EXHIBIT 10.12
October 15, 1996
Xxxxxxx X. Xxxxxxxx
0000 Xxxxxxxxx 000xx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
RE: EMPLOYMENT AGREEMENT WITH FIRST AMERICAN
RAILWAYS, INC. (THE "COMPANY")
Dear Xxxx:
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
August 5, 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 give 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, Treasurer
and Chief Financial Officer 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 President 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 of the Company shall
request without further compensation other than that for which provision is made
in this Agreement. You will be allowed to participate in various entities so
long as the nature and scope of such participation is approved in advance in
writing by the President.
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:
Xx. Xxxxxxx X. Xxxxxxxx
October 15, 1996
Page 2
1996: $47,917.00 base compensation (which
(Commencement - 12/31/96) represents an annual rate of $115,000)
along with a target bonus of 30% of base
compensation, to be paid in January,
1997, as determined by the President of
the Company consistent with your
attainment of pre-determined individual
and corporate objectives.
Calendar 1997: $120,000 per annum base compensation
(1/1/97 - 12/31/97) along with a target bonus of 30% of base
compensation as determined by the
President of the Company consistent with
your attainment of pre-determined
individual and corporate objectives. (If
your employment is not renewed as
provided herein effective August 5,
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.)
Base compensation, target bonus and
Calendar 1998: future stock options to be evaluated and
(1/1/98 - 12/31/98) determined by the President.
The Company agrees to grant you on September 23, 1996 and thereafter on each of
the first and second anniversaries of that date (so long as this agreement has
not otherwise been terminated except as otherwise provided herein)
non-qualified, ten-year stock options to purchase 18,000 shares of common stock
(subject to standard anti-dilutive protections) at an exercise price which is
equal to the then current market price, each of such 18,000-share options shall
vest in one-third increments (6,000 shares) annually, with the initial vesting
beginning on the date granted; provided, however, any such options which remain
to be granted and/or 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 hereafter defined.
Xx. Xxxxxxx X. Xxxxxxxx
October 15, 1996
Page 3
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 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. 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 $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
Xx. Xxxxxxx X. Xxxxxxxx
October 15, 1996
Page 4
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 incentive
compensation plan that the Board of Directors of the Company shall determine to
make available to such employees. Beginning on January 1, 1997, the Company will
pay you a car allowance of $400 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) other than for "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 12 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 granting and
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.
Xx. Xxxxxxx X. Xxxxxxxx
October 15, 1996
Page 5
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 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
15th day of October, 1996
/s/ XXXXXXX X. XXXXXXXX
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Xxxxxxx X. Xxxxxxxx
