EXHIBIT 10.5
FIRST AMERICAN
RAILWAYS, INC.
July 9, 1997
Xx. Xxxxxxx Xxxxxxxxxx
0000 Xxxxx 00xx Xxxxxxx
Xxxxxxxxx, Xxxxxxx 00000
RE: AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Dear Ray:
This letter confirms our mutual agreement with respect to the
following:
First American Railways, Inc. (the "Company"), agrees to employ you and
you agree to accept such employment, upon the terms and conditions set forth
below from July 1, 1996, through March 31, 2002; thereafter, the term of your
employment shall be automatically renewed for consecutive additional one-year
periods, unless and until you or the Company gives the other party written
notice, received not later than 120 days prior to the then current expiration
date of your employment, of your or the Company's intention to terminate your
employment hereunder. For the annual periods ending December 31, 2000; December
31, 2001; and the quarterly period ending March 31, 2002, you shall meet the
following performance standards to be mutually determined by you and the
Chairman of the Board and which include, among other things, as its parameters
the Company's revenue, net income, and cash flow. These standards will be
determined by the Chairman of the Board and approved by the Compensation
Committee, and such
________________________________
0000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
954/000-0000 * Fax: 954/000-0000
FIRST AMERICAN
RAILWAYS, INC.
Xx. Xxxxxxx Xxxxxxxxxx
July 9, 1997
Page 2
standards will be established at or prior to the beginning of each
applicable period.
During the period of your employment, you will serve as President and
Chief Operating Officer of the Company and President and Chief Executive Officer
of each operating subsidiary of the Company. You agree that, during the period
of your employment under this Agreement, you shall serve the Company faithfully,
diligently and to the best of your ability, under the direction and supervision
of the Board of Directors of the Company, devoting your full time, energy and
skill to such employment; provided, however, you may serve on the Board of
Directors of up to four "for-profit" entities (a current list of which is
attached as Schedule A, which schedule shall be updated by you from time to
time), and further provided that there shall be no such limitation on the
service provided by you on behalf of any "not-for-profit" entities, so long as
such entities are approved by the Chairman of the Board*. You further agree to
perform from time to time such services and to act in such capacities as the
Board of Directors 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:
________________________________
0000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
954/000-0000 * Fax: 954/000-0000
2
FIRST AMERICAN
RAILWAYS, INC.
Xx. Xxxxxxx Xxxxxxxxxx
July 9, 1997
Page 3
1996: (July 1 - December 31)
$75,000 ($150,000 annualized) with a bonus payable on
or before January 1, 1997, in an amount which shall
be no less than $12,500 for that year and may be up
to 50% of your base compensation for the subject
six-month period.**
1997: Base compensation shall be at least $175,000 base
compensation along with a bonus payable on or before
January 1, 1998 in an amount which shall be no less
than $25,000 and may be up to 50% of your base
compensation for the subject year.**
1998: Base compensation shall be at least 8% more than the
base compensation in 1997, along with a bonus payable
on or before January 1, 1999, in an amount which is
at least $25,000 and may be up to 50% of the
compensation for the subject year.**
1999: Base compensation shall be at least 8% more than the
base compensation in 1998, along with a bonus payable
on or before January 1, 2000 in an amount which is at
least $25,000 and may be up to 50% of the
compensation for the subject year.**
2000: Base compensation shall be at least 8% more than the
base compensation in 1999, along with a bonus payable
on or before January 1, 2001 in an amount which is at
least $25,000 and may be up to 50% of the
compensation for the subject year.**
2001: Base compensation shall be at least 8% more than the
base compensation in 2000, along with a bonus payable
on or before January 1, 2002 in an amount which is at
least $25,000 and may be up to 50% of the
compensation for the subject year.**
--------------------
* XXXX UNIVERSITY (BOCA RATON) SHALL BE AN APPROVED NOT-FOR PROFIT CORPORATION.
