Exhibit 10 to Form 10-Q
(Material Contracts)
Exhibit Page Description
No. No.
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10.1 * Lease with Capitol Properties Four, L.C.
10.2 * 1998 Incentive Stock Option Plan
10.3 * Security Agreement with Michael and Barbara Feaster
10.4 1 Employment Agreement with Robert H. Reback, President and Chief
Executive Officer
10.5 9 Employment Agreement with David P. Faulkner, Executive Vice
President and Managing Director of Machine Control Products
10.6 17 Employment Agreement with Michael D. Feaster, Vice President
of Software Development
10.7 25 Employment Agreement with Steven K. Sorensen, Vice President
and Chief Technical Officer
10.8 33 Employment Agreement with Riley G. Astill, Vice President of
Finance, Chief Financial Officer, Treasurer and Secretary
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* Incorporated by reference
Exhibit 10.4
(Employment Agreement for Robert H. Reback)
CIMETRIX INCORPORATED
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this
___ day of November, 2001, by and between CIMETRIX INCORPORATED, a Nevada
corporation (the "Company") and ROBERT H. REBACK (the "Executive"), to become
effective as of October 1, 2001 (the "Effective Date").
NOW THEREFORE, in consideration of Executive's employment by the Company,
and the mutual promises and covenants contained in, and the mutual benefits to
be derived from this Agreement, and to set forth and establish the terms and
conditions upon which Executive shall be employed by the Company, the parties
hereto agree as follows:
1. Employment
The Company hereby employs Executive and Executive hereby accepts such
employment, upon the terms and conditions set forth herein.
2. Terms and Conditions of Employment.
----------------------------------
(a) Executive shall be employed in the position of President and Chief
Executive Officer and shall supervise, control and be responsible for all
aspects of the business activities of the Company and any subsidiary of the
Company, including direct supervision of the day-to-day operations of the
Company and any subsidiary of the Company. Executive shall also perform
such related services and duties for the Company as are from time to time
assigned or delegated to him from time to time by the Board of Directors.
(b) Throughout his employment hereunder, Executive shall devote his
full time, energy and skill to perform the duties of his employment
(reasonable vacations in accordance with this Agreement and reasonable
absences due to illness excepted), shall faithfully and industriously
perform such duties, and shall use his best efforts to follow and implement
all management policies and decisions of the Board of Directors.
3. Compensation and Benefits.
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As the entire consideration for the services to be performed and the
obligations incurred by Executive hereunder, and subject to the terms and
conditions hereof, during the term of this Agreement Executive shall be entitled
to the following:
(a) Salary. Commencing from the effective date of this Agreement, the
Company shall pay Executive an annual salary of $150,000 (the "Annual
Salary"). Such Annual Salary will be pro-rated for any partial employment
period, will be payable in equal bi-weekly installments or at such other
intervals as may be established for the Company's customary pay schedule.
The Annual Salary is subject to such incremental increases as the Board of
Directors may determine from time to time in its sole discretion.
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(b) Bonus. As additional compensation and as further consideration for
his entering into this Agreement for services to be rendered by Executive,
the Company may pay Executive annually following the end of each fiscal
year, a cash bonus. Such bonus shall be paid to Executive upon the
satisfaction by the Company of the performance objectives that shall be
determined by the Board of Directors of the Company on an annual basis.
Executive shall have the right to direct any portion of the bonus to be
paid into a deferred compensation fund.
(c) Incentive Stock Option Plan. Executive shall be entitled to
participate in the Company's 1998 Incentive Stock Option Plan. As of the
Effective Date of this Agreement, the Company shall cause to be issued to
Executive stock options (in addition to the stock options previously issued
to Executive) to purchase 750,000 shares of the Company's common stock
pursuant to the terms and conditions of the plan at an exercise price of
$1.00 per share, vesting annually in equal amounts on December 31, 2001,
2002 and 2003 and with an exercise period of five (5) years from the date
of grant of such options. However, if there is a Change in Control (as
defined below), all such stock options shall become vested as of the date
of such Change in Control.
(d) Additional Benefits. Executive shall be entitled to participate,
to the extent of Executive's eligibility, in any Executive benefit plans
made available by the Company to its Executives during the Term of this
Agreement, including, without limitation, such profit sharing plans, 401K
and cafeteria plans, and health, life, hospitalization, dental, disability
or other insurance plans as may be in effect from time to time. Such
participation shall be in accordance with the terms established from time
to time by the Company for individual participation in any such plans.
(e) Life Insurance. The Company shall provide Executive with a life
insurance policy in an amount equal to the lessor of (i) twice his Annual
Salary or (ii) the maximum amount allowable under the Company's life
insurance plan.
(f) Vacation, Sick Leave, and Holidays. Executive shall be entitled to
four (4) weeks of vacation, and also sick leave and holidays at full pay in
accordance with the Company's policies established and in effect from time
to time.
(g) Car Allowance. Executive shall be entitled to an automobile
allowance of $550 per month payable on the first day of each
month.
(h) Deductions. The Company shall have the right to deduct and
withhold from the compensation due to Executive hereunder, including
Executive's Annual Salary and Compensation Bonus, if any, such taxes and
other amounts as may be customary or required by law.
(i) Change in Control. A "Change in Control" shall be deemed to
have occurred if (i) a tender offer shall be made and consummated for
the ownership of more than 50% of the outstanding voting securities of
the Company, (ii) the Company shall be merged or consolidated with
another corporation and as a result of such merger or consolidation
less than 50% of the outstanding voting securities of the surviving or
resulting corporation shall be owned in the aggregate by the former
shareholders of the Company, as the same shall have existed
immediately prior to such merger or consolidation, (iii) the Company
shall sell all or substantially all of its assets to another
corporation which is not a wholly-owned subsidiary or affiliate, (iv)
as the result of, or in connection with, any contested election for
the Board of Directors of the Company, or any tender or exchange
offer, merger or business combination or sale of assets, or any
combination of the foregoing (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company, or any
successor thereto, or (v) a person, within the meaning of Section
3(a)(9) or of Section 1 3(d)(3) (as in effect on the date hereof) of
the Securities Exchange Act of 1934 ("Exchange Act"), other than any
Executive benefit plan then maintained by the Company, shall acquire
more than 30% of the outstanding voting securities of the Company
(whether directly, indirectly, beneficially or of record). For
purposes hereof, ownership of voting securities shall take into
account and shall include ownership as determined by applying the
provisions of Rule 1 3d-3(d)(1)(i) (as in effect on the date hereof)
pursuant to the Exchange Act.
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4. Business Expenses.
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The Company shall promptly reimburse Executive for all reasonable
out-of-pocket business expenses incurred in performing Executive's duties
hereunder, in accordance with the Company's policies with respect thereto in
effect from time to time (including without limitation policies regarding prior
consent for significant expenditures), provided that Executive promptly
furnishes to the Company adequate records and other documentary evidence
required by all federal and state statutes and regulations issued by the
appropriate taxing authorities for the substantiation of each such business
expense as a deduction on the federal and state income tax returns of the
Company.
5. Term and Termination.
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(a) Term. The Term of this Agreement shall commence on the Effective
Date of this Agreement, and subject to earlier termination as provided
below, and except for the provisions of this Agreement which, by their
terms, continue in force beyond the termination hereof, the term of this
Agreement shall end on December 31, 2003.
(b) Termination on Death and for Cause. This Agreement, and
Executive's employment hereunder, shall terminate upon Executive's death
and is otherwise immediately terminable for cause (as defined below) upon
written notice from the Company to Executive. As used in this Agreement,
"cause" shall include: (i) habitual neglect of or deliberate or intentional
refusal to perform any of Executive's duties or obligations under this
Agreement or to follow Company policies or procedures following written
notification by the Company to Executive of his failure to perform such
duties or obligations or to follow such policies or procedures and a ten
(10) day period for Executive to cure the failure set forth in such written
notification; (ii) fraudulent or criminal activities; (iii) any grossly
negligent activity; or (iv) deliberate breach of Company rules resulting in
material loss or damage to the Company, or intentional or negligent
unauthorized disclosure of Company trade secrets or confidential
information.
(c) Termination for Disability. The Company's Board of Directors may
terminate this Agreement, upon written notice to Executive, for the
"disability" (as defined below) of Executive at the expiration of a
consecutive twenty-six (26) week period of disability if the Board of
Directors determines in its sole discretion that Executive's disability
will prevent Executive from substantially performing Executive's duties
hereunder. As used in this Agreement, "disability" shall be defined as (i)
Executive's inability, by reason of physical or mental illness or other
cause, to perform substantially Executive's duties hereunder; or (ii), in
the discretion of the Board of Directors, as it is defined in any
disability insurance policy in effect at the Company during the time in
question. Executive shall receive full compensation, benefits, and
reimbursement of expenses pursuant to the terms of this Agreement from the
date disability begins until the date Executive receives notice of
termination under this paragraph or until Executive begins to receive
disability benefits pursuant to a Company disability insurance policy in an
amount comparable to Executive's salary, whichever occurs first.
(d) Termination Without Cause or for Good Reason. If the Company
terminates Executive's employment hereunder during the Term of employment
other than for "cause" (as defined above) by giving Executive at least ten
(10) days written notice, or if Executive terminates his employment for
"good reason" (as defined below) by giving the Company at least ten (10)
days written notice, in such event the Company shall pay to Executive all
salary and bonuses accrued up to and including the date of termination, all
unused vacation and all unreimbursed expenses which are reimbursable
pursuant to Section 4 incurred prior to such termination. As used in this
Agreement, "good reason" shall be defined as (i) Executive's duties,
responsibilities or authority as an Executive are materially reduced from
those in effect on the date hereof or Executive no longer reports directly
to the Board of Directors without the Executive's consent; (ii) the
Executive's compensation or benefits are reduced without the Executive's
consent; (iii) The Company has not obtained shareholder approval within one
year from the date hereof of all the stock options granted to Executive
pursuant to Section 3(c) above; In addition, in the event of such
termination without cause or for good reason, the Company shall have the
following duties:
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(i) The Company shall pay to Executive a severance payment in an
amount equal to Executive's Annual Salary in effect on the date of
termination, but not more than the Salary left to be paid during the
remainder of the Term (the "Severance Payment"). The Severance Payment
shall be paid in one lump sum payment if termination occurs pursuant
to Section 5(d)(iv), otherwise the Severance Payment shall be paid in
approximately equal bi-weekly installments, or at such other intervals
as may be established for the Company's customary pay schedule, at the
annual rate of Executive's Salary on the date of termination;
(ii) The Company shall pay to Executive all deferred
compensation, if any, owed to Executive, under any other agreement.
However, any amounts owed under a 401(k) or other plan qualified under
the Internal Revenue Code shall be paid in accordance with the terms
and provisions of such plans;
(iii) All outstanding stock options allocated to Executive which
would have been vested at the end of the Term had Executive remained
employed by the Company to the end of the Term, shall be immediately
vested, subject to the restrictions that may apply under the law
including restrictions applicable to any options granted under the
Company's 1998 Incentive Stock Option Plan; and
(iv) Executive shall no longer be subject to the covenants and
agreements not to compete under Section 6 of this Agreement following
the date of termination under this Section 5(d).
(e) Mutual Voluntary Termination. In the event the parties mutually
agree in writing to terminate this Agreement, Executive agrees, at the
Company's request, to continue providing services for a requested period of
time up to, but not more than, six months after such voluntary termination
(the "Transition Period") to facilitate transition. Executive shall be an
independent contractor and not an Executive during the Transition Period
and shall be available to assist in the transition during such period.
During the Transition Period, Executive shall receive compensation equal to
110 percent of the Salary at the time of the voluntary termination. Payment
of such compensation shall be made at least monthly. It is understood and
agreed that Executive, during the Transition Period, may be seeking other
opportunities and will not be devoting 100 percent of his time to the
affairs of the Company. The Company may elect to terminate the independent
contractor relationship with Executive prior to the end of the Termination
Period once Executive accepts a full time position with another company.
(f) Effect of Termination. In the event Executive's employment is
terminated hereunder, all obligations of the Company and all obligations of
Executive shall cease except as otherwise provided herein. Upon such
termination, Executive or Executive's representative or estate shall be
entitled to receive only the compensation, benefits, and reimbursement
earned or accrued by Executive under the terms of this Agreement prior to
the date of termination computed pro rata up to and including the date of
termination, but shall not be entitled to any further compensation,
benefits, or reimbursement from such date, except as otherwise provided
herein.
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6. Covenant Not to Compete
(a) Covenant. Executive hereby covenants and agrees that during the
term of this Agreement and for a period of two (2) years thereafter, he
will not, except as a director, officer, executive or consultant of the
Company, or any subsidiary or affiliate of the Company, directly or
indirectly own, manage, operate, join, control, or participate in the
ownership, management, operation or control of, or be connected with (as
director, officer, executive, consultant, agent, independent contractor of
otherwise) in any other manner with any business engaged in the Defined
Business (as described below) which is the same or substantially similar in
nature to the business engaged in by the Company or contemplated by the
Company as of the date thereof in the State of Utah, and each of the other
states in the United States, and each foreign country, in which the Company
may engage (whether directly or indirectly through subsidiaries,
affiliates, franchisees, licensees, representatives, agents or otherwise)
during the term of this Agreement and Executive's employment with the
Company. Notwithstanding the foregoing, after termination of Executive's
employment with the Company, Executive may contract as an independent
contractor or be employed in a position with a business that is the same or
substantially similar in nature to the business engaged by the Company,
provided that Executive is neither employed by nor involved in any manner
whatsoever with any part of the business that competes directly with any
product of the Company and Executive does not work on any product that
competes with any product existing, being designed or in development by the
Company.
(b) Definition of Defined Business. As used herein, the term "Defined
Business" shall mean the business of developing, manufacturing, marketing
or selling products that are similar to or compete with the current or
contemplated products of the Company as of the date thereof.
