EXHIBIT 10.3
COMPENSATION AGREEMENT
XXXXXXX X. XXXXXXXX
EFFECTIVE DATE: February 1, 1999
POSITION: Chairman/CEO
RESPONSIBILITIES: Rebuild organization, launch new product, increase market
share, rebuild sales and return on investment to
shareholders.
COMPENSATION: For the period February 1, 1999 to December 31, 1999 base
salary will be $200,000 per annum paid as follows:
- $150,000 payable in cash as part of the Company's
customary payroll practices.
- $50,000 in common stock, payable on signing and
priced at the closing price of the Company's stock
on the trading day immediately preceding the
effective date of this agreement.
Thereafter, annual compensation will be adjusted based on
achievement of prior year objectives.
Quarterly Bonuses: Ending 5/3/99 $ 5,000
Ending 8/31/99 10,000
Ending 11/30/99 10,000
Ending 2/28/00 10,000
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Total $35,000 *
* Bonuses will be tied directly to quarterly objectives
approved by the Board of Directors. Thereafter, bonus
payments will be adjusted based on achievement of goals.
BENEFITS: Kerrison will be eligible to participate in all Company
benefits offered to its employees.
ATTORNEY FEES: The Company will pay for legal fees to review this
agreement.
ACCOUNTING FEES: The Company will pay for accounting fees, up to $1,000,
to review the tax liabilities associated with this
agreement.
STOCK OPTIONS: An incentive stock option to purchase 625,000 shares
(under the 1997 Stock Option Plan) will be granted upon
signing of this agreement. The shares granted under this
agreement will vest as follows:
- Two Hundred and Fifty Thousand (250,000) shares will
vest immediately upon signing.
- Up to Three Hundred Seventy Five Thousand (375,000)
performance shares will vest on May 31, 2000 based
on the following schedule for achieving the Fiscal
2000 Business Plan revenue objectives as approved at
the January 31, 1999 Special Meeting of the Board of
Directors and as may be amended from time to time.
% Shares
Vested Vested
------ -------
- 65% of Business Plan revenues 50% 125,000
- 70% of Business Plan revenues 60% 150,000
- 75% of Business Plan revenues 70% 175,000
- 80% of Business Plan revenues 80% 200,000
- 85% of Business Plan revenues 85% 212,500
- 90% of Business Plan revenues 90% 225,000
- 95% of Business Plan revenues 95% 237,500
- 100% of Business Plan revenues 100% 250,000
- 105% of Business Plan revenues 110% 275,000
- 110% of Business Plan revenues 120% 300,000
- 115% of Business Plan revenues 130% 325,000
- 120% of Business Plan revenues 140% 350,000
- 125% of Business Plan revenues 150% 375,000
In the event that not all of the 375,000 performance
shares become vested in Fiscal Year 2000 and provided
that 65% or more of the Business Plan revenue was
achieved, the unearned option shares will be eligible to
be earned in future fiscal years based on performance
that will be determined by the Board of Directors.
Shares issued pursuant to this option will expire five
years from the date of grant and will have an exercise
price equal to the fair market value of the underlying
common stock on the grant date. In any event, these
shares will vest in their entirety fifty-seven (57)
months from the date of grant.
To protect the 625,000 option shares from dilution, an
equitable increase will be made to maintain Xxxxxxxx'x
fully diluted percentage interest in the Company (only
pertaining to the 625,000 option shares or shares
received from the exercise of these options) in the event
that new shares of common stock are issued above $1.00
subsequent to May 31, 1999. These shares will have an
exercise price equal to the fair market value of the
underlying common stock on the date these new option
shares are granted.
ACCELERATED VESTING
DUE TO CHANGE IN
CORPORATE CONTROL: Each option share will become fully exercisable upon a
change in corporate control, which is defined in
paragraph 1.2 of the enclosed 1997 Option Plan.
VACATION: Six weeks paid vacation per annum.
TRAINING: The Company will pay for continuing executive education
up to $8,000 per annum.
SIGNED:
/s/ Xxxxxxx X. Xxxxxxxx 2/1/99
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Xxxxxxx X. Xxxxxxxx Date
/s/ Xxxxxx X. Xxxx 2/1/99
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Xxxxxx X. Xxxx, Corporate Secretary Date
For the Board of Directors of PurchaseSoft, Inc.
