EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of July 15, 1997, by and
between Topro, Inc., a Colorado corporation (the "Employer" or "Company") and
Xxxxx X. Xxxxxxxx (the "Employee"). In consideration of the mutual covenants
contained in this Agreement, the Employer agrees to employ the Employee, and
the Employee agrees to be employed by the Employer, upon the terms and
conditions hereinafter set forth.
ARTICLE I
TERM OF EMPLOYMENT; SERVICES PRIOR TO COMMENCEMENT DATE
1.1 INITIAL TERM. The initial term of full-time employment hereunder
shall be two years and will commence on July 15, 1997 ("Commencement Date").
1.2 RENEWAL; NOTICE OF NON-RENEWAL. At the end of the initial term of
this Agreement, and on each anniversary thereafter, the term of Employee's
employment automatically will be extended for one additional year unless, at
least 90 days before such anniversary, the Employer or the Employee shall
have delivered to the other written notice that this Agreement will not be
extended.
ARTICLE II
DUTIES OF THE EMPLOYEE
2.1 DUTIES. The Employee shall be employed as the Company's Senior Vice
President of Marketing and Sales, with the responsibilities and authority
customary for such officers including, but not limited to, those duties as
from time to time may be assigned to Employee by the Company's Board of
Directors, Chief Operating Officer and Chief Executive Officer. Employee
shall have responsibility and authority for directing and managing all of the
Company's sales and marketing activities within the strategic guidelines and
budgets approved by the Board of Directors. Employee shall report directly
to the Chief Operating Officer ("COO") of the Company.
2.2 EXTENT OF DUTIES. Subject only to the foregoing, Employee shall
devote all of his working time, efforts, attention and energies to the
business of the Employer.
ARTICLE III
COMPENSATION OF THE EMPLOYEE
3.1 BASE COMPENSATION. As compensation for services rendered under this
Agreement, the Employee will be paid an annual base salary of not less than
$160,000 during the term of this Agreement, to be paid in accordance with
Employer's normal payroll practices. The annual base salary specified herein
may be increased from time to time at the discretion of the Employer's Board
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of Directors. The Employee's annual base salary shall not be deemed
exclusive compensation and shall not prevent Employee from participating in
any other compensation or benefit plan of Employer.
3.2 SHORT-TERM INCENTIVE COMPENSATION PROGRAM. Employee shall be
eligible to participate in any performance bonus program which may be
established by the Company for its officers. As of the date of this
Agreement, such program has not been fully designed and adopted. The program
currently contemplated would provide the opportunity for officers, including
Employee, to earn annual bonuses which would average 50% of base salary over
a five year term. During the first year of this Agreement, if the Company
achieves 80% of its growth goal (to be developed and approved by the
executive team), Employee shall receive a minimum of $55,000 in bonus.
Participation in such bonus program shall not preclude Employee from
receiving additional bonus or incentive compensation granted in accordance
with Company programs or in the discretion of the Board of Directors.
3.3 LONG-TERM INCENTIVE COMPENSATION PROGRAM.
a. Employee shall receive incentive compensation for his services
hereunder through the grant of stock purchase options (the "Options") as
set forth herein. On the Commencement Date, the Company shall grant to
Employee Options exercisable as set forth herein to purchase 225,000 shares
of the Company's Common Stock, at the prices per share set forth below,
which prices shall be based upon the average of the closing price of the
Company's Common Stock as reported by Nasdaq for the ten trading days prior
to the Commencement Date (such average of the closing price hereafter
referred to as the "Market Price"). The Options shall expire on July 15,
2007, (the "Option Expiration Date"), provided, however, that all Options
shall expire on the date 90 days following any termination of employment by
Employee pursuant to Section 5.1.e and shall expire on the Date of
Termination if employment is terminated by Employer for Cause. Subject to
the provisions of Section 3.3.b. below, the Options shall become
exercisable on the initial exercise dates set forth below, provided that no
Option shall become exercisable if the Employee's employment has been
terminated, or if Notice of Termination (hereafter defined) has been given
by Employee or Employer, before the initial exercise dates specified below:
(i) on the day following the Commencement Date, 75,000 Options
shall become exercisable to purchase an aggregate of 75,000 shares of
Common Stock at a price per share equal to the Market Price;
(ii) on the day following the first anniversary of the
Commencement Date, 75,000 Options shall become exercisable to purchase
an aggregate of 75,000 shares of Common Stock at a price per share
equal to 150% of the Market Price; and
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(iii) on the day following the third anniversary of the
Commencement Date, 75,000 Options shall become exercisable to purchase
an aggregate of 75,000 shares of Common Stock at a price per share
equal to 175% of the Market Price.