** AS DETERMINED BY MUTUAL AGREEMENT BETWEEN YOU AND THE CHAIRMAN OF THE BOARD
OF THE COMPANY; PROVIDED, HOWEVER, IF SUCH AN AGREEMENT CANNOT BE REACHED, THEN
THE BOARD OF DIRECTORS SHALL ESTABLISH THE AMOUNT OF SUCH BASE COMPENSATION,
BONUS AND STOCK OPTION GRANTS WITHIN THE APPLICABLE PARAMETERS.
________________________________
0000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
954/000-0000 * Fax: 954/000-0000
3
FIRST AMERICAN
RAILWAYS, INC.
Xx. Xxxxxxx Xxxxxxxxxx
July 9, 1997
Page 4
2002: (January 1 - March 31)
Base compensation shall be at least 8% more than the
base compensation in 2001 (pro rated for the three
month period) with a bonus payable on or before March
31, 2002 in an amount which is at least $25,000 and
may be up to 50% of the compensation for the subject
three month period.**
The Company agrees to promptly grant you a total of 10,800 shares of
common stock which shares shall be fully paid, non-assessable and not subject to
forfeiture or return to the Company for any reason. The price per share of the
10,800 shares of common stock granted pursuant to the foregoing sentence shall
be $3.50 per share (the market price as of July 1, 1996). In addition, the
Company will grant to you annually (beginning on the date hereof and thereafter
on each anniversary of this Agreement during its term and any extensions
thereof) non-qualified, ten-year stock options to purchase at least** 30,000
shares of common stock (subject to standard anti-dilutive protection) at an
exercise price which is equal to the then current market price which for
purposes of the initial grant shall be $3.50 per share, each of such
30,000-share options shall vest in one-third increments (10,000 shares)
annually, with the initial vesting beginning on the date hereof; provided,
however, any such options which remain to be granted
________________
** FOOTNOTE ON PRECEDING PAGE.
________________________________
0000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
954/000-0000 * Fax: 954/000-0000
4
FIRST AMERICAN
RAILWAYS, INC.
Xx. Xxxxxxx Xxxxxxxxxx
July 9, 1997
Page 5
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 provided below, or in the event of the
termination of this Agreement by the Company for reasons other than for "cause."
The Company shall as soon as reasonably possible prepare and file a Form S-8
Registration Statement covering the resale of the shares granted to you as
provided above and the shares underlying your granted stock option, as well as
those shares underlying all employee stock option plans.
It is contemplated that, in connection with your employment by the
Company, you will be required to incur travel, entertainment and other business
expenses which you deem necessary for the performance of your duties and
responsibilities. The Company also agrees to reimburse you for all such
necessary out-of-pocket expenses reasonably incurred by you upon the submission
to the Company of expense vouchers or other statements satisfactorily evidencing
the expenses for which reimbursement is sought. The Company will pay you a $500
per month car allowance and will reimburse you at the rate of $.20 per mile for
all mileage driven by you while on Company business (for automobile expenses,
e.g., gas, oil, maintenance, etc.).
________________________________
0000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
954/000-0000 * Fax: 954/000-0000
5
FIRST AMERICAN
RAILWAYS, INC.
Xx. Xxxxxxx Xxxxxxxxxx
July 9, 1997
Page 6
In the event that you are incapacitated by reason of mental or physical
disability or otherwise 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
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.
Notwithstanding the foregoing, in the event that you die prior to January 14,
1997 (the date upon which the life insurance policy described herein becomes
effective), the Company will continue to pay your salary, at normal payroll
intervals, to your estate for period of three months after the date of your
death.
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
________________________________
0000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
954/000-0000 * Fax: 954/000-0000
6
FIRST AMERICAN
RAILWAYS, INC.
