Employment Agreement
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 20 day of March, 1997 (the "Effective Date") by and between COVOL
Technologies, Inc., a Delaware corporation (the "Company"), and Xxx X. Xxxxxxxx
("Employee"). The Company and Employee are sometimes later in this Agreement
collectively referred to as the "Parties."
RECITALS
This Agreement is entered into with reference to the following facts,
definitions and objectives:
NOW, THEREFORE, in Consideration of this Agreement and of the covenants
contained in this Agreement, the Parties agree as follows:
1. Employment and Positions.
(a) Position. The Company employs Employee and the Employee
accepts employment by the Company as Vice President of the Company for the
Period of Employment specified in Paragraph 4 ("Period of Employment").
2. Services to be Rendered. Employee shall, during the period of
Employment, serve the Company in the position set forth in Paragraph 1
("Employment") diligently, competently and in conformance with the corporate
policies of the Company. Employee shall be free to conduct investment activities
that do not conflict or interfere with the performance of his duties under this
Agreement including but not limited to those contained in Paragraph 13.
Performance of the required services will in no way require Employee to use
confidential information obtained from his previous employer.
In fulfilling his duties and responsibilities under this Agreement,
Employee shall report to the President and Chief Executive Officer of the
Company.
3. Period of Employment. Employee's employment by the Company pursuant
to this Agreement shall, unless sooner terminated as provided in this Agreement,
be for a term of three (3) years, commencing as of the 1 day of April 1997, and
ending with the close of "business on the 1 day of April, 2000 (the "Period of
Employment").
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4. Base Salary. During the first twelve months of this Agreement, the
Employee's regular salary, before all customary and proper taxes, shall be no
less than $6,667.00 per month payable bi-weekly. During the second twelve months
of this Agreement, the Employee's regular salary, before all customary and
proper taxes, shall be no less than $10,833.00 per month payable bi-weekly.
During the last twelve months of this Agreement, the Employee's regular salary,
before all customary and proper taxes, shall be no less than $10,833.00 per
month payable bi-weekly. The car allowance and cost of term life insurance shall
be added to the base salary.
5. Incentive Bonus. During the Period of Employment, Employee shall be
entitled to receive a bonus pursuant to the Company's bonus plan as in effect
from time to time.
6. Stock Options. Stock Options shall be issued pursuant and subject to
the provisions outlined below or as otherwise mutually agreed to.
(a) Purchase Price. The purchase price per share for the
shares subject to the Stock Option will be One Dollar and Fifty Cents ($1.50)
per share.
(b) Number of Shares. The Stock Options will be for Fifty
Thousand (50,000) shares of the Company's Common Stock (the "Optioned Shares").
(c) Exercise Periods. The Optioned Shares will vest and be
exercisable as follows: (1) Twenty Five Thousand (25,000) Optioned Shares will
be vested on April 1, 1997. Twelve Thousand Five Hundred (12,500) on the first
anniversary date of Employment, and Twelve Thousand Five Hundred (12,500) on the
second anniversary date of Employment. Once vested, the Optioned Shares may be
exercised in whole or in part at any time, subject to the limitations within
which the exercise of the Options must occur.
(d) Vesting of Options in Event of Disability or Death. In the
event of disability or death of the employee any nonvested Stock Options shall
vest effective as of the date of the disability or the death of employee. In the
event of Employee's disability or death, the Employee, heirs or estate of
Employee, as the case may be, may exercise any unexecuted options at any time
subject to the time limitations within which exercise of options must occur.
(e) Additional Stock Options. Employee shall also be eligible
to receive additional stock options during the Period of Employment pursuant to
a stock option bonus plan as may from time to time be in effect.
7. Other Benefits. In addition to the benefits previously set forth in
this Agreement, Employee shall, during the Period of Employment, be entitled to
the benefits described below, and as concerns all such benefit programs where
years of service are a factor, to the extent permitted by law, Employee shall be
given credit for his years of service with the Steel Industry.
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(a) Car Allowance. Employee shall be paid a monthly car
allowance in the amount of Five Hundred and Fifty Dollars ($550).
(b) Vacation. During the Period of Employment, Employee shall
be entitled to not less than Four (4) weeks of paid vacation during each
calendar year occurring during the Period of Employment and that amount of
vacation provided to other senior executive officers of the Company. Upon
termination of Employee's employment under this Agreement, Employee shall be
paid for any unused vacation in the year in which the termination occurred.
(c) Sick Leave. Sick leave time that is reasonable under the
circumstances and that is consistent with the Company's policies and procedures,
as the same may be changed, modified or terminated for all participants from
time to time.
(d) Insurance. The Company shall pay the premium for and
provide life, disability, medical, and dental benefits for the Employee and his
family. Said insurance shall be provided with no lapse in coverage between the
time Employee's insurance benefits with prior employer terminate and the time
Employee's insurance benefits from the Company begin. All preexisting conditions
are be covered to the extent that they are not covered by the prior employer.
Life insurance \ Disability insurance will be provided as is typical for
Officers in the Steel Industry.
(e) Retirement Plan. Participation in the Company's Retirement
Plans in accordance with the terms and provisions and applicable law, as the
same may be implemented, changed, amended, or terminated from time to time.
