Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement is made effective as of the 21st day of December,
1998 ("Effective Date"), by and between TAVA Technologies, Inc., a Colorado
corporation ("Company"), and Xxxx Xxxxxxx ("Xxxxxxx").
WHEREAS, the Company desires to retain the services of Xxxxxxx in the capacity
of President and Chief Executive Officer of Company, and Xxxxxxx is willing to
be so employed, subject to the terms and conditions of this Agreement,
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
Section 1. Employment. The Company agrees to employ Xxxxxxx and Xxxxxxx agrees
to accept the employment described in this Agreement.
Section 2. Duties. Xxxxxxx shall be employed as President and Chief Executive
Officer of the Company, with such duties, responsibilities and authority as are
customarily delegated to such position and those as may from time to time be
assigned to Xxxxxxx by the Board of Directors. Xxxxxxx shall have full
responsibility and authority for formulating policies and for the management and
operation of Company, subject to the general direction and control of the Board
of Directors. The Board of Directors shall use its best efforts, subject to its
fiduciary obligations to the Company and its shareholders, to have Xxxxxxx
re-elected to the Board of Directors so long as Xxxxxxx is employed hereunder in
the position of President and Chief Executive Officer. Xxxxxxx shall not be
entitled to additional compensation by reason of service as a director of the
Company or as a fiduciary of an employee benefit plan of the Company.
Section 3. Extent of Services. Xxxxxxx shall devote his entire working time,
attention, and energies to the performance of his duties and shall not be
engaged in any other business activity, whether or not pursued for gain. Xxxxxxx
may invest his personal assets in such form or manner as will not require
services on his part. Xxxxxxx shall at all times faithfully and to the best of
his ability perform his duties under this Agreement. The duties shall be
rendered at the Company's principal executive office in metropolitan Denver,
Colorado, or at such other place or places as the needs of the Company may from
time-to-time dictate.
Section 4. Term. The term of employment under this Agreement shall be three
years, commencing on January 1, 1999 ("Commencement Date"). Upon the
Commencement Date, this Agreement shall supersede the Employment Agreement dated
January 28, 1997 between the Company and Xxxxxxx. This Agreement may be renewed
at the end of the term for an additional term upon the written agreement of the
parties. If there is no written agreement for an additional term, Xxxxxxx'
employment hereunder will continue as though extended on a month to month basis,
upon the terms set forth herein.
Section 5. Compensation.
5.1 Base Salary. Xxxxxxx will receive a minimum base salary of $241,000
per calendar year payable in accordance with the Company's standard payroll
procedures. This base salary shall be reviewed annually and may be increased
from time to time in the discretion of the Company's Board of Directors, but
shall not be decreased during the term of this Agreement without the consent of
Xxxxxxx. The base salary provided for in this subsection shall in no way be
deemed exclusive and shall not prevent Xxxxxxx from participating in any other
compensation or benefit plan of Company.
5.2 Designated Bonus Program. Xxxxxxx shall participate in the Company's
designated bonus program, which currently provides the opportunity for Xxxxxxx
to earn an annual cash bonus equal to 50% of his base salary. Receipt of
compensation under the designated bonus program shall not preclude Xxxxxxx from
receiving additional bonus or incentive compensation granted in accordance with
other Company programs or in the discretion of the Board of Directors.
5.3 Incentive Stock Options. On the Effective Date, as a matter of separate
inducement, Xxxxxxx shall be granted 150,000 incentive stock options expiring
December 20, 2008. Each option shall be exercisable at a price equal to the
average of the closing price reported by Nasdaq over the five trading days prior
to the Effective Date. The options shall become exercisable as follows: 50,000
on December 21, 1999; 50,000 on December 21, 2000; and 50,000 on December 21,
2001. Except as provided in Section 6 of this Agreement, no option shall become
exercisable if Xxxxxxx' employment with the Company has been terminated before
the initial exercise date specified above.
5.4 Other Benefits. Xxxxxxx shall receive the vacation, sick leave, medical
and dental insurance and other fringe benefits provided to full-time, non-union
employees of the Company. Company will pay the premiums for a $500,000 term life
insurance for which Xxxxxxx names beneficiary.
Section 6. Termination.