b. Regardless of the initial exercise dates set forth above, all
unexercised options shall become immediately exercisable in the event of a
"Change of Control," which, for purposes of this Agreement, shall be
defined as the occurrence of one of the following events:
(i) any "person" (as that term is used in Section 13(d) and 14(d)
of the Exchange Act), other than the Company or any "person" who on
the date hereof is a director or officer of the Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's
then outstanding securities, other than in connection with a merger or
business combination by the Company of another entity in which the
Company is the surviving entity and which does not result in a change
in the majority of the Board of Directors upon the effective date of
such merger or business combination, or
(ii) during any period of two consecutive years during the term of
this Agreement, individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at least a
majority thereof, unless the election of each director who was not a
director at the beginning of such period has been approved in advance
by directors representing at least two-thirds of the directors then in
office who were directors at the beginning of the period.
c. Employee understands that the Options and underlying Shares are
"restricted securities" under the Securities Act of 1933 and applicable
state statutes. Employee agrees to execute an investment representation
letter to acknowledge his understanding of the terms of the grant and the
characteristics of this investment in securities.
d. Employee represents and acknowledges that the issuance of securities
hereunder is intended solely as compensation for the services provided
pursuant to this Agreement, and that the payment in securities is not
intended by the Company to be and has not been construed by Employee to be
a promise of continued employment by the Company, nor as a promise of
renewal of this Agreement or of the continuation of the relationship of the
parties beyond the term of this Agreement. Employee represents that the
securities to be acquired as compensation for his services hereunder are
being acquired by Employee for his own account and not on behalf of any
other person, and that the Securities are being acquired for investment
purposes and not for distribution. Employee represents that an investment
in the Securities is a suitable investment for Employee, taking into
consideration the restrictions on transferability affecting the Securities.
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3.4 RELOCATION EXPENSES. Employer shall pay Employee's reasonable
expenses for relocating one residence. Such expenses shall include, but not
be limited to, sales commissions, moving expenses, temporary living expenses,
house-hunting travel and closing costs on a new home, "grossed up" to cover
any tax liability incurred by Employee. All expenses are subject to the
prior approval of Employer's COO.
3.5 BENEFITS.
a. Employee shall be entitled to paid vacation and all paid
holidays customarily extended to executive employees, and shall be entitled
to a minimum of three weeks paid vacation during the first year of this
Agreement.
b. Employee shall be entitled to participate in all of
Employer's employee benefit plans and employee benefits, including any
retirement, 401(k), pension, profit-sharing, stock option, insurance,
hospital or other plans and benefits which now may be in effect or which may
hereafter be adopted, it being understood that Employee shall have the same
rights and privileges to participate in such plans and benefits as any other
executive employee. Participation in any benefit plans shall be in addition
to the compensation otherwise provided for in this Agreement. Employer will
also reimburse Employee for Cobra bridge payments for the wait period to join
Tava/Topro plans.
c. Employer shall provide an automobile allowance of an
up-front payment ranging from $5,000.00 to $6,000.00 and $500.00 per month to
reimburse and compensate Employee for reasonable expenses of maintaining one
automobile for Employee's use.
d. Employer will assume payment of reasonable dues related to
Employee's membership in professional associations.