Employee shall become eligible to participate in the Company's Retirement Plans
as of April 1, 1997 or as the effective date of implementation of such plans
whichever as later.
(f) Other Miscellaneous Benefits. The Company shall pay or
reimburse Employee for the following miscellaneous benefits:
(i) annual dues for association membership for
relevant professional groups; and
(ii) subscription and purchase of books, journals,
and publications which relate to job duties and responsibilities.
8. Termination of Employment By the Company. Anytime in this Agreement
to the contrary notwithstanding, the Company shall have the following rights
with respect to termination of Employee's employment:
(a) Cause. Employee's employment may be terminated for Cause.
For purpose of this Agreement, "Cause" shall mean and refer to a determination
made in good faith by the Company's Board of Directors that:
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(i) Employee has been convicted of or has entered
a plea of guilty or nolo contendere to a felony or to any other crime, which
other crime is punishable by incarceration for a period of one (1) year or
longer, or which is a crime involving moral turpitude:
(ii) There has been a theft, embezzlement, or
other criminal misappropriation of funds by Employee, whether from Company or
any other person;
(iii) Employee has willfully failed or refused to
follow reasonable written policies or directives established by the Board of
Directors or the Chief Executive Officer of the Company, or Employee has
willfully failed to attend to material duties or obligations of his office
(other than any such failure resulting from Employee's incapacity due to
physical or mental illness which is a cause or manifestation of Employee's
disability), which failure or refusal continues for thirty (30) days following
delivery of a written demand from the Company's Chief Executive Officer for
performance to Employee identifying the manner in which Employee has failed to
follow such policies or directives or to preform such duties.
Termination pursuant to this Paragraph 8(a) shall be effective as of the
effective date of the notice by the Board of Directors to Employee that it has
made the required determination, or at such other subsequent date, if any,
specified in such notice.
(b) Death. If Employee dies during the term of
this Agreement, his personal representative or designated survivor shall be
entitled to receive all of the salary and benefits provided hereunder for the
remaining term of this Agreement.
9. Termination of Employment by Employee.
(a) With Good Reason. Employee shall have the
right to terminate his employment under this Agreement at any time for Good
Reason, provided Employee has delivered written notice to the Company which
briefly describes the facts underlying Employee's belief that "Good Reason"
exists and the Company has failed to cure such situation within thirty (30) days
after effective date of such notice. For purposes of this Agreement, "Good
Reason" shall mean and consist of:
(i) a material breach by the Company of
its obligations under this Agreement;
(ii) without Employee's prior written
consent, the assignment to Employee of duties that are materially inconsistent
with, or that constitute a material alteration in the status of his
responsibilities set forth in this Agreement, as a Vice President of the
Company;
(iii) a reduction by the Company of
Employee's Base Salary below the Base Salary set forth in Paragraph 4 ("Base
Salary")'
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(iv) without Employee's prior written
consent, the transfer or relocation of Employee pace of employment to any place
other than the Salt Lake City/Provo metropolitan area, except for reasonable
travel on the business of the Company; or
(v) upon the consummation of a sale of
all or substantially all of the assets of the Company not in the usual or
regular course of the business of the Company in which sale the acquiring
company did not assume all of the obligations of the Company under this
Agreement.
(b) Without Good Reason. With not less than
sixty (60) days prior written notice (which notice shall specify the date of
termination), Employee shall have the right to terminate his employment under
this Agreement without Good Reason.
10. Effect of Termination.
Certain Insurance Benefits. If the employment of Employee is
terminated by the Company without Cause, or due to the death or disability of
Employee, or by Employee With Good Reason, the Company shall pay the insurance
premium payable by Employee or his heirs, as the case may be, for continued
insurance coverage under the insurance policies or programs of the Company
pursuant to COBRA for or with respect to the first twelve (12) months of such
COBRA coverage.
11. Severance Pay. If the Employee does not continue in the employ of
the Company after the termination of this Agreement, whether or not the Employee
is offered continued employment by the Company, Company shall pay to the
Employee, no later than April 1, 2000, the sum of one years annual wages. The
Employee shall not be required to mitigate the amount of the payment provided
for in this section by seeking other employment or otherwise; nor shall the
amount of the payment be reduced by any compensation earned by the Employee as
the result of employment by another employer after termination or otherwise.
12. Signing Bonus. The Employee shall be entitled to a Signing Bonus at
$50,000 to be paid in four (4) equal installments of $12,500 beginning with the
first paycheck in April 1997. The remaining installments shall be paid in the
first pay check in July, October and December 1997.
13. Outside Interests. It is recognized that the Employee has
outside interests in Ferro Resources LLC which previously entered into joint
venture agreements with Covol for two coal fines processing facilities. Employee
is also involved in activities related to limestone and iron ore processing in
Utah and processing of hot rolled coils . Covol is aware of these activities and
does not wish to pursue them. Such activities will not materially detract from
the Employee meeting his obligations sited in Paragraph 2.
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Employee: COVOL TECHNOLOGIES,INC.
By:__________________ By:__________________
Xxx X. Xxxxxxxx Xxxxx X. Xxxx, President
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