EXHIBIT 10.14
August 21, 1996
Xx. Xxxxxx X. Xxxxxxx
000 Xxxxx Xxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
RE: EMPLOYMENT AGREEMENT WITH FIRST AMERICAN
RAILWAYS, INC. (THE "COMPANY")
Dear Xxx:
This letter confirms that the Company agrees to employ you and you agree to
accept such employment, upon the terms and conditions set forth below beginning
on August 21, 1996, and continuing for a period of one year. The term of your
employment shall be automatically renewed for two consecutive additional
one-year periods, unless and until you or the Company gives the other party
written notice, received not later than 90 days prior to the then current
expiration date of your employment, of your or the Company's intention to
terminate your employment hereunder.
During the period of your employment, you will serve as Vice
President-Operations of the Company. You agree that, during the period of your
employment under this Agreement, you will serve the Company faithfully,
diligently and to the best of your ability, under the direction and supervision
of the Chief Financial Officer of the Company, and you will devote your full
time, energy and skill to such employment. You further agree to perform, from
time to time, such services and to act in such capacities as the President or
Chief Financial Officer of the Company shall request without further
compensation other than that for which provision is made in this Agreement.
During the initial term of your employment, the Company shall pay you a
salary (in accordance with the Company's regular payroll practices) as follows:
1996:
(Commencement-12/31/96) $30,975 base compensation (which
represents an annual rate of $85,000)
along with a target bonus of 25% of base
compensation (pro-rated), but not less
Xx. Xxxxxx X. Xxxxxxx
August 21, 1996
Page 2
than 10% of base compensation for
the subject employment period, to be
paid in January 1997. The criteria
for determining bonus compensation
shall be developed and agreed to by
you and the President of the Company
on or before August 30, 1996.
Calendar 1997: $85,000 per annum base compensation along
(1/1/97 - 12/31/97) with a target bonus of 25% of base
compensation, but not less than 10%
of base compensation. The criteria
for determining bonus compensation
shall be developed and agreed to by
you and the President of the Company
on or before December 20, 1996. (If
your employment is not renewed as
provided herein effective August 12,
1997, you will only be entitled to
receive the prorated amount of your
base compensation for Calendar Year
1997, for the period of your actual
employment.)
Calendar 1998: Base compensation, bonus, vacation time
(1/1/98 - 12/31/98) and future stock options, all to be
evaluated and determined by the
President.
In addition, the Company agrees to grant to you as of the date of your
acceptance of these employment terms, non-qualified, ten year, stock options to
purchase 10,000 shares of common stock (subject to standard anti-dilution
protections) at an exercise price which is equal to the then current market
price, with such 10,000-share option vesting in one-third increments (so long as
this Agreement has not otherwise been terminated except as otherwise provided
below) with the initial vesting of 3,333 shares on the date of grant, the second
3,333-share increment vesting on the first anniversary of the date of grant, and
the remaining 3,334-share increment vesting on the second anniversary of the
date of grant; provided, however, any such options which remain to be vested
hereunder shall be immediately and fully granted and vested in their entirety
upon your election to terminate this Agreement by reason of a "change in
control" of the Company as provided below.
In the event that you are incapacitated by reason of mental or physical
disability during the period of your employment so that you are prevented from
performing your principal duties and services to the Company for a period of 120
consecutive days or for
Xx. Xxxxxx X. Xxxxxxx
August 21, 1996
Page 3
shorter periods aggregating 120 days during any 12-month period, the Company
shall have the right to terminate your employment by sending or telecopying
written notice of such termination to you or to your legal representative, as
the case may be. Upon such termination or in the event of your death, the
Company shall be relieved of any further obligations under this Agreement with
the exception of the obligation to pay to you or your estate, as the case may
be, any accrued and unpaid salary earned by you, and all granted but unvested
options shall become fully vested. Further, in the event of termination pursuant
to this paragraph, the Company will pay the health and life insurance premiums
in connection with the coverage contemplated hereby for the six-month period
following such termination.
