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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of December 31, 1996, to
become effective as set forth below, by and between Topro, Inc., a Colorado
corporation (the "Employer" or "Company") and Xxxxx Xxxxxx (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.
WHEREAS, pursuant to an Agreement of Merger ("Merger Agreement") dated
December 31, 1996, All Control Systems, Inc. ("ACS"), a Pennsylvania
corporation of which Employee is the Chief Executive Officer, will become and
will operate as a subsidiary of the Company;
WHEREAS, since December 1, 1996, ACS and its operations effectively
have been controlled by and for the benefit of Employer;
WHEREAS, the Company believes Employee has particular knowledge and
expertise concerning the industry and business in which the Company and ACS are
engaged, desires to employ Employee to serve as the Chief Operating Officer of
the Company following the Company's acquisition of ACS, and Employee desires to
be so employed;
WHEREAS, In the event the Merger Agreement is not consummated, the
Employer and the Employee desire to provide compensation to ACS for the
services provided by Employee since December 1, 1996;
THEREFORE, 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.
SECTION I
TERM OF EMPLOYMENT
1.1 Initial Term. The initial term of this Agreement shall be two
years (unless sooner terminated under Article V) and will commence on the
Closing Date of the Merger Agreement (such date hereafter referred to as the
"Commencement Date"). If the Merger Agreement is not consummated, this
Agreement will be void ab initio, except for the provisions of Subsection 1.3,
Section IV and Section VII hereof, which shall be effective upon execution of
this Agreement.
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.
1.3 Services Prior to Commencement Date. As of December 1, 1996,
with the knowledge and approval of ACS and in anticipation of the closing of
the transaction contemplated by the Letter of Intent and the Merger Agreement,
Employee has devoted substantial time and effort to activities which are for
the common benefit of ACS and Employer. Recognizing that ACS and its operations
effectively have been controlled by and for the benefit of Employer since that
date, if for any reason the Merger Agreement is not consummated, Employer will
reimburse ACS for salary and benefits paid to Employee from December 1, 1996
through the date of termination of the Merger Agreement.
SECTION II
DUTIES OF THE EMPLOYEE
2.1 Duties. The Employee shall be employed as the Company's Vice
President and Chief Operating Officer, and as the President of ACS, 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 Chief Executive Officer ("CEO") and the Board of Directors.
Employee shall have responsibility and authority for directing and managing all
of the Company's operations, including the Company's sales, marketing and
engineering operations, and
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shall be responsible for operations of the Company within the strategic
guidelines and budgets approved by the Board of Directors. Employee shall also
manage the Company's Human Relations functions, including benefit program
administration and regulatory compliance, and will supervise the Company's
accounting and human relations staff. Employee shall not be responsible for
finance and accounting functions. Employee shall report directly to the CEO of
the Company.
2.2 Full Time Employment. Employee shall devote all of his
working time, efforts, attention and energies to the business of the Employer.
SECTION 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 $150,000, 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 of Directors. If increased,
the Employee's annual base salary shall not thereafter be decreased without the
Employee's consent. 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. 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. As of the date of this Agreement, such program has not been fully
designed and adopted. Participation in any such program, if adopted, 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. During the term of this Agreement, Employee shall be guaranteed
a minimum annual bonus of $18,000 in year one of this Agreement and $15,000 in
year two of this Agreement, which bonuses shall become part of the performance
bonus program once established. Such bonuses shall be paid on a quarterly
basis.
3.3 Long-Term Incentive Compensation Program. Employee shall
receive incentive compensation for his services hereunder through the grant of
stock purchase options (the "Options") as set forth herein. 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. Employee further understands and agrees that the
provisions of the "lock-up" agreement entered into by Employee in connection
with the Merger Agreement shall apply to the shares of Common Stock underlying
the Options. On the Commencement Date, the Company shall grant to Employee
Options exercisable as set forth herein to purchase 200,000 shares of the
Company's Common Stock at a per share price of $2.25. The Options shall be
exercisable commencing on the Commencement Date and thereafter for a period
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of ten years 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:
a. on the day following the Commencement Date, Options shall
become exercisable to purchase an aggregate of 66,667 shares of Common
Stock;
b. on the day following the first anniversary of the Commencement
Date, Options shall become exercisable to purchase an aggregate of
66,667 shares of Common Stock; and
c. on the day following the second anniversary of the
Commencement Date, Options shall become exercisable to purchase an
aggregate of 66,666 shares of Common Stock.
