EXHIBIT 99.2
December 7, 2000
Xxxx X. Xxxxx, Xx.
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Dear Gil:
On behalf of the Board of Directors (the "Board") of Allied Research
Corporation (the "Company"), I am very pleased to offer you the positions of
Executive Vice President and Chief Operating Officer of the Company. This letter
agreement clarifies and confirms the terms of your employment with the Company.
9. POSITIONS; START DATE
As Executive Vice President and Chief Operating Officer of the Company,
you shall have the duties and responsibilities customarily associated with such
positions 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").
10. SALARY
Your salary will be $13,333.33 per month ($160,000 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.
11. 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.
12. 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 and approved by the
Compensation Committee. 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.
13. 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.
14. 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 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
options 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 options
will be incentive stock options 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 such shares. 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.
15. 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":
(a) 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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16. 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 by the Company without Cause or if you
terminated your employment with the Company 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) a
reduction in your title of Executive Vice President and Chief Operating Officer,
or (iii) a 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
your receipt of the Company's notice of your 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.
11. ADDITIONAL PROVISIONS
If you would like to defer receipt of any portion of your compensation, we
will establish an appropriate plan to effect the deferral.
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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.
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/ Xxxx X. Xxxxx, Xx.
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Xxxx X. Xxxxx, Xx.
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