The Company shall have the right to terminate your employment for
"cause" at any time by reason of one or more of the following occurrences: (i)
your conviction, by a court of competent and final jurisdiction, of any crime
(but only in the event such crime involves the Company or directly relates to
your duties thereto) which constitutes a felony in such jurisdiction; or (ii)
your commission of a material act of malfeasance, fraud, dishonesty or breach of
trust against the Company; or (iii) your material violation of the terms of this
Agreement; or (iv) your failure to devote sufficient time, e.g., averaging 40
hours per week (taking into account vacation and holiday time) to the Company's
business; or (v) your violation of the ethics provisions established by the
American Institute of Certified Public Accountants. In the event the Company
elects to terminate your employment for "cause," the Company shall send or
telecopy written notice to you informing you of such election and setting forth
the action or omission constituting the reason for terminating your employment
for "cause."
You shall be entitled to paid sick days and paid vacation days
commensurate with that due to an executive at your level of employment, with no
more than two weeks of which to be consecutive.
Until the establishment by the Company of a health insurance plan for
its executives, which is contemplated to be done on or before January 15, 1997,
the Company will pay you up to $300 per month to reimburse you for maintaining
your own health insurance coverage; you will provide the Company with receipts
to document your expenditure for such coverage. Thereafter, it is anticipated
that beginning on January 15, 1997, the Company shall provide you with
"standard" medical insurance. You shall also be entitled to participate to the
same extent as other employees of the Company of a like capacity and position in
any profit sharing plan, executive non-qualified deferred compensation plan or
Xx. Xxxxxx X. Xxxxxxx
August 21, 1996
Page 4
incentive compensation plan that the Board of Directors of the Company shall
determine to make available to such employees. Beginning on August 21, 1996, the
Company will pay you a car allowance of $300 per month.
Subject to the provisions of the subsequent paragraph, in the event
your employment with the Company is terminated (i) for "cause" (as defined
above), you will be entitled to receive 90 days' worth of your then current base
compensation along with any applicable bonus, or (ii) for other than "cause" you
will be entitled to the full benefits hereunder through the existing term
hereof.
In the event there is a "change in control" of the Company (as defined
below) and (i) within 12 months of such "change in control" you terminate your
employment hereunder, or (ii) your employment hereunder is terminated by the
Company for any reason or no reason within months of such "change in control",
then in either case you shall, within fifteen days of such termination, receive
as severance pay a payment in cash of an amount equal to one year's worth of
your then current base compensation plus applicable bonus (if any), along with
the above-described acceleration of the vesting of your stock options (the
"Termination Benefits"). For purposes of this Agreement, a "change in control"
of the Company shall occur when more than 50% of the Company's voting capital
stock is acquired by any "individual," "entity" or "group" as those terms are
defined in the Securities Exchange Act of 1934.
It is expressly understood and agreed that your employment must
terminate in order for the provisions of the preceding paragraph (which provides
for the payment of Termination Benefits to you in certain circumstances) to be
operative.
You agree that you will execute the Company's standard confidentiality
and noncompetition agreement upon your acceptance of employment with the
Company.
For the sixty-day period commencing September 1, 1996, the Company
agrees to sell to you up to 10,000 shares of its common stock for a per share
price equal to the current public market price of the Company's common stock.
This Agreement represents the entire understanding and agreement
between us with respect to your employment by the Company and supersedes all
prior negotiations, representations and agreements made by and between us. No
alteration, amendment or modification of any of the terms or provisions of this
Agreement
Xx. Xxxxxx X. Xxxxxxx
August 21, 1996
Page 5
shall be valid unless made pursuant to an instrument in writing and signed by
each of us. This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida.
Kindly indicate below that the foregoing represents our mutual
agreement with respect to the matters described in this Agreement by signing and
returning a copy of this Agreement, whereupon this Agreement shall constitute an
agreement between us.
Very truly yours,
FIRST AMERICAN RAILWAYS, INC.
By: /S/ XXXXXXX XXXXXXXXXX
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Xxxxxxx Xxxxxxxxxx, President
and Chief Operating Officer
Agreed to and Accepted this
23rd day of August, 1996
/s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