(c) Non-Solicitation Agreement. Executive shall not, directly or
indirectly, solicit for employment, or advise or recommend to any other
person that they solicit for employment, any executive of the Company (or
any subsidiary or affiliate), during the term of this Agreement and
Executive's employment with the Company and for a term of two years
thereafter; provided however, that this paragraph shall not preclude
Executive from giving an employment reference at the request of any
Executive of the Company or at the request of a prospective employer of
such Executive.
(d) Conflicting Employment. Executive shall not, during the term of
his employment with the Company, engage in any other employment,
occupation, consulting or other business activity directly related to the
business in which the Company is now involved or becomes involved during
the term of his employment, nor will Executive engage in any other
activities that conflict with his obligations to the Company.
(e) Unique and Essential Nature of Services of Executive. Executive
understands and acknowledges that the Company is entering into this
Agreement in reliance upon the unique and essential nature of the personal
services Executive is to perform as an Executive of the Company and that
irreparable injury would befall the Company or its subsidiaries or
affiliates should Executive serve a competitor of, or compete, with the
Company or any of its subsidiaries or affiliates.
(f) Acknowledgment of Reasonableness of Restrictions. Executive
specifically acknowledges and agrees that the post-employment limitation
upon his activities as specified above, together with the geographical
limitations set forth above, are reasonable limitations as to time and
place upon Executive's post-employment activities and that the restrictions
are necessary to preserve, promote and protect the business, accounts and
good-will of the Company and impose no greater restraint than is reasonably
necessary to secure such protection.
(g) Limitation on Scope or Duration. In the event that any provision
of this Section 6 shall be held invalid or unenforceable by a court of
competent jurisdiction by reason of the geographic or business scope or the
duration thereof, such invalidity or unenforceability shall attach only to
the scope or duration of such provision and shall not affect or render
invalid or unenforceable any other provision of this Section 6 and, to the
fullest extent permitted by law, this Section shall be construed as if the
geographic or business scope or the duration of such provision had been
more narrowly drafted so as not to be invalid or unenforceable but rather
to provide the broadest protection to the Company permitted by law.
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7. Confidential Information Agreement.
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Executive agrees that Executive will keep confidential and will not, during
or after this Agreement, disclose, divulge, furnish or make accessible to any
person, firm, corporation or other business entity, any information, trade
secrets, customer information, marketing information, sales information, cost
information, technical data, know-how, secret processes, discoveries, methods,
patentable or unpatentable ideas, formulae, processing techniques or technical
operations relating to the business, business practices, methods, products,
processes, equipment, financial affairs or any confidential or secret aspect of
the business of the Company, including the following: (i) information
identifying or tending to identify any of the clients, customers, Executives, or
distributors of the Company or any subsidiary of the Company; (ii) information
regarding the intellectual property of the Company or any subsidiary of the
Company, including all patents, trademarks, trade names, service marks, and
copyrighted materials, all computer programs, computer software (in objet or
executable code versions), computer source codes, and graphical user interface
screens, and all copy, ideas, designs, methods, scripts, concepts, inventions,
recordings, advertising and promotional materials, whether or not protected
under any law; and (iii) information pertaining to the plans, products,
services, processes, prospects, supplies, procedures, techniques, research and
development, financial statements, and financial forecasts and projections of
the Company or any subsidiary of the Company; but excluding information that has
been intentionally disclosed to the public by the Company or any subsidiary of
the Company or a disclosure required by law, by a court of competent
jurisdiction, or to respond in good faith to a valid inquiry by a governmental
authority (collectively, the "Confidential Information") without the prior
written consent of the Company. Upon the termination of this Agreement for any
reason, and at any time prior thereto upon request by the Company, Executive
shall return to the Company all written records of any Confidential Information,
together with any and all copies of such records, in Executive's possession. Any
Confidential Information which Executive may conceive of or make during the Term
of this Agreement shall be and remain the property of the Company. Executive
agrees promptly to communicate and disclose all such Confidential Information to
the Company and to execute and deliver to the Company any instruments deemed
necessary by the Company to effect disclosure and assignment thereof to it.
8. Assignment.
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This Agreement is for the unique personal services of Executive and is not
assignable or delegable in whole or in part by Executive without the consent of
the Board of Directors of the Company. This Agreement may be assigned or
delegated in whole or in part by the Company and, in such case, the terms of
this Agreement shall inure to the benefit of, be assumed by, and be binding upon
the entity to which this Agreement is assigned.
9. Inventions
(a) Disclosure of Inventions. Executive hereby agrees that if he
conceives, learns, makes, or first reduces to practice, either alone or
jointly with others, any inventions, improvements, original works of
authorship, formulas, processes, computer programs, techniques, know-how,
or data relating to the Defined Business (hereinafter referred to
collectively as "Inventions") while he is employed by the Company, he will
promptly disclose such Inventions to the Company or to any person
designated by it. Notwithstanding the fact that Executive may determine
that the Company has no right to such Invention, he shall nevertheless
promptly disclose any such Invention to the Company or to any person
designated by it upon reasonable request.
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(b) Ownership, Assignment, Assistance, and Power of Attorney. All
Inventions related to the Company's business activities, including the
development of software for controlling motion-oriented equipment operating
on a factory floor, shall be the sole and exclusive property of the
Company, and the Company shall have the right to use and to apply for
patents, copyrights, or other statutory or common law protection for such
Inventions in any country. Executive hereby assigns to he Company any
rights which he may acquire in such Inventions. Furthermore, Executive
agrees to assist the Company in every proper way at the Company's expense
to obtain patents, copyrights, and other statutory common law protections
for such Inventions in any country and to enforce such rights from time to
time. Specifically, Executive agrees to execute all documents as the
Company may desire for use in applying for and in obtaining or enforcing
such patents, copyrights, and other statutory or common law protections
together with any assignments thereof to the Company or to any person
designated by the Company. In the event the Company is unable for any
reason whatsoever to secure Executive's signature to any lawful document
required to apply for or to enforce any patent, copyright, or other
statutory or common law protections for such Inventions, the Executive
hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as his agents and attorneys-in-fact to act
in his stead to execute such documents and to do such other lawful and
necessary acts to further the issuance and protection of such patents,
copyrights, or other statutory or common law protection, such documents or
such acts to have the same legal force and effect as if such documents were
executed by or such acts were done by Executive.
10. Waiver or Modification.
----------------------
Any waiver, modification or amendment of any provision of this Agreement
shall be effective only if in writing in a document that specifically refers to
this Agreement and such document is signed by the party against whom enforcement
of any waiver, change, modification, extension, or discharge is sought. The
waiver by either party of a breach of any provision of this Agreement by the
other party shall not operate or be construed as a waiver of any other provision
hereof or any subsequent breach of the same provision hereof.
11. Severability.
------------
If any provision of this Agreement is found to be unenforceable by a court
of competent jurisdiction, the remaining provisions shall nevertheless remain in
full force and effect.
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12. Notices.
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Any notice required or permitted hereunder to be given by either party
shall be in writing and shall be delivered personally or sent by certified or
registered mail, postage prepaid, or by private courier, or by telex or telegram
to the party to the address set forth below or to such other address as either
party may designate from time to time according to the terms of this paragraph:
To Executive at: Robert H. Reback
6979 South High Tech Drive
Salt Lake City, Utah 84047-3757
To the Company at: Cimetrix Incorporated
6979 South High Tech Drive
Salt Lake City, Utah 84047-3757
With a copy to: Randall A. Mackey, Esq.
Mackey Price & Williams
350 American Plaza II
57 West 200 South
Salt Lake City, Utah 84101-3663
A notice delivered personally shall be effective upon receipt. A notice
sent by facsimile or telegram shall be effective twenty-four (24) hours after
the dispatch thereof. A notice delivered by mail or by private courier shall be
effective on the third day after the day of mailing.
13. Attorney's Fees.
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In the event of any action at law or equity to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorney's fees and court costs in addition to any other relief to which such
party may be entitled.
14. Entire Agreement.
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This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and, except for the Incentive
Stock Option Agreement between Executive and the Company, supersedes all prior
agreements and understandings, both written and oral between the parties hereto
with respect to the subject matter hereof and is not intended to confer upon any
other person or entity any rights or remedies hereunder except as otherwise
expressly provided herein.
15. Governing Law.
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This Agreement shall be governed by and construed in accordance with
the laws of the State of Nevada applicable to contracts entered into and to be
performed entirely within such state.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first set forth above.
EXECUTIVE:
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THE COMPANY:
CIMETRIX INCORPORATED
By:
---------------
Its:
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<page>
Exhibit 10.5
(Employment Agreement for David P. Faulkner)
CIMETRIX INCORPORATED
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this
___ day of November, 2001, by and between CIMETRIX INCORPORATED, a Nevada
corporation (the "Company") and David P. Faulkner (the "Executive"), to become
effective as of October 1, 2001 (the "Effective Date").
NOW THEREFORE, in consideration of Executive's employment by the Company,
and the mutual promises and covenants contained in, and the mutual benefits to
be derived from this Agreement, and to set forth and establish the terms and
conditions upon which Executive shall be employed by the Company, the parties
hereto agree as follows:
I. Employment
The Company hereby employs Executive and Executive hereby accepts such
employment, upon the terms and conditions set forth herein.
2. Terms and Conditions of Employment.
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(a) Executive shall be employed in the position of Executive Vice
President and Managing Director of Machine Control Products and, subject to
direction from the President and Chief Executive Officer, shall supervise,
control and be responsible for Non-Semiconductor Sales and Machine Control
product management for the Company and any subsidiary of the Company,
including direct supervision of day-to-day activities relating to
Non-Semiconductor Sales and Machine Control product management of the
Company and any subsidiary of the Company. Executive shall also perform
such related services and duties for the Company as are from time to time
assigned or delegated to him from time to time by the President and Chief
Executive Officer and the Board of Directors. Executive shall report
directly to the President and Chief Executive Officer.
(b) Throughout his employment hereunder, Executive shall devote his
full time, energy and skill to perform the duties of his employment
(reasonable vacations in accordance with this Agreement and reasonable
absences due to illness excepted), shall faithfully and industriously
perform such duties, and shall use his best efforts to follow and implement
all management policies and decisions of the President and Chief Executive
Officer.
3. Compensation and Benefits.
-------------------------
As the entire consideration for the services to be performed and the
obligations incurred by Executive hereunder, and subject to the terms and
conditions hereof, during the term of this Agreement Executive shall be entitled
to the following:
(a) Salary. Commencing from the effective date of this Agreement, the
Company shall pay Executive an annual salary of $150,000 (the "Annual
Salary"). Such Annual Salary will be pro-rated for any partial employment
period, will be payable in equal bi-weekly installments or at such other
intervals as may be established for the Company's customary pay schedule.
The Annual Salary is subject to such incremental increases as the President
and Chief Executive Officer may determine from time to time in its sole
discretion.
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(b) Bonus. As additional compensation and as further consideration for
his entering into this Agreement for services to be rendered by Executive,
the Company may pay Executive annually following the end of each fiscal
year, a cash bonus. Such bonus shall be paid to Executive upon the
satisfaction by the Company of the performance objectives that shall be
determined by the President and Chief Executive Officer of the Company on
an annual basis. Executive shall have the right to direct any portion of
the bonus to be paid into a deferred compensation fund.
(c) Incentive Stock Option Plan. Executive shall be entitled to
participate in the Company's 1998 Incentive Stock Option Plan. As of the
Effective Date of this Agreement, the Company shall cause to be issued to
Executive stock options (in addition to the stock options previously issued
to Executive) to purchase 500,000 shares of the Company's common stock
pursuant to the terms and conditions of the plan at an exercise price of
$1.00 per share, vesting annually in equal amounts on December 31, 2001,
2002 and 2003 and with an exercise period of five (5) years from the date
of grant of such options. However, if there is a Change in Control (as
defined below), all such stock options shall become vested as of the date
of such Change in Control.
(d) Additional Benefits. Executive shall be entitled to participate,
to the extent of Executive's eligibility, in any Executive benefit plans
made available by the Company to its Executives during the Term of this
Agreement, including, without limitation, such profit sharing plans, 401K
and cafeteria plans, and health, life, hospitalization, dental, disability
or other insurance plans as may be in effect from time to time. Such
participation shall be in accordance with the terms established from time
to time by the Company for individual participation in any such plans.
(e) Life Insurance. The Company shall provide Executive with a life
insurance policy in an amount equal to the lessor of (i) twice his Annual
Salary or (ii) the maximum amount allowable under the Company's life
insurance plan.
(f) Vacation, Sick Leave, and Holidays. Executive shall be entitled to
four (4) weeks of vacation, and also sick leave and holidays at full pay in
accordance with the Company's policies established and in effect from time
to time.
(g) Car Allowance. Executive shall be entitled to an automobile
allowance of $550 per month payable on the first day of each month.
(h) Deductions. The Company shall have the right to deduct and
withhold from the compensation due to Executive hereunder, including
Executive's Annual Salary and Compensation Bonus, if any, such taxes and
other amounts as may be customary or required by law.
(i) Change in Control. A "Change in Control" shall be deemed to
have occurred if (i) a tender offer shall be made and consummated for
the ownership of more than 50% of the outstanding voting securities of
the Company, (ii) the Company shall be merged or consolidated with
another corporation and as a result of such merger or consolidation
less than 50% of the outstanding voting securities of the surviving or
resulting corporation shall be owned in the aggregate by the former
shareholders of the Company, as the same shall have existed
immediately prior to such merger or consolidation, (iii) the Company
shall sell all or substantially all of its assets to another
corporation which is not a wholly-owned subsidiary or affiliate, (iv)
as the result of, or in connection with, any contested election for
the Board of Directors of the Company, or any tender or exchange
offer, merger or business combination or sale of assets, or any
combination of the foregoing (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company, or any
successor thereto, or (v) a person, within the meaning of Section
3(a)(9) or of Section 1 3(d)(3) (as in effect on the date hereof) of
the Securities Exchange Act of 1934 ("Exchange Act"), other than any
Executive benefit plan then maintained by the Company, shall acquire
more than 30% of the outstanding voting securities of the Company
(whether directly, indirectly, beneficially or of record). For
purposes hereof, ownership of voting securities shall take into
account and shall include ownership as determined by applying the
provisions of Rule 1 3d-3(d)(1)(i) (as in effect on the date hereof)
pursuant to the Exchange Act.
