<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) APRIL 21, 1999
COMPOST AMERICA HOLDING COMPANY, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW JERSEY 0-27832 22-2603175
- --------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
3000 HADLEY ROAD SOUTH PLAINFIELD, NEW JERSEY 07080
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (908) 668-9335
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
PLEASE ADDRESS ALL CORRESPONDENCE TO: Mark Gasarch, Esq.
40 West 57th Street
33rd Floor
New York, New York 10019
<PAGE>
ITEM 5. OTHER EVENTS
On April 21, 1999 the Company formed an Office of the President to better
respond to its growing executive management responsibilities. Roger E. Tuttle, a
founder of the Company, has been elected as the Chairman of the Board of
Directors and has relinquished his duties as the Company's President and Chief
Executive Officer. Until the Company's Board of Directors appoints a new
President and Chief Executive Officer, the Office of the President will be
managed jointly by Roger E. Tuttle and by two consultants, Christopher Daggett
and Marvin Roseman, pending negotiation and approval of consulting agreements
with Messrs. Daggett and Roseman. Mr. Daggett is a former Commissioner of the
New Jersey Department of Environmental Protection and a Regional Administrator
of the United States Environmental Protection Agency. Mr. Roseman has forty
years of experience in project finance and management.
As Chairman of the Board of Directors, Mr. Tuttle will be an officer of the
Company. His responsibilities will include developing the strategic plan for
the Company, identifying the locations for new facilities, determining
political and regulatory issues, developing local partners and contacts,
identifying and proposing acquisition opportunities, developing ancillary
businesses, developing and maintaining relations with the investment
community and the public and finding additional capital for the Company.
The foregoing will require shareholder approval of an appropriate amendment
to the Company's By-Laws setting forth the new duties and responsibilities of
the Company's Chairman.
Mr. Pasquale Dileo, a founding Director of the Company and its
Assistant Secretary, has become the Secretary of the Company. Mr.
Anthony Cipollone, CPA, presently the Company's Controller, has
become the Treasurer of the Company. Alfred Rattie, a founder of
the Company along with Mr. Tuttle, will remain as Vice-President of
Marketing.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) and (b) - none
(c) Exhibits
99.1 - Second Amendment to Employment Agreement of Roger E. Tuttle
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 27, 1999
COMPOST AMERICA HOLDING COMPANY, INC.
(Registrant)
By /s/ Roger E. Tuttle
-----------------------------
Roger E. Tuttle, Chairman
<PAGE>
EXHIBIT 99.1
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT OF
ROGER E. TUTTLE
<PAGE>
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (the "Second Amended
Agreement") effective the 1st day of May, 1999 between COMPOST AMERICA HOLDING
COMPANY, INC., a New Jersey corporation with offices at 3000 Hadley Road, South
Plainfield, New Jersey 07080 (the "Company") and ROGER E. TUTTLE, an individual
residing at 3105 Gibson Lane, Doylestown, Pennsylvania 18901 (the "Executive").
R E C I T A L S
A. The Company is engaged in the business of operating an intermodal
rail transfer station, land application of sewer sludge, development of
marine-to-rail transfer stations and development of composting facilities
throughout the United States (the "Business").
B. The Executive has certain unique skills and business experience
which he wishes to devote to the Company.
C. The Company desires to employ the Executive and the Executive
desires to be so employed by the Company.
D. The Company and the Executive previously entered into an Employment
Agreement dated May 10, 1996 ("Agreement"), which Agreement was amended in its
entirety by a First Amendment to Employment Agreement, effective May 1, 1997
("First Amended Agreement"), and the Company and the Executive, by mutual
agreement, wish to amend the First Amended Agreement by entering into this
Second Amended Agreement. Except as set forth in Section 7 hereof, the parties
acknowledge and agree that this Second Amended Agreement supersedes all previous
agreements, whether written or oral, including without limitation, the Agreement
and the First Amended Agreement.
E. This Second Amended Agreement, including Schedules A, B and C
attached hereto, was approved by the Company's board of directors (the "Board")
on April 13, 1999.
NOW THEREFORE, in consideration of the premises together with other
good and valuable consideration, the receipt of which is hereby acknowledged, it
is agreed as follows:
1. AMENDMENT OF FIRST AMENDED AGREEMENT, RECITALS AND EFFECTIVE DATE:
The foregoing recitals are true and correct, and are incorporated herein by
reference. The effective date of this Second Amended Agreement shall be May 1,
1999 (the "Effective Date"). Except as set forth in Section 7 hereof, the First
Amended Agreement is hereby superseded in its entirety by this Second Amended
Agreement.
<PAGE>
2. EMPLOYMENT OF THE EXECUTIVE: Subject to the terms and conditions
contained herein, and unless sooner terminated as hereinafter provided, the
Company agrees to employ the Executive, and the Executive agrees to serve as an
employee of the Company, for a term of employment commencing on the Effective
Date and ending five (5) years from the Effective Date (the "Term").
3. DUTIES OF THE EXECUTIVE: During the Term, the Executive shall have
the following powers and duties:
3.1 Executive will have the powers and duties of the Chairman
of the Company as set forth in Schedule B attached hereto, as modified from time
to time by the Board.
3.2 During the Term, the Executive shall devote his full
business time, attention, effort and skill to the business affairs and interests
of the Company. It is understood and agreed that the Executive may serve or
continue to serve on the boards of directors of nd hold any other offices or
positions in companies or organization as the Executive may desire, provided
such position will not present any significant conflict of interest with the
Company or materially affect the performance of the Executive's duties pursuant
to this Second Amended Agreement, subject to Board approval. If any potential
conflict of interest arises, the Executive shall present the position and
circumstances to a meeting of the Board, which shall determine if a conflict
exists. Nothing contained herein shall prohibit the Executive from managing his
personal, financial and less active business affairs to the extent such affairs
do not contravene any of the foregoing provisions.
