Employment Agreement
THIS EMPLOYMENT AGREEMENT (this "Agreement") is effective as of the first day of
August 1997 (the "Effective Date") by and between Covol Technologies, Inc., a
Delaware corporation (the "Company") and Dee J. Priano ("Employee"). The Company
and Employee are sometimes later in this Agreement collectively referred to as
the "Parties".
RECITALS
This Agreement is entered into with reference to the following facts,
definitions and objectives.
NOW, THEREFORE, in Consideration of this Agreement and of the covenants
contained in this Agreement, the Parties agree as follows:
1) Employment and Position. The Company employs Employee and the Employee
accepts employment by the Company as Vice President of the Company or other
mutually agreed senior position for 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 position set forth in Paragraph 1, Employment and
Position, diligently, competently and in conformance with the corporate
policies of the Company. Employee shall be free to conduct real estate
investment activities that do not conflict or interfere with the
performance of his duties under this Agreement. Employee may from time to
time perform services for Kennecott Utah Copper Corporation as long as said
services 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 or Chief Executive
Officer of the Company.
3) Period of Employment. Employee's employment by the Company pursuant to this
Agreement shall, unless sooner terminated as provided in this Agreement, be
for a term of three (3) years, commencing as of the first day of August
1997, and ending with the close of "business" on the thirty-first day of
July 2000 (the "Period of Employment").
4) Base Salary. During the first twenty-four months of this Agreement, the
Employee's regular salary, before all customary and proper taxes, shall be
no less than $80,000 per year, payable bi-weekly. During the last twelve
months of this Agreement, the Employee's regular salary, before all
customary and proper taxes, shall be no less than $125,000 per year,
payable bi-weekly.
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5) Incentive Bonus. During the Period of Employment, Employee shall be
entitled to receive bonuses pursuant to the Company's bonus plan as in
effect from time to time.
6) Stock Options. Incentive Stock Options (as defined in Section 422 of the
Internal Revenue Code) shall be issued pursuant and subject to the
provisions outlined below or as otherwise mutually agreed to:
a) Purchase Price. The purchase price per share for the shares
subject to the Stock Option will be Eight Dollars and
Twenty-five Cents ($8.25) per share.
b) Number of Shares. The Stock Options will be for One Hundred
Thousand (100,000) shares of the Company's Common Stock (the
"Optioned Shares").
c) Exercise Periods. Four Thousand (4,000) Optioned Shares will
be vested and exercisable on August 1, 1997 and Four Thousand
(4,000) additional Optioned Shares will be vested and
exercisable on the first day of each month following through
September 1, 1999, at which time all One Hundred Thousand
Optioned Shares will be fully vested and exercisable.
d) Additional Stock Options. Employee shall also be eligible to
receive additional stock options during the Period of
Employment pursuant to a stock option bonus plan as may from
time to time be in effect.
e) Vesting of Options in Event of Disability or Death. In the
event of disability or death of Employee, any nonvested Stock
Options shall vest effective as of the date of the disability
or the death of Employee. In the event of Employee's
disability or death, the Employee, heirs or estate of
Employee, as the case may be, may exercise any unexecuted
options at any time.
f) Vesting of Options in Event of Management Change. In the event
of replacement of Brent M. Cook as Chief Executive Officer of
the Company, all nonvested Stock Options and Additional Stock
Options shall vest as of the date Brent M. Cook is released
from the position of Chief Executive Officer of the Company.
g) Vesting of Options in Event of Ownership Change. In the event
a third party tenders to purchase all outstanding shares of
the Company, or substantially all of the assets of the
Company, all non-vested Stock Options shall vest as of the
date the tender offer or asset sale is announced. The intent
of this section is to allow the Employee to vote the shares
represented by the Stock Options and at the Employee's
discretion, exercise any unexecuted options.
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7) Other Benefits. In addition to the benefits previously set forth in this
Agreement, Employee shall, during the Period of Employment, be entitled to
the benefits described below, and as concerns all such benefit programs
where years of service are a factor, to the extent permitted by law,
Employee shall be given credit for his years of service with Kennecott
Corporation and/or any of its subsidiaries.
a) Vacation. During the Period of Employment, Employee shall be
entitled to not less than Five (5) weeks of paid vacation
during each calendar year occurring during the Period of
Employment and that amount of vacation provided to other
senior executive officers of the Company. Upon termination of
Employee's employment under this Agreement, Employee shall be
paid for any unused vacation in the year in which the
termination occurred.
b) Sick Leave. Sick leave time will be granted to the Employee
that is reasonable under the circumstances and that is
consistent with the Company's policies and procedures, as the
same may be changed, modified or terminated for all
participants from time to time.
c) Insurance. At the Employee's option, the Company shall pay the
premium for and provide life, disability, medical, and dental
benefits for the Employee and his family.
d) Retirement Plan. The Employee shall participate in the
Company's Retirement Plans in accordance with the terms and
provisions and applicable law, as the same may be implemented,
changed, amended, or terminated from time to time. Employee
shall become eligible to participate in the Company's
Retirement Plans as of August 1, 1997, or as the effective
date of the implementation of such plans whichever is later.
e) Other Miscellaneous Benefits. The Company shall pay or
reimburse Employee for the following miscellaneous benefits:
i) Annual dues for association membership for relevant
professional groups.
ii) Subscription and purchase of books, journals, and
publications which relate to job duties and
responsibilities.