-10-
4. Business Expenses.
-----------------
The Company shall promptly reimburse Executive for all reasonable
out-of-pocket business expenses incurred in performing Executive's duties
hereunder, in accordance with the Company's policies with respect thereto in
effect from time to time (including without limitation policies regarding prior
consent for significant expenditures), provided that Executive promptly
furnishes to the Company adequate records and other documentary evidence
required by all federal and state statutes and regulations issued by the
appropriate taxing authorities for the substantiation of each such business
expense as a deduction on the federal and state income tax returns of the
Company.
5. Term and Termination.
--------------------
(a) Term. The Term of this Agreement shall commence on the Effective
Date of this Agreement, and subject to earlier termination as provided
below, and except for the provisions of this Agreement which, by their
terms, continue in force beyond the termination hereof, the term of this
Agreement shall end on December 31, 2003.
(b) Termination on Death and for Cause. This Agreement, and
Executive's employment hereunder, shall terminate upon Executive's death
and is otherwise immediately terminable for cause (as defined below) upon
written notice from the Company to Executive. As used in this Agreement,
"cause" shall include: (i) habitual neglect of or deliberate or intentional
refusal to perform any of Executive's duties or obligations under this
Agreement or to follow Company policies or procedures following written
notification by the Company to Executive of his failure to perform such
duties or obligations or to follow such policies or procedures and a ten
(10) day period for Executive to cure the failure set forth in such written
notification; (ii) fraudulent or criminal activities; (iii) any grossly
negligent activity; (iv) deliberate breach of Company rules resulting in
material loss or damage to the Company, or intentional or negligent
unauthorized disclosure of Company trade secrets or confidential
information; or (v) if the Executive fails to fulfill the annual
performance goals and objectives, which shall be mutually determined by
Executive and the President and Chief Executive Officer. A determination
whether Executive's actions justify termination for cause and the date such
termination is effective shall be made by the President and Chief Executive
Officer in his sole discretion. However, if Executive's employment is
terminated for cause under Subsection 5(b)(v) of this section, the Company
shall pay to Executive a severance payment in the amount equal to three (3)
months of the salary then payable to Executive pursuant to Section 3(a)
hereof on the date of termination, but not more than the Salary left to be
paid during the remainder of the Term. This severance payment shall be made
according to the terms and conditions in Section 5(d)(i) below.
(c) Termination for Disability. The President and Chief Executive
Officer may terminate this Agreement, upon written notice to Executive, for
the "disability" (as defined below) of Executive at the expiration of a
consecutive twenty-six (26) week period of disability if the President and
Chief Executive Officer determines in its sole discretion that Executive's
disability will prevent Executive from substantially performing Executive's
duties hereunder. As used in this Agreement, "disability" shall be defined
as (i) Executive's inability, by reason of physical or mental illness or
other cause, to perform substantially Executive's duties hereunder; or
(ii), in the discretion of the President and Chief Executive Officer, as it
is defined in any disability insurance policy in effect at the Company
during the time in question. Executive shall receive full compensation,
benefits, and reimbursement of expenses pursuant to the terms of this
Agreement from the date disability begins until the date Executive receives
notice of termination under this paragraph or until Executive begins to
receive disability benefits pursuant to a Company disability insurance
policy in an amount comparable to Executive's salary, whichever occurs
first.
-11-
(d) Termination Without Cause or for Good Reason. If the Company
terminates Executive's employment hereunder during the Term of employment
other than for "cause" (as defined above) by giving Executive at least ten
(10) days written notice, or if Executive terminates his employment for
"good reason" (as defined below) by giving the Company at least ten (10)
days written notice, in such event the Company shall pay to Executive all
salary and bonuses accrued up to and including the date of termination, all
unused vacation and all unreimbursed expenses which are reimbursable
pursuant to Section 4 incurred prior to such termination. As used in this
Agreement, "good reason" shall be defined as the Company has not obtained
shareholder approval within one year from the date hereof of all the stock
options granted to Executive pursuant to Section 3(c) above. In addition,
in the event of such termination without cause or for good reason, the
Company shall have the following duties:
(i) The Company shall pay to Executive a severance payment in an
amount equal to six (6) months of the salary then payable to Executive
pursuant to Section 3(a) hereof on the date of termination, but not
more than the Salary left to be paid during the remainder of the Term.
This severance payment shall be paid in approximately equal bi-weekly
installments, or at such other intervals as may be established for the
Company's customary pay schedule, at the annual rate of Executive's
Salary on the date of termination;
(ii) The Company shall pay to Executive all deferred
compensation, if any, owed to Executive, under any other agreement.
However, any amounts owed under a 401(k) or other plan qualified under
the Internal Revenue Code shall be paid in accordance with the terms
and provisions of such plans;
(iii) All outstanding stock options allocated to Executive which
would have been vested at the end of the Term had Executive remained
employed by the Company to the end of the Term, shall be immediately
vested, subject to the restrictions that may apply under the law
including restrictions applicable to any options granted under the
Company's 1998 Incentive Stock Option Plan; and
(iv) Executive shall no longer be subject to the covenants and
agreements not to compete under Section 6 of this Agreement following
the date of termination under this Section 5(d).
(e) Mutual Voluntary Termination. In the event the parties mutually
agree in writing to terminate this Agreement, Executive agrees, at the
Company's request, to continue providing services for a requested period of
time up to, but not more than, six months after such voluntary termination
(the "Transition Period") to facilitate transition. Executive shall be an
independent contractor and not an Executive during the Transition Period
and shall be available to assist in the transition during such period.
During the Transition Period, Executive shall receive compensation equal to
110 percent of the Salary at the time of the voluntary termination. Payment
of such compensation shall be made at least monthly. It is understood and
agreed that Executive, during the Transition Period, may be seeking other
opportunities and will not be devoting 100 percent of his time to the
affairs of the Company. The Company may elect to terminate the independent
contractor relationship with Executive prior to the end of the Termination
Period once Executive accepts a full time position with another company.
(f) Effect of Termination. In the event Executive's employment is
terminated hereunder, all obligations of the Company and all obligations of
Executive shall cease except as otherwise provided herein. Upon such
termination, Executive or Executive's representative or estate shall be
entitled to receive only the compensation, benefits, and reimbursement
earned or accrued by Executive under the terms of this Agreement prior to
the date of termination computed pro rata up to and including the date of
termination, but shall not be entitled to any further compensation,
benefits, or reimbursement from such date, except as otherwise provided
herein.
-12-
6. Covenant Not to Compete
(a) Covenant. Executive hereby covenants and agrees that during the
term of this Agreement and for a period of two (2) years thereafter, he
will not, except as a director, officer, executive or consultant of the
Company, or any subsidiary or affiliate of the Company, directly or
indirectly own, manage, operate, join, control, or participate in the
ownership, management, operation or control of, or be connected with (as
director, officer, executive, consultant, agent, independent contractor of
otherwise) in any other manner with any business engaged in the Defined
Business (as described below) which is the same or substantially similar in
nature to the business engaged in by the Company or contemplated by the
Company as of the date thereof in the State of Utah, and each of the other
states in the United States, and each foreign country, in which the Company
may engage (whether directly or indirectly through subsidiaries,
affiliates, franchisees, licensees, representatives, agents or otherwise)
during the term of this Agreement and Executive's employment with the
Company. Notwithstanding the foregoing, after termination of Executive's
employment with the Company, Executive may contract as an independent
contractor or be employed in a position with a business that is the same or
substantially similar in nature to the business engaged by the Company,
provided that Executive is neither employed by nor involved in any manner
whatsoever with any part of the business that competes directly with any
product of the Company and Executive does not work on any product that
competes with any product existing, being designed or in development by the
Company.
(b) Definition of Defined Business. As used herein, the term "Defined
Business" shall mean the business of developing, manufacturing, marketing
or selling products that are similar to or compete with the current or
contemplated products of the Company as of the date thereof.
(c) Non-Solicitation Agreement. Executive shall not, directly or
indirectly, solicit for employment, or advise or recommend to any other
person that they solicit for employment, any executive of the Company (or
any subsidiary or affiliate), during the term of this Agreement and
Executive's employment with the Company and for a term of two years
thereafter; provided however, that this paragraph shall not preclude
Executive from giving an employment reference at the request of any
Executive of the Company or at the request of a prospective employer of
such Executive.
(d) Conflicting Employment. Executive shall not, during the term of
his employment with the Company, engage in any other employment,
occupation, consulting or other business activity directly related to the
business in which the Company is now involved or becomes involved during
the term of his employment, nor will Executive engage in any other
activities that conflict with his obligations to the Company.
(e) Unique and Essential Nature of Services of Executive. Executive
understands and acknowledges that the Company is entering into this
Agreement in reliance upon the unique and essential nature of the personal
services Executive is to perform as an Executive of the Company and that
irreparable injury would befall the Company or its subsidiaries or
affiliates should Executive serve a competitor of, or compete, with the
Company or any of its subsidiaries or affiliates.
(f) Acknowledgment of Reasonableness of Restrictions. Executive
specifically acknowledges and agrees that the post-employment limitation
upon his activities as specified above, together with the geographical
limitations set forth above, are reasonable limitations as to time and
place upon Executive's post-employment activities and that the restrictions
are necessary to preserve, promote and protect the business, accounts and
good-will of the Company and impose no greater restraint than is reasonably
necessary to secure such protection.
-13-
(g) Limitation on Scope or Duration. In the event that any provision
of this Section 6 shall be held invalid or unenforceable by a court of
competent jurisdiction by reason of the geographic or business scope or the
duration thereof, such invalidity or unenforceability shall attach only to
the scope or duration of such provision and shall not affect or render
invalid or unenforceable any other provision of this Section 6 and, to the
fullest extent permitted by law, this Section shall be construed as if the
geographic or business scope or the duration of such provision had been
more narrowly drafted so as not to be invalid or unenforceable but rather
to provide the broadest protection to the Company permitted by law.
7. Confidential Information Agreement.
----------------------------------
Executive agrees that Executive will keep confidential and will not, during
or after this Agreement, disclose, divulge, furnish or make accessible to any
person, firm, corporation or other business entity, any information, trade
secrets, customer information, marketing information, sales information, cost
information, technical data, know-how, secret processes, discoveries, methods,
patentable or unpatentable ideas, formulae, processing techniques or technical
operations relating to the business, business practices, methods, products,
processes, equipment, financial affairs or any confidential or secret aspect of
the business of the Company, including the following: (i) information
identifying or tending to identify any of the clients, customers, Executives, or
distributors of the Company or any subsidiary of the Company; (ii) information
regarding the intellectual property of the Company or any subsidiary of the
Company, including all patents, trademarks, trade names, service marks, and
copyrighted materials, all computer programs, computer software (in objet or
executable code versions), computer source codes, and graphical user interface
screens, and all copy, ideas, designs, methods, scripts, concepts, inventions,
recordings, advertising and promotional materials, whether or not protected
under any law; and (iii) information pertaining to the plans, products,
services, processes, prospects, supplies, procedures, techniques, research and
development, financial statements, and financial forecasts and projections of
the Company or any subsidiary of the Company; but excluding information that has
been intentionally disclosed to the public by the Company or any subsidiary of
the Company or a disclosure required by law, by a court of competent
jurisdiction, or to respond in good faith to a valid inquiry by a governmental
authority (collectively, the "Confidential Information") without the prior
written consent of the Company. Upon the termination of this Agreement for any
reason, and at any time prior thereto upon request by the Company, Executive
shall return to the Company all written records of any Confidential Information,
together with any and all copies of such records, in Executive's possession. Any
Confidential Information which Executive may conceive of or make during the Term
of this Agreement shall be and remain the property of the Company. Executive
agrees promptly to communicate and disclose all such Confidential Information to
the Company and to execute and deliver to the Company any instruments deemed
necessary by the Company to effect disclosure and assignment thereof to it.
8. Assignment.
----------
This Agreement is for the unique personal services of Executive and is not
assignable or delegable in whole or in part by Executive without the consent of
the President and Chief Executive Officer of the Company. This Agreement may be
assigned or delegated in whole or in part by the Company and, in such case, the
terms of this Agreement shall inure to the benefit of, be assumed by, and be
binding upon the entity to which this Agreement is assigned.
-14-
9. Inventions
(a) Disclosure of Inventions. Executive hereby agrees that if he
conceives, learns, makes, or first reduces to practice, either alone or
jointly with others, any inventions, improvements, original works of
authorship, formulas, processes, computer programs, techniques, know-how,
or data relating to the Defined Business (hereinafter referred to
collectively as "Inventions") while he is employed by the Company, he will
promptly disclose such Inventions to the Company or to any person
designated by it. Notwithstanding the fact that Executive may determine
that the Company has no right to such Invention, he shall nevertheless
promptly disclose any such Invention to the Company or to any person
designated by it upon reasonable request.
