DATE: August 27, 1993
TO: X. Xxxxxx Xxxxxxxx
FROM: Sono-Tek Corporation
2012 Route 9W, Bldg. 3
Milton, NY 12547
SUBJECT: Letter of Agreement
Dear Xxxxxx,
As you are aware, Sono-Tek Corporation ("Sono-Tek" or the "Company") has
sustained extensive losses from operations for the last several years. In order
to assure the survival of the Company, it is necessary to restructure the
Company and raise additional working capital. This has forced the Company to
implement drastic and far reaching initiatives and restructuring. Sono-Tek has
sought and received significant reductions in the amounts owed to suppliers and
creditors, as well as extended payment terms. This letter of agreement
represents the full understanding between you and Sono- Tek as of August 27,
1993.
1. Sono-Tek will continue your employment as Controller, reporting to the
CEO of the Company.
2. Your compensation will consist of a base salary and a bonus plan based
on the overall financial performance of the Company. The base salary
will be at an annual rate of $52,700 and will be paid at times
consistent with the standard payroll practice of the Company. In
addition to the base salary, you will be eligible to receive a maximum
annual bonus of $7,000. This bonus will consist of $1,250, paid
quarterly, for each quarter in which the Company earns a profit after
giving effect to all management bonuses, and a one-time payment at the
end of the year of $2,000 if the Company is profitable after giving
effect to all management bonuses. In future years, it is anticipated
that this bonus plan will be based on individual performance to the
Annual Operating Plan of the Company in addition to overall corporate
performance.
The initial payment of $2,500 for the first and second quarters will be
made to you on September 24, 1993.
3. You currently have no options to purchase shares of common stock of .
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Sono-Tek The Company has been advised by legal counsel that the 1983
Incentive Stock Option plan for key employees is flawed. In
addition, the 1,000,000 shares reserved for issuance under the Plan
is out of line with generally accepted levels.
As a result, Management will, working with legal counsel, establish a
1993 Incentive Stock Option Plan and use its best efforts to obtain
shareholder approval for that Plan at the shareholder meeting
tentatively scheduled for October, 1993. You will be issued 25,000 new
options at an exercise price of approximately $1.00 per share.
4. The Company has reserved a total of $1,016 in accrued salary, and you
hereby agree to forgive this entire amount and further agree that this
represents full and total past-due salary payable to you.
7. The level of your base salary and bonuses will be reviewed annually at
the time of the Annual Meeting of Shareholders of the Company.
SONO-TEK CORPORATION ACCEPTED AND AGREED TO:
BY: /s/ Xxxxxx Xxxxxxxx /s/ X.Xxxxxx Xxxxxxxx
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XXXXXX XXXXXXXX J. XXXXXX XXXXXXXX
CHAIRMAN
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