3.6 EXPENSES. Employee shall be reimbursed promptly for all reasonable
expenses incurred by Employee in the performance of his duties hereunder
following Employer's customary practice.
3.7 NON-EXCLUSIVE PROVISIONS. None of the provisions of this Article
III shall be deemed to limit additional compensation which the Employer's
Board of Directors may grant to Employee.
ARTICLE IV
NON-COMPETITION; CONFIDENTIALITY
4.1 The Employee will offer to the Employer any investment or other
opportunity of which he becomes aware in the process control and systems
integration industries (including, without limitation, software product
development) or in the other areas of business in which the Company operates.
If the Board of Directors of the Employer refuses the opportunity to
participate in such investment or other opportunity, the Employee may do so
as permitted by Section 4.2 hereof and otherwise only if the Employer's Board
of Directors consents thereto.
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4.2 Notwithstanding the above, the Employee may make passive investments
in companies involved in the process control and systems integration
industries or other industries in which the Company operates, provided any
such investment does not exceed a 5% equity interest. Employee may acquire
an equity interest exceeding 5% only if a majority of the Employer's Board of
Directors consents thereto.
4.3 Except as provided in Sections 4.1 and 4.2 hereof, during the term
of this Agreement the Employee may not participate in the process control or
systems integration industries or other areas of business in which the
Company is engaged except through and on behalf of the Company.
4.4 a. The Employee recognizes and acknowledges that the
information, business, customer list and any other trade secret or other
secret or confidential information relating to Employer's business as they
may exist from time to time are valuable, special and unique assets of
Employer's business. Therefore, Employee agrees as follows:
(i) that Employee will hold in strictest confidence and not
disclose, reproduce, publish or use in any manner, whether during or
subsequent to this employment, without the express authorization of
the Board of Directors of the Employer, any information, business,
customer lists of other employees of Employer, or any other secret or
confidential matter relating to any aspect of the Employer's business,
except as such disclosure or use may be required in connection with
Employee's work for the Employer or by court order or subpoena;
(ii) that upon request or at the time of leaving the employ of the
Employer the Employee will deliver to the Employer, and not keep or
deliver to anyone else, any notes, memoranda, documents and, in
general, any and all material relating to the Employer's business; and
(iii) that the Board of Directors of Employer may from time to time
designate other subject matters requiring confidentiality and secrecy
that shall be covered by the terms of this Agreement.
b. The restrictions imposed by this Section 4.4 shall not apply to
information which is publicly disclosed by the Company or otherwise within
the public domain through no fault or action or failure to act of Employee
or rightfully received by Employee from a third party without restrictions
on disclosure or use.
c. In the event of Employee's breach or threatened breach of the
provisions of this paragraph 4.4, the Employer shall be entitled to an
injunction (i) restraining the Employee from disclosing, in whole or in
part, any information as described above or from rendering any services to
any person, firm, corporation, association or other entity to whom such
information, in whole or in part, has been disclosed or is threatened to be
disclosed, and/or (ii) requiring that Employee deliver to Employer all
information, documents, notes,
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memoranda and any other material as described above upon Employee's leave
of the employ of the Employer. Nothing herein shall prohibit the Employer
from pursuing other remedies available to the Employer for such breach or
threatened breach, including the recovery of damages from the Employee.
d. In addition to the confidential information described above, Employee
agrees that prior to the Commencement Date, the existence of this Agreement
is considered by the Company to be confidential and Employee agrees not to
disclose this Agreement or Employee's contemplated employment by the
Company to any party prior to the Company's announcement of these matters.