(b) Ownership, Assignment, Assistance, and Power of Attorney. All
Inventions related to the Company's business activities, including the
development of software for controlling motion-oriented equipment operating
on a factory floor, shall be the sole and exclusive property of the
Company, and the Company shall have the right to use and to apply for
patents, copyrights, or other statutory or common law protection for such
Inventions in any country. Executive hereby assigns to he Company any
rights which he may acquire in such Inventions. Furthermore, Executive
agrees to assist the Company in every proper way at the Company's expense
to obtain patents, copyrights, and other statutory common law protections
for such Inventions in any country and to enforce such rights from time to
time. Specifically, Executive agrees to execute all documents as the
Company may desire for use in applying for and in obtaining or enforcing
such patents, copyrights, and other statutory or common law protections
together with any assignments thereof to the Company or to any person
designated by the Company. In the event the Company is unable for any
reason whatsoever to secure Executive's signature to any lawful document
required to apply for or to enforce any patent, copyright, or other
statutory or common law protections for such Inventions, the Executive
hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as his agents and attorneys-in-fact to act
in his stead to execute such documents and to do such other lawful and
necessary acts to further the issuance and protection of such patents,
copyrights, or other statutory or common law protection, such documents or
such acts to have the same legal force and effect as if such documents were
executed by or such acts were done by Executive.
10. Waiver or Modification.
----------------------
Any waiver, modification or amendment of any provision of this Agreement
shall be effective only if in writing in a document that specifically refers to
this Agreement and such document is signed by the party against whom enforcement
of any waiver, change, modification, extension, or discharge is sought. The
waiver by either party of a breach of any provision of this Agreement by the
other party shall not operate or be construed as a waiver of any other provision
hereof or any subsequent breach of the same provision hereof.
11. Severability.
------------
If any provision of this Agreement is found to be unenforceable by a court
of competent jurisdiction, the remaining provisions shall nevertheless remain in
full force and effect.
-15-
12. Notices.
-------
Any notice required or permitted hereunder to be given by either party
shall be in writing and shall be delivered personally or sent by certified or
registered mail, postage prepaid, or by private courier, or by telex or telegram
to the party to the address set forth below or to such other address as either
party may designate from time to time according to the terms of this paragraph:
To Executive at: David P. Faulkner
6979 South High Tech Drive
Salt Lake City, Utah 84047-3757
To the Company at: Cimetrix Incorporated
6979 South High Tech Drive
Salt Lake City, Utah 84047-3757
With a copy to: Randall A. Mackey, Esq.
Mackey Price & Williams
350 American Plaza II
57 West 200 South
Salt Lake City, Utah 84101-3663
A notice delivered personally shall be effective upon receipt. A notice
sent by facsimile or telegram shall be effective twenty-four (24) hours after
the dispatch thereof. A notice delivered by mail or by private courier shall be
effective on the third day after the day of mailing.
13. Attorney's Fees.
---------------
In the event of any action at law or equity to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorney's fees and court costs in addition to any other relief to which such
party may be entitled.
14. Entire Agreement.
----------------
This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and, except for the Incentive Stock
Option Agreement between Executive and the Company, supersedes all prior
agreements and understandings, both written and oral between the parties hereto
with respect to the subject matter hereof and is not intended to confer upon any
other person or entity any rights or remedies hereunder except as otherwise
expressly provided herein.
15. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of Nevada applicable to contracts entered into and to be
performed entirely within such state.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first set forth above.
EXECUTIVE:
------------------
THE COMPANY:
CIMETRIX INCORPORATED
By:
---------------
Its:
---------------
-16-
Exhibit 10.6
(Employment Agreement for Michael D. Feaster)
CIMETRIX INCORPORATED
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this
___ day of November, 2001, by and between CIMETRIX INCORPORATED, a Nevada
corporation (the "Company") and Michael D. Feaster (the "Executive"), to become
effective as of October 1, 2001 (the "Effective Date").
NOW THEREFORE, in consideration of Executive's employment by the Company,
and the mutual promises and covenants contained in, and the mutual benefits to
be derived from this Agreement, and to set forth and establish the terms and
conditions upon which Executive shall be employed by the Company, the parties
hereto agree as follows:
I. Employment
The Company hereby employs Executive and Executive hereby accepts such
employment, upon the terms and conditions set forth herein.
2. Terms and Conditions of Employment.
----------------------------------
(a) Executive shall be employed in the position of Vice President of
Software Development and, subject to direction from the President and Chief
Executive Officer, shall supervise, control and be responsible for software
development for the Company and any subsidiary of the Company, including
direct supervision of personnel relating to day-to-day activities of
software development of the Company and any subsidiary of the Company.
Executive shall also perform such related services and duties for the
Company as are from time to time assigned or delegated to him from time to
time by the President and Chief Executive Officer and the Board of
Directors. Executive shall report directly to the President and Chief
Executive Officer.
(b) Throughout his employment hereunder, Executive shall devote his
full time, energy and skill to perform the duties of his employment
(reasonable vacations in accordance with this Agreement and reasonable
absences due to illness excepted), shall faithfully and industriously
perform such duties, and shall use his best efforts to follow and implement
all management policies and decisions of the President and Chief Executive
Officer.
3. Compensation and Benefits.
-------------------------
As the entire consideration for the services to be performed and the
obligations incurred by Executive hereunder, and subject to the terms and
conditions hereof, during the term of this Agreement Executive shall be entitled
to the following:
(a) Salary. Commencing from the effective date of this Agreement, the
Company shall pay Executive an annual salary of $125,000 (the "Annual
Salary"). Such Annual Salary will be pro-rated for any partial employment
period, will be payable in equal bi-weekly installments or at such other
intervals as may be established for the Company's customary pay schedule.
The Annual Salary is subject to such incremental increases as the President
and Chief Executive Officer may determine from time to time in its sole
discretion.
-17-
(b) Bonus. As additional compensation and as further consideration for
his entering into this Agreement for services to be rendered by Executive,
the Company may pay Executive annually following the end of each fiscal
year, a cash bonus. Such bonus shall be paid to Executive upon the
satisfaction by the Company of the performance objectives that shall be
determined by the President and Chief Executive Officer of the Company on
an annual basis. Executive shall have the right to direct any portion of
the bonus to be paid into a deferred compensation fund.
(c) Incentive Stock Option Plan. Executive shall be entitled to
participate in the Company's 1998 Incentive Stock Option Plan. As of the
Effective Date of this Agreement, the Company shall cause to be issued to
Executive stock options (in addition to the stock options previously issued
to Executive) to purchase 300,000 shares of the Company's common stock
pursuant to the terms and conditions of the plan at an exercise price of
$1.00 per share, vesting annually in equal amounts on December 31, 2001,
2002 and 2003 and with an exercise period of five (5) years from the date
of grant of such options. However, if there is a Change in Control (as
defined below), all such stock options shall become vested as of the date
of such Change in Control.
(d) Additional Benefits. Executive shall be entitled to participate,
to the extent of Executive's eligibility, in any Executive benefit plans
made available by the Company to its Executives during the Term of this
Agreement, including, without limitation, such profit sharing plans, 401K
and cafeteria plans, and health, life, hospitalization, dental, disability
or other insurance plans as may be in effect from time to time. Such
participation shall be in accordance with the terms established from time
to time by the Company for individual participation in any such plans.
(e) Life Insurance. The Company shall provide Executive with a life
insurance policy in an amount equal to the lessor of (i) twice his Annual
Salary or (ii) the maximum amount allowable under the Company's life
insurance plan.
(f) Vacation, Sick Leave, and Holidays. Executive shall be entitled to
four (4) weeks of vacation, and also sick leave and holidays at full pay in
accordance with the Company's policies established and in effect from time
to time.
(g) Car Allowance. Executive shall be entitled to an automobile
allowance of $350 per month payable on the first day of each month.
(h) Deductions. The Company shall have the right to deduct and
withhold from the compensation due to Executive hereunder, including
Executive's Annual Salary and Compensation Bonus, if any, such taxes and
other amounts as may be customary or required by law.
(i) Change in Control. A "Change in Control" shall be deemed to have
occurred if (i) a tender offer shall be made and consummated for the
ownership of more than 50% of the outstanding voting securities of the
Company, (ii) the Company shall be merged or consolidated with another
corporation and as a result of such merger or consolidation less than 50%
of the outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former shareholders of
the Company, as the same shall have existed immediately prior to such
merger or consolidation, (iii) the Company shall sell all or substantially
all of its assets to another corporation which is not a wholly-owned
subsidiary or affiliate, (iv) as the result of, or in connection with, any
contested election for the Board of Directors of the Company, or any tender
or exchange offer, merger or business combination or sale of assets, or any
combination of the foregoing (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to constitute a
majority of the Board of Directors of the Company, or any successor
thereto, or (v) a person, within the meaning of Section 3(a)(9) or of
Section 1 3(d)(3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934 ("Exchange Act"), other than any Executive benefit
plan then maintained by the Company, shall acquire more than 30% of the
outstanding voting securities of the Company (whether directly, indirectly,
beneficially or of record). For purposes hereof, ownership of voting
securities shall take into account and shall include ownership as
determined by applying the provisions of Rule 1 3d-3(d)(1)(i) (as in effect
on the date hereof) pursuant to the Exchange Act.
-18-
4. Business Expenses.
-----------------
The Company shall promptly reimburse Executive for all reasonable
out-of-pocket business expenses incurred in performing Executive's duties
hereunder, in accordance with the Company's policies with respect thereto in
effect from time to time (including without limitation policies regarding prior
consent for significant expenditures), provided that Executive promptly
furnishes to the Company adequate records and other documentary evidence
required by all federal and state statutes and regulations issued by the
appropriate taxing authorities for the substantiation of each such business
expense as a deduction on the federal and state income tax returns of the
Company.
5. Term and Termination.
--------------------
(a) Term. The Term of this Agreement shall commence on the Effective
Date of this Agreement, and subject to earlier termination as provided
below, and except for the provisions of this Agreement which, by their
terms, continue in force beyond the termination hereof, the term of this
Agreement shall end on December 31, 2003.
(b) Termination on Death and for Cause. This Agreement, and
Executive's employment hereunder, shall terminate upon Executive's death
and is otherwise immediately terminable for cause (as defined below) upon
written notice from the Company to Executive. As used in this Agreement,
"cause" shall include: (i) habitual neglect of or deliberate or intentional
refusal to perform any of Executive's duties or obligations under this
Agreement or to follow Company policies or procedures following written
notification by the Company to Executive of his failure to perform such
duties or obligations or to follow such policies or procedures and a ten
(10) day period for Executive to cure the failure set forth in such written
notification; (ii) fraudulent or criminal activities; (iii) any grossly
negligent activity; (iv) deliberate breach of Company rules resulting in
material loss or damage to the Company, or intentional or negligent
unauthorized disclosure of Company trade secrets or confidential
information; or (v) if the Executive fails to fulfill the annual
performance goals and objectives, which shall be mutually determined by
Executive and the President and Chief Executive Officer. A determination
whether Executive's actions justify termination for cause and the date such
termination is effective shall be made by the President and Chief Executive
Officer in his sole discretion. However, if Executive's employment is
terminated for cause under Subsection 5(b)(v) of this section, the Company
shall pay to Executive a severance payment in the amount equal to three (3)
months of the salary then payable to Executive pursuant to Section 3(a)
hereof on the date of termination, but not more than the Salary left to be
paid during the remainder of the Term. This severance payment shall be made
according to the terms and conditions in Section 5(d)(i) below.
(c) Termination for Disability. The President and Chief Executive
Officer may terminate this Agreement, upon written notice to Executive, for
the "disability" (as defined below) of Executive at the expiration of a
consecutive twenty-six (26) week period of disability if the President and
Chief Executive Officer determines in its sole discretion that Executive's
disability will prevent Executive from substantially performing Executive's
duties hereunder. As used in this Agreement, "disability" shall be defined
as (i) Executive's inability, by reason of physical or mental illness or
other cause, to perform substantially Executive's duties hereunder; or
(ii), in the discretion of the President and Chief Executive Officer, as it
is defined in any disability insurance policy in effect at the Company
during the time in question. Executive shall receive full compensation,
benefits, and reimbursement of expenses pursuant to the terms of this
Agreement from the date disability begins until the date Executive receives
notice of termination under this paragraph or until Executive begins to
receive disability benefits pursuant to a Company disability insurance
policy in an amount comparable to Executive's salary, whichever occurs
first.
-19-
(d) Termination Without Cause or for Good Reason. If the Company
terminates Executive's employment hereunder during the Term of employment
other than for "cause" (as defined above) by giving Executive at least ten
(10) days written notice, or if Executive terminates his employment for
"good reason" (as defined below) by giving the Company at least ten (10)
days written notice, in such event the Company shall pay to Executive all
salary and bonuses accrued up to and including the date of termination, all
unused vacation and all unreimbursed expenses which are reimbursable
pursuant to Section 4 incurred prior to such termination. As used in this
Agreement, "good reason" shall be defined as the Company has not obtained
shareholder approval within one year from the date hereof of all the stock
options granted to Executive pursuant to Section 3(c) above. In addition,
in the event of such termination without cause or for good reason, the
Company shall have the following duties:
(i) The Company shall pay to Executive a severance payment in an
amount equal to six (6) months of the salary then payable to Executive
pursuant to Section 3(a) hereof on the date of termination, but not
more than the Salary left to be paid during the remainder of the Term.
This severance payment shall be paid in approximately equal bi-weekly
installments, or at such other intervals as may be established for the
Company's customary pay schedule, at the annual rate of Executive's
Salary on the date of termination;
(ii) The Company shall pay to Executive all deferred
compensation, if any, owed to Executive, under any other agreement.
However, any amounts owed under a 401(k) or other plan qualified under
the Internal Revenue Code shall be paid in accordance with the terms
and provisions of such plans;
(iii) All outstanding stock options allocated to Executive which
would have been vested at the end of the Term had Executive remained
employed by the Company to the end of the Term, shall be immediately
vested, subject to the restrictions that may apply under the law
including restrictions applicable to any options granted under the
Company's 1998 Incentive Stock Option Plan; and
(iv) Executive shall no longer be subject to the covenants and
agreements not to compete under Section 6 of this Agreement following
the date of termination under this Section 5(d).
