Exhibit 10.3
Employment Agreement between the Company and Xxxxxxx X. Xxxxxxxx
August 1, 1995 PERSONAL & CONFIDENTIAL
Mr. Xxxxxxx Xxxxxxxx
0000 Xxxx Xxxxx Xxx
Xxxxxx, Xxxxxxxx 00000
Dear Dick:
This will confirm our agreement in connection with your continued employment, as
of 01 June 1995, by Microlog Corporation (the "Corporation"). Please confirm
your acceptance of these terms by signing at the space provided on the last page
of this letter.
1. Duties and responsibilities.
You are to be employed on a full-time basis as President and Chief Operating
Officer of the Corporation, reporting directly to me as the Corporation's Chief
Executive Officer. Your duties and responsibilities will be those normally
associated with such positions. Subject to the direction of the Board and CEO on
matters of general policy, and of the Board as to matters legally requiring
Board approval, you will be responsible for strategic planning, day to day
operations, profitability, and company growth. Your duties will also include the
supervision of all aspects of finance, planning, operations, marketing, sales,
and personnel. With the exception of the CEO all company employees will be
subject to your orders and direction. As I previously discussed with you, it is
my intent to retire as CEO sometime during the term of this agreement, and to
continue on a part time basis as a consultant to the Corporation. At such time,
you will succeed to the office of CEO at which time your duties and
responsibilities will be those normally associated with that position. I
anticipate such a transition to take place after December 1996. In anticipation
of such a transition, you are expected to prepare a plan of succession for
consideration by the Board within the next year. Pursuant to this understanding,
you are authorized to disclose this fact to others as you consider appropriate
and in the best interest of the Corporation. However, you succession to the
office of CEO is subject to the approval by the Corporation's Board of
Directors.
2. Compensation
You will be compensated at the base rate of $160,000 per year, or such greater
amount as determined by the Board from time to time, payable twice a month less
normal withholdings and deductions.
You shall be entitled to participate in all benefit plans which are generally
available to the employees, and those available to executive officers of the
Company, including, but not limited to, executive perquisites, incentive stock
option plan, and the executive bonus plan. You will be entitled to five weeks of
paid vacation per year, this includes your time to perform your Naval Reserve
duty.
You shall be entitled to continued use of a company car, leased for your
business and personal use, and the Company will continue to pay all related
costs such as fuel, maintenance, insurance, and any excess mileage charges. Upon
the expiration of the term of the lease for the car now provided to you, or
earlier if necessary, you shall be provided with a replacement vehicle of a
comparable type.
The Board of Directors will consider the purchase of key man insurance on your
life, and on the lives of other executives if appropriate, in connection with
its review of proposals for executive insurance to be prepared by you for Board
consideration in conjunction with the development of the next annual budget. You
will cooperate full with the Corporation on matters relating to such insurance.
The Corporation will be the beneficiary of any such life key man life insurance,
unless otherwise agreed with you in writing.
3. Stock Options
You will be granted an option to purchase 100,000 shares of the Corporation's
common stock in consideration of your acceptance of continued employment. The
terms and conditions of this stock option will be in accordance with a successor
plan to the Corporation's existing 1986 Stock Option plan. It is anticipated
that such options will be granted subject to stockholder approval of a successor
plan, and that such options will not be granted until the Board has approved a
successor plan to be developed and presented to the Board in September 1995. The
option which is given in consideration of your acceptance of continued
employment, when granted, will become exercisable over three years at the
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rate of thirty three and a third percent per year, and will have an option price
per share which is the market price per share on the date of the grant.
If the Corporation terminates your employment other than that "for cause", as
defined below, you will be permitted to exercise the option, to the extent that
it had become exercisable before the termination of employment (but not beyond
the original ten year term of the option). To the extent eligible, the option
will be issued as an Incentive Stock Option (ISO), within the meaning of the
Internal Revenue Code.
3a. Restricted Stock Grant.
