EXHIBIT 99.3
December 7, 0000
Xxxxx X. Xxxxxxx
0000 Xxxx Xxxxx Xxxxxxxxx, X
Xxxx Xxxxx, Xxxxxxxxxx 00000
Dear Xxxxx:
On behalf of the Board of Directors (the "Board") of Allied Research
Corporation (the "Company"), I am very pleased to offer you the position of Vice
President for Strategic Planning and Corporate Development of the Company. This
letter agreement clarifies and confirms the terms of your employment with the
Company.
17. POSITIONS; START DATE
As Vice President for Strategic Planning and Corporate Development of the
Company, you shall have the duties and responsibilities customarily associated
with such position and such duties as may be assigned to you by the Chief
Executive Officer of the Company. You will report directly to the Chief
Executive Officer of the Company. Your office will be at the Company's
headquarters, located at 0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx
00000. You agree not to actively engage in any other employment, occupation or
consulting activity that conflicts with the interests of the Company. Unless we
mutually agree otherwise, you will commence employment on January 1, 2001 (the
"Start Date").
18. SALARY
Your salary will be $12,083.33 per month ($145,000 annualized), payable
monthly in accordance with the Company's standard payroll practice and subject
to applicable withholding taxes. Because your position is exempt from overtime
pay, your salary will compensate you for all hours worked. Your salary will be
reviewed and effective annually by the Board or its Compensation Committee, and
any adjustments will be effective as of the date determined by the Board or its
Compensation Committee.
19. STOCK AWARD
As a one-time "signing bonus", and subject to Board of Directors' approval,
you will be granted a stock award of 2,500 shares of Company common stock as of
the Start Date. These shares are registered pursuant to the S-8 Registration
Statement filed by the Company with the Securities and Exchange Commission on
March 20, 1998.
20. BONUS
In addition to your salary, you will be eligible to earn an annual bonus of
up to 35% of your base salary if you meet or exceed certain performance
standards which will be mutually
determined by you and the Chief Executive Officer, approved by the Compensation
Committee and evidenced by a separate writing executed by you and the Company.
The performance standards for 2001 will be mutually determined and approved
within ninety (90) days of commencement of employment and prior to the beginning
of each subsequent calendar year. You will be eligible for an annual bonus for
any calendar year only if you remain employed with the Company as of December 31
of such calendar year. The bonus will be payable within thirty (30) days of the
filing by the Company of its Form 10-K for the relevant calendar year. The bonus
will be payable, at your election, in cash and/or shares of Company common
stock. In the event the shares are subject to any restrictions on
transferability, we will agree upon an appropriate discount from the market
value of the shares on the date of your receipt of the shares thereby resulting
in an increase in the number of shares awarded over the number which would have
been awarded on an unrestricted basis.
21. BENEFITS
You will also be entitled, during the term of your employment, to such
employee benefits as the Company may offer from time to time, subject to
applicable eligibility requirements.
22. STOCK OPTION
As we discussed, our compensation structure is weighted towards equity
ownership because we believe we will create the most value for the Company and
its shareholders over time by having employees think and act like, and therefore
be, owners. To this end, and subject to Board of Directors' approval, you will
be granted as of the Start Date a five (5) year option to purchase 40,000 shares
of Company common stock, which will vest as to 16,000 shares on the first day of
January, 2002 and at the rate of 8,000 shares on the first day of January of
each of 2003, 2004 and 2005, provided you remain in the employ of the Company on
said dates. The option will provide for accelerated vesting upon a Change of
Control (as defined below). The strike price will be the fair market value per
share of such stock on the last trading day immediately preceding the Start
Date. The option will be an incentive stock option to the extent permissible
under the Internal Revenue Service code and regulations and to the extent
available under the Company's 1997 stock plan. The Company will use its best
efforts to file a Form S-8 registration statement to register all shares issued
as a result of exercise of the option. Your option will be documented by
delivery to you of a stock option agreement. The Board (or the Committee) will
consider and may in its discretion issue future option grants to you based on
your performance, the Company's operating results and other appropriate factors.
For purposes hereof, the term "Change of Control" means:
(i) the acquisition (other than by the Company) by any person, entity
or "group" within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") (excluding, for
this purpose, the Company or its subsidiaries or any employee benefit
plan of the Company or its subsidiaries which acquires beneficial
ownership of voting securities of the Company) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act),
of 50% or more of either the then outstanding shares of common
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stock or the combined voting power of the Company's then outstanding
capital stock entitled to vote generally in the election of directors;
or
(ii) individuals who, as of the date hereof, constitute the Board
(as of the date hereof the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any person
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such person were a
member of the Incumbent Board; or
(iii) approval by the shareholders of the Company of (x) a
reorganization, merger, consolidation or share exchange, in each case,
with respect to which persons who were the shareholders of the Company
immediately prior to such reorganization, merger, consolidation or
share exchange do not, immediately thereafter, own more than 50% of
the combined voting power entitled to vote generally in the election
of directors of the reorganized, merged, consolidated or other
surviving company's then outstanding voting securities, (y) a
liquidation or dissolution of the Company or (iii) the sale of all or
substantially all of the assets of the Company.
23. TERMINATION OF EMPLOYMENT
Your employment may be terminated at any time by you, or by the Company
with or without Cause, with ninety (90) days' prior written notice. Subject to
this notice requirement, this at-will employment relationship cannot be changed
except in writing signed by the Chief Executive Officer of the Company or the
Chairman of the Compensation Committee. The following matters will provide the
Company with justification for termination of your employment with "Cause":
(c) your conviction of any act by you of fraud or embezzlement;
(b) your conviction of any felony involving an act of dishonesty, moral
turpitude, deceit or fraud;
(c) your conviction of any act of dishonesty or misconduct (whether in
connection with your responsibilities as an employee of the Company or
otherwise) that either materially impairs the Company's business, goodwill or
reputation or materially compromises your ability to represent the Company with
the public; or
(d) your material failure to perform your lawful duties to the Company
after receiving written notice from the Company's Board of Directors describing
such failure in reasonable detail.