(e) Mutual Voluntary Termination. In the event the parties mutually
agree in writing to terminate this Agreement, Executive agrees, at the
Company's request, to continue providing services for a requested period of
time up to, but not more than, six months after such voluntary termination
(the "Transition Period") to facilitate transition. Executive shall be an
independent contractor and not an Executive during the Transition Period
and shall be available to assist in the transition during such period.
During the Transition Period, Executive shall receive compensation equal to
110 percent of the Salary at the time of the voluntary termination. Payment
of such compensation shall be made at least monthly. It is understood and
agreed that Executive, during the Transition Period, may be seeking other
opportunities and will not be devoting 100 percent of his time to the
affairs of the Company. The Company may elect to terminate the independent
contractor relationship with Executive prior to the end of the Termination
Period once Executive accepts a full time position with another company.
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(f) Effect of Termination. In the event Executive's employment is
terminated hereunder, all obligations of the Company and all obligations of
Executive shall cease except as otherwise provided herein. Upon such
termination, Executive or Executive's representative or estate shall be
entitled to receive only the compensation, benefits, and reimbursement
earned or accrued by Executive under the terms of this Agreement prior to
the date of termination computed pro rata up to and including the date of
termination, but shall not be entitled to any further compensation,
benefits, or reimbursement from such date, except as otherwise provided
herein.
6. Covenant Not to Compete
(a) Covenant. Executive hereby covenants and agrees that during the
term of this Agreement and for a period of two (2) years thereafter, he
will not, except as a director, officer, executive or consultant of the
Company, or any subsidiary or affiliate of the Company, directly or
indirectly own, manage, operate, join, control, or participate in the
ownership, management, operation or control of, or be connected with (as
director, officer, executive, consultant, agent, independent contractor of
otherwise) in any other manner with any business engaged in the Defined
Business (as described below) which is the same or substantially similar in
nature to the business engaged in by the Company or contemplated by the
Company as of the date thereof in the State of Utah, and each of the other
states in the United States, and each foreign country, in which the Company
may engage (whether directly or indirectly through subsidiaries,
affiliates, franchisees, licensees, representatives, agents or otherwise)
during the term of this Agreement and Executive's employment with the
Company. Notwithstanding the foregoing, after termination of Executive's
employment with the Company, Executive may contract as an independent
contractor or be employed in a position with a business that is the same or
substantially similar in nature to the business engaged by the Company,
provided that Executive is neither employed by nor involved in any manner
whatsoever with any part of the business that competes directly with any
product of the Company and Executive does not work on any product that
competes with any product existing, being designed or in development by the
Company.
(b) Definition of Defined Business. As used herein, the term "Defined
Business" shall mean the business of developing, manufacturing, marketing
or selling products that are similar to or compete with the current or
contemplated products of the Company as of the date thereof.
(c) Non-Solicitation Agreement. Executive shall not, directly or
indirectly, solicit for employment, or advise or recommend to any other
person that they solicit for employment, any executive of the Company (or
any subsidiary or affiliate), during the term of this Agreement and
Executive's employment with the Company and for a term of two years
thereafter; provided however, that this paragraph shall not preclude
Executive from giving an employment reference at the request of any
Executive of the Company or at the request of a prospective employer of
such Executive.
(d) Conflicting Employment. Executive shall not, during the term of
his employment with the Company, engage in any other employment,
occupation, consulting or other business activity directly related to the
business in which the Company is now involved or becomes involved during
the term of his employment, nor will Executive engage in any other
activities that conflict with his obligations to the Company.
(e) Unique and Essential Nature of Services of Executive. Executive
understands and acknowledges that the Company is entering into this
Agreement in reliance upon the unique and essential nature of the personal
services Executive is to perform as an Executive of the Company and that
irreparable injury would befall the Company or its subsidiaries or
affiliates should Executive serve a competitor of, or compete, with the
Company or any of its subsidiaries or affiliates.
-21-
(f) Acknowledgment of Reasonableness of Restrictions. Executive
specifically acknowledges and agrees that the post-employment limitation
upon his activities as specified above, together with the geographical
limitations set forth above, are reasonable limitations as to time and
place upon Executive's post-employment activities and that the restrictions
are necessary to preserve, promote and protect the business, accounts and
good-will of the Company and impose no greater restraint than is reasonably
necessary to secure such protection.
(g) Limitation on Scope or Duration. In the event that any provision
of this Section 6 shall be held invalid or unenforceable by a court of
competent jurisdiction by reason of the geographic or business scope or the
duration thereof, such invalidity or unenforceability shall attach only to
the scope or duration of such provision and shall not affect or render
invalid or unenforceable any other provision of this Section 6 and, to the
fullest extent permitted by law, this Section shall be construed as if the
geographic or business scope or the duration of such provision had been
more narrowly drafted so as not to be invalid or unenforceable but rather
to provide the broadest protection to the Company permitted by law.
7. Confidential Information Agreement.
----------------------------------
Executive agrees that Executive will keep confidential and will not, during
or after this Agreement, disclose, divulge, furnish or make accessible to any
person, firm, corporation or other business entity, any information, trade
secrets, customer information, marketing information, sales information, cost
information, technical data, know-how, secret processes, discoveries, methods,
patentable or unpatentable ideas, formulae, processing techniques or technical
operations relating to the business, business practices, methods, products,
processes, equipment, financial affairs or any confidential or secret aspect of
the business of the Company, including the following: (i) information
identifying or tending to identify any of the clients, customers, Executives, or
distributors of the Company or any subsidiary of the Company; (ii) information
regarding the intellectual property of the Company or any subsidiary of the
Company, including all patents, trademarks, trade names, service marks, and
copyrighted materials, all computer programs, computer software (in objet or
executable code versions), computer source codes, and graphical user interface
screens, and all copy, ideas, designs, methods, scripts, concepts, inventions,
recordings, advertising and promotional materials, whether or not protected
under any law; and (iii) information pertaining to the plans, products,
services, processes, prospects, supplies, procedures, techniques, research and
development, financial statements, and financial forecasts and projections of
the Company or any subsidiary of the Company; but excluding information that has
been intentionally disclosed to the public by the Company or any subsidiary of
the Company or a disclosure required by law, by a court of competent
jurisdiction, or to respond in good faith to a valid inquiry by a governmental
authority (collectively, the "Confidential Information") without the prior
written consent of the Company. Upon the termination of this Agreement for any
reason, and at any time prior thereto upon request by the Company, Executive
shall return to the Company all written records of any Confidential Information,
together with any and all copies of such records, in Executive's possession. Any
Confidential Information which Executive may conceive of or make during the Term
of this Agreement shall be and remain the property of the Company. Executive
agrees promptly to communicate and disclose all such Confidential Information to
the Company and to execute and deliver to the Company any instruments deemed
necessary by the Company to effect disclosure and assignment thereof to it.
8. Assignment.
----------
This Agreement is for the unique personal services of Executive and is not
assignable or delegable in whole or in part by Executive without the consent of
the President and Chief Executive Officer of the Company. This Agreement may be
assigned or delegated in whole or in part by the Company and, in such case, the
terms of this Agreement shall inure to the benefit of, be assumed by, and be
binding upon the entity to which this Agreement is assigned.
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9. Inventions
(a) Disclosure of Inventions. Executive hereby agrees that if he
conceives, learns, makes, or first reduces to practice, either alone or
jointly with others, any inventions, improvements, original works of
authorship, formulas, processes, computer programs, techniques, know-how,
or data relating to the Defined Business (hereinafter referred to
collectively as "Inventions") while he is employed by the Company, he will
promptly disclose such Inventions to the Company or to any person
designated by it. Notwithstanding the fact that Executive may determine
that the Company has no right to such Invention, he shall nevertheless
promptly disclose any such Invention to the Company or to any person
designated by it upon reasonable request.
(b) Ownership, Assignment, Assistance, and Power of Attorney. All
Inventions related to the Company's business activities, including the
development of software for controlling motion-oriented equipment operating
on a factory floor, shall be the sole and exclusive property of the
Company, and the Company shall have the right to use and to apply for
patents, copyrights, or other statutory or common law protection for such
Inventions in any country. Executive hereby assigns to he Company any
rights which he may acquire in such Inventions. Furthermore, Executive
agrees to assist the Company in every proper way at the Company's expense
to obtain patents, copyrights, and other statutory common law protections
for such Inventions in any country and to enforce such rights from time to
time. Specifically, Executive agrees to execute all documents as the
Company may desire for use in applying for and in obtaining or enforcing
such patents, copyrights, and other statutory or common law protections
together with any assignments thereof to the Company or to any person
designated by the Company. In the event the Company is unable for any
reason whatsoever to secure Executive's signature to any lawful document
required to apply for or to enforce any patent, copyright, or other
statutory or common law protections for such Inventions, the Executive
hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as his agents and attorneys-in-fact to act
in his stead to execute such documents and to do such other lawful and
necessary acts to further the issuance and protection of such patents,
copyrights, or other statutory or common law protection, such documents or
such acts to have the same legal force and effect as if such documents were
executed by or such acts were done by Executive.
10. Waiver or Modification.
----------------------
Any waiver, modification or amendment of any provision of this Agreement
shall be effective only if in writing in a document that specifically refers to
this Agreement and such document is signed by the party against whom enforcement
of any waiver, change, modification, extension, or discharge is sought. The
waiver by either party of a breach of any provision of this Agreement by the
other party shall not operate or be construed as a waiver of any other provision
hereof or any subsequent breach of the same provision hereof.
11. Severability.
------------
If any provision of this Agreement is found to be unenforceable by a court
of competent jurisdiction, the remaining provisions shall nevertheless remain in
full force and effect.
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12. Notices.
-------
Any notice required or permitted hereunder to be given by either party
shall be in writing and shall be delivered personally or sent by certified or
registered mail, postage prepaid, or by private courier, or by telex or telegram
to the party to the address set forth below or to such other address as either
party may designate from time to time according to the terms of this paragraph:
To Executive at: Michael D. Feaster
6979 South High Tech Drive
Salt Lake City, Utah 84047-3757
To the Company at: Cimetrix Incorporated
6979 South High Tech Drive
Salt Lake City, Utah 84047-3757
With a copy to: Randall A. Mackey, Esq.
Mackey Price & Williams
350 American Plaza II
57 West 200 South
Salt Lake City, Utah 84101-3663
A notice delivered personally shall be effective upon receipt. A notice
sent by facsimile or telegram shall be effective twenty-four (24) hours after
the dispatch thereof. A notice delivered by mail or by private courier shall be
effective on the third day after the day of mailing.
13. Attorney's Fees.
---------------
In the event of any action at law or equity to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorney's fees and court costs in addition to any other relief to which such
party may be entitled.
14. Entire Agreement.
----------------
This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and, except for the Incentive Stock
Option Agreement between Executive and the Company, supersedes all prior
agreements and understandings, both written and oral between the parties hereto
with respect to the subject matter hereof and is not intended to confer upon any
other person or entity any rights or remedies hereunder except as otherwise
expressly provided herein.
15. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of Nevada applicable to contracts entered into and to be
performed entirely within such state.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first set forth above.
EXECUTIVE:
------------------
THE COMPANY:
CIMETRIX INCORPORATED
By:
---------------
Its:
---------------
-24-
Exhibit 10.7
(Employment Agreement for Steven K. Sorensen)
CIMETRIX INCORPORATED
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this
___ day of November, 2001, by and between CIMETRIX INCORPORATED, a Nevada
corporation (the "Company") and Steven K. Sorensen (the "Executive"), to become
effective as of October 1, 2001 (the "Effective Date").
NOW THEREFORE, in consideration of Executive's employment by the Company,
and the mutual promises and covenants contained in, and the mutual benefits to
be derived from this Agreement, and to set forth and establish the terms and
conditions upon which Executive shall be employed by the Company, the parties
hereto agree as follows:
I. Employment
The Company hereby employs Executive and Executive hereby accepts such
employment, upon the terms and conditions set forth herein.
2. Terms and Conditions of Employment.
----------------------------------
(a) Executive shall be employed in the position of Vice President and
Chief Technical Officer and, subject to direction from the Managing
Director of Machine Control Products, shall supervise, control and be
responsible for Machine Control product management of the Company and any
subsidiary of the Company. Executive shall also perform such related
services and duties for the Company as are from time to time assigned or
delegated to him from time to time by the President and Chief Executive
Officer and the Board of Directors. Executive shall report directly to the
President and Chief Executive Officer.
(b) Throughout his employment hereunder, Executive shall devote his
full time, energy and skill to perform the duties of his employment
(reasonable vacations in accordance with this Agreement and reasonable
absences due to illness excepted), shall faithfully and industriously
perform such duties, and shall use his best efforts to follow and implement
all management policies and decisions of the President and Chief Executive
Officer.
3. Compensation and Benefits.
-------------------------
As the entire consideration for the services to be performed and the
obligations incurred by Executive hereunder, and subject to the terms and
conditions hereof, during the term of this Agreement Executive shall be entitled
to the following:
(a) Salary. Commencing from the effective date of this Agreement, the
Company shall pay Executive an annual salary of $100,000 (the "Annual
Salary"). Such Annual Salary will be pro-rated for any partial employment
period, will be payable in equal bi-weekly installments or at such other
intervals as may be established for the Company's customary pay schedule.
The Annual Salary is subject to such incremental increases as the President
and Chief Executive Officer may determine from time to time in its sole
discretion.
-25-
(b) Bonus. As additional compensation and as further consideration for
his entering into this Agreement for services to be rendered by Executive,
the Company may pay Executive annually following the end of each fiscal
year, a cash bonus. Such bonus shall be paid to Executive upon the
satisfaction by the Company of the performance objectives that shall be
determined by the President and Chief Executive Officer of the Company on
an annual basis. Executive shall have the right to direct any portion of
the bonus to be paid into a deferred compensation fund.