Xx. Xxxxxxx Xxxxxxxxxx
July 9, 1997
Page 7
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
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." If your employment is validly terminated for
"cause" under this paragraph, notwithstanding any other provisions of this
Agreement, the Company will be relieved of any further obligations under this
Agreement with the exception of the obligation to pay you any accrued and unpaid
salary due to you, and those obligations (if any) regarding the granting and/or
vesting of your stock options as described in the carry-over paragraph at page 4
and continuing on page 5, above.]
In the event of termination or substantial reduction in duties without
(i) a "change in control" as defined below, or (ii) for reasons other than
"cause," you will be paid, in accordance with the Company's ordinary pay
schedule, your base compensation and
________________________________
0000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
954/000-0000 * Fax: 954/000-0000
7
FIRST AMERICAN
RAILWAYS, INC.
Xx. Xxxxxxx Xxxxxxxxxx
July 9, 1997
Page 8
maximum bonus for the remaining term of this Agreement, and you will be entitled
to the vesting and granting of all stock options under this Agreement as if
continued in full force and effect.
You shall be entitled to paid sick days and paid vacation days
commensurate with that due to an executive at your level of employment, which
initially shall be up to four weeks of vacation time, with no more than two
weeks of which to be consecutive. The Company's Chairman of the Board shall be
responsible for monitoring this aspect of your Employment Agreement to determine
that the amount of sick time and vacation time is in a manner consistent with
the policies of the Company and the effective discharge of your duties herein.
Beginning on January 14, 1997, the Company shall provide you with life
insurance (with coverage equal to at least twice your applicable annual base
compensation), medical insurance and disability insurance (with coverage equal
to at least 60% of your applicable annual base compensation and payment of
benefits for the period described in the Company's group disability program);
provided, however, to the extent such disability insurance is not in force for
you in the amount described above or is not available to the Company on
reasonable terms, then the Company shall be responsible during the term of any
such disability insurance for the prompt and timely payment of any "shortfall"
in disability
________________________________
0000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
954/000-0000 * Fax: 954/000-0000
8
FIRST AMERICAN
RAILWAYS, INC.
Xx. Xxxxxxx Xxxxxxxxxx
July 9, 1997
Page 9
payments due to you, as if you had been insured for disability to the extent as
otherwise provided above, i.e., at least 60% of your annual base compensation.
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,
pension plan or incentive compensation plan that the Board of Directors of the
Company shall determine to make available to such employees.
The Company shall fund an individual retirement plan established on
your behalf as follows: $5,000 in December 1996; $10,000 in December 1997;
$10,000 in December 1998; $10,000 in December 1999; $10,000 in December 2000;
$10,000 in December 2001; and, $10,000 in March 2002. To supplement the
foregoing, the Company shall use its best efforts to establish a non-qualified
defined contribution or defined benefit retirement plan in which you shall
participate along with other members of the Company's management, at a level
commensurate with your position with the Company. Any such supplemental
retirement plan(s) shall immediately vest to you upon (i) any termination of
this Agreement by the Company other than for "cause", or (ii) your election to
terminate this Agreement upon the occurrence of a "change in control" of the
Company, as provided below.
In the event there is a "change in control" of the Company (as defined
below) and you promptly terminate (within 12 months) this Agreement, then you
shall, within 15 days of such termination,
________________________________
0000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
954/000-0000 * Fax: 954/000-0000
9
FIRST AMERICAN
RAILWAYS, INC.
Xx. Xxxxxxx Xxxxxxxxxx
July 9, 1997
Page 10
receive a payment of an amount equal to twice your current annualized
compensation (base compensation plus applicable maximum bonus) as severance pay
along with the above-described acceleration of the granting and vesting of your
stock options and the vesting of any retirement plans (the "Termination
Benefits"). In the event there is a "change in control" of the Company and (i)
you are terminated by the Company for any reason during the 12-month period
following such "change in control", or (ii) you terminate this Agreement because
your duties hereunder have been substantially reduced during the 12-month period
following a "change in control", then you shall within 15 days of such
termination, receive a payment equal to three times your current annualized
compensation (base compensation plus applicable maximum bonus) as severance pay
along with the above-described acceleration of the granting and vesting of your
stock options and the vesting of your stock options and the vesting of any
retirement plans (the "Extended Termination Benefits"). For purposes of this
Agreement, a "change in control" of the Company shall occur when (i) 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, or (ii) someone other than Xxxxx X. Xxxxxx or you, is the Company's Chief
Executive Officer.