6.1 For Cause. The Company may terminate Xxxxxxx' employment at any time
"for cause" with immediate effect upon delivering written notice to Xxxxxxx. For
purposes of this Agreement, "for cause" shall include: (a) embezzlement, theft,
larceny, material fraud, or other acts of dishonesty; (b) Xxxxxxx' neglect or
intentional disregard of his duties under this Agreement, or any other material
violation by Xxxxxxx of this Agreement; (c) conviction of or entrance of a plea
of guilty or nolo contendere to a felony or other crime which has or may have a
material adverse affect on Xxxxxxx' ability to carry out his duties under this
Agreement or upon the reputation of the Company; (d) conduct involving moral
turpitude; (e) gross insubordination or repeated insubordination after written
warning by the Board of Directors; (f) unauthorized disclosure by Xxxxxxx of the
confidences of the Company; or (g) material and continuing failure by Xxxxxxx to
perform the duties described in Section 2 above in a quality and professional
manner for at least thirty (30) days after written warning by the Board of
Directors. Upon termination for cause, the Company's sole and exclusive
obligation will be to pay Xxxxxxx his compensation earned through the date of
termination, and Xxxxxxx shall not be entitled to any compensation after the
date of termination.
6.2 Upon Death. This Agreement shall terminate upon the date of Xxxxxxx'
death. Upon such date, all stock options granted pursuant to Section 5.3 of this
Agreement shall become fully vested and exercisable, and the Company shall pay
to Xxxxxxx' spouse, if living, or to his estate, if his spouse is not then
living, Xxxxxxx' base salary and bonus compensation earned through the date of
death.
6.3 Upon Disability. The Company's rights to terminate Xxxxxxx' employment
upon his total disability and Xxxxxxx' rights to compensation thereupon shall be
in accordance with the Company's policy concerning disability applicable to
full-time, non-union employees. In addition, all stock options granted pursuant
to Section 5.3 of this Agreement shall become fully vested and exercisable as of
the date of such termination.
6.4 By the Company Without Cause. The Company may terminate Xxxxxxx'
employment without cause, whether before or after the initial term of this
Agreement, in accordance with this Section 6.4.
6.4.1 In the event of the Company's termination of this Agreement,
other than for cause, within one year following a change in control of the
Company, Xxxxxxx will receive (i) continuation of base salary payments for
24 months following the date of termination; (ii) full and immediate
vesting and exercisability of all stock options granted pursuant to Section
5.3 of this Agreement; and (iii) payment of any accrued bonus, regardless
of whether the scheduled payment date falls before or after the date of
termination. The Company's obligation to continue base salary payments
shall terminate immediately upon Xxxxxxx' violation of Section 7 of this
Agreement. For purposes of this Agreement, a "change in control of the
Company," shall mean a change in control of a nature that would be required
to be reported in response to Item 5(e) of Schedule 14A of Regulation 14A
under the Securities and Exchange Act of 1934 (the "Act"); provided that,
without limitation, such a change in control shall be deemed to have
occurred if (i) any "person" (as that term is used in Section 13(d) and
14(d) of the Act) other than the Company or any "person" who on the date
hereof is a director or officer of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities, or (ii)
during any period of two consecutive years during the term of this
Agreement, individuals who at the beginning of such period constitute the
Board cease for any reason to constitute at least a majority thereof,
unless the election of each director who was not a director at the
beginning of such period has been approved in advance by directors
representing at least two-thirds of the directors then in office who were
directors at the beginning of the period.
6.4.2 In the event of the Company's termination of this Agreement,
other than for cause, and other than within one year following a change in
control of the Company, Xxxxxxx will receive: (i) continuation of base
salary payments for a period of 12 months following the date of
termination; (ii) full and immediate vesting and exercisability of all
stock options which, in accordance with Section 5.3, would become
exercisable within 12 months following the date of termination; and (iii)
payment of any accrued bonus, regardless of whether the scheduled payment
date falls before or after the date of termination. The Company's
obligation to continue base salary payments shall terminate immediately
upon Xxxxxxx' acceptance of other full time employment and/or Xxxxxxx'
violation of Section 7.
6.5 By Xxxxxxx Without Cause. Xxxxxxx may at any time terminate his
employment hereunder without cause upon 90 days' prior written notice to the
Company, in which case Xxxxxxx shall be entitled to receive his base salary and
all compensation accrued and payable through the date of termination.
Section 7. Covenant Not to Compete.