3.3 During the Term, the Executive shall be a member of the
"Office of the President" as set forth in Schedule C attached hereto or any
executive committee that may replace the Office of the President at any future
date.
3.4 The Company's Stockholders Agreement shall be amended
immediately to provide that, during the Term, the Company agrees to cause
Executive, or his designee, to be elected as a director on the Board of the
Company, and the Executive agrees to serve. The Executive will not receive any
additional compensation with such directorship. Directors' fees cannot exceed
$100,000 per year for a director.
3.5 The Company's Board of Directors shall, by resolution,
agree to recommend an amendment to the Company's ByLaws incorporating the duties
outlined in Schedule B as the duties of the Chairman. This recommendation shall
be presented to the shareholders for a vote at the next regularly scheduled
shareholders meeting.
4. COMPENSATION: During the Term, as compensation for the
services to be rendered by the Executive, the Company shall pay the
- 2 -
<PAGE>
Executive the following amounts:
4.1 BASE SALARY: Each twelve-month fiscal period commencing
May 1st of one year, and ending April 30th of the next, is called herein a
"Fiscal Year". During the Fiscal Year beginning on the Effective Date and ending
April 30, 2000, Executive shall be paid at the annual rate of $120,000.00,
payable in equal monthly installments of $10,000 per month (the "Base Salary").
Upon the financial closing of the first of the Company's development projects
(presently anticipated to be one of the following five projects: Newark, North
Dade, South Dade, American Soil of Florida [Soil Project] and American Marine
Rail [assuming the funds upstreamed from American Marine Rail to the Company]),
the Base Salary of the Executive shall be increased by $5,500 per month, up to
$15,500 per month. Upon the financial closing of the second of the Company's
development projects (presently anticipated to be another one of the following
five projects: Newark, North Dade, South Dade, American Soil of Florida [Soil
Project] and American Marine Rail [assuming the funds upstreamed from American
Marine Rail to the Company]), the Base Salary of the Executive shall be
increased by an additional $5,500 per month, up to $21,000 per month. During the
balance of the Term, the Executive shall be entitled to and shall receive annual
increases in his Base Salary commensurate with the growth of the Company as
shall be agreed upon at an annual review of the Executive's performance and
compensation by the Board, provided that such annual increases shall be no less
than an amount equal to the increase in the Consumer Price Index for all Urban
Consumers and Urban Wage Earners U.S. City Average issued by the United States
Department of Labor Bureau of Labor Statistics, or its successor index ("CPI")
over the preceding calendar year. The Executive agrees to defer the commencement
of actual receipt of one hundred percent (100%) of his Base Salary until the
Company has received Three Million Dollars ($3,000,000) of funding, during which
time this deferred Base Salary shall be accrued by the Company. Upon the receipt
of Three Million Dollars ($3,000,000) of cumulative funding by the Company, the
Executive agrees to defer the commencement of actual receipt of fifty percent
(50%) of his Base Salary until the Company has received an additional Three
Million Dollars ($3,000,000) of cumulative funding, during which time this
deferred Base Salary shall be accrued by the Company. At such time as the
Company is reasonably capitalized, then all accrued Base Salary shall be paid to
the Executive.
4.2 BONUS: During each Fiscal Year of the Term, commencing
with the fiscal year May 1, 1999 through April 30, 2000, Executive shall be paid
a bonus (the "Bonus"). The Bonus shall be as set forth on Schedule A attached
hereto.
4.3 COMPUTATION OF BONUS: The Bonus shall be determined by
calculations made by Company's independent certified public accountants, which
determination shall be final and conclusive upon
- 3 -
<PAGE>
all parties, subject to the accuracy and consistency of the calculations in
accordance with the provisions of this Second Amended Agreement. Payment of the
Bonus shall be made by the Company as soon as reasonably practicable, but in no
event later than 120 days after the last day of Company's Fiscal Year for which
the Bonus is due to the Executive from Company.
4.4 CONVERSION OF ACCRUALS INTO SHARES: Company acknowledges
that certain accrued salary is owed to the Executive, in the amount as set forth
in the Company's Form 10-QSB for the fiscal quarter ended January 31, 1999
("Accrued Salary") and as updated in the Company's Form 10-KSB dated April 30,
1999 when such Form is filed and issued. For a period of one year after the
execution of this Agreement, the Executive shall have the right, but not the
obligation, to convert some or all of this Accrued Salary To Executive into
unregistered shares of the Company's common stock at $2.00 per share, such
conversion to be effected by written instructions from the Executive to the
Company.
5. FRINGE BENEFITS: During the Term, the Executive shall be entitled
to:
5.1 BUSINESS EXPENSES: Executive is authorized to use the
Company's Corporate American Express Card to incur reasonable expenses to
execute and/or promote the Business of the Company, including but not limited to
expenses for entertainment, travel and similar items. All expenses must be
documented on a monthly basis. Company will reimburse the Executive for all such
expenses incurred on behalf of Company.
5.2 AUTOMOBILE: Company will continue to pay for the
Executive's current vehicle at a rate of $700 per month or shall furnish the
Executive with an equal vehicle for his use in discharging his duties hereunder,
and the Company shall pay all costs and expenses relating thereto, including,
but not limited, to gasoline, tolls, maintenance, insurance and car phone.