ARTICLE V
TERMINATION OF EMPLOYMENT
5.1 TERMINATION. The Employee's employment hereunder may be terminated
without any breach of this Agreement only under the following circumstances:
a. BY EMPLOYEE. Upon the occurrence of any of the following events, this
Agreement may be terminated by the Employee by written notice to Employer:
(i) if Employer makes a general assignment for the benefit of
creditors, files a voluntary bankruptcy petition, files a petition or
answer seeking a reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any
law, or any petition or application for the involuntary bankruptcy of
Employer, or other similar proceeding, has been filed in which an
order for relief is entered or which remains undismissed for a period
of thirty days or more, or Employer seeks, consents to, or acquiesces
in the appointment of a trustee, receiver, or liquidator of Employer
or any material part of its assets;
(ii) a decision by Employer to terminate its business and
liquidate its assets; or
(iii) Employer's breach of any of the terms of this Agreement which
breach is not cured by Employer within 15 business days after notice
from Employee.
(iv) within 90 days following a Change in Control of the Company.
b. DEATH. This Agreement shall terminate upon the death of Employee.
c. DISABILITY. The Employer may terminate this Agreement due to
Employee's permanent disability only in accordance with Employer's policy
applicable to other employees.
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d. CAUSE. The Employer may terminate the Employee's employment
hereunder for Cause. For purposes of this Agreement, the Employer shall
have "Cause" to terminate the Employee's employment hereunder only upon the
following: (i) the continued failure by the Employee substantially to
perform his duties hereunder (other than any such failure resulting from
the Employee's incapacity due to physical or mental illness), after demand
for substantial performance is delivered by the Employer; or (ii)
misconduct by the Employee that is deemed by the Board of Directors to be
harmful to the Employer, monetarily or otherwise; or (iii) the violation by
the Employee of the provisions of this Agreement.
e. BY EMPLOYER OR EMPLOYEE OTHER THAN FOR CAUSE. In any other case,
the Company and the Employee shall have the right to terminate this
Agreement upon 30 days' prior written notification to the other party.
5.2 NOTICE OF TERMINATION. Any termination of the Employee's employment
by the Employer or by the Employee (other than termination pursuant to
subsection 5.1(b) above) shall be communicated by written notice ("Notice of
Termination") sent to the other party in accordance with Section 7.5 hereof.
5.3 DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Employee's employment is terminated by his death, the date of his death; and
(ii) if the Employee's employment is terminated for any other reason, the
date specified in a Notice of Termination by Employer or Employee, which date
shall not be less than 30 days after the date of the Notice of Termination.
5.4 PAYMENTS FOLLOWING TERMINATION OR NON-RENEWAL.
a. In the event of termination of this Agreement by Employee pursuant to
Section 5.1(a)(iv) or by Employer pursuant to Section 5.1(e) within one
year following a Change in Control of the Company, the Employee will
receive (i) continuation of base salary payments for 12 months following
the Date of Termination; (ii) full and immediate vesting exercisability of
all stock options and stock appreciation rights or other benefits
consisting of or related to securities granted under this Agreement; and
(iii) payment of any accrued bonus.
b. Following the termination of this Agreement pursuant to Section
5.1(b), Employer shall pay to Employee's estate the compensation that would
otherwise be payable through the end of the month in which his death
occurs.
c. Upon temporary or permanent disability of the Employee as described in
Section 5.1(c) hereof, whether or not the Employer elects to terminate
this Agreement, Employee shall receive such compensation and benefits, if
any, as are payable to employees generally in accordance with the policy of
Employer.
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d. If this Agreement is terminated by Employer other than for Cause,
Employer shall continue to pay to the Employee his base salary as then in
effect for a period of six months following the Date of Termination, which
payments shall constitute severance pay.
e. In the event this Agreement is not renewed by Employer at the end of
the initial or any subsequent term, Employer shall continue to pay to the
Employee his base salary as then in effect for a period of six months
following the Date of Termination.