7.1 Covenant. During Xxxxxxx' employment with the Company, and for a
period of 12 months thereafter, Xxxxxxx shall not:
7.1.1 own, manage, operate, control, be employed by,
participate in, or be connected in any manner with the ownership,
management, operation or control of any business operating in the
Company's "Central Region" which is engaged in the type of
business conducted by the Company at the time this Agreement
terminates. Nevertheless, Xxxxxxx may own less than five percent
of the outstanding equity securities of a company that is engaged
in such business if the equity securities of such company are
registered under the Securities Exchange Act of 1934. In the
event of Xxxxxxx' actual or threatened breach of this paragraph,
the Company shall be entitled to a preliminary restraining order
and injunction restraining Xxxxxxx from violating its provisions.
Nothing in this Agreement shall be construed to prohibit the
Company from pursuing any other available remedies for such
breach or threatened breach, including the recovery of damages
from Xxxxxxx.
7.1.2 induce or attempt to persuade any former, current or
future employee, agent, manager, consultant, or other participant
in the Company's business to terminate such employment or other
relationship in order to enter into any relationship with
Xxxxxxx, any business organization in which Xxxxxxx is a
participant in any capacity whatsoever, or any other business
organization in competition with the Company's business; or
7.1.3 use contracts, proprietary information, trade secrets,
confidential information, customer lists, mailing lists,
goodwill, or other intangible property used or useful in
connection with the Company's business.
7.2 Consideration. Company and Xxxxxxx acknowledge and agree that the
Company's promise to pay severance to Xxxxxxx in the event it terminates his
employment without cause, whether or not such compensation becomes due under the
terms of this Agreement, is given as additional and sufficient consideration for
the covenant contained in this Section.
Section 8. Severability. The covenant set forth in Section 7 above shall be
construed as a series of separate covenants, one for each county in each of the
states of the United States to which such restriction applies. If, in any
judicial proceeding, a court of competent jurisdiction shall refuse to enforce
any of the separate covenants deemed included in this Agreement, or shall find
that the term or geographic scope of one or more of the separate covenants is
unreasonably broad, the parties shall use their best good faith efforts to
attempt to agree on a valid provision which shall be a reasonable substitute for
the invalid provision. The reasonableness of the substitute provision shall be
considered in light of the purpose of the covenants and the reasonable
protectable interests of the Company and Xxxxxxx. The substitute provision shall
be incorporated into this Agreement. If the parties are unable to agree on a
substitute provision, then the invalid or unreasonably broad provision shall be
deemed deleted or modified to the minimum extent necessary to permit
enforcement.
Section 9. Proprietary Information; Inventions Confidentiality. Concurrently
with the execution of this Agreement, the parties have entered into a
Proprietary Information and Inventions Agreement, the terms and conditions of
which are incorporated herein by this reference.
Section 10. Remedies. Xxxxxxx acknowledges that monetary damages would be
inadequate to compensate the Company for any breach by Xxxxxxx of the covenants
set forth in Section 7 above. Xxxxxxx agrees that, in addition to other remedies
which may be available, the Company shall be entitled to obtain injunctive
relief against the threatened breach of this Agreement or the continuation of
any breach, or both, without the necessity of proving actual damages.
Section 11. Waiver. The waiver by the Company of the breach of any provision of
this Agreement by Xxxxxxx shall not operate or be construed as a waiver of any
subsequent breach by Xxxxxxx.
Section 12. Arbitration. Any controversy or claim arising out of or relating to
this Agreement or the breach thereof shall be settled by arbitration in the City
and County of Denver, Colorado in accordance with the rules then existing of the
American Arbitration Association and judgment upon the award may be entered in
any court having jurisdiction thereof.
Section 13. Entire Agreement. This Agreement supersedes any and all other
Agreements, whether oral or in writing, between the parties with respect to the
employment of Xxxxxxx by the Company. Each party to this Agreement acknowledges
that no representations, inducements, promises, or agreements, orally or
otherwise, have been made by either party, or anyone acting on behalf of any
party, that are not embodied in this Agreement, and that no agreement,
statement, or promise not contained in this Agreement shall be valid or binding.
Section 14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute only one legal instrument. This Agreement shall
become effective when copies hereof, when taken together, shall bear the
signatures of both parties hereto.
TAVA Technologies, Inc.
By /s/ Xxxxxxx X. Xxxxxxx /s/ Xxxx Xxxxxxx
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Xxxxxxx X. Xxxxxxx Xxxx Xxxxxxx
Vice President - Finance and
Administration
