EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of January, 1997 (the "Effective Date") by and between COVOL
TECHNOLOGIES, INC., a Delaware corporation (the "Company"), and ("Employee").
The Company and Employee are sometimes STANLEY M. KIMBALL later in this
Agreement collectively referred to as the "Parties."
RECITALS
This Agreement is entered into with reference to the following facts,
definitions, and objectives:
A. Employee is a Certified Public Accountant and immediately prior to
the Effective Date, was employed by Huntsman Corporation, a Utah corporation, as
Vice President, Administration.
B. Employee's services are deemed to be of value to the Company and it
is recognized that inducements must be offered to Employee in order that the
Company may retain Employee's services.
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NOW, THEREFORE, in consideration of this Agreement and of the covenants
and conditions contained in this Agreement, the Parties agree as follows:
1. Employment and Positions.
(a) Positions. The Company employs Employee and Employee
accepts employment by the Company as a Vice President and as the Chief Financial
Officer of the Company for the Period of Employment specified in Paragraph 3
("Period of Employment").
2. Services to be Rendered. Employee shall, during the Period of
Employment, serve the Company in the positions set forth in Paragraph 1
("Employment and Positions") diligently, competently, and in conformance with
the corporate policies of the Company. Employee shall be free to conduct
personal business and investment activities that do not conflict or interfere
with the performance of his duties under this Agreement.
In fulfilling his duties and responsibilities under this Agreement,
Employee shall report to the President and Chief Executive Officer of the
Company.
3. Period of Employment. Employee's employment by the Company pursuant
to this Agreement shall, unless sooner
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terminated as provided in this Agreement, be for a term of three (3) years,
commencing as of the 1st day of January 1997, and ending with the close of
business on the 31st day of December, 1999 (the "Period of Employment").
4. Base Salary. At the commencement of the Period of Employment,
Employee shall be paid a yearly base salary ("Base Salary") of Eighty Thousand
Dollars ($80,000). It is recognized by the Company and Employee that a Base
Salary of Eighty Thousand Dollars ($80,000) is less than the amount that should
be paid to Employee as his Base Salary considering Employee's past experience
and his responsibilities as a Vice President and the Chief Financial Officer of
the Company. Therefore, (i) as soon as possible under the circumstances, the
Company shall cause Employee's Base Salary to be in line with the base salary or
other comparable compensation paid by the Company to the Company's President and
Chief Executive Officer, (ii) throughout the Period of Employment the Company
shall exercise its best efforts to cause Employee's Base Salary to be in line
with the base salary or other comparable compensation paid to the President and
Chief Executive Officer of the Company, (iii) Employee's Base Salary shall not
be less than Eighty Thousand Dollars ($80,000), and (iv) Employee's Base Salary
shall be in addition to all other amounts or benefits to which Employee is or
shall be entitled under this Agreement or otherwise as a result
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of his employment by the Company. Base Salary shall be paid in bi-weekly
installments during the Period of Employment. Employee's Base Salary shall be
reviewed on or before April 1, 1997 and thereafter on or before the end of each
calendar year during the Period of Employment. The review shall be conducted by
the President and Chief Executive Officer of the Company and Employee's Base
Salary may be increased as a result of any such review, but not decreased The
increase, if any, in Employee's Base Salary resulting from such review shall
take effect as of the date determined in good faith by the Company's President
and Chief Executive Officer.
5. Stock Option. As soon as practical following the completion of such
steps as may be required to qualify the issuance of the stock option described
in this Paragraph 5 (the "Option") and the shares of the Company's Common Stock
to be issued in connection with the exercise, if any, of the Option under or
pursuant to the securities laws of the State of Utah and the United States of
America, but in any case not later than , 1997, the Company shall grant to
Employee the Option to purchase shares of the Company's Common Stock on the
following terms and conditions:
(a) Purchase Price. The purchase price per share for the
shares subject to the Option shall be One Dollar and 50/100 ($1.50) per share.
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(b) Number of Shares. The Option shall be for Fifty Thousand
(50,000) shares of the Company's Common Stock (the "Optioned Shares").
