsequent addresses as the parties shall so designate in writing.

 

Section 15. Arbitration. Any controversy or claim arising out of this Agreement,
or the breach of this Agreement shall be settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association,
and judgment upon the award rendered by the Arbitrator may be entered in any
court having jurisdiction.

 

Section 16. Attorney’s Fees. If any action at law or in equity, including an
action for declaratory relief is brought to enforce or interpret the provisions
of this Agreement, the prevailing party will be entitled to reasonable
attorney’s fees as determined by the court in the same action.

 

Section 17. Amendment. Any modification, amendment or change of this Agreement
will be effective only if it is in a writing signed by both parties.

 

Section 18. Governing Law. This Agreement, and all transactions contemplated by
this Agreement, shall be governed by, construed, and enforced in accordance with
the laws of the State of Texas.

 

Section 19. Headings. The titles to the paragraphs of this Agreement are solely
for the convenience of the parties and shall not affect in any way the meaning
or interpretation of this Agreement.

 

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Employment Agreement – Wayne R. Holbrook

Page 6

 

Section 20. MANAGEMENT ORGANIZATION. EMPLOYER, ACTING THROUGH ITS CHIEF
EXECUTIVE OFFICER WITH THE CONCURRENCE OF THE INDEPENDENT MEMBERS OF EMPLOYER’S
BOARD OF DIRECTORS, RESERVES THE RIGHT UNILATERALLY TO REVISE THE ORGANIZATION
OF ANY AND ALL OF THE MANAGEMENT FUNCTIONS AND RELATED REPORTING RELATIONSHIPS
AT ITS SOLE DISCRETION. THE CONTENTS OF THE DIAGRAM ATTACHED AS EXHIBIT A SHALL
BE SUBORDINATE TO THE AUTHORITY OF THE EMPLOYER TO REVISE MANAGEMENT
ORGANIZATION AND RELATED REPORTING RELATIONSHIPS AS PROVIDED IN THIS SECTION.

 

IN WITNESS WHEREOF, the parties have executed this Agreement on this 20th day of
February, 2004.

 

EMPLOYEE:

 

EMPLOYER:

   

Royal BodyCare, Inc.

/s/ Wayne R. Holbrook

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By:

 

/s/ Clinton H. Howard

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(Signature)

     

(Signature)

Wayne R. Holbrook

     

Clinton H. Howard

       

Chief Executive Officer

 

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EXHIBIT A

 

LOGO [g22827image002.jpg]

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EXHIBIT B

 

CASH INCENTIVE BONUS

 

For purposes of this Exhibit B, “Operating Margin” shall be defined as sales
minus the sum of cost of goods sold and distributor commissions. Sales, cost of
goods sold and distributor commissions shall be reported each month on the same
basis as that used to report the Employer’s results of operations in its audited
financial statements, and in accordance with generally accepted accounting
principles. For purposes of this section, “RBC” shall mean the network marketing
business conducted in the US, Canada and any other international territory,
whether through a license agreement or through an entity owned by the Employer
or affiliated with the Employer, and shall exclude the operations of Employer’s
wholly owned subsidiary, MPM Medical, Inc.

 

Employee shall be entitled to receive a cash incentive bonus based on the
increase in Operating Margin earned by RBC each month. For purposes of this
Exhibit, Operating Margin shall be defined as sales minus the sum of cost of
goods sold and distributor commissions. Sales, cost of goods sold and
distributor commissions shall be reported each month on the same basis as that
used to report the Employer’s results of operations in its audited financial
statements, and in accordance with generally accepted accounting principles. For
purposes of this Exhibit, RBC shall mean the network marketing business
conducted in the US, Canada and any other international territory, whether
through a license agreement or through an entity owned by the Employer or
affiliated with the Employer. The Bonus shall be based on the monthly increase
in RBC’s Operating Margin over RBC’s Base Operating Margin, which is equal to
$592,000. For each increment of $84,000 that RBC’s Operating Margin increases
over the Base, the Employee shall receive a Bonus of $4,200. Employee shall be
paid this Bonus the month following the month in which the bonus is earned.

 

If the Employee earns a Bonus of $8,400 or more for three consecutive months,
his annual base salary shall be adjusted according to the following calculation,
up to a maximum annual rate of $750,000. This adjustment shall be calculated by
multiplying by 12, the difference between the lowest Bonus earned during the
preceding three-month period and $4,200. For example, if the Employee earns
monthly Bonuses of $8,400, $12,600 and $12,600 in three consecutive months, the
Employee’s annual base salary shall be increased by $50,400 ($8,400 - $4,200 =
$4,200; $4,200 x 12 = $50,400). If the Employee earns monthly Bonuses of $4,200,
$8,400 and $8,400 in three consecutive months, the Employee’s annual base salary
shall not be increased ($4,200 - $4,200 = $0; $0 x 12 = $0). For each
incremental increase of $50,400 in the Employee’s annual base salary, RBC’s Base
Operating Margin shall increase by an increment of $84,000. An increase in the
Employee’s annual base salary pursuant to this Exhibit shall become effective
the first full pay period of the second month following the last month in the
three consecutive month period that gave rise the to the increase. For example,
if an increase in the Employee’s annual base salary is warranted by Bonuses
earned for the months of February, March and April, the increase will become
effective during the first full pay period of June. Accordingly, RBC’s Base
Operating Margin for the month during which the Employee’s annual base salary is
adjusted shall be prorated based on the number of days paid at the old and new
annual base salary rates.

 

Not withstanding any other provisions of this Exhibit, the Employer shall not be
obligated to pay the Employee in any month, a rate of base salary plus Bonus
that, if annualized, would result in annual compensation exceeding $750,000.

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If RBC’s Operating Margin is below RBC’s Base Operating Margin, as adjusted
pursuant to the previous paragraph, in any month, the Employee’s annual base
salary shall be reduced effective the first full pay period following
determination of this result. This reduction shall be calculated as follows: the
difference between RBC’s Operating Margin and the Base Operating Margin shall be
divided by $84,000 and rounded up to the next highest whole number; this whole
number shall then be multiplied by $50,400. For example, assume RBC’s Operating
Margin is $1,400,000 and RBC’s Base Operating Margin is $1,500,000. In this
example, the Employee’s annual base salary would be reduced $100,800 ($1,500,000
- $1,400,000 = $100,000; $100,000 / $84,000 = 1.2; 1.2 is rounded to 2; 2 x
$50,400 = $100,800). Accordingly, RBC’s Base Operating Margin for the month
during which the Employee’s annual base salary is adjusted shall be prorated
based on the number of days paid at the old and new annual base salary rates. In
addition, the Employer shall have the right to deduct from future Bonus
payments, any amounts paid to the Employee as increased annual base salary that
were not earned. Notwithstanding any provision of this Exhibit, the Employee’s
annual base salary shall in no case be less than $250,000.