5.3 HEALTH, MEDICAL, AND DENTAL INSURANCE: Executive shall be
provided with hospital, major medical, and dental insurance reasonably
satisfactory to the Executive and his family dependents with full medical and
dental coverage. Said policy shall be chosen by the Executive.
5.4 LIFE INSURANCE: Upon the financial closing of the first of
the Company's development projects (presently anticipated to be one of the
following five projects: Newark, North Dade, South Dade, American Soil of
Florida [Soil Project] and American Marine Rail [assuming funds upstreamed from
American Marine Rail to the Company]), Executive shall be provided with a term
life insurance policy issued by a company chosen by the Executive for the
benefit of the Executive's family as Executive may designate, in the amount
- 4 -
<PAGE>
of $1,500,000.00. The Company shall pay the premium during the Term of this
Second Amended Agreement. Upon the termination of this Amended Agreement, the
Company shall assign such policy to the Executive. The Executive will be solely
liable and responsible for any tax consequences he incurs in connection with
this benefit.
5.5 DISABILITY INSURANCE: Upon the financial closing of the
first of the Company's development projects (presently anticipated to be one of
the following five projects: Newark, North Dade, South Dade, American Soil of
Florida [Soil Project] and American Marine Rail [assuming funds upstreamed from
American Marine Rail to the Company]), the Executive shall be entitled to
disability insurance issued by a company chosen by the Executive which provides
to the Executive not less than 80% of Executive's Base Salary hereunder after an
elimination period not to exceed 30 days and proof of disability. Furthermore,
the disability policy shall provide for coverage in the event of disability
through the age of 70. The Executive may request that Company satisfy this
paragraph 5.5 by reimbursing Executive for payments made by the Executive under
an existing plan which presently covers the Executive.
5.6 VACATION: The Executive shall be entitled to four weeks
paid vacation annually.
5.7 COMPANY BENEFIT PLANS: The Executive shall be entitled to
participate in any and all plans, arrangements or distributions maintained by
the Company pertaining to or in connection with any pension, profit sharing,
stock options and/or similar benefits for its regular employees and/or for its
executives, as determined by the Board or committees thereof pursuant to the
governing instruments which establish and/or determine eligibility and other
rights of the participants and beneficiaries under such plans or other benefit
programs.
5.8 OFFICERS AND DIRECTORS LIABILITY INSURANCE: The Company
shall purchase Officers and Directors Liability Insurance which shall cover
the Executive, all Directors and designated Officers in an amount and with
coverage mutually agreeable to the Company and the Executive.
5.9 FRINGE BENEFITS OF OTHER DIRECTORS: Should the fringe
benefits to any other director of the Company be greater than that of the
Executive, then the Executive shall receive such fringe benefits equal to that
paid to said other officer or director.
5.10 CELLULAR TELEPHONE: The Company will provide the
Executive with a cellular telephone and a telephone credit card and will
reimburse the Executive for reasonable business expenses incurred by the
Executive in connection with the use of such cellular telephone.
- 5 -
<PAGE>
6. RIGHTS OF INDEMNIFICATION: The Company shall obtain and maintain in
full force and effect during the Term directors' and officers' liability
insurance policies providing full and adequate protection to the Executive for
his capacities.
7. STOCK OPTIONS AND REPLACEMENT SHARES: The 1,000,000 stock options
(the "Stock Options") to purchase 1,000,000 shares of the common stock of the
Company (the "Option Shares") granted to the Executive in the First Amended
Agreement, remain in full force and effect, and fully vested. The Company
acknowledges that the Executive has, from his own holdings of common stock of
the Company, delivered to others, for the benefit of the Company, approximately
750,000 to 1,000,000 shares of common stock (as estimated by the Executive). The
Executive shall provide the Company with a detailed analysis of these
transactions, including dates, number of shares delivered, recipient, purpose
and value, and the Company shall issue to the Executive as replacement shares an
equal number of shares as had been delivered by the Executive.
7.1 EXERCISE OF STOCK OPTIONS: Stock Options may be exercised
by written notice directed to the Company or such other person as may be
designated by the Company accompanied by a check payable to the Company in
payment of the option price for the Option Shares or, at the sole option of the
Executive, payment may be made by "cashless exercise", as herein defined, or a
combination thereof. Cashless exercise shall mean payment for the Option Shares
by the surrender to the Company by the Executive of that number of shares of the
Company's common stock which is calculated by multiplying (i) the total number
of common shares being acquired by the exercise of the Stock Option by (ii) the
exercise price and (iii) dividing the product by the closing bid price of the
Company's common stock on the date of exercise. The Company shall make immediate
delivery of the purchased Option Shares, fully paid and nonassessable,
registered in the name of the Executive subject to a restrictive legend set
forth on the purchased Option Shares certificate as follows:
The shares of stock represented by this Certificate have not been
registered under the Securities Act of 1933, as amended ("Act"), or the
securities laws of any other jurisdiction and may not be sold,
transferred, pledged, hypothecated or otherwise disposed of in any
manner unless they are registered under such Act and the securities
laws of any applicable jurisdictions or unless pursuant to an exemption
therefrom.