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24. PAYMENTS UPON TERMINATION OF EMPLOYMENT
If you terminate your employment or if the Company terminates your
employment with or without Cause, the Company will pay you any accrued and
unpaid compensation (subject to normal withholding and other deductions) to the
effective date of termination of your employment. In addition, if your
employment with the Company is terminated without Cause following (i) a material
adverse alteration or diminution in the nature or status of your authority,
duties or responsibilities from those in effect immediately prior to such
change, (ii) any change which results in you reporting to anyone other than the
Chief Executive Officer of the Company or (iii) a material reduction in your
base salary: (a) you will be entitled to receive severance pay equal to your
then existing base salary monthly installments throughout the period ending
twelve (12) months from the earlier to occur of receipt of notice of termination
of employment or the date of employment termination; (b) any non-vested stock
option which is scheduled to vest as of the next January 1 will vest as of the
date of the termination of your employment in an amount equal to the amount
scheduled to vest as of said January 1 multiplied by a fraction, the numerator
of which shall be the number of days of the then current calendar year up to and
including the date of termination and the denominator of which will be 365; and
(c) you will be deemed to have remained an employee throughout the severance
period for purposes of any group health plan maintained by the Company.
9. NON-COMPETITION
For a one (1) year period from and after termination of your employment for
any reason, you shall not engage, directly or indirectly, either on your own
behalf or on behalf of any other person, firm, corporation or other entity, in
any business competitive with any business of the Company (or any of its
subsidiaries), in the geographic area or areas in which Company (or any of its
subsidiaries) is conducting business at the time of termination of your
employment, or own more than 5% of any such firm, corporation or other entity.
Upon any violation of the foregoing sentence, you will forfeit any remaining
amounts payable to you hereunder in addition to any other remedies available to
the Company as a result of the violation.
10. CONFIDENTIALITY
With your employment comes the responsibility that you will honor any
confidentiality agreements you have signed with other entities. If you have any
confidential information or trade secrets, written, or otherwise known by you,
you agree not to bring them to the Company, and you agree not to use them in any
way. You attest that you have not signed a "non-competition" agreement or any
other agreement that would prohibit you from working here.
Neither party shall disclose or appropriate to its own use, or the use of
any third party, at any time during or subsequent to the term of this letter
agreement, any Confidential Information (as defined herein), except to employees
or agents who require the same for purposes of performing under this letter
agreement, without the prior written consent of the disclosing party. The
parties agree to take every reasonable precaution to prevent the unauthorized
disclosure of Confidential Information to any third party.
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"Confidential Information" is defined as all information of either party or
their parent or affiliate companies, that is considered confidential, special,
unique, proprietary, gives the disclosing party a competitive advantage and/or
enhances the disclosing party's goodwill, whether designated confidential or
not, and whether written, oral or obtained by viewing the disclosing party's
premises, data or information, and includes, but is not limited to formulae,
revisions of same, processes and methods as well as business plans, financial
data, product development plans, marketing plans and strategies, distributor or
representative lists, manufacturing methodologies, research data and any other
information of the disclosing party.
The obligations set forth in the preceding two (2) paragraphs shall not
apply to any information which: (i) is or becomes part of the public domain
through no act of the receiving party; (ii) is or may be rightfully or legally
disclosed subsequent to the receipt thereof from the disclosing party by a third
party not having a confidential relationship to the disclosing party with
respect thereto; or (iii) the receiving party can demonstrate by written proof
that the information was known to it, other than through disclosure by a third
party not having a confidential or fiduciary relationship to the disclosing
party with respect thereto, prior to gaining access to the Confidential
Information.
11. ADDITIONAL PROVISIONS
The Company will reimburse you for all reasonable house hunting and
relocation expenses incurred by you in moving your personal residence to the
Virginia/Maryland area.
If you would like to defer receipt of any portion of your compensation, we
will establish an appropriate plan to effect the deferral.
The terms described in this letter agreement will be the terms of your
employment, and this letter supersedes any previous discussions or offers. Any
additions or modifications of these terms would have to be in writing and signed
by you and the Chief Executive Officer of the Company or the Chairman of the
Compensation Commission.
The validity, interpretation, construction and performance of this letter
agreement shall be governed by the laws of the State of Delaware (except their
provisions governing the choice of law).
If you agree that this letter agreement evidences our agreement concerning
your employment with the Company, please indicate so by signing both copies of
this letter retaining one for your files. This offer and all terms of
employment stated in this letter agreement will expire if you have not returned
a signed copy to me on or prior to December 7, 2000.
We are very excited about you joining us. I look forward to a productive
and mutually beneficial working relationship. Please let me know if I can
answer any questions for you about any of the matters outlined in this letter
agreement.
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Sincerely,
/s/ X. X. Xxxxxxx Xxxx, III
---------------------------
X.X. Xxxxxxx Xxxx, III,
President-Elect of
Allied Research Corporation
ACCEPTANCE
I accept employment with Allied Research Corporation under the terms set forth
in this letter agreement:
/s/ Xxxxx X. Xxxxxxx
------------------------
Xxxxx X. Xxxxxxx
Allied/Xxxx ltr to Xxxxxxx 11-00.3
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