EXHIBIT 10.3
September 10, 1997
Xx. Xxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
RE: EMPLOYMENT AGREEMENT WITH FIRST AMERICAN RAILWAYS,
INC. (THE "COMPANY")
Dear Xxx:
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
on November 1, 1997 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 gives 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, Business
Development and Administration 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.
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:
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September 10, 1997
1997: (Commencement - 12/31/97)
$18,333 base compensation (which represents an annual
rate of $110,000) along with a target bonus of 25% of
base compensation (pro-rated) for the subject
employment period, to be paid in January 1998. The
criteria for determining bonus compensation shall be
developed and agreed to by you and the President of
the Company.
Calendar 1998: $115,000 per annum base compensation along
with a target bonus of 25% of base compensation, but
not less than 5% of base compensation. The criteria
for determining bonus compensation shall be developed
and agreed to by you and the President of the
Company. (If your employment is not renewed as
provided herein effective any time during 1998, you
will only be entitled to receive a bonus based on 5%
of the pro-rated amount of your base compensation for
calendar year 1998, for the period of your actual
employment.)
Calendar 1999: Base compensation, bonus, vacation time and
future stock options, all to be evaluated and
determined by the President.
In addition, the Company agrees to grant to you as of the date of your
acceptance of these employment terms, 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 option vesting in one-third increments (so long
as this Agreement has not otherwise been terminated except as otherwise provided
below) with the initial vesting of 3,333 shares on the first anniversary of the
date of grant, the second 3,333-share increment vesting on the second
anniversary of the date of grant, and the remaining 3,334-share increment
vesting on the third anniversary of the date of grant; provided, however, any
such options which remain to be 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 provided below.
In addition, you will be granted 5,000 stock options on the first and second
anniversary dates of your Agreement (assuming you are still employed by the
Company). Each grant will be a ten-year, non-qualified stock option to purchase
5,000 shares of common
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September 10, 1997
stock at an exercise price which is equal to the then current market price of
the Company's common stock. Each option will vest in one-third annual increments
(approximately 1,666 shares) with the initial vesting beginning on the first
anniversary of the date of grant. These options will be subject to the same
anti-dilution provisions and the accelerated vesting as provided for the stock
option initially granted to you.
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 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; or (v) your violation of the ethics provisions established by the
American Institute of Certified Public Accountants. 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
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September 10, 1997
employment, with no more than two weeks of which to be consecutive.
The Company shall provide you with "standard officer" 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. The Company will pay you a car allowance of $300
per month. In addition, you will be covered under the Company's Directors and
Officers liability insurance policy.
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) for other than "cause" you
will be entitled to the full benefits hereunder through the existing term
thereof.
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 of
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 applicable bonus (if any), along with
the above-described acceleration of the 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.
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September 10, 1997
For the sixty-day period commencing November 1, 1997, the Company agrees to sell
to you up to 10,000 shares of its common stock for a per share price equal to
the public market price of the Company's common stock on the date you begin
employment.
It is further understood and a part of this Agreement that you and your
immediate family will not relocate permanently to southeastern Florida within
the year. During the year, the Company agrees to reimburse you 50% of your
actual commuting expense not to exceed your total budget of $16,000. You will be
reimbursed (up to $8,000) by the Company by submitting receipts to document your
expenditure for such coverage.
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
of 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: _____________________________
Xxxxxxx Xxxxxxxxxx, President
Agreed to and Accepted this
___ day of _________, 1997
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Xxxxxx X. Xxxxxxx