(c) Incentive Stock Option Plan. Executive shall be entitled to
participate in the Company's 1998 Incentive Stock Option Plan. As of the
Effective Date of this Agreement, the Company shall cause to be issued to
Executive stock options (in addition to the stock options previously issued
to Executive) to purchase 300,000 shares of the Company's common stock
pursuant to the terms and conditions of the plan at an exercise price of
$1.00 per share, vesting annually in equal amounts on December 31, 2001,
2002 and 2003 and with an exercise period of five (5) years from the date
of grant of such options. However, if there is a Change in Control (as
defined below), all such stock options shall become vested as of the date
of such Change in Control.
(d) Additional Benefits. Executive shall be entitled to participate,
to the extent of Executive's eligibility, in any Executive benefit plans
made available by the Company to its Executives during the Term of this
Agreement, including, without limitation, such profit sharing plans, 401K
and cafeteria plans, and health, life, hospitalization, dental, disability
or other insurance plans as may be in effect from time to time. Such
participation shall be in accordance with the terms established from time
to time by the Company for individual participation in any such plans.
(e) Life Insurance. The Company shall provide Executive with a life
insurance policy in an amount equal to the lessor of (i) twice his Annual
Salary or (ii) the maximum amount allowable under the Company's life
insurance plan.
(f) Vacation, Sick Leave, and Holidays. Executive shall be entitled to
four (4) weeks of vacation, and also sick leave and holidays at full pay in
accordance with the Company's policies established and in effect from time
to time.
(g) Car Allowance. Executive shall be entitled to an automobile
allowance of $350 per month payable on the first day of each month after
the Company returns to profitability.
(h) Deductions. The Company shall have the right to deduct and
withhold from the compensation due to Executive hereunder, including
Executive's Annual Salary and Compensation Bonus, if any, such taxes and
other amounts as may be customary or required by law.
(i) Change in Control. A "Change in Control" shall be deemed to have
occurred if (i) a tender offer shall be made and consummated for the
ownership of more than 50% of the outstanding voting securities of the
Company, (ii) the Company shall be merged or consolidated with another
corporation and as a result of such merger or consolidation less than 50%
of the outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former shareholders of
the Company, as the same shall have existed immediately prior to such
merger or consolidation, (iii) the Company shall sell all or substantially
all of its assets to another corporation which is not a wholly-owned
subsidiary or affiliate, (iv) as the result of, or in connection with, any
contested election for the Board of Directors of the Company, or any tender
or exchange offer, merger or business combination or sale of assets, or any
combination of the foregoing (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to constitute a
majority of the Board of Directors of the Company, or any successor
thereto, or (v) a person, within the meaning of Section 3(a)(9) or of
Section 1 3(d)(3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934 ("Exchange Act"), other than any Executive benefit
plan then maintained by the Company, shall acquire more than 30% of the
outstanding voting securities of the Company (whether directly, indirectly,
beneficially or of record). For purposes hereof, ownership of voting
securities shall take into account and shall include ownership as
determined by applying the provisions of Rule 1 3d-3(d)(1)(i) (as in effect
on the date hereof) pursuant to the Exchange Act.
-26-
4. Business Expenses.
-----------------
The Company shall promptly reimburse Executive for all reasonable
out-of-pocket business expenses incurred in performing Executive's duties
hereunder, in accordance with the Company's policies with respect thereto in
effect from time to time (including without limitation policies regarding prior
consent for significant expenditures), provided that Executive promptly
furnishes to the Company adequate records and other documentary evidence
required by all federal and state statutes and regulations issued by the
appropriate taxing authorities for the substantiation of each such business
expense as a deduction on the federal and state income tax returns of the
Company.
5. Term and Termination.
--------------------
(a) Term. The Term of this Agreement shall commence on the Effective
Date of this Agreement, and subject to earlier termination as provided
below, and except for the provisions of this Agreement which, by their
terms, continue in force beyond the termination hereof, the term of this
Agreement shall end on December 31, 2003.
(b) Termination on Death and for Cause. This Agreement, and
Executive's employment hereunder, shall terminate upon Executive's death
and is otherwise immediately terminable for cause (as defined below) upon
written notice from the Company to Executive. As used in this Agreement,
"cause" shall include: (i) habitual neglect of or deliberate or intentional
refusal to perform any of Executive's duties or obligations under this
Agreement or to follow Company policies or procedures following written
notification by the Company to Executive of his failure to perform such
duties or obligations or to follow such policies or procedures and a ten
(10) day period for Executive to cure the failure set forth in such written
notification; (ii) fraudulent or criminal activities; (iii) any grossly
negligent activity; (iv) deliberate breach of Company rules resulting in
material loss or damage to the Company, or intentional or negligent
unauthorized disclosure of Company trade secrets or confidential
information; or (v) if the Executive fails to fulfill the annual
performance goals and objectives, which shall be mutually determined by
Executive and the President and Chief Executive Officer. A determination
whether Executive's actions justify termination for cause and the date such
termination is effective shall be made by the President and Chief Executive
Officer in his sole discretion. However, if Executive's employment is
terminated for cause under Subsection 5(b)(v) of this section, the Company
shall pay to Executive a severance payment in the amount equal to three (3)
months of the salary then payable to Executive pursuant to Section 3(a)
hereof on the date of termination, but not more than the Salary left to be
paid during the remainder of the Term. This severance payment shall be made
according to the terms and conditions in Section 5(d)(i) below.
(c) Termination for Disability. The President and Chief Executive
Officer may terminate this Agreement, upon written notice to Executive, for
the "disability" (as defined below) of Executive at the expiration of a
consecutive twenty-six (26) week period of disability if the President and
Chief Executive Officer determines in its sole discretion that Executive's
disability will prevent Executive from substantially performing Executive's
duties hereunder. As used in this Agreement, "disability" shall be defined
as (i) Executive's inability, by reason of physical or mental illness or
other cause, to perform substantially Executive's duties hereunder; or
(ii), in the discretion of the President and Chief Executive Officer, as it
is defined in any disability insurance policy in effect at the Company
during the time in question. Executive shall receive full compensation,
benefits, and reimbursement of expenses pursuant to the terms of this
Agreement from the date disability begins until the date Executive receives
notice of termination under this paragraph or until Executive begins to
receive disability benefits pursuant to a Company disability insurance
policy in an amount comparable to Executive's salary, whichever occurs
first.
-27-
(d) Termination Without Cause or for Good Reason. If the Company
terminates Executive's employment hereunder during the Term of employment
other than for "cause" (as defined above) by giving Executive at least ten
(10) days written notice, or if Executive terminates his employment for
"good reason" (as defined below) by giving the Company at least ten (10)
days written notice, in such event the Company shall pay to Executive all
salary and bonuses accrued up to and including the date of termination, all
unused vacation and all unreimbursed expenses which are reimbursable
pursuant to Section 4 incurred prior to such termination. As used in this
Agreement, "good reason" shall be defined as the Company has not obtained
shareholder approval within one year from the date hereof of all the stock
options granted to Executive pursuant to Section 3(c) above. In addition,
in the event of such termination without cause or for good reason, the
Company shall have the following duties:
(i) The Company shall pay to Executive a severance payment in an
amount equal to six (6) months of the salary then payable to Executive
pursuant to Section 3(a) hereof on the date of termination, but not
more than the Salary left to be paid during the remainder of the Term.
This severance payment shall be paid in approximately equal bi-weekly
installments, or at such other intervals as may be established for the
Company's customary pay schedule, at the annual rate of Executive's
Salary on the date of termination;
(ii) The Company shall pay to Executive all deferred
compensation, if any, owed to Executive, under any other agreement.
However, any amounts owed under a 401(k) or other plan qualified under
the Internal Revenue Code shall be paid in accordance with the terms
and provisions of such plans;
(iii) All outstanding stock options allocated to Executive which
would have been vested at the end of the Term had Executive remained
employed by the Company to the end of the Term, shall be immediately
vested, subject to the restrictions that may apply under the law
including restrictions applicable to any options granted under the
Company's 1998 Incentive Stock Option Plan; and
(iv) Executive shall no longer be subject to the covenants and
agreements not to compete under Section 6 of this Agreement following
the date of termination under this Section 5(d).
(e) Mutual Voluntary Termination. In the event the parties mutually
agree in writing to terminate this Agreement, Executive agrees, at the
Company's request, to continue providing services for a requested period of
time up to, but not more than, six months after such voluntary termination
(the "Transition Period") to facilitate transition. Executive shall be an
independent contractor and not an Executive during the Transition Period
and shall be available to assist in the transition during such period.
During the Transition Period, Executive shall receive compensation equal to
110 percent of the Salary at the time of the voluntary termination. Payment
of such compensation shall be made at least monthly. It is understood and
agreed that Executive, during the Transition Period, may be seeking other
opportunities and will not be devoting 100 percent of his time to the
affairs of the Company. The Company may elect to terminate the independent
contractor relationship with Executive prior to the end of the Termination
Period once Executive accepts a full time position with another company.
(f) Effect of Termination. In the event Executive's employment is
terminated hereunder, all obligations of the Company and all obligations of
Executive shall cease except as otherwise provided herein. Upon such
termination, Executive or Executive's representative or estate shall be
entitled to receive only the compensation, benefits, and reimbursement
earned or accrued by Executive under the terms of this Agreement prior to
the date of termination computed pro rata up to and including the date of
termination, but shall not be entitled to any further compensation,
benefits, or reimbursement from such date, except as otherwise provided
herein.
-28-
6. Covenant Not to Compete
(a) Covenant. Executive hereby covenants and agrees that during the
term of this Agreement and for a period of two (2) years thereafter, he
will not, except as a director, officer, executive or consultant of the
Company, or any subsidiary or affiliate of the Company, directly or
indirectly own, manage, operate, join, control, or participate in the
ownership, management, operation or control of, or be connected with (as
director, officer, executive, consultant, agent, independent contractor of
otherwise) in any other manner with any business engaged in the Defined
Business (as described below) which is the same or substantially similar in
nature to the business engaged in by the Company or contemplated by the
Company as of the date thereof in the State of Utah, and each of the other
states in the United States, and each foreign country, in which the Company
may engage (whether directly or indirectly through subsidiaries,
affiliates, franchisees, licensees, representatives, agents or otherwise)
during the term of this Agreement and Executive's employment with the
Company. Notwithstanding the foregoing, after termination of Executive's
employment with the Company, Executive may contract as an independent
contractor or be employed in a position with a business that is the same or
substantially similar in nature to the business engaged by the Company,
provided that Executive is neither employed by nor involved in any manner
whatsoever with any part of the business that competes directly with any
product of the Company and Executive does not work on any product that
competes with any product existing, being designed or in development by the
Company.
(b) Definition of Defined Business. As used herein, the term "Defined
Business" shall mean the business of developing, manufacturing, marketing
or selling products that are similar to or compete with the current or
contemplated products of the Company as of the date thereof.
(c) Non-Solicitation Agreement. Executive shall not, directly or
indirectly, solicit for employment, or advise or recommend to any other
person that they solicit for employment, any executive of the Company (or
any subsidiary or affiliate), during the term of this Agreement and
Executive's employment with the Company and for a term of two years
thereafter; provided however, that this paragraph shall not preclude
Executive from giving an employment reference at the request of any
Executive of the Company or at the request of a prospective employer of
such Executive.
(d) Conflicting Employment. Executive shall not, during the term of
his employment with the Company, engage in any other employment,
occupation, consulting or other business activity directly related to the
business in which the Company is now involved or becomes involved during
the term of his employment, nor will Executive engage in any other
activities that conflict with his obligations to the Company.
(e) Unique and Essential Nature of Services of Executive. Executive
understands and acknowledges that the Company is entering into this
Agreement in reliance upon the unique and essential nature of the personal
services Executive is to perform as an Executive of the Company and that
irreparable injury would befall the Company or its subsidiaries or
affiliates should Executive serve a competitor of, or compete, with the
Company or any of its subsidiaries or affiliates.
(f) Acknowledgment of Reasonableness of Restrictions. Executive
specifically acknowledges and agrees that the post-employment limitation
upon his activities as specified above, together with the geographical
limitations set forth above, are reasonable limitations as to time and
place upon Executive's post-employment activities and that the restrictions
are necessary to preserve, promote and protect the business, accounts and
good-will of the Company and impose no greater restraint than is reasonably
necessary to secure such protection.
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(g) Limitation on Scope or Duration. In the event that any provision
of this Section 6 shall be held invalid or unenforceable by a court of
competent jurisdiction by reason of the geographic or business scope or the
duration thereof, such invalidity or unenforceability shall attach only to
the scope or duration of such provision and shall not affect or render
invalid or unenforceable any other provision of this Section 6 and, to the
fullest extent permitted by law, this Section shall be construed as if the
geographic or business scope or the duration of such provision had been
more narrowly drafted so as not to be invalid or unenforceable but rather
to provide the broadest protection to the Company permitted by law.