3.4 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 four weeks paid vacation during the first
year of this Agreement. 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.
b. Employer shall provide an automobile allowance of $500 per
month to Employee, plus reimbursement for business related auto
expenses.
c. Employer will reimburse Employee for fees and reasonable
expenses associated with Employee's membership in the Young Presidents
Organization and associated with Employee's continuing education.
3.5 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.
3.6 Term Life Insurance. Employer will pay the premiums on a term
life insurance policy on Employee's life with a death benefit of at least
$250,000. Employer shall be the owner of such policy. However, Employee shall
have right to designate the beneficiary under such policy.
3.7 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. All expenses are subject
to the prior approval of Employer's CEO.
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3.8 Non-Exclusive Provisions. None of the provisions of this
Section III shall be deemed to limit additional compensation which the
Employer's Board of Directors may grant to Employee.
SECTION 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 takes no action for 30 days from the
date of receipt of the offer, or refuses the opportunity during such 30 day
period, 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.
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;
(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
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(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, 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.
SECTION 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;
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(ii) the sale by Employer of substantially all of its
assets;
(iii) the merger or consolidation of Employer with another
entity or an agreement to such a merger or consolidation or
any other type of reorganization;
(iv) there are material changes in Employee's duties and
responsibilities without his written consent;
(v) a decision by Employer to terminate its business and
liquidate its assets;
(vi) a Change in Control of Employer, if Employee makes an
election to terminate this Agreement within 90 days thereof.
"Change in Control" shall mean a change in at least 30% of
voting control of Employer, or a change in a majority of the
Employer's Board members after May 1997; or
(vii) Employer's breach of any of the terms of this
Agreement which breach is not cured by Employer after notice
from Employee.
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.
d. Cause. The Employer may terminate the Employee's employment
hereunder immediately 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 Other than for Cause. The Company shall have the
right to terminate Employee's employment hereunder other than for
Cause upon not less than 30 days' prior written notification to
Employee.
5.2 Delivery of 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") delivered to the other party in
accordance with Section 7.5 hereof.
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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;
(ii) if the Employee's employment is terminated for any other reason, the date
specified in a Notice of Termination by Employer or Employee; and (iii) if the
Employee's employment is effectively terminated due to notice of non-renewal
delivered by the Employer in accordance with Section 1.2, the last day of the
initial term of this Agreement.
5.4 Payments Following Termination or Non-renewal.
a. Following the termination of this Agreement by Employee
pursuant to Sections 5.1 (a) or by Employer for Cause pursuant to
Section 5.1 (d), the Employee shall be entitled to compensation only
through the Date of Termination.
b. Following the termination of this Agreement due to Employee's
death 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. In addition, in the event
no life insurance policy is in force at the time of Employer's death
as required by Section 3.6, Employee's estate shall receive
compensation for 12 months following Employee's death.
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.
d. If this Agreement is terminated by Employer other than for
Cause pursuant to Section 5.1(e), Employer shall continue to pay to
the Employee his base salary as then in effect for a period of 12
months following the date on which Notice of Termination is delivered
to Employee; provided, however, that if the Notice of Termination is
received within six months following a Change in Control (as defined
below) of Employer, then Employer shall continue to pay to the
Employee his base salary as then in effect for a period of 18 months
following the date on which Notice of Termination is delivered to
Employee. Change in Control is defined as a change in at least 30% of
voting control of Employer, or a change in a majority of the Employers
Board members after May 1997. Payments under this Section 5.4(d)
shall constitute severance pay.
e. In the event this Agreement is not renewed by Employer at the
end of the initial term, Employer shall continue to pay to the
Employee his base salary as then in effect for a period of nine 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.
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SECTION 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 this Agreement 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.
SECTION 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 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 herefrom, 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.
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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 Xxxxxx
c/o Xxx Xxxxx, Esq.
0 Xxxxx Xxxx Xxxx Xxx.
Xxxxx 000
Xxxx Xxxx, 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.
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.
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"EMPLOYER"
TOPRO, INC.
By /s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx, President and CEO
"EMPLOYEE"
By /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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