EXHIBIT 10.3
ACCRUED SALARY PAYMENT AGREEMENT
THIS ACCRUED SALARY PAYMENT AGREEMENT (this "Agreement") is effective
as of 21 December 2005, by and between ELCOM INTERNATIONAL, INC., a Delaware
corporation (the "Company") and XXXXXX X. XXXXXXX, its Chairman and Chief
Executive Officer, the ("Executive").
RECITALS:
A. WHEREAS, over the past several years, the Executive has reduced the
payment of certain portions of his Base Salary, on a voluntary and temporary
basis, which amount continues to be owed to him by the Company and accrued for
in its accounts.
B. WHEREAS, the Company is in the process of completing a private
placement of shares to be listed on the AIM Exchange, which shares will be
admitted to the AIM (the "Admission"), the Company and Executive desire to
establish the terms by which the Company shall pay Executive his Accrued Salary
Amount after Admission. The Accrued Salary Amount, which will change based on
the date of Admission as defined herein, is shown on Exhibit A.
NOW, THEREFORE, in consideration of the premises and mutual covenants
described herein, the Company and Executive agree as follows:
1. Payment of Accrued Salary Amount.
1.1 The Company shall only begin to pay Executive the "Accrued Salary
Amount" (as defined below) on the terms set forth in this Agreement
upon the Company achieving after the date of this Agreement two
sequential quarterly periods of positive operating cash flow,
(excluding for the avoidance of doubt cash inflows from financing).
For purposes of this Agreement, Accrued Salary Amount shall mean all
amounts of Base Salary temporarily reduced voluntarily by Executive to
assist the Company's cash availability.
1.2 The Company shall pay the Accrued Salary Amount in installments (each,
an "Accrued Salary Payment"), each less applicable payroll taxes,
withholdings and deductions. The Board, in its sole discretion, shall
determine the specific amount of any such Accrued Salary Payment;
provided, however, that the aggregate amount of each installment of
the Accrued Salary Payment payable by the Company in any one calendar
month, shall be for the determination of the Board, dependent upon the
extent of the Company's positive operating cash flow and the Company's
other financial commitments as shown by the Company's latest monthly
accounts. Provided always that where an Accrued Salary Payment has
become payable, it shall be no more than the remaining unpaid balance
of the Accrued Salary Amount but subject to that no less than
twenty-five percent (25%)
and no greater than fifty percent (50%) of the Company's positive
operating cash flow for the month immediately prior thereto.
1.3 If, having achieved two sequential quarterly periods of positive
operating cash flow it is determined by the Board that in any
subsequent month(s) the Company did not achieve positive operating
cash flow, the Company shall immediately discontinue payment of the
remaining Accrued Salary Amount until the Company achieves its next
monthly period where it has positive cash flow to which clause 1.2
will then apply accordingly.
1.4 In the event the Company experiences a fresh cash infusion of more
than $500,000 in any particular month (a "Cash Infusion Event"), such
as by the sale of a large software license, receipt of loan proceeds,
advance or issue of securities, or other cash infusion event, the
Board, taking into consideration the cash requirements of the Company,
may elect to pay the Executive an Accrued Salary Payment of an amount
equal to a maximum of 10% of the cash received in the Cash Infusion
Event.
1.5 The Executive shall not himself vote on any resolution of the Board
regarding any decision or determination that the Board is entitled to
make under this Agreement.
2. Miscellaneous.
2.1 Interpretation. All questions of interpretation, construction or
application arising under this Agreement will be decided solely by the
Board of Directors of the Company.
2.2 Severability. In the event that any provision or term of this
Agreement is determined by any judicial, quasi-judicial or
administrative body to be void or not enforceable for any reason, it
is the agreed upon intent of the parties hereto that all other
provisions or terms of the Agreement will remain in full force and
effect and that the Agreement will be enforceable as if such void or
unenforceable provision or term had never been a part hereof.
2.3 Change of Control. If, subsequent to Admission, more than fifty
percent (50%) of the issued shares in the capital of the Company is
acquired by one or more persons acting together (a "Change of
Control"), then the amount (if any) of the outstanding Accrued Salary
Amount together with accrued interest on the same (if any) shall be
paid to the Executive in full, in a lump sum payment, as an integral
part of the Change of Control arrangement or agreement itself. For the
avoidance of doubt a Change of Control shall not be triggered where
shares in the capital of the Company are transferred as between the
Xxxxx & Xxxxxxxxxx Group (as defined below). For purposes of this
Agreement, Xxxxx & Xxxxxxxxxx Group means Xxxxx & Xxxxxxxxxx
Investment Management Limited ("SWIM"), its subsidiaries and
subsidiary undertakings and any holding company or parent
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undertaking of SWIM and all other subsidiaries and subsidiary
undertakings of any holding company or parent undertaking of SWIM.
2.4 No Rights In Any Property of the Company. The undertakings of the
Company herein constitute merely the unsecured promise of the Company
to make the payments as provided for herein. No property of the
Company is or will, by reason of this Agreement, be held in trust for
Executive, nor any other person will have by reason of this Agreement
any rights, title or interest of any kind in or to any property of the
Company.
2.5 Death or Other Termination. In the event the Executive's employment
terminates with the Company under any circumstances, this Agreement
will remain in effect and the Company will pay, as per the conditions
set forth herein, the Accrued Salary Amount directly to Executive or,
in the event of his death, to his estate.
2.6 Conflict. In the event of a conflict between the terms and conditions
of this Agreement and the terms and conditions of the Employment
Agreement, the terms and conditions of this Agreement shall control.
2.7 Counterparts. This Agreement may be executed in multiple counterparts,
each of which will be deemed an original and all of which will
constitute one and the same document.
2.8 Governing Law. This Agreement is executed in and will be construed in
accordance with and governed by the laws of the State of
Massachusetts, County of Norfolk, without giving effect to the
conflict of laws provisions thereof.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of
the day and year first above written.
ELCOM INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
/s/ Xxxxxx X. Xxxxxxx
----------------------------------------
XXXXXX X. XXXXXXX
Title: Executive
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EXHIBIT A
CONFIDENTIAL
SALARY ACCRUED AS OF 11/12/05
XXXXXX XXXXXXX
ACCRUED SALARY
A B C
Pre-AIM Accrued 2005 Accrued
April-04 Remainder 2004 to 12 November 2005(1)
----------- -------------- ----------------------
$327,447.00 $105,000.00 $315,000.00
Note 1: This amount will change depending upon the date of Admission.
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