7. Confidential Information Agreement.
----------------------------------
Executive agrees that Executive will keep confidential and will not, during
or after this Agreement, disclose, divulge, furnish or make accessible to any
person, firm, corporation or other business entity, any information, trade
secrets, customer information, marketing information, sales information, cost
information, technical data, know-how, secret processes, discoveries, methods,
patentable or unpatentable ideas, formulae, processing techniques or technical
operations relating to the business, business practices, methods, products,
processes, equipment, financial affairs or any confidential or secret aspect of
the business of the Company, including the following: (i) information
identifying or tending to identify any of the clients, customers, Executives, or
distributors of the Company or any subsidiary of the Company; (ii) information
regarding the intellectual property of the Company or any subsidiary of the
Company, including all patents, trademarks, trade names, service marks, and
copyrighted materials, all computer programs, computer software (in objet or
executable code versions), computer source codes, and graphical user interface
screens, and all copy, ideas, designs, methods, scripts, concepts, inventions,
recordings, advertising and promotional materials, whether or not protected
under any law; and (iii) information pertaining to the plans, products,
services, processes, prospects, supplies, procedures, techniques, research and
development, financial statements, and financial forecasts and projections of
the Company or any subsidiary of the Company; but excluding information that has
been intentionally disclosed to the public by the Company or any subsidiary of
the Company or a disclosure required by law, by a court of competent
jurisdiction, or to respond in good faith to a valid inquiry by a governmental
authority (collectively, the "Confidential Information") without the prior
written consent of the Company. Upon the termination of this Agreement for any
reason, and at any time prior thereto upon request by the Company, Executive
shall return to the Company all written records of any Confidential Information,
together with any and all copies of such records, in Executive's possession. Any
Confidential Information which Executive may conceive of or make during the Term
of this Agreement shall be and remain the property of the Company. Executive
agrees promptly to communicate and disclose all such Confidential Information to
the Company and to execute and deliver to the Company any instruments deemed
necessary by the Company to effect disclosure and assignment thereof to it.
8. Assignment.
----------
This Agreement is for the unique personal services of Executive and is not
assignable or delegable in whole or in part by Executive without the consent of
the President and Chief Executive Officer of the Company. This Agreement may be
assigned or delegated in whole or in part by the Company and, in such case, the
terms of this Agreement shall inure to the benefit of, be assumed by, and be
binding upon the entity to which this Agreement is assigned.
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9. Inventions
(a) Disclosure of Inventions. Executive hereby agrees that if he
conceives, learns, makes, or first reduces to practice, either alone or
jointly with others, any inventions, improvements, original works of
authorship, formulas, processes, computer programs, techniques, know-how,
or data relating to the Defined Business (hereinafter referred to
collectively as "Inventions") while he is employed by the Company, he will
promptly disclose such Inventions to the Company or to any person
designated by it. Notwithstanding the fact that Executive may determine
that the Company has no right to such Invention, he shall nevertheless
promptly disclose any such Invention to the Company or to any person
designated by it upon reasonable request.
(b) Ownership, Assignment, Assistance, and Power of Attorney. All
Inventions related to the Company's business activities, including the
development of software for controlling motion-oriented equipment operating
on a factory floor, shall be the sole and exclusive property of the
Company, and the Company shall have the right to use and to apply for
patents, copyrights, or other statutory or common law protection for such
Inventions in any country. Executive hereby assigns to he Company any
rights which he may acquire in such Inventions. Furthermore, Executive
agrees to assist the Company in every proper way at the Company's expense
to obtain patents, copyrights, and other statutory common law protections
for such Inventions in any country and to enforce such rights from time to
time. Specifically, Executive agrees to execute all documents as the
Company may desire for use in applying for and in obtaining or enforcing
such patents, copyrights, and other statutory or common law protections
together with any assignments thereof to the Company or to any person
designated by the Company. In the event the Company is unable for any
reason whatsoever to secure Executive's signature to any lawful document
required to apply for or to enforce any patent, copyright, or other
statutory or common law protections for such Inventions, the Executive
hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as his agents and attorneys-in-fact to act
in his stead to execute such documents and to do such other lawful and
necessary acts to further the issuance and protection of such patents,
copyrights, or other statutory or common law protection, such documents or
such acts to have the same legal force and effect as if such documents were
executed by or such acts were done by Executive.
10. Waiver or Modification.
----------------------
Any waiver, modification or amendment of any provision of this
Agreement shall be effective only if in writing in a document that specifically
refers to this Agreement and such document is signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought. The waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other provision hereof or any subsequent breach of the same provision
hereof.
11. Severability.
------------
If any provision of this Agreement is found to be unenforceable by a court
of competent jurisdiction, the remaining provisions shall nevertheless remain in
full force and effect.
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12. Notices.
-------
Any notice required or permitted hereunder to be given by either party
shall be in writing and shall be delivered personally or sent by certified or
registered mail, postage prepaid, or by private courier, or by telex or telegram
to the party to the address set forth below or to such other address as either
party may designate from time to time according to the terms of this paragraph:
To Executive at: Steven K. Sorensen
6979 South High Tech Drive
Salt Lake City, Utah 84047-3757
To the Company at: Cimetrix Incorporated
6979 South High Tech Drive
Salt Lake City, Utah 84047-3757
With a copy to: Randall A. Mackey, Esq.
Mackey Price & Williams
350 American Plaza II
57 West 200 South
Salt Lake City, Utah 84101-3663
A notice delivered personally shall be effective upon receipt. A notice
sent by facsimile or telegram shall be effective twenty-four (24) hours after
the dispatch thereof. A notice delivered by mail or by private courier shall be
effective on the third day after the day of mailing.
13. Attorney's Fees.
---------------
In the event of any action at law or equity to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorney's fees and court costs in addition to any other relief to which such
party may be entitled.
14. Entire Agreement.
----------------
This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and, except for the Incentive Stock
Option Agreement between Executive and the Company, supersedes all prior
agreements and understandings, both written and oral between the parties hereto
with respect to the subject matter hereof and is not intended to confer upon any
other person or entity any rights or remedies hereunder except as otherwise
expressly provided herein.
15. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of Nevada applicable to contracts entered into and to be
performed entirely within such state.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first set forth above.
EXECUTIVE:
------------------
THE COMPANY:
CIMETRIX INCORPORATED
By:
---------------
Its:
---------------
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Exhibit 10.8
(Employment Agreement for Riley G. Astill)
CIMETRIX INCORPORATED
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this
___ day of November, 2001, by and between CIMETRIX INCORPORATED, a Nevada
corporation (the "Company") and Riley G. Astill (the "Executive"), to become
effective as of October 1, 2001 (the "Effective Date").
NOW THEREFORE, in consideration of Executive's employment by the Company,
and the mutual promises and covenants contained in, and the mutual benefits to
be derived from this Agreement, and to set forth and establish the terms and
conditions upon which Executive shall be employed by the Company, the parties
hereto agree as follows:
I. Employment
The Company hereby employs Executive and Executive hereby accepts such
employment, upon the terms and conditions set forth herein.
2. Terms and Conditions of Employment.
----------------------------------
(a) Executive shall be employed in the position of Vice President and
Chief Financial Officer and, subject to direction from the President and
Chief Executive Officer, shall supervise, control and be responsible for
Financial and Human Resource activities of the Company and any subsidiary
of the Company, including direct supervision of day-to-day financial and
human resource activities of the Company and any subsidiary of the Company.
Executive shall also perform such related services and duties for the
Company as are from time to time assigned or delegated to him from time to
time by the President and Chief Executive Officer and the Board of
Directors. Executive shall report directly to the President and Chief
Executive Officer.
(b) Throughout his employment hereunder, Executive shall devote his
full time, energy and skill to perform the duties of his employment
(reasonable vacations in accordance with this Agreement and reasonable
absences due to illness excepted), shall faithfully and industriously
perform such duties, and shall use his best efforts to follow and implement
all management policies and decisions of the President and Chief Executive
Officer.
3. Compensation and Benefits.
-------------------------
As the entire consideration for the services to be performed and the
obligations incurred by Executive hereunder, and subject to the terms and
conditions hereof, during the term of this Agreement Executive shall be entitled
to the following:
(a) Salary. Commencing from the effective date of this Agreement, the
Company shall pay Executive an annual salary of $80,000 (the "Annual Salary").
Such Annual Salary will be pro-rated for any partial employment period, will be
payable in equal bi-weekly installments or at such other intervals as may be
established for the Company's customary pay schedule. The Annual Salary is
subject to such incremental increases as the President and Chief Executive
Officer may determine from time to time in its sole discretion.
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(b) Bonus. As additional compensation and as further consideration for his
entering into this Agreement for services to be rendered by Executive, the
Company may pay Executive annually following the end of each fiscal year, a cash
bonus. Such bonus shall be paid to Executive upon the satisfaction by the
Company of the performance objectives that shall be determined by the President
and Chief Executive Officer of the Company on an annual basis. Executive shall
have the right to direct any portion of the bonus to be paid into a deferred
compensation fund.
(c) Incentive Stock Option Plan. Executive shall be entitled to participate
in the Company's 1998 Incentive Stock Option Plan. As of the Effective Date of
this Agreement, the Company shall cause to be issued to Executive stock options
(in addition to the stock options previously issued to Executive) to purchase
150,000 shares of the Company's common stock pursuant to the terms and
conditions of the plan at an exercise price of $1.00 per share, vesting annually
in equal amounts on December 31, 2001, 2002 and 2003 and with an exercise period
of five (5) years from the date of grant of such options. However, if there is a
Change in Control (as defined below), all such stock options shall become vested
as of the date of such Change in Control.
(d) Additional Benefits. Executive shall be entitled to participate, to the
extent of Executive's eligibility, in any Executive benefit plans made available
by the Company to its Executives during the Term of this Agreement, including,
without limitation, such profit sharing plans, 401K and cafeteria plans, and
health, life, hospitalization, dental, disability or other insurance plans as
may be in effect from time to time. Such participation shall be in accordance
with the terms established from time to time by the Company for individual
participation in any such plans.
(e) Life Insurance. The Company shall provide Executive with a life
insurance policy in an amount equal to the lessor of (i) twice his Annual Salary
or (ii) the maximum amount allowable under the Company's life insurance plan.
(f) Vacation, Sick Leave, and Holidays. Executive shall be entitled to four
(4) weeks of vacation, and also sick leave and holidays at full pay in
accordance with the Company's policies established and in effect from time to
time.
(g) Car Allowance. Executive shall be entitled to an automobile allowance
of $350 per month payable on the first day of each month.
(h) Deductions. The Company shall have the right to deduct and withhold
from the compensation due to Executive hereunder, including Executive's Annual
Salary and Compensation Bonus, if any, such taxes and other amounts as may be
customary or required by law.
(i) Change in Control. A "Change in Control" shall be deemed to have
occurred if (i) a tender offer shall be made and consummated for the ownership
of more than 50% of the outstanding voting securities of the Company, (ii) the
Company shall be merged or consolidated with another corporation and as a result
of such merger or consolidation less than 50% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the former shareholders of the Company, as the same shall have
existed immediately prior to such merger or consolidation, (iii) the Company
shall sell all or substantially all of its assets to another corporation which
is not a wholly-owned subsidiary or affiliate, (iv) as the result of, or in
connection with, any contested election for the Board of Directors of the
Company, or any tender or exchange offer, merger or business combination or sale
of assets, or any combination of the foregoing (a "Transaction"), the persons
who were directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company, or any successor
thereto, or (v) a person, within the meaning of Section 3(a)(9) or of Section 1
3(d)(3) (as in effect on the date hereof) of the Securities Exchange Act of 1934
("Exchange Act"), other than any Executive benefit plan then maintained by the
Company, shall acquire more than 30% of the outstanding voting securities of the
Company (whether directly, indirectly, beneficially or of record). For purposes
hereof, ownership of voting securities shall take into account and shall include
ownership as determined by applying the provisions of Rule 1 3d-3(d)(1)(i) (as
in effect on the date hereof) pursuant to the Exchange Act.
-34-
4. Business Expenses.
-----------------
The Company shall promptly reimburse Executive for all reasonable
out-of-pocket business expenses incurred in performing Executive's duties
hereunder, in accordance with the Company's policies with respect thereto in
effect from time to time (including without limitation policies regarding prior
consent for significant expenditures), provided that Executive promptly
furnishes to the Company adequate records and other documentary evidence
required by all federal and state statutes and regulations issued by the
appropriate taxing authorities for the substantiation of each such business
expense as a deduction on the federal and state income tax returns of the
Company.
5. Term and Termination.
--------------------
(a) Term. The Term of this Agreement shall commence on the Effective
Date of this Agreement, and subject to earlier termination as provided
below, and except for the provisions of this Agreement which, by their
terms, continue in force beyond the termination hereof, the term of this
Agreement shall end on December 31, 2003.
(b) Termination on Death and for Cause. This Agreement, and
Executive's employment hereunder, shall terminate upon Executive's death
and is otherwise immediately terminable for cause (as defined below) upon
written notice from the Company to Executive. As used in this Agreement,
"cause" shall include: (i) habitual neglect of or deliberate or intentional
refusal to perform any of Executive's duties or obligations under this
Agreement or to follow Company policies or procedures following written
notification by the Company to Executive of his failure to perform such
duties or obligations or to follow such policies or procedures and a ten
(10) day period for Executive to cure the failure set forth in such written
notification; (ii) fraudulent or criminal activities; (iii) any grossly
negligent activity; (iv) deliberate breach of Company rules resulting in
material loss or damage to the Company, or intentional or negligent
unauthorized disclosure of Company trade secrets or confidential
information; or (v) if the Executive fails to fulfill the annual
performance goals and objectives, which shall be mutually determined by
Executive and the President and Chief Executive Officer. A determination
whether Executive's actions justify termination for cause and the date such
termination is effective shall be made by the President and Chief Executive
Officer in his sole discretion. However, if Executive's employment is
terminated for cause under Subsection 5(b)(v) of this section, the Company
shall pay to Executive a severance payment in the amount equal to three (3)
months of the salary then payable to Executive pursuant to Section 3(a)
hereof on the date of termination, but not more than the Salary left to be
paid during the remainder of the Term. This severance payment shall be made
according to the terms and conditions in Section 5(d)(i) below.