7.2 RECLASSIFICATION, CONSOLIDATION OR MERGER: If and to the
extent that the number of issued and outstanding shares of common stock of the
Company shall be increased or reduced by a change of par value, split-up,
reclassification, distribution of a
- 6 -
<PAGE>
dividend payable in stock, issuance of convertible debentures, warrants or
similar transactions, the number of shares subject to the Stock Options and the
Option Price per share shall be proportionately adjusted to protect the
Executive from dilution. If the Company is reorganized or consolidated or merged
with another corporation, the Company shall make such equitable adjustment to
the unexercised Stock Options held by the Executive at the time of the
transaction as the Board, in its sole discretion, deems appropriate. Such
adjustment may include, without limitation, providing the Executive a cash
payment in exchange for the Stock Options or securing from the purchaser of the
Company the provision to the Executive of substitute stock options or other
equity compensation. If there is a purchase of stock of the Company by a party
who is not an affiliate of the Company that causes a change in control of the
Company (as defined hereinafter), the Company or purchasing entity shall
purchase the Option Shares which have not been registered on the same basis as
all other shares.
7.3 REGISTRATION RIGHTS:
a. DEMAND REGISTRATION. At anytime after May 1,
1999, the Executive shall have the right to make a request of the Company, in
writing (any such request hereinafter referred to as a "Registration Request"),
to register under the Securities Act of 1933 (the "Securities Act"), all or any
part of the Option Shares as to which the Stock Options were exercised and the
Company shall cause such shares to be registered for sale under the Securities
Act as soon as reasonably practicable so as to permit promptly the sale thereof,
and, in connection therewith, the Company shall prepare on such appropriate form
as the Company in its discretion shall determine, a registration statement under
the Securities Act to effect such registration and shall file such registration
statement with the Securities and Exchange Commission ("Commission") and
diligently pursue the declaration of such registration statement as effective.
The Executive undertakes to provide all such information and materials and take
all such action as may be required in order to permit the Company to comply with
all applicable requirements of the Commission and to obtain any desired
acceleration of the effective date of such registration statement.
Notwithstanding the foregoing, the Company shall be entitled to postpone for a
reasonable period of time, but not in excess of 180 days, the filing of any
registration statement otherwise required to be prepared and filed by the
Company pursuant to this Second Amended Agreement if the Company is, at such
time, conducting or about to conduct an underwritten public offering of equity
securities (or securities convertible into equity securities) and is advised by
its managing underwriter or underwriters that such offering would in its or
their reasonable opinion be materially and adversely affected by the
registration so requested.
b. PIGGYBACK REGISTRATIONS. If, in the case of
- 7 -
<PAGE>
any offering of equity securities (or securities convertible into equity
securities), within ten days after Executive has been made aware by the Company
of its intention to effect a registration of any of its securities (otherwise
than pursuant to an employee benefit plan or filing on Form S-8), the Executive
may request and the Company shall honor Executive's request that any equity
securities in the Company owned by Executive be included in the registration
statement.
Notwithstanding the foregoing, if the underwriter consents to the
inclusion in the registration statement of less than all shares proposed to be
offered by selling shareholders, including the Executive, then the amount of
shares to be sold for the account of each selling shareholder shall be reduced
proportionately in the ratio by which the amount each selling shareholder
proposes to sell bears to the total amount of shares which the underwriter will
permit to be sold for the account of all selling shareholders.
c. LIMITATIONS: In connection with any offering
of shares registered pursuant to this Second Amended Agreement, the Company (i)
shall furnish to the Executive such number of copies of any prospectus
(including any preliminary prospectus, or supplement) as he may reasonably
request in order to effect the offering and sale of the shares to be offered and
sold, but only while the Company shall be required under the provisions hereof
to cause the registration statement to remain current for not more than six
months, and (ii) take such action as shall be necessary to qualify the shares
covered by such registration statement under such blue sky or other state
securities laws for offer and sale as Executive shall request; provided,
however, that the Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any jurisdiction in which it shall
not then be qualified or to file any general consent to service of process in
any jurisdiction in which such a consent has not been previously filed. If
requested by the Company, in connection with a piggyback sale of the Option
Shares covered hereunder, Executive shall enter into an underwriting agreement
with a managing underwriting or underwriters selected by the Company and shall
enter into an agreement with the Company containing representations, warranties,
indemnities and agreements then customarily included by an issuer or selling
shareholder in underwriting agreements with respect to secondary distributions.
In connection with any offering of shares registered pursuant to this Second
Amended Agreement, the Company shall (y) furnish to the underwriters, at the
Company's expense, unlegended certificates representing ownership of the shares
being sold in such denominations as requested and (z) instruct any transfer
agent and registrar of the shares to release any stop transfer order with
respect to shares included in any registration becoming effective pursuant to
this Second Amended Agreement. The Company shall use its best efforts to keep
such registration statement current for a period of six months.
- 8 -
<PAGE>
8. DEATH DURING EMPLOYMENT: If the Executive dies during the Term of
this Second Amended Agreement, the Executive's surviving spouse or the
Executive's estate, if otherwise provided, shall obtain all rights in all stock
options, together with the sales rights of such stocks and/or stock options that
have been granted to the Executive hereunder.
9. TERMINATION OF EMPLOYMENT: Subject to the requirements set forth in
Section 9 and Section 10, the Company may terminate the Executive's employment
at any time, for an reason, and the Executive is similarly free to resign from
his employment hereunder.
9.1 TERMINATION BY THE EXECUTIVE: The Executive may
voluntarily resign at any time after five (5) years of full employment as
Chairman of the Company, upon six months' prior written notice to the Company.
Six months prior to the end of the Term of this Second Amended Agreement, the
Company and the Executive shall mutually agree whether or not this Second
Amended Agreement shall be extended for an additional five (5) year term. In the
event of Termination by the Executive, and not including circumstances described
in Section 11 below, the Executive shall be entitled solely to the amounts
specified in Section 10.1 of this Second Amended Agreement.