5.5 REMEDIES. Any termination of this Agreement shall not prejudice any
other remedy to which the Employer or Employee may be entitled, either at
law, equity, or under this Agreement.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION. To the fullest extent permitted by applicable law,
Employer agrees to indemnify, defend and hold Employee harmless from any and
all claims, actions, costs, expenses, damages and liabilities, including,
without limitation, reasonable attorneys' fees, hereafter or heretofore
arising out of or in connection with activities of Employer or its employees,
including Employee, or other agents in connection with and within the scope
of his employment by Employer or by reason of the fact that he is or was a
director or officer of Employer or any affiliate of Employer. To the fullest
extent allowed by applicable law, Employer shall advance to Employee expenses
of defending any such action, claim or proceeding. However, Employer shall
not indemnify Employee or defend Employee against, or hold him harmless from
any claims, damages, expenses or liabilities, including attorneys' fees,
resulting from the gross negligence or willful misconduct of Employee. The
duty to indemnify shall survive the expiration or early termination of this
Agreement as to any claims based on facts or conditions which occurred or are
alleged to have occurred prior to expiration or termination.
ARTICLE VII
GENERAL PROVISIONS
7.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
7.2 ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement or the breach thereof shall be settled by arbitration in the
City and County of Denver, Colorado in accordance with the rules then
existing of the American Arbitration Association and judgment upon the award
may be entered in any court having jurisdiction thereof.
7.3 ENTIRE AGREEMENT. This Agreement supersedes any and all other
Agreements, whether oral or in writing, between the parties with respect to
the employment of the Employee by the Employer. Each party to this Agreement
acknowledges that no representations, inducements, promises, or agreements,
orally or otherwise, have been made by either party, or anyone acting on
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behalf of any party, that are not embodied in this Agreement, and that no
agreement, statement, or promise not contained in this Agreement shall be
valid or binding.
7.4 SUCCESSORS AND ASSIGNS. This Agreement, all terms and conditions
hereunder, and all remedies arising here from, shall inure to the benefit of
and be binding upon Employer, any successor in interest to all or
substantially all of the business and/or assets of Employer (whether by
merger, consolidation or otherwise), and the heirs, administrators,
successors and assigns of Employee. Except as provided in the preceding
sentence, the rights and obligations of the parties hereto may not be
assigned or transferred by either party without the prior written consent of
the other party.
7.5 NOTICES. For purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed given if delivered by hand or overnight courier or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other addresses for a party as shall be
specified by like notice), and shall be deemed given on the date on which so
hand-delivered, or on the business day following the day on which sent by
overnight courier, or on the third business day following the date on which
so mailed:
If to Employee: Xxxxx X. Xxxxxxxx
00 Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
If to Employer: Topro, Inc.
Attn: Xxxx Xxxxxxx, President and CEO
0000 Xxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
7.6 SEVERABILITY. If any provision of this Agreement is prohibited by
or is unlawful or unenforceable under any applicable law of any jurisdiction
as to such jurisdiction, such provision shall be ineffective to the extent of
such prohibition without invalidating the remaining provisions hereof.
7.7 SECTION HEADINGS. The section headings used in this Agreement are
for convenience only and shall not affect the construction of any terms of
this Agreement.
7.8 SURVIVAL OF OBLIGATIONS. Termination of this Agreement for any
reason shall not relieve Employer or Employee of any obligation accruing or
arising prior to such termination.
7.9 AMENDMENTS. This Agreement may be amended only by written agreement
of both Employer and Employee.
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7.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original but all of which,
when taken together, shall constitute only one legal instrument. This
Agreement shall become effective when copies hereof, when taken together,
shall bear the signatures of both parties hereto. It shall not be necessary
in making proof of this Agreement to produce or account for more than one
such counterpart.
7.11 FEES AND COSTS. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys fees, costs and necessary disbursements
in addition to any other relief to which that party may be entitled.
IN WITNESS WHEREOF, the Employer and the Employee have executed this
Agreement to be effective as set forth above.
"EMPLOYER"
TOPRO, INC.
By /s/ XXXXX XXXXXX
---------------------------------------
Xxxxx Xxxxxx, Chief Operating Officer
"EMPLOYEE"
/s/ XXXXX X. XXXXXXXX
---------------------------------------
Xxxxx X. Xxxxxxxx
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