Employment Agreement - CTI Inc. and David N. Gill
January 11, 2002
Mr. David N. Gill
2712 Long Grove Drive
Marietta, GA 30062
Dear David:
We're very pleased to offer you employment as the Chief Financial Officer and
Senior Vice President of Finance for CTI, Inc. In this position you will report
to the CTI President and serve with the other Officers of CTI in the leadership
of CTI and its businesses. The effective date of your employment with CTI will
be January 14, 2002, or any date within 17 days of this offer letter that is
acceptable to you and CTI.
As discussed, your principal objective will be to lead the finance and
accounting functions of CTI. We believe you have the background and skills to
make a significant contribution to our long-term success, and that you will play
an important in helping CTI achieve our goals and objectives. We also believe
that CTI provides a unique environment and career challenges that will stimulate
your continued personal and professional development.
We are offering you a comprehensive compensation package that includes the
following elements:
- Base salary of $185,000 a year, paid every two weeks. Your salary will
be reviewed annually by the Board of Directors of CTI.
- A professional expense and car allowance of $8,000 per year, paid every
two weeks. In the first year, the $8,000 will be paid to you in the
form of a stock as of the effective date of your employment with CTI
(see below).
- Participation in the executive incentive pay program. Basically, you
can earn up to 120% or more of your base salary in incentive pay
compensation. For a "normal" year, e.g. one in which we make plan, you
could earn a cash bonus of 40% of base pay for the year. For a "very
good" year, you could earn up to an additional 40% of base pay with 50%
of the amount in cash and 50% in stock options. For an "outstanding"
year, you could earn up to an additional 40% of base pay all of which
would be in stock options. The number of shares in the options would be
determined from the dollar amount of the applicable bonus and the
current stock option price of the stock at the time of the award. The
parameters defining a normal, very good, and outstanding year will be
defined at the beginning of the year by the Officer Compensation
Committee of the Board. Since our fiscal year began in October and you
did not participate in the plan development, we will guarantee a
minimum cash bonus of 50% this year. The Officer Compensation Committee
will determine any awards beyond this amount.
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- The total minimum guaranteed bonus in your first year will be $92,500.
You have elected to take this bonus as well as the $8,000 car allowance
in the form of a stock grant for 13,400 shares ($100,500 / $7.50 per
share). This stock will be issued to you within 60 days of your
effective employment date.
- An Incentive Stock Option grant of 160,000* CTI shares at the current
stock option price as set by the CTI Board of Directors of $7.50 per
share. (*The first $100,000 in value per option grant will be qualified
incentive stock options. The remainder will be non-qualified options.)
Twenty percent of the options would vest on your start date and 20%
would vest on each anniversary of your start date. On a
change-of-control of CTI, your options would be totally vested.
Obviously, the potential for significant returns from the growth in
value of CTI is very high, and you will be a major contributor to
making that happen.
- An excellent Fringe Benefits Program, which includes a medical and
dental plan, life insurance, and a 401(k) Plan. The CTI Benefits
Program provides a number of individual options, including the
opportunity to achieve tax savings through Flexible Spending and
Dependent Care Accounts. We have provided some additional information
that will help to quantify the value of your personal CTI benefits
package.
- Three weeks of vacation per year and ten paid holidays.
- A relocation package which includes the relocation of your household
goods with our current carrier, QuickWay Transportation, temporary
housing for up to 90 days with Corporate Quarters, and a relocation
allowance of up to $60,000. The relocation allowance is provided to
cover transition expenses such as current home sale costs, new home
closing costs, final moving trip expenses, miscellaneous items such as
car tags and cable/phone connections, and IRS taxes on the allowance
amount.
This offer is contingent on your ability to pass a drug screening test
administered by a licensed physician designated by and compensated by CTI. This
offer is also contingent on your agreement to CTI's "Guidelines for Protection
of Confidential and Proprietary Information," which are attached. You should
sign and return these guidelines to us with the signed copy of the offer letter.
In the event that, CTI terminates your employment for any reason other than
Cause or Disability, then you shall be entitled to receive the following
payment: CTI shall pay you following the date of your employment termination and
over the succeeding (12) twelve months, in accordance with standard payroll
procedures, an amount equal to twelve (12) months of your Base Compensation in
effect on the date of the employment termination. Any stock options that have
vested at the date of termination will remain vested. In addition, the following
supplementary vesting conditions will apply:
1. If you are terminated for any reason other than Cause prior to an IPO,
an addition year's worth, or 20%, of options will vest at the date of
termination.
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2. If you are terminated for any reason other than Cause after an IPO, an
additional year's worth or 20% of options will vest at the date of
termination. In addition, a minimum of at least 50% of all your options
will be considered vested at that date.
3. If you are terminated after a personnel change for CTI, Inc.'s CEO,
president or COO, and after an IPO has occurred, then all of your
options held at that time will accelerate vest and be fully
exercisable.
CTI may terminate your employment for "Cause." "Cause" will exist in the event
you are convicted of a felony, or carrying out your duties, you are guilty of
gross negligence or gross misconduct resulting, in either case in material harm
to CTI. In the event your employment is terminated for Cause, you will be
entitled to any unpaid salary through the date of termination due you, and you
will be entitled to no other compensation hereunder from CTI and your deferred
compensation will be forfeited.
We want you to know how much we hope that you decide to join us. If you have any
questions or we can assist you in any way, please let us know.
Best Regards,
/s/ Terry Douglass /s/ Traci Etherton
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Terry Douglass Traci Etherton
President & CEO Human Resources Manager
<PAGE>
The undersigned accepts the above employment offer and agrees that it contains
the terms of employment with CTI and that there are no other terms expressed or
implied. In addition, by accepting the terms of the above employment offer, the
undersigned hereby acknowledges and recognizes the highly competitive nature of
CTI's business and agrees that he will not, after termination of employment with
CTI for a period of (1) year:
a. directly or indirectly engage in any Competitive Business (as
hereinafter defined), whether as an officer, director, owner, investor,
employee, partner, or other participant in any such business:
b. assist others in engaging in any such capacity in any Competitive
Business;
c. induce employees of the Company to terminate their employment with the
Company or to engage in any such capacity in any Competitive Business;
or
d. interfere with or disrupt or attempt to interfere or disrupt any
relationship of any employee of the company with any employee,
consultant, customer or supplier thereof.
[As used herein, the term "Competitive Business" shall mean and include any
business (whether or not for profit) which directly or indirectly competes with
the business conducted by the Company or its affiliates.]
/s/ David N. Gill Date: 1/11/02
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David N. Gill