9.2 TERMINATION BY THE COMPANY: The Executive's employment may
be terminated by the Company at any time, upon notice to the Executive, with or
without "Cause." For this purpose, the term "Cause" is defined as:
a. BREACH. A material violation by the Executive
of his duties as an employee of the Company which are not remedied in a
reasonable period of time (not to exceed 30 days) after receipt of written
notice from the Company;
b. CONVICTION. A conviction of the Executive for
a felony crime;
c. FRAUD. The commission or participation of
Executive in an act or acts of personal dishonesty intended to
result in his material personal enrichment at the expense of the
Company; and
d. GROSS NEGLIGENCE/MATERIAL MISCONDUCT. The
commission of an act, or the failure to act, which constitutes gross negligence
or material misconduct on the part of the Executive.
Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to him a copy of a resolution duly adopted by the affirmative vote of not less
than three quarters
- 9 -
<PAGE>
(3/4) of the entire membership of the Board (which Board must consist of at
least four members at such time, including the Executive), at a meeting of the
Board held for the purpose (after at least seven days prior written notice to
the Executive and an opportunity for him, together with his counsel, to be heard
before said Board), finding that in the good faith opinion of said Board the
Executive was guilty of conduct set forth above in subsections (a), (b), (c) or
(d) above and specifying the particulars thereof in detail. In the event that
the Board shall consist of less than four members, the affirmative vote of at
least two-thirds of the entire membership of the Board will be required for
purposes of this Section.
9.3 NOTICE OF TERMINATION: Any termination by the Company, or
by the Executive, shall be communicated by written Notice of Termination to the
other party or parties hereto. For purposes of this Second Amended Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Second Amended Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the employment of the Executive under the provision so
indicated.
9.4 DATE OF TERMINATION: For purposes of this Second Amended
Agreement, "Date of Termination" shall mean:
(i) if the Executive resigns from his employment with
the Company either with or without Good Reason (as
defined below), the date specified in the Notice of
Termination; and
(ii) if the Executive's employment is terminated by
the Company either with or without Cause, the date on
which a Notice of Termination is delivered by the
Company to the Executive;
provided that if within thirty (30) days after any Notice of Termination is
given the party or parties receiving such Notice of Termination notifies the
other party or parties that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is finally determined
by a binding and final arbitration award or by a final judgment, order or decree
of a court of competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected); provided, however, that the
Executive's action is finally adjudicated or arbitrated in his favor and against
the Company or that the Executive's action is settled by written agreement of
the parties in the Executive's favor.
10. PAYMENTS UPON TERMINATION:
10.1. TERMINATION BY THE COMPANY FOR CAUSE, RESIGNATION
- 10 -
<PAGE>
OR BY MUTUAL AMENDED AGREEMENT. If Executive and the Company mutually agree to
the termination of this Second Amended Agreement, if Executive voluntarily
resigns, except as provided in Section 12 below, or if the Executive is
terminated by the Company for Cause (as defined in Section 9.2), then Executive
shall be entitled only to a pro rata portion of the Base Salary, a Bonus which
has accrued through the Date of Termination together with accrued vacation to
such date, and all reimbursements from the Company due under Paragraph 5 hereof.
On the Date of Termination, all unexercised Stock Options held by the Executive
shall lapse and become void. Notwithstanding anything else in this Section 10.1,
the 1,000,000 stock options granted pursuant to the First Amended Agreement will
remain fully vested.
10.2. TERMINATION FOR REASONS OTHER THAN TERMINATION BY THE
COMPANY FOR CAUSE, RESIGNATION, MUTUAL AMENDED AGREEMENT, DEATH OR DISABILITY.
For any form of termination other than that described in the preceding section
or in Section 8, including if the Executive shall terminate his employment for
Good Reason, as herein defined, or if the Company shall terminate the Executive
without Cause, then the Company shall pay the Executive the following amounts:
(i) The Executive's full Base Salary (and any annual
increases and Bonus) through the full five (5) year
term of this Second Amended Agreement.
(ii) All Option Shares shall be exercisable for a
period of five years from the Date of Termination.
(iii) The provisions of Section 16 of this Agreement
as they may have been applicable to the Executive,
shall terminate on the Date of Termination.
(iv) The Company shall continue to fund the
Executive's term life insurance and disability
insurance until the end of the Term of this Second
Amended Agreement.
Providing that the Executive is not in violation of Section 15 or 17 hereof, the
Executive shall not be required to mitigate the amount of any payment provided
for in this Section 10.2 by seeking other employment or otherwise.
11. GOOD REASON: The Executive may terminate his employment
for Good Reason. For purposes of this Second Amended Agreement,
"Good Reason" shall mean:
(i) without the express written consent of the
Executive, the assignment to him of any duties
- 11 -
<PAGE>
grossly inconsistent with his positions, duties,
responsibilities and status with the Company, or a
change in his reporting responsibilities, titles, or
offices, or any removal of him from any of such
positions, except because of the termination of his
employment for Cause, Disability or Death;
(ii) a reduction by the Company in his Base Salary
as in effect on the date hereof, or as the same may
be increased from time to time; or the failure by the
Company to increase such Base Salary each year as
provided for in this Second Amended Agreement;
(iii) the failure by the Company to allow the
Executive to participate in any Company-sponsored
benefit or compensation plan, pension plan, life
insurance plan, medical and dental plan, personal
accident plan or disability plan in which the
Executive is participating (or plans providing him
with substantially similar benefits), the taking of
any action by the Company which would adversely
affect his participation in or materially reduce his
benefits under any of such plans or deprive him of
any material fringe benefit enjoyed by him, unless
such action has been taken regarding all participants
therein, or the failure by the Company to make any of
the payments called for in Section 5 hereof;
(iv) the failure of the Company to obtain the
assumption of an agreement to perform this Second
Amended Agreement by any successor as contemplated in
Section 17 below;
(v) a "Change in Control" of the Company as defined
in Section 12 below; or
(vi) the purported termination of the Executive's
employment which is not effected pursuant to a Notice
of Termination satisfying the requirements of
paragraph 9.3 above, and for purposes of this Second
Amended Agreement, no such purported termination
shall be effective.