(c) Exercise Periods. The Option shall vest as follows: (i) on
the date on which this Agreement is executed by the Parties as to twenty-five
thousand (25,000) of the Optioned Shares, (ii) on March 1, 1997, as to an
additional two thousand (2,000) of the Optioned Shares, (iii) on the first day
of each and every of the next following twenty-three (23) calendar months
commending with the month of April, 1997 and ending with the month of February,
1999, as to an additional one thousand (1,000) of the remaining Optioned Shares,
and (iv) anything in this Agreement notwithstanding, on April 1, 1999 as to all
of the Optioned Shares.
(d) Full Venting in Event of Death, Disability, or Certain
Terminations. If Employees employment with the Company is terminated (i) as a
result of Employees death, (ii) as a result of Employees disability, determined
as set forth in Paragraph 7(a) ('[Termination of Employment By the Company
- -Disability"), (iii) by the Company pursuant to Paragraph 7(c) ("Termination of
Employment by the Company - Notice, Without Cause"), or (iv) by Employee
pursuant to Paragraph 8(b)
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("Termination of Employment by Employee - With Good Reasons), the Option shall
vest in its entirety and Employee (if he is capable of acting under the
circumstances) or the guardian, heirs, or estate of Employee, as the case may
be, may exercise the Option at any time within one hundred-eighty (180) days of
the effective date of the termination of Employees employment.
(e) Additional Stock Options. The Option shall be in addition
to and not in lieu of such other or additional stock options as Employee may be
entitled or eligible to receive during the Period of Employment pursuant to any
plans or policies of the Company that from time to time during the Period of
Employment may be in effect.
6. Other Benefits. In addition to the benefits previously set forth in
this Agreement, Employee shall, during the Period of Employment, be entitled to
the benefits described below, and as concerns all such benefit programs where
years of service are a factor, to the fullest extent permitted by law, Employee
shall be given credit for his years of service with Huntsman Corporation:
(a) Car Allowance. Employee shall be paid a monthly car
allowance in the amount of Five Hundred Fifty Dollars ($550.00).
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(b) Entertainment Expenses. Employee shall be reimbursed for
Employees reasonable entertainment and business expenses that are consistent
with the Company's written policies and procedures, as the said policies and
procedures may be changed, modified, or terminated for all officers of the
Company from time to time.
(c) Vacation. During the Period of Employment, Employee shall
be entitled to the greater of (i) four (4) weeks of paid vacation during each
full calendar year occurring during the Period of Employment and (ii) that
amount of vacation provided or made available to other senior executive officers
of the Company. Should Employee desire additional time off during the Period of
Employment, that time will be without pay and the amount of time off will be
negotiated with the Company's President and Chief Executive Officer. Upon
termination of Employee's employment under this Agreement other than by the
Company for Cause or by Employee without Good Reason, Employee shall be paid for
any unused vacation to which he was entitled.
(d) Sick Leave. Sick leave time that is reasonable under the
circumstances and that is consistent with the Company's policies and procedures,
as the same may be changed, modified, or terminated from time to time for all
senior
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executive officers of the Company.
(e) Insurance. Participation in the group insurance program of
the Company as concerns life, disability, medical, and dental insurance
currently available to other senior executive officers of the Company as the
same may be changed, modified, or terminated for all participants from time to
time. Employee shall be required to pay that portion of the premiums for
coverage under such insurance that is payable by other senior executive officers
of the Company for their insurance coverage. Provided, however, that anything in
this Agreement to the contrary notwithstanding, if the insurance carrier or
company that is providing health insurance coverage to or for employees of the
Company shall at the time the eligibility of Employee or Employee's dependents
for such coverage is first determined refuse or decline to provide health
insurance coverage for Employee or any of Employee's dependents with respect to
any condition or circumstance and Employee shall determine that it is in his or
such dependent's best interests to maintain health insurance coverage on himself
or such dependent through Huntsman Corporation pursuant to Employee's COBRA
rights, the Company shall reimburse Employee for the actual cost to Employee of
maintaining such COBRA coverage for the shorter of (i) the duration of the
denial or refusal by the Company's insurance carrier or company to provide
insurance coverage and (ii) the
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duration of COBRA coverage available to Employee
or the involved dependent.