(c) Termination for Disability. The President and Chief Executive
Officer may terminate this Agreement, upon written notice to Executive, for
the "disability" (as defined below) of Executive at the expiration of a
consecutive twenty-six (26) week period of disability if the President and
Chief Executive Officer determines in its sole discretion that Executive's
disability will prevent Executive from substantially performing Executive's
duties hereunder. As used in this Agreement, "disability" shall be defined
as (i) Executive's inability, by reason of physical or mental illness or
other cause, to perform substantially Executive's duties hereunder; or
(ii), in the discretion of the President and Chief Executive Officer, as it
is defined in any disability insurance policy in effect at the Company
during the time in question. Executive shall receive full compensation,
benefits, and reimbursement of expenses pursuant to the terms of this
Agreement from the date disability begins until the date Executive receives
notice of termination under this paragraph or until Executive begins to
receive disability benefits pursuant to a Company disability insurance
policy in an amount comparable to Executive's salary, whichever occurs
first.
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(d) Termination Without Cause or for Good Reason. If the Company
terminates Executive's employment hereunder during the Term of employment
other than for "cause" (as defined above) by giving Executive at least ten
(10) days written notice, or if Executive terminates his employment for
"good reason" (as defined below) by giving the Company at least ten (10)
days written notice, in such event the Company shall pay to Executive all
salary and bonuses accrued up to and including the date of termination, all
unused vacation and all unreimbursed expenses which are reimbursable
pursuant to Section 4 incurred prior to such termination. As used in this
Agreement, "good reason" shall be defined as the Company has not obtained
shareholder approval within one year from the date hereof of all the stock
options granted to Executive pursuant to Section 3(c) above. In addition,
in the event of such termination without cause or for good reason, the
Company shall have the following duties:
(i) The Company shall pay to Executive a severance payment in an
amount equal to six (6) months of the salary then payable to Executive
pursuant to Section 3(a) hereof on the date of termination, but not
more than the Salary left to be paid during the remainder of the Term.
This severance payment shall be paid in approximately equal bi-weekly
installments, or at such other intervals as may be established for the
Company's customary pay schedule, at the annual rate of Executive's
Salary on the date of termination;
(ii) The Company shall pay to Executive all deferred
compensation, if any, owed to Executive, under any other agreement.
However, any amounts owed under a 401(k) or other plan qualified under
the Internal Revenue Code shall be paid in accordance with the terms
and provisions of such plans;
(iii) All outstanding stock options allocated to Executive which
would have been vested at the end of the Term had Executive remained
employed by the Company to the end of the Term, shall be immediately
vested, subject to the restrictions that may apply under the law
including restrictions applicable to any options granted under the
Company's 1998 Incentive Stock Option Plan; and
(iv) Executive shall no longer be subject to the covenants and
agreements not to compete under Section 6 of this Agreement following
the date of termination under this Section 5(d).
(e) Mutual Voluntary Termination. In the event the parties mutually
agree in writing to terminate this Agreement, Executive agrees, at the
Company's request, to continue providing services for a requested period of
time up to, but not more than, six months after such voluntary termination
(the "Transition Period") to facilitate transition. Executive shall be an
independent contractor and not an Executive during the Transition Period
and shall be available to assist in the transition during such period.
During the Transition Period, Executive shall receive compensation equal to
110 percent of the Salary at the time of the voluntary termination. Payment
of such compensation shall be made at least monthly. It is understood and
agreed that Executive, during the Transition Period, may be seeking other
opportunities and will not be devoting 100 percent of his time to the
affairs of the Company. The Company may elect to terminate the independent
contractor relationship with Executive prior to the end of the Termination
Period once Executive accepts a full time position with another company.
(f) Effect of Termination. In the event Executive's employment is
terminated hereunder, all obligations of the Company and all obligations of
Executive shall cease except as otherwise provided herein. Upon such
termination, Executive or Executive's representative or estate shall be
entitled to receive only the compensation, benefits, and reimbursement
earned or accrued by Executive under the terms of this Agreement prior to
the date of termination computed pro rata up to and including the date of
termination, but shall not be entitled to any further compensation,
benefits, or reimbursement from such date, except as otherwise provided
herein.
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6. Covenant Not to Compete
(a) Covenant. Executive hereby covenants and agrees that during the
term of this Agreement and for a period of two (2) years thereafter, he
will not, except as a director, officer, executive or consultant of the
Company, or any subsidiary or affiliate of the Company, directly or
indirectly own, manage, operate, join, control, or participate in the
ownership, management, operation or control of, or be connected with (as
director, officer, executive, consultant, agent, independent contractor of
otherwise) in any other manner with any business engaged in the Defined
Business (as described below) which is the same or substantially similar in
nature to the business engaged in by the Company or contemplated by the
Company as of the date thereof in the State of Utah, and each of the other
states in the United States, and each foreign country, in which the Company
may engage (whether directly or indirectly through subsidiaries,
affiliates, franchisees, licensees, representatives, agents or otherwise)
during the term of this Agreement and Executive's employment with the
Company. Notwithstanding the foregoing, after termination of Executive's
employment with the Company, Executive may contract as an independent
contractor or be employed in a position with a business that is the same or
substantially similar in nature to the business engaged by the Company,
provided that Executive is neither employed by nor involved in any manner
whatsoever with any part of the business that competes directly with any
product of the Company and Executive does not work on any product that
competes with any product existing, being designed or in development by the
Company.
(b) Definition of Defined Business. As used herein, the term "Defined
Business" shall mean the business of developing, manufacturing, marketing
or selling products that are similar to or compete with the current or
contemplated products of the Company as of the date thereof.
(c) Non-Solicitation Agreement. Executive shall not, directly or
indirectly, solicit for employment, or advise or recommend to any other
person that they solicit for employment, any executive of the Company (or
any subsidiary or affiliate), during the term of this Agreement and
Executive's employment with the Company and for a term of two years
thereafter; provided however, that this paragraph shall not preclude
Executive from giving an employment reference at the request of any
Executive of the Company or at the request of a prospective employer of
such Executive.
(d) Conflicting Employment. Executive shall not, during the term of
his employment with the Company, engage in any other employment,
occupation, consulting or other business activity directly related to the
business in which the Company is now involved or becomes involved during
the term of his employment, nor will Executive engage in any other
activities that conflict with his obligations to the Company.
(e) Unique and Essential Nature of Services of Executive. Executive
understands and acknowledges that the Company is entering into this
Agreement in reliance upon the unique and essential nature of the personal
services Executive is to perform as an Executive of the Company and that
irreparable injury would befall the Company or its subsidiaries or
affiliates should Executive serve a competitor of, or compete, with the
Company or any of its subsidiaries or affiliates.
(f) Acknowledgment of Reasonableness of Restrictions. Executive
specifically acknowledges and agrees that the post-employment limitation
upon his activities as specified above, together with the geographical
limitations set forth above, are reasonable limitations as to time and
place upon Executive's post-employment activities and that the restrictions
are necessary to preserve, promote and protect the business, accounts and
good-will of the Company and impose no greater restraint than is reasonably
necessary to secure such protection.
-37-
(g) Limitation on Scope or Duration. In the event that any provision
of this Section 6 shall be held invalid or unenforceable by a court of
competent jurisdiction by reason of the geographic or business scope or the
duration thereof, such invalidity or unenforceability shall attach only to
the scope or duration of such provision and shall not affect or render
invalid or unenforceable any other provision of this Section 6 and, to the
fullest extent permitted by law, this Section shall be construed as if the
geographic or business scope or the duration of such provision had been
more narrowly drafted so as not to be invalid or unenforceable but rather
to provide the broadest protection to the Company permitted by law.
7. Confidential Information Agreement.
----------------------------------
Executive agrees that Executive will keep confidential and will not, during
or after this Agreement, disclose, divulge, furnish or make accessible to any
person, firm, corporation or other business entity, any information, trade
secrets, customer information, marketing information, sales information, cost
information, technical data, know-how, secret processes, discoveries, methods,
patentable or unpatentable ideas, formulae, processing techniques or technical
operations relating to the business, business practices, methods, products,
processes, equipment, financial affairs or any confidential or secret aspect of
the business of the Company, including the following: (i) information
identifying or tending to identify any of the clients, customers, Executives, or
distributors of the Company or any subsidiary of the Company; (ii) information
regarding the intellectual property of the Company or any subsidiary of the
Company, including all patents, trademarks, trade names, service marks, and
copyrighted materials, all computer programs, computer software (in objet or
executable code versions), computer source codes, and graphical user interface
screens, and all copy, ideas, designs, methods, scripts, concepts, inventions,
recordings, advertising and promotional materials, whether or not protected
under any law; and (iii) information pertaining to the plans, products,
services, processes, prospects, supplies, procedures, techniques, research and
development, financial statements, and financial forecasts and projections of
the Company or any subsidiary of the Company; but excluding information that has
been intentionally disclosed to the public by the Company or any subsidiary of
the Company or a disclosure required by law, by a court of competent
jurisdiction, or to respond in good faith to a valid inquiry by a governmental
authority (collectively, the "Confidential Information") without the prior
written consent of the Company. Upon the termination of this Agreement for any
reason, and at any time prior thereto upon request by the Company, Executive
shall return to the Company all written records of any Confidential Information,
together with any and all copies of such records, in Executive's possession. Any
Confidential Information which Executive may conceive of or make during the Term
of this Agreement shall be and remain the property of the Company. Executive
agrees promptly to communicate and disclose all such Confidential Information to
the Company and to execute and deliver to the Company any instruments deemed
necessary by the Company to effect disclosure and assignment thereof to it.
8. Assignment.
----------
This Agreement is for the unique personal services of Executive and is not
assignable or delegable in whole or in part by Executive without the consent of
the President and Chief Executive Officer of the Company. This Agreement may be
assigned or delegated in whole or in part by the Company and, in such case, the
terms of this Agreement shall inure to the benefit of, be assumed by, and be
binding upon the entity to which this Agreement is assigned.
-38-
9. Inventions
(a) Disclosure of Inventions. Executive hereby agrees that if he
conceives, learns, makes, or first reduces to practice, either alone or
jointly with others, any inventions, improvements, original works of
authorship, formulas, processes, computer programs, techniques, know-how,
or data relating to the Defined Business (hereinafter referred to
collectively as "Inventions") while he is employed by the Company, he will
promptly disclose such Inventions to the Company or to any person
designated by it. Notwithstanding the fact that Executive may determine
that the Company has no right to such Invention, he shall nevertheless
promptly disclose any such Invention to the Company or to any person
designated by it upon reasonable request.
(b) Ownership, Assignment, Assistance, and Power of Attorney. All
Inventions related to the Company's business activities, including the
development of software for controlling motion-oriented equipment operating
on a factory floor, shall be the sole and exclusive property of the
Company, and the Company shall have the right to use and to apply for
patents, copyrights, or other statutory or common law protection for such
Inventions in any country. Executive hereby assigns to he Company any
rights which he may acquire in such Inventions. Furthermore, Executive
agrees to assist the Company in every proper way at the Company's expense
to obtain patents, copyrights, and other statutory common law protections
for such Inventions in any country and to enforce such rights from time to
time. Specifically, Executive agrees to execute all documents as the
Company may desire for use in applying for and in obtaining or enforcing
such patents, copyrights, and other statutory or common law protections
together with any assignments thereof to the Company or to any person
designated by the Company. In the event the Company is unable for any
reason whatsoever to secure Executive's signature to any lawful document
required to apply for or to enforce any patent, copyright, or other
statutory or common law protections for such Inventions, the Executive
hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as his agents and attorneys-in-fact to act
in his stead to execute such documents and to do such other lawful and
necessary acts to further the issuance and protection of such patents,
copyrights, or other statutory or common law protection, such documents or
such acts to have the same legal force and effect as if such documents were
executed by or such acts were done by Executive.
10. Waiver or Modification.
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Any waiver, modification or amendment of any provision of this Agreement
shall be effective only if in writing in a document that specifically refers to
this Agreement and such document is signed by the party against whom enforcement
of any waiver, change, modification, extension, or discharge is sought. The
waiver by either party of a breach of any provision of this Agreement by the
other party shall not operate or be construed as a waiver of any other provision
hereof or any subsequent breach of the same provision hereof.
11. Severability.
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If any provision of this Agreement is found to be unenforceable by a court
of competent jurisdiction, the remaining provisions shall nevertheless remain in
full force and effect.
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12. Notices.
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Any notice required or permitted hereunder to be given by either party
shall be in writing and shall be delivered personally or sent by certified or
registered mail, postage prepaid, or by private courier, or by telex or telegram
to the party to the address set forth below or to such other address as either
party may designate from time to time according to the terms of this paragraph:
To Executive at: Riley G. Astill
6979 South High Tech Drive
Salt Lake City, Utah 84047-3757
To the Company at: Cimetrix Incorporated
6979 South High Tech Drive
Salt Lake City, Utah 84047-3757
With a copy to: Randall A. Mackey, Esq.
Mackey Price & Williams
350 American Plaza II
57 West 200 South
Salt Lake City, Utah 84101-3663
A notice delivered personally shall be effective upon receipt. A notice
sent by facsimile or telegram shall be effective twenty-four (24) hours after
the dispatch thereof. A notice delivered by mail or by private courier shall be
effective on the third day after the day of mailing.
13. Attorney's Fees.
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In the event of any action at law or equity to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorney's fees and court costs in addition to any other relief to which such
party may be entitled.
14. Entire Agreement.
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This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and, except for the Incentive Stock
Option Agreement between Executive and the Company, supersedes all prior
agreements and understandings, both written and oral between the parties hereto
with respect to the subject matter hereof and is not intended to confer upon any
other person or entity any rights or remedies hereunder except as otherwise
expressly provided herein.
15. Governing Law.
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This Agreement shall be governed by and construed in accordance with the
laws of the State of Nevada applicable to contracts entered into and to be
performed entirely within such state.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first set forth above.
EXECUTIVE:
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THE COMPANY:
CIMETRIX INCORPORATED
By:
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Its:
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