12. CHANGE IN CONTROL:
12.1 For purposes of this Second Amended Agreement, a "change
in control of the Company" shall mean a change in control of the nature that
would be required to be reported in response to Item 6(a) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"); provided that, without limitation, such a change of control
also
- 12 -
<PAGE>
shall be deemed to have occurred:
(i) if, with the exception of the Executive, any
"person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the
beneficial owner, directly or indirectly by
acquisition, or otherwise, of securities of the
Company representing fifty (50%) percent or more of
the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of two consecutive years,
individuals who at the beginning of such period
constitute the Board of Directors of the Company
cease for any reason to constitute at least a
majority thereof, unless the election or the
nomination for election by the Company's
shareholders, of each new director, was approved by a
vote of at least three-fourths (3/4) of the directors
then still in office who were directors at the
beginning of the period.
12.2 If certain of the events described in Section 12.1 above
constituting a change in control of the Company shall have occurred, the
Executive shall be entitled to the benefits provided in Section 10.2; provided,
however, that this Section 12.2 shall not apply after any change in control that
is due to a consolidation or merger of the Company or in the event the change in
control is due to the sale of substantially all of the Company's assets.
13. REPORTING OBLIGATION: The Company and the Executive hereby agree
that the Executive shall only be responsible to, and shall be required to report
only to, the Company's Board.
14. FUTURE INVENTIONS: The Executive shall assign and convey to the
Company, and hereby does assign and convey to the Company, and the Company
hereby accepts, all of the Executive's right, title and interest in and to all
Future Inventions made or conceived during the Term of this Second Amended
Agreement, and the Executive hereby agrees that he shall, without the payment of
royalty or any other consideration to him therefor:
(a) Inform the Company promptly and fully of each such
Future Invention by a written report satisfactory to the Company;
(b) Apply, at the Company's request and expense, for
United States and foreign letters patent, copyright, trademark or
- 13 -
<PAGE>
service mark, as the case may be, either in the Executive's name or
otherwise as the Company shall direct;
(c) Assign and convey to the Company, and he hereby does
assign and convey to the Company, all of his right, title and interest in and to
applications for United States and foreign letters patent, copyrights,
trademarks and service marks and to any letters patent, copyrights, trademarks
and service marks which may be issued upon any such Future Invention;
(d) Deliver promptly to the Company, without charge to the
Company but at its expense, such written instruments, and do such other acts, as
may be reasonably necessary, in the opinion of the Company, to obtain and
maintain United States and foreign letters patent, copyrights, trademarks or
service marks on each such Future Invention and to vest the Executive's entire
right, title and interest thereto in the Company; and
(e) Grant to the Company, and he hereby does grant to the
Company, prior to any further assignment of the Executive's right, title and
interest to the Company in any Future Invention as required above, the
royalty-free right to use in its business, and to make, have made, use and sell
products, processes, services, writings and marks based upon or related to such
Future Invention made or conceived by the Executive.
As used herein, Future Invention shall mean all inventions, discoveries, ideas,
concepts, designs and improvements of any sort, whether patentable,
copyrightable or not, relating in any way to the business of the Company, which
the Executive may, during the term of this Second Amended Agreement, conceive or
invent, whether alone or jointly with others, and whether during business hours
or thereafter, and such term includes all "know-how" and Technical Data relating
to the foregoing, and all letters patent and copyrights of the United States or
any other country which may be issued in connection with the foregoing.
Technical Data shall mean all written, printed and other tangible materials
embodying or containing Know-how, and includes, without limiting the generality
of the foregoing, all correspondence, designs, processes, source codes, object
codes, engineering sketches, drawings and tracings, specifications and
engineering data, reporting formats, memoranda, notebooks, and all copies
thereof, together with all models and prototypes of every description.
15. CONFIDENTIALITY:
(a) During the Term of this Second Amended Agreement and at
all times thereafter, the Executive will not use Secret or Confidential
Information for his own benefit or for the benefit of any person or entity other
than the Company, nor will he disclose the same to any other person or legal
entity, except as required to conduct the business of the Company in the
ordinary course.
- 14 -
<PAGE>
(b) Except with the prior written approval of the Company, or
except as required to conduct the business of the Company in the ordinary
course, the Executive will not, at any time, directly or indirectly, use,
disseminate, disclose, lecture upon, or publish articles concerning, any Secret
or Confidential Information.
(c) Upon the termination of his employment with the Company,
all documents, records, notebooks and similar repositories of, or containing,
Secret or Confidential Information, including any copies thereof, then in the
Executive's possession, or under his control, whether prepared by him or others,
will be left with or immediately returned to the Company by the Executive.
As used herein, Secret or Confidential Information shall mean any ideas
or any compilations of information kept or which shall hereafter be kept
confidential by the Company in the operation of its business or the conduct of
its research and which are not in the public domain, and which give or can give
to the Company an advantage over its competitors, including, by way of
illustration but not limitation: source codes, object codes, engineering and
other sketches, drawings and tracings, specifications, engineering data,
memoranda, designs, sources of supplies and materials, cost and financial data,
processes, production machines and equipment, procedures, customer lists,
marketing plans and business forecasts, together with all Know-how and Technical
Data relating thereto.