(f) Retirement Plans. Participation in the Company's
retirement plans, including, but not limited to, any 401(K) Plan, that may be
adopted or implemented by the Company and any time during the Period of
Employment. Any such participation, shall be in accordance with the terms and
provisions of the plan and applicable law, as the same may be changed, amended,
or terminated from time to time.
(g) Other Miscellaneous Benefits. The Company shall pay,
reimburse Employee for, or extend to Employee the following miscellaneous
benefits:
(i) annual dues for association memberships including
the American Institute of Certified Public Accountants and the Utah
Association of Certified Public Accounts;
(ii) time off with pay while traveling to and from
and while attending and reimbursement for all reasonable program fees
and travel, lodging, and other reasonable expenses incurred by Employee
in connection with all continuing professional education required of
Employee to maintain his license as a certified public accountant; and
(iii) the cost to Employee to subscribe to or
purchase books, journals, or publications that relate to or
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discuss accounting, finance, cash management, compensation, fringe
benefits, insurance, and/or other relevant business issues.
7. Termination of Employment By the Company. Anything in this Agreement
to the contrary notwithstanding, the Company shall have the following rights
with respect to the termination of Employee's employment:
(a) Disability. The Company may terminate Employee's
employment under this Agreement if Employee shall become unable to fulfill his
duties under this Agreement, as measured by the Company's usual business
activities, by reason of any medically determinable physical and/or mental
disability.
(b) Cause. Employee's employment may be terminated by the
Company for Cause. For purposes of this Agreement, "Cause" shall mean and refer
to a determination made in good faith by the Company's Board of Directors that:
(i) Employee has been convicted of or has entered of
a plea of guilty or nolo contendere to a felony or to any other crime,
which other crime is punishable by incarceration for a period of one
(1) year or longer, or which is a crime involving moral turpitude)
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(ii) there has been a theft, embezzlement, or other
criminal misappropriation of funds by Employee, whether from the
Company or any other person; or
(iii) Employee has willfully failed or refused in a
material respect to follow reasonable written policies or directives
established by the Board of Directors or the President and Chief
Executive Officer of the Company, or Employee has willfully failed to
attend to material duties or obligations of his office (other than any
such failure resulting from Employee's incapacity due to physical or
mental illness which is a cause or manifestation of Employee's
disability) which failure or refusal continues for thirty (30) days
following delivery of a written demand from the Company's President and
Chief Executive Officer for performance to Employee identifying the
manner in which Employee has failed to follow such policies or
directives or to perform such duties.
Termination pursuant to this Paragraph 7(b) shall be effective as of
the effective date of the notice by the Board of Directors to Employee that it
has made the required determination, or at such other subsequent date, if any,
specified in such notice.
(c) Notice, Without Cause. The Company may also terminate
Employee's employment under this Agreement on not less than thirty (30) days
notice without Cause (which notice shall
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specify the effective date of any such termination).
8. Termination of Employment BY Employee.
(a) Disability. Employee may terminate his employment under
this Agreement if Employee shall become unable to fulfill his duties under this
Agreement, as measured by the Company's usual business activities, by reason of
any medically determinable physical and/or mental disability.
(b) With Good Reason. Employee shall have the right to
terminate his employment under this Agreement at any time for Good Reason,
provided Employee has delivered a written notice to the Company that briefly
describes the facts underlying Employee's belief that "Good Reason" exists and
the Company has failed to cure such situation within thirty (30) days after the
effective date of such notice. For purposes of this Agreement, "Good Reason"
shall mean and consist of:
(iv) a material breach by the Company of its
obligations under this Agreement, including, but not limited to, a
failure to maintain or increase Employee's Base Salary at or to the
level required by Paragraph 4 ("Base Salary");
(v) without Employee's prior written consent, the
assignment to Employee of duties that are materially inconsistent with,
or that constitute a material alteration in
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the status of his responsibilities set forth in this Agreement, as an
Vice President and/or the Chief Financial Officer of the Company;
(iii) without Employee's prior written consent, the
relocation of the Company's chief executive office outside of the Salt
Lake City/Provo metropolitan area;
(iv) without Employee's prior written consent, the
transfer or relocation of Employee's place of employment to any place
other than the Salt Lake City/Provo metropolitan area, except for
reasonable travel on the business of the Company; or
(v) upon the consummation of a sale of all or
substantially all of the assets of the Company not in the usual or
regular course of the business of the Company in which sale the
acquiring company did not assume all of the obligations of the Company
under this Agreement.