________________________________
0000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
954/000-0000 * Fax: 954/000-0000
10
FIRST AMERICAN
RAILWAYS, INC.
Xx. Xxxxxxx Xxxxxxxxxx
July 9, 1997
Page 11
It is further expressly understood and agreed that this Agreement must
be terminated as a result of a "change in control," or a substantial reduction
in your duties hereunder, in order for the Termination Benefits or the Extended
Termination Benefits to become available and payable to you.
You agree that during, and for a period of two years following
cessation of, your employment with the Company, you shall not, without the prior
written consent of the Board of Directors of the Company, disclose to any
person, firm, corporation or other entity, for any reason or for any purpose
whatsoever, any confidential or proprietary knowledge or information pertaining
to the Company or any of its affiliates.
You covenant and agree that during the term hereof and, if you or the
Company shall terminate this Agreement prior to the expiration of the term
hereof, then for a period ending two years from the termination date, you will
not be a consultant, director, officer or employee or have any interest either
directly or indirectly in any individual, partnership, corporation or other
entity which is engaged in a business competitive with the business of the
Company; provided, however, that the foregoing shall not prohibit the ownership
by you of less than 5% of any class of outstanding voting securities (or any
options, warrants or rights
________________________________
0000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
954/000-0000 * Fax: 954/000-0000
11
FIRST AMERICAN
RAILWAYS, INC.
Xx. Xxxxxxx Xxxxxxxxxx
July 9, 1997
Page 12
to acquire such securities or any securities convertible into such
securities) of any corporation.
You shall also be elected to the Board of Directors of the Company and
the Company agrees to use its best efforts to see that you are nominated as part
of management's slate of director nominees in connection with all subsequent
election(s) of directors by the Company's shareholders which are held during the
term of this Agreement. During the term of this Agreement, you shall also serve
as a director on the Board of Directors of all of the subsidiaries of the
Company. You will receive no additional compensation from the Company for your
service as a director.
You represent to the Company that you are not subject to any
restriction, contractual or otherwise, which prohibits you from undertaking
employment by the Company in accordance with the terms and provisions of this
Agreement. The Company acknowledges that you are party to a January 12, 1996
agreement with Sensormatic Electronics Corporation ("Sensormatic") which
provides, among other things, that you are subject to certain non-competition
and confidentiality provisions thereof. In addition, you have advised the
Company that you may be required to provide certain consulting services to
Sensormatic for a limited period of time; however, your services thereunder will
not materially interfere with your obligations hereunder.
________________________________
0000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
954/000-0000 * Fax: 954/000-0000
12
FIRST AMERICAN
RAILWAYS, INC.
Xx. Xxxxxxx Xxxxxxxxxx
July 9, 1997
Page 13
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/ XXXXX X. XXXXXX
----------------------------------
Xxxxx X. Xxxxxx, Chairman
of the Board of Directors
Agreed to and Accepted this
9th day of July, 1997
/s/ XXXXXXX XXXXXXXXXX
------------------------------
Xxxxxxx Xxxxxxxxxx
________________________________
0000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
954/000-0000 * Fax: 954/000-0000
13
FIRST AMERICAN
RAILWAYS, INC.
SCHEDULE A
List of "for profit" corporations as of July 1, 1996
1. Pointe Financial Corporation (including Pointe
Federal Savings Bank);
2. Xxxxx Industries; and
3. Rexall Sundown.
________________________________
0000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
954/000-0000 * Fax: 954/000-0000
