EXHIBIT 10.3
[LETTERHEAD OF FIRST AMERICAN RAILWAYS, INC.]
December 4, 1996
Xxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000
RE: EMPLOYMENT AGREEMENT WITH FIRST AMERICAN
RAILWAYS, INC. (THE "COMPANY")
Dear Xxxxxx:
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 December 2, 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
of Marketing and Sales. 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.
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:
Xxxxxx X. Xxxxxxx
December 4, 1996
1996-'97:
(Commencement-1/31/97) Base compensation at an annual rate
of $95,000.
1997:
(2/1/97 - 12/31/97) $100,000 per annum base compensation
along with a target bonus of 25% of
base compensation as determined by
the President of the Company
consistent with your attainment of
pre-determined individual and
corporate objectives; provided,
however, if the Company achieves its
"revenue goals" as previously
determined by the President of the
Company then you shall be entitled
to (i) receive as an additional
bonus an amount equal to 5% of your
applicable base compensation, and
(ii) the grant of ten-year,
non-qualified options covering 3,000
shares of common stock exercisable
at the then current market price and
all of which shall be fully vested
upon grant. (If your employment is
not renewed as provided herein
effective December 2, 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:
(1/1/98 - 12/31/98) Base compensation, target bonus,
and future stock options to be
evaluated and determined by the
President.
The Company agrees to grant you on December 2, 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 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, each of such 10,000-share options shall
vest in one-third increments (3,333 shares) annually, with the initial vesting
beginning on the date granted; provided, however, that 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.
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Xxxxxx X. Xxxxxxx
December 4, 1996
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
delivering 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 deliver 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
beginning on January 15, 1997, the Company shall provide you with "standard"
medical insurance. You shall also be entitled to
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Xxxxxx X. Xxxxxxx
December 4, 1996
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 December 2, 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 60 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 December 2, 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.
It is further understood and a part of this Agreement that you and your
immediate family will relocate permanently to southeastern Florida within one
year.
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Xxxxxx X. Xxxxxxx
December 4, 1996
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
6 day of December, 1996
/s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
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