(c) Notice, Without Good Reason. With not less than ninety (90)
day's prior written notice (which notice shall specify the effective date of the
termination), Employee shall have the right to terminate his employment under
this Agreement without Good Reason.
9. Termination of Employment by Death. If Employee dies during the
Period of Employment, Employee's employment shall
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be thereby terminated effective as of the end of the calendar month during which
Employee died.
10. Determination of Disability. If in the opinion of the Company or
Employee, Employee is disabled, then the following shall occur:
(i) the Company or Employee shall promptly so notify
(by dated written notice) the insurance company or carrier that, at
that time, insures the employees of the Company against long-term
disability and request a determination as to whether Employee is
disabled pursuant to the terms of the Company's long-term disability
plan; and
(ii) the matter of Employee's disability shall be
resolved and Employee and the Company shall abide by the decision of
the insurance company or carrier that, at such time, is insuring
employees of the Company against long-term disability.
11. Effect of Termination.
(a) Termination of Employment Due to Employees Disability or
Death. If Employee's employment is terminated by the Company or Employee,
pursuant to Paragraph 7(a) ("Termination of Employment By the Company
Disability") or Paragraph 8(a) ("Termination of Employment by Employee
Disability"), as the
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case may be, due to Employee's disability or if Employee's employment is
terminated by his death, pursuant to Paragraph 9 (~'Termination of Employment by
Death"), in either situation:
(i) all cash compensation described in this Agreement
shall be computed and paid to the effective date of such termination
and shall cease upon such effective date of termination;
(ii) Employee shall receive all compensation and
employee benefits accrued through the effective date of the
termination, and all benefits provided through the Company~s insurance
plans pursuant to the terms and conditions of such insurance plans; and
(iii) except as expressly provided in this Paragraph
11(a), Employee shall not be entitled to any additional cash
compensation following the effective date of the termination.
In the event of Employee's death, the provisions of this Paragraph
11(a) shall not affect the entitlements, if any, of the heirs, executors,
administrators, beneficiaries, or assigns of Employee with respect to the Option
or any benefit plan, fund, or program of the Company that provides benefits to
one or more of them as a result or in connection with the death of Employee.
(b) Termination of Employment By the Company for Cause or by
Employee Without Good Reason. If Employee's
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employment shall be terminated by the Company for Cause pursuant to Paragraph
7(b) ("Termination of Employment By the Company -Cause"), or by Employee without
Good Reason pursuant to Paragraph 8(c) ("Termination of Employment By Employee
Notice, Without Good Reason"), then in any such event:
(i) the Company shall pay Employee all compensation
and benefits described in this Agreement through the effective date of
such termination, together with all benefits, if any, to which Employee
had accrued or vested rights through the effective date of the
termination, including, but not limited to, any such accrued or vested
rights to any benefits available, pursuant to Company-wide policies
then in effect, to an employee of the Company whose employment is
terminated by the Company, and thereupon all rights to such
compensation and benefits shall cease;
(ii) Employee shall be paid all bonuses, if any,
payable to Employee for the year(s) prior to the year in which
Employee's employment is so terminated, but not then paid; and
(iii) anything in this Paragraph 12(b) to the
contrary notwithstanding, except as expressly provided in subparts (ii)
and (iii) of this Paragraph 12(b), Employee shall not be entitled to or
be paid any unpaid compensation or benefit under any bonus plan for the
year in which Employee's employment is terminated by the Company for
Cause or by Employee without
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Good Reason.
(c) Termination of Employment By the Company Without Cause or
by Employee For Good Reason. If the Company terminates Employee's employment
without Cause or if Employee terminates his employment with Good Reason:
(i) the Company shall continue to pay Employee the
Base Salary provided for by Paragraph 5 ("Base Salary") at the rate in
effect on the effective date of the notice of termination through the
effective date of the termination;
(ii) within thirty (30) days following the effective
date of the termination, the Company shall pay Employee a severance
payment equal to two hundred percent (200~) of Employee's yearly Base
Salary in effect on the effective date of the notice of termination;
(iii) Employee shall receive all benefits available,
pursuant to Company-wide policies then in effect, to an employee of the
Company whose employment is terminated by the Company; and
(iv) thereupon all rights of Employee to such
compensation and benefits shall cease.