16. NON-COMPETE: The Executive agrees that, during the Term of this
Second Amended Agreement and during the period of three (3) years following the
Date of Termination, he will not, without the written approval of the Company,
directly or indirectly, under any circumstances whatsoever, own, manage,
operate, engage in, control or participate in the ownership, management,
operation or control of, or be connected in any manner, whether as in
individual, partner, stockholder, director, officer, principal, agent, employee
or consultant, or in any other relation or capacity whatsoever, with any
Competing Organization, and will not in any such manner, compete with or solicit
or call on any Customer of the Company, wherever located, who was a Customer of
the Company at any time during the period one year prior to the Date of
Termination, for the purpose Of inducing such Customer to purchase or lease a
Competing Product. Notwithstanding the foregoing, nothing contained in this
paragraph shall restrict the Executive from making any investment in any
company, so long as such investment consists of no more than five percent (5%)
of any class of equity securities of a company whose securities are traded on a
national securities exchange or in the over-the-counter market.
As used herein, "Competing Organization" shall mean, to the best of the
Executive's knowledge, any person or legal entity engaged in, about to engage
in, or intending to engage in, research on, or development, use, production,
marketing or selling of, a
- 15 -
<PAGE>
Competing Product in or outside of the United States of America; "Competing
Product" shall mean any process, service or product of any person or legal
entity other than the Company, or a parent, subsidiary or affiliate of the
Company, in existence or under development, which during the Term of this Second
Amended Agreement, competes with or is an alternative to any present or planned
future process, service or product of the Company, whether or not actively
marketed by the Company; and "Customer" shall mean any individual, firm,
partnership, corporation, company, joint venture or governmental or military
unit or any other entity or any parent, subsidiary or affiliate of any of them
which is negotiating or has a contract with the Company for the purchase, sale
or lease of the Company's equipment, products or services or which has been
solicited by the Company with respect to such purchase or lease during the
Executive's employment with the Company.
17. NON-INTERFERENCE: The Executive will not, for a period of two (2)
years following the Date of Termination, directly or indirectly, employ, hire,
solicit or, in any manner, encourage any employee or consultant of the Company
to leave the employ of the Company.
18. INJUNCTIVE RELIEF In addition to any other rights or remedies
available to the Company as a result of any breach by the Executive of his
obligations under this Second Amended Agreement, the Company shall be entitled
to enforcement of such obligations by an injunction or a decree of specific
performance from a court with appropriate jurisdiction, and in the event that
the Company is successful in any suit or proceeding brought or instituted by the
Company to enforce any of the provisions of this Second Amended Agreement, or on
account of any damages sustained by the Company by reason of the violation by
the Executive of any of the terms of this Second Amended Agreement to be
performed by the Executive, the Executive agrees to pay to the Company all
attorneys' fees reasonably incurred by the Company.
19. NOTICES: Any notice, request, demand, offer, payment or
communication required or permitted to be given by any provision of this Second
Amended Agreement shall be deemed to have been delivered and given for all
purposes if written, and (a) if delivered personally or by courier or delivery
service to the address set forth below at the time of such delivery, (b) if sent
by registered or certified United States mail, postage and charges prepaid,
addressed to the intended recipient, at the address specified above, effective
upon receipt or refusal. Any party may change the address to which notices are
to be mailed by giving five (5) days prior notice as provided herein to all
other parties. Commencing on the day after the receipt or refusal of such
notice, such newly designated address shall be such person's address for
purposes of all notices or other communications required or permitted to be
given pursuant to this Second Amended Agreement.
- 16 -
<PAGE>
20. SUCCESSORS:
The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Second Amended Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Second Amended Agreement and shall
entitle the Executive to compensation from the Company in the same amount and on
the same terms as he would be entitled hereunder if the Executive had terminated
his employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this section, "Company" shall mean
the Company as hereinbefore defined, and any successor to its business and/or
assets as aforesaid which executes and delivers the agreement provided for in
this Section 20 or which otherwise becomes bound by all the terms and provisions
of this Second Amended Agreement by operation of law.
21. CONSTRUCTION OF SECOND AMENDED AGREEMENT:
21.1. NEW JERSEY LAW. This Second Amended Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of New Jersey, and all of its provisions shall be administered according to and
its validity shall be determined under the laws of the State of New Jersey
without reference to Florida law provisions regarding conflicts of law.
21.2. GENDER AND NUMBER. Whenever appropriate, references in
this Second Amended Agreement in any gender shall be construed to include all
other genders, references in the singular shall be construed to include the
plural, and references in the plural shall be construed to include the singular,
unless the context clearly indicates to the contrary.
21.3. CERTAIN WORDS. The words "hereof", "herein",
"hereunder", and other similar compounds of the word "here" shall mean and refer
to the entire Second Amended Agreement and not to any particular article,
provision or paragraph unless so required by this Second Amended Agreement.
21.4. CAPTIONS. Section and paragraph headings, titles or
captions contained in this Second Amended Agreement are inserted only as a
matter of convenience and/or reference, and they shall in no way be construed as
limiting, extending, defining or describing either the scope or intent of this
Second Amended Agreement or any provision hereof.
- 17 -
<PAGE>
21.5. COUNTERPARTS. This Second Amended Agreement may be
executed in one or more counterparts, and any such counterpart shall, for all
purposes, be deemed an original, but all such counterparts together shall
constitute but one and the same instrument.