8) Termination of Employment by the Company. Anytime in this Agreement to the
contrary notwithstanding, the Company shall have the following rights with
respect to termination of the Employee's employment:
a) Cause. Employee's employment may be terminated for Cause. For
purpose of this Agreement, "cause" shall mean and refer to a
determination made in good faith by the Company's Board of
Directors that:
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i) Employee has been convicted of or has entered a plea
of guilty or nolo contendre to a felony or to any
other crime, which other crime is punishable by
incarceration for a period of one (1) year or longer,
or which is a crime involving moral turpitude.
ii) There has been a theft, embezzlement, or other
criminal misappropriation of funds by Employee,
whether from Company or any other person.
iii) Employee has willfully failed or refused to follow
reasonable written policies or directives established
by the Board of Directors or the Chief Executive
Officer of the Company, or Employee has willfully
failed to attend to material duties or obligations of
his office (other than any such failure resulting
from Employee's incapacity due to physical or mental
illness which is a cause or manifestation of
Employee's disability), which failure or refusal
continues for thirty (30) days following delivery of
a written demand from the Company's Chief Executive
Officer for performance to Employee identifying the
manner in which Employee has failed to follow such
policies or directives or to perform such duties.
Termination pursuant to this Paragraph shall be
effective as of the effective date of the notice by
the Board of Directors to Employee that it has made
the required determination, or at such other
subsequent date, if any, specified in such notice.
b) Without Cause. Employee's employment may be terminated without
cause provided that the Company pays Employee upon notice of
termination, any unearned salary specified in Paragraph 4,
Base Salary, the amount specified in Paragraph 10, Severance
Pay, any earned Incentive Bonuses specified in Paragraph 5,
Incentive Bonus, vests Employee in any Stock Options specified
in Paragraph 6)b, Stock Options Number of Shares, which have
not vested as of the date of termination and awards to and
vests Employee, effective date of termination, any Additional
Stock Options that Employee has received or is eligible to
receive under Paragraph 6)d, Additional Stock Options.
9) Termination of Employment by Employee. Anytime in this Agreement to the
contrary notwithstanding, the Employee shall have the following rights with
respect to termination of the Employee's employment:
a) With Good Reason. Employee shall have the right to terminate
his employment under this Agreement at any time for Good
Reason, provided Employee has delivered written notice to the
Company which briefly describes the facts underlying
Employee's belief that "Good Reason" exists and the Company
has failed to cure such situation within thirty (30) days
after effective date of such notice. If the employee
terminates With Good Reason, the Company shall pay the
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Employee on the date of termination, any unearned salary
specified in Paragraph 4, Base Salary, the amount specified in
Paragraph 10, Severance Pay, any earned Incentive Bonuses
specified in Paragraph 5, Incentive Bonus, vests Employee in
any Stock Options specified in Paragraph 6)b, Stock Options
Number of Shares which have not vested as of the date of
termination and awards to and vests Employee, effective the
date of termination, any Additional Stock Options that
Employee has received or is eligible to receive under
Paragraph 6)d, Additional Stock Options. For purposes of this
Agreement, "Good Reason" shall mean and consist of:
i) A material breach by the Company of its obligations
under this Agreement; without Employee's prior
written consent, the assignment to Employee of duties
that are materially inconsistent with, or that
constitute a material alteration in the status of his
responsibilities set forth in this Agreement, as a
Vice President of the Company; 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; upon consummation of a sale of all or
substantially all of the outstanding stock or assets
of the Company in which sale the acquiring company
did not assume all of the obligations of the Company
under this Agreement.
b) Without Good Reason. With not less than sixty (60) days prior
written notice (which notice shall specify the date of
termination), Employee shall have the right to terminate his
employment under this Agreement without Good Reason.
10) Severance Pay. If this Agreement terminates and the Employee does not
continue in the employment of the Company, whether or not the Employee is
offered continued employment by the Company, the Company shall pay to the
Employee an amount equal to two times the base annual salary in effect at
the time of such termination. The Employee shall not be required to
mitigate the amount of the payment provided for in this section by seeking
other employment or otherwise, nor shall the amount of the payment be
reduced by any compensation earned by the Employee as the result of
employment by another employer after termination or otherwise.
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11) Automobile Allowance. Commencing January 1, 1999 and continuing until this
Agreement terminates, the Company shall pay the Employee an Automobile
Allowance of no less than $550 per month.
Accepted and Agreed to:
/Dee J. Priano/ 4 January 1999
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Dee J. Priano Date
Accepted and Agreed to for Covol Technologies:
/Brent M. Cook/ 4 January 1999
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Brent M. Cook Date
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