(d) Certain Insurance Benefits. If the employment of Employee
(i) is terminated by the Company without Cause, (ii) is terminated due to the
death or disability of
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Employee, or (iii) is terminated by Employee With Good Reason, the Company shall
pay the insurance premium payable by Employee or his heirs, as the case may be,
for continued insurance coverage under the insurance policies or programs of the
Company pursuant to COBRA for or with respect to the duration of such COBRA
coverage.
12. Confidential Information.
(a) Definition. The term "Confidential Information" shall mean
trade secrets and any other information, matter, or thing of a secret,
confidential, or private nature connected with the business of the Company.
Included within Confidential Information are matters of a technical nature
(including know-how, computer programs, software, accounting methods, and
documentation), matters of a business nature (such as information about contract
forms, costs, profits, promotional methods, markets, market or marketing plans,
sales, client accounts, plans for further development, and any other information
not generally available to the public. Confidential Information shall also
include information developed by Employee for the Company while an employee of
the Company. "Confidential information" does not include (i) information that is
in the public domain at the time the information is acquired by Employee, (ii)
information that later becomes public through no act or omission of Employee, or
(iii) information generally known
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in the industry or industries in which the Company does business.
(b) Nondisclosure of Confidential Information. Employee shall
not, now or in the future, and whether or not then an employee of the Company,
use any Confidential Information for any purpose whatsoever other than the
pursuit of the Company~s business or in the performance of his duties as an
employee of the Company. Employee shall further refrain at all times from
disclosing any Confidential Information to any third party without the prior
written consent of the Company, such consent to be given or withheld by the
Company in the exercise of its absolute discretion. Employee shall take all
reasonable steps to prevent unauthorized disclosure of Confidential Information
to third parties, intentionally or negligently, by Employee or persons acting
pursuant to Employee's directions.
Except as expressly otherwise provided in this Agreement, the
provisions of this Paragraph 12 shall survive and continue in full force and
effect after the end of the Period of Employment.
13. Notices and Payments. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be delivered
(i) personally, (ii) by first class mail, certified, return receipt requested,
postage prepaid, or (iii) by facsimile transmission followed by delivery by
first
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class mail, in the manner provided for in this Paragraph 13, and properly
addressed as follows:
If to the Company, to:
COVOL Technologies, Inc.
3280 North Frontage Road
Lehi, Utah 84043
Attention: General Counsel
If to Employee to:
Stanley M. Kimball
9943 North Meadow Lane
Highland, Utah 84003
or to such other address as a party to this Agreement may indicate to the other
party in the manner provided for by this Paragraph 13. Notices, etc. given by
mail shall be deemed effective and complete two (2) business days following the
date of the posting and mailing thereof in accordance with this Paragraph 13,
notices by facsimile transmission shall be deemed effective upon receipt, unless
receipt thereof shall be disputed in which case receipt shall be deemed
effective as of the effective date of the follow-up notice called for by this
Paragraph 13 with respect to such facsimile transmitted notice, and notices,
etc. delivered personally shall be deemed effective and complete at the time of
the delivery of the notice and the obtaining of a signed receipt for the notice,
unless a party shall refuse to provide a signed receipt, in which case the
notice shall be effective upon the completion of personal delivery of the notice
in such a way as to insure the ability to
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establish personal delivery. All payments to Employee provided for in this
Agreement shall be deemed made, whether so stated or not, on the date of the
first to occur of (i) actual delivery thereof by the Company to Employee, (ii)
the mailing thereof to Employee by regular United States mail to the address
specified in or in accordance with this Paragraph 13, or (iii) when made by
direct deposit as authorized by Employee.
14. Additional Agreements.
(a) Parties in Interest. All of the terms of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
Parties and their respective successors, permitted assigns, heirs, and legal
representatives, and nothing in this Agreement is intended to confer any right,
remedy, or benefit upon any other person.
(b) No Assignments or Delegation. No assignment or delegation
of this Agreement or of any of the rights or obligations under this Agreement by
either of the Parties shall be valid without the written consent of the other
party.