21.6. VALIDITY; SEVERABILITY. The invalidity or
unenforceability of any provision of this Second Amended Agreement shall not
affect the validity or enforceability of any other provision of this Second
Amended Agreement, which shall remain in full force and effect. If the final
determination of a court of competent jurisdiction or arbitrator declares, after
the expiration of the time within which judicial review (if permitted) of such
determination may be perfected, that any term or provision hereof is invalid or
unenforceable, (i) the remaining terms and provisions hereof shall be unimpaired
and (ii) the invalid or unenforceable term or provision shall be deemed replaced
by a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
22. MISCELLANEOUS:
22.1. ENTIRE SECOND AMENDED AGREEMENT. Except as provided in
Section 7 hereof and with respect to the 1,000,000 Stock Options previously
granted under the First Amended Agreement, this Second Amended Agreement
constitutes the entire agreement among the parties pertaining to the subject
matter hereof, and supersedes and revokes any and all prior or existing
agreements, written or oral, relating to the subject matter hereof, including
without limitation, the Agreement and the First Amended Agreement. This Second
Amended Agreement shall be solely determinative of the matters addressed herein.
22.2. WAIVER. Either the Company or the Executive may, at any
time or times, waive (in whole or in part) any rights or privileges to which he
or it may be entitled hereunder. However, no waiver by any party of any
condition or of the breach of any term, covenant, representation or warranty
contained in this Second Amended Agreement, in any one or more instances, shall
be deemed to be or construed as a further or continuing waiver of any such
condition or breach in other instances, or as a waiver of any other condition or
of any breach of any other terms, covenants, representations of warranties
contained in this Second Amended Agreement, and no waiver shall be effective
unless it is in writing and signed by the waiving party.
22.3. ATTORNEY'S FEES. If either party shall be required to
retain the services of an attorney to enforce any of his or its rights
hereunder, the prevailing party shall be entitled to receive from the other
party all costs and expenses including (but not limited to) court costs and
attorney's fees (whether in a court of original jurisdiction or one or more
courts of appellate
- 18 -
<PAGE>
jurisdiction), incurred by him or it in connection therewith.
22.4. VENUE. Any litigation arising hereunder shall be
instituted only in Bergen County, New Jersey, the place where this Second
Amended Agreement was executed, and all parties hereto agree that venue shall be
proper in said county for all such legal or equitable proceedings.
22.5. ASSIGNMENT. The rights and obligations of the parties
under this Second Amended Agreement shall inure to the benefit of and shall be
binding upon their successors, assigns, and/or other legal representatives. This
Second Amended Agreement shall not be assignable by the Company, except as
provided herein by the Executive. The services of the Executive are personal and
his obligations may not be delegated by him except as otherwise provided herein.
22.6. AMENDMENT. This Second Amended Agreement may not be
amended, modified, superseded or canceled, and any of the matters, covenants,
representations, warranties or conditions hereof may not be waived, except by a
written instrument executed by the Company and the Executive or, in the case of
a waiver, by the party to be charged with such waiver.
22.7. ARBITRATION. Any controversy or claim arising out of or
relating to this Second Amended Agreement, or the breach thereof, shall be
settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association with the American Arbitration Association,
Bergen County, New Jersey, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction over the parties.
The dispute will be resolved by a panel of three arbitrators if the dollar
amount in question that is being arbitrated exceeds $100,000.
IN WITNESS WHEREOF, the Company and the Executive have caused this Second
Amended Agreement to be effective on the day and year first above written.
WITNESSES: "Company"
COMPOST AMERICA HOLDING COMPANY, INC.
By:
- ------------------ -------------------------------
Pasquale Dileo, Secretary
"Executive"
- ------------------- -------------------------------
Roger E. Tuttle
- 19 -
<PAGE>
SCHEDULE A
BONUS PLAN
The Bonus Plan of the Company for all of its executives shall be as follows:
A. For each fiscal year, the Company, through the Compensation
Committee of its Board of Directors, shall establish a budget
and plan (the "Plan") for the Company, and for each individual
who shall be eligible to participate in the Bonus Plan,
including the Executive.
B. The Executive shall be eligible, in each fiscal year, to earn
a bonus of from 10% to 50% of the Executive's Base Salary for
that fiscal year.
C. The determination of the actual amount of the bonus shall
be based upon the following formula:
1. If the Executive achieves 80% of his Plan, then his
bonus shall be 10% of his Base Salary.
2. If the Executive achieves 100% of his Plan, then his
bonus shall be 25% of his Base Salary.
3. If the Executive achieves 120% of his Plan, then his
bonus shall be 50% of his Base Salary.
The bonus shall be calculated pro-rata for performance between
80% and 120% of the Plan.
- 20 -
<PAGE>
SCHEDULE B
DUTIES OF THE CHAIRMAN
The duties of the Chairman of the Company shall be as follows:
I. Develop the Strategic Plan for the Company
II. Identify the locations for new facilities
A. Determine political and regulatory issues
B. Develop local partners and contacts
III. Identify and propose acquisition opportunities
IV. Develop ancillary businesses
V. Develop and maintain relations with investment community
and the public
VI. Lead fund-raising efforts
- 21 -
<PAGE>
SCHEDULE C
STRUCTURE OF THE OFFICE OF THE PRESIDENT
The structure of the Office of the President of the Company shall be as follows:
1. The Office of the President shall have three members
2. All decisions of the Office of the President shall be by
2/3 vote
3. No one member of the Office of the President, acting
alone, may bind the Company to any agreement