In consideration of your continued employment, you will be awarded a grant of
100,000 shares of common stock as of June 14, 1995. Any shares issued under this
grant will be subject to forfeiture back to the Corporation as follows:
one-third shall forfeit if the average fair market value per share of the
Corporation's common stock does not exceed $3.50 for all trading days during the
month of June 1996; one-third shall forfeit if the average fair market value per
share of the Corporation's common stock does not exceed $5.00 for all trading
days during the month of June 1997; and one-third shall forfeit if the average
fair market value per share of the Corporation's common stock does not exceed
$10.00 for all trading days during the month of June, 1998; the award will be
made pursuant to and subject to the provision of an appropriate restricted stock
agreement appropriately structured to avoid taxation in advance of removal of
the risk of forfeiture and other restrictions on the sale of the stock, and will
also contain appropriate anti-dilution provisions to appropriately adjust the
dollar price targets stated above in the event of forward or reverse stock
splits, stock dividends, and other changes in the capital structure of the
Corporation.
4. Bonuses
You will be entitled to executive bonuses in accordance with the terms of each
Executive Bonus Plan approved by the Board during or with respect to each year
of your continued employment.
5. Board Membership
You will continue to serve as a director of the Corporation and shall be
proposed for re-election at the expiration of your current term of office as a
director for as long as you continue to be an officer of the Corporation.
6. Term of Employment
Your term of employment under this agreement, shall be from 1 June 1995 thru 31
May 1998 unless earlier terminated as provided below. The Board of Directors may
terminate your employment at any time with or without cause. You shall have no
right to receive compensation or any other benefits form the Corporation for any
period after termination for cause other than such vested retirement benefits to
which you may be entitled under any qualified employee pension plan maintained
by the Corporation, and any deferred compensation to which you may be entitled.
The term "termination for cause" shall mean termination by the Corporation
because of your gross incompetence, willful and intentional misconduct to the
Corporation, breach of fiduciary duty in connection with your services,
involving personal profit, intentional failure to perform the duties of your
office, willful violation of any law, rule or regulation other than minor
traffic violations or similar offenses, or material breach of any provision of
this agreement.
In no event however will a termination be deemed to be "for cause" unless, prior
to such termination, the Board of Directors after giving you reasonable notice,
and an opportunity to be heard, shall have duly adopted a resolution approved by
at least two thirds of its members finding that you have been guilty of specific
conduct as described above, and further finding that the effect of such conduct
has been materially adverse to the interests of the Corporation. In the event
that you do not agree with such findings, the issue of whether the termination
shall be "for cause" will be subject to binding arbitration under the
"Employment Dispute Resolution" rules of the American Arbitration Association.
If your employment is terminated for any reason other than "for cause" at any
time prior to the expiration of the three year term of your employment under
this agreement, or prior to the expiration of any extension of the term, signed
by any authorized representative of the Corporation, your then existing base
salary plus all benefits or their equivalent value, will continue for a period
of twelve months following the date of such termination, and you will also
receive such vested retirement benefits to which you may be entitled under any
qualified employee pension plan maintained by the Corporation, plus any deferred
compensation to which you may be entitled.
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If you continue in the employment of the Corporation following expiration of the
term stated above, in the absence of a new written employment agreement between
you and the Corporation, the term of this agreement shall be deemed to be
extended in one year increments for year to year, unless terminated earlier as
provided above, or terminated by either party effective as of the end of any
incremental extension upon at least sixty days prior written notice.
7. Noncompetition
During the term of you employment, and for a period of one year after the
termination of your employment, shall not compete, directly or indirectly on
your own behalf, or on behalf of any other person or entity, with the
Corporation or any of its affiliates; nor shall you solicit or induce, directly
or indirectly on your own behalf, or on behalf of any other person or entity,
any employee of the Corporation or its affiliates to leave the employ of the
Corporation or any of its affiliates; nor shall you solicit or induce, directly
or indirectly, on your own behalf or on behalf of any other person or entity,
any customer of the Corporation or any of its affiliates to reduce its business
with the Corporation or any of its affiliates.
Dick, on behalf of Microlog and the other Board members, I am pleased to extend
this offer of continued employment, and I look forward towards a long and
mutually profitable association.
Yours truly,
Microlog Corporation
By: /s/ Xxx X Xxxx
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Xxx X. Xxxx
Chief Executive Officer
Accepted:
/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Date:
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