(c) Integration. This Agreement supersedes all prior
agreements or understandings of the Parties on the subject matter of this
Agreement. Any prior negotiations,
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correspondence, agreements, proposals, or understandings relating to the subject
matter of this Agreement shall be deemed to be merged into this Agreement and to
the extent inconsistent with this Agreement, such negotiations, correspondence,
agreements, proposals, or understandings shall be deemed to be of no force or
effect. There are no representations, warranties, or agreements, whether express
or implied, or oral or written, with respect to the subject matter of this
Agreement, except as set forth in this Agreement.
(d) Modification; Amendment. This Agreement shall not be
modified by any oral agreement, either express or implied, and all amendments or
modifications of this Agreement shall be in writing and be signed by both of the
Parties. The provisions of this and the immediately preceding sentence
themselves may not be amended or modified, either orally or by conduct, either
express or implied, and it is the declared intention of the Parties that no
provision of this Agreement, including said two sentences, shall be modifiable
in any way or manner whatsoever other than through a written document signed by
both of the Parties.
(e) Headings. The paragraph headings in this Agreement are for
the purpose of convenience only and shall not limit or otherwise affect any of
the terms of this Agreement.
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(f) No Waiver. The failure of either of the Parties to insist,
in any one or more instances, upon strict performance of any of the terms or
conditions of this Agreement shall not be construed to constitute a waiver or
relinquishment of any right granted under this Agreement or of the future
performance of any such term, covenant, or condition, and the obligations of the
appropriate party with respect to any such term or condition shall continue in
full force and effect.
(g) Construction. Where the context requires, the singular
shall include the plural, the plural shall include the singular, and any gender
shall include all other genders.
(h) Attorneys' Fees. Should either the Company or Employee
default in any of the covenants contained in this Agreement, or in the event a
dispute shall arise as to the meaning of any term of this Agreement, the
defaulting or nonprevailing party shall pay all costs and expenses, including
reasonable attorneys' fees, that may arise or accrue from enforcing this
Agreement, securing an interpretation of any provision of this Agreement, or in
pursuing any remedy provided by applicable law whether such remedy is pursued or
interpretation is sought by the filing of a lawsuit, an appeal, or otherwise.
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(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Utah, which
internal laws exclude any provision or interpretation of such laws that would
call for, or permit, the application of the laws of any other state or
jurisdiction, and any dispute arising therefrom and the remedies available shall
be determined solely in accordance with such internal laws. Any actions under or
with respect to this Agreement shall be filed only in the state courts located
in Utah County, Utah, in the federal courts located in Salt Lake County, Utah,
or in such courts located nearest to such other county in which Employee then is
primarily rendering services to the Company, and the Parties consent to the
jurisdiction and venue of such courts.
(j) Injunctive Relief. Employee acknowledges that it is
impossible to measure in money the damage that will accrue to the Company by
reason of Employee's failure to abide by the provisions of Paragraph 12
("Confidential Information"). Therefore, if the Company shall institute any
action or proceeding to enforce the provisions of said Paragraph 12, in addition
to any other relief, the court in such action or proceeding may grant injunctive
relief against Employee and Employee waives the claim or defense in any such
action or proceeding that the Company has an adequate remedy at law, and
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Employee shall not argue in any such action or proceeding the claim or defense
that such remedy at law exists.
(k) Bluelininq. Should any portion of Paragraph 12
("Confidential Information") be declared by a court of competent jurisdiction to
be unreasonable, unenforceable, or void for any reason or reasons, the involved
court shall modify the applicable provision(s) of the said Paragraph 12, so as
to be reasonable or as is otherwise necessary to make Paragraph 12 enforceable
and, valid and to protect the interests of the Company intended to be protected
by Paragraph 12 to the maximum extent possible.
(l) Recitals. Recitals A and B to this Agreement are by this
reference incorporated into and made a part of this Agreement.
IN WITNESS WHEREOF, the Company and Employee have executed and
delivered this Agreement this 14th day of February, 1997 effective as of the
Effective Date.
COVOL Technologies, Inc., a Delaware
corporation (the "Company")
By: /s/ Brent M. Cook
------------------------
Its: CEO/President
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/s/ Stanley M. Kimball
-------------------------------
Stanley M. Kimball ("Employee")
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