<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 13, 1998
REGISTRATION NO. 333-65429
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
A-55, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 2869 86-0888952
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
5270 NEIL ROAD, RENO, NEVADA 89502
(702) 826-8300
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT
FOR SERVICE)
RUDOLF W. GUNNERMAN
CHIEF EXECUTIVE OFFICER
A-55, INC.
5270 NEIL ROAD, RENO, NEVADA 89502
(702) 826-8300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale of the Common Stock being registered
hereby, other than underwriting commissions and discounts.
<TABLE>
<CAPTION>
ITEM AMOUNT
---- --------
<S> <C>
SEC registration fee........................................ $ 33,925
NASD filing fee............................................. 12,000
Nasdaq National Market Listing Fee..........................
Blue Sky fees and expenses..................................
Printing and engraving expenses.............................
Legal fees and expenses.....................................
Accounting fees and expenses................................
Transfer Agent and Registrar fees...........................
Miscellaneous expenses......................................
--------
Total............................................. $
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company has included in the Certificate and the Bylaws provisions to
(i) eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty to the extent permitted by the
General Corporation Law of the State of Delaware (the "DGCL") and (ii) indemnify
its directors and officers to the fullest extent permitted by the DGCL,
including circumstances in which indemnification is otherwise discretionary.
Section 145 of the DGCL permits a corporation, under specified
circumstances, to indemnify its directors, officers, employees or agents against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlements actually and reasonably incurred by each in connection with any
action, suit or proceeding brought by third parties by reason of the fact that
they were or are directors, officers, employees or agents of the corporation, if
such directors, officers, employees or agents acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reason to believe their conduct was unlawful. In a derivative action, i.e., one
by or in the right of the corporation, indemnification may be made only for
expenses (including attorneys' fees) actually and reasonably incurred by
directors, officers, employees or agents in connection with the defense or
settlement of an action or suit, and only with respect to a matter as to which
they shall have acted in good faith and in a manner they reasonably believed to
be in or not opposed to the best interests of the corporation, except that no
indemnification shall be made if such person shall have been adjudged liable to
the corporation, unless and only to the extent that the court in which the
action or suit was brought shall determine upon application that the defendant
directors, officers, employees or agents are fairly and reasonably entitled to
indemnity for such expenses despite such adjudication of liability.
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<PAGE> 3
The Company's directors and officers are covered by insurance policies
indemnifying them against certain civil liabilities, including liabilities under
the federal securities laws, which might be incurred by them in such capacity.
The Underwriting Agreement (Exhibit 1.1) provides for indemnification by
the Underwriters of the Company, its directors and officers, and by the Company
of the Underwriters, for certain liabilities, including liabilities arising
under the Securities Act of 1933, as amended (the "Securities Act"), and affords
certain rights of contribution with respect thereto.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since May 1, 1996, the Registrant (including its predecessor) has issued
and sold the following unregistered securities:
In the Reorganization, the partnership interests in A-55, L.P. will be
converted into all of the shares of Common Stock of the Company that are
outstanding prior to the Offering (the "Merger Shares"). The Merger Shares
have not been, and will not be, registered under the Securities Act in
reliance on the exemption provided by Section 4(2) thereof as an offer and
sale of securities which does not involve any public offering.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
2.1+ Agreement of Merger between the Company and A-55, L.P.
3.1+ Amended and Restated Certificate of Incorporation of the
Company.
3.2+ Amended and Restated Bylaws of the Company.
4.1+ Form of the Company's Common Stock Certificate.
5.1* Opinion of Howard, Rice, Nemerovski, Canady, Falk & Rabkin,
A Professional Corporation, as to the validity of the
issuance of the securities registered hereby.
10.1+ Exclusive License Agreement by and between the Company and
Rudolf W. Gunnerman, dated as of January 3, 1994.
10.2 First Amendment to Exclusive License Agreement by and
between the Company and Rudolf W. Gunnerman, dated as of
January 1, 1995.
10.3+ Second Amendment Exclusive License Agreement by and between
the Company and Rudolf W. Gunnerman, dated as of August 18,
1998.
10.4+ License Agreement by and between Advanced Fuels, L.L.C. and
Caterpillar Inc., dated as of July 7, 1994.
10.5+ Agreement of Dissolution of Advanced Fuels, L.L.C. by and
between A-55, L.P. and Caterpillar Inc., dated as of October
24, 1996.
10.6 Employment Agreement by and between the Company and Thomas
N. Harvey dated January 7, 1998.
</TABLE>
II-2
<PAGE> 4
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<C> <S>
10.7+ Employment Agreement by and between the Company and Dr.
William Charles Tao dated June 30, 1998.
10.8+ Employment Agreement by and between the Company and Dr.
Thomas M. Houlihan dated July 1, 1998.
10.9* Form of Indemnification Agreement entered into by and
between the Registrant and each of its directors and
executive officers.
10.10+ License (Republic of Korean & Democratic People's Republic
of Korea) by and between the Company and Stanton Energy Fund
Pty. Limited dated June 9, 1997.
10.11+ License (Exclusive--Australia, New Zealand & New Guinea) by
and between the Company and A-55 Australia Ltd. dated March
4, 1997.
10.12+ License Agreement by and between the Company and Vanetik and
Associates, Inc. dated December 2, 1997.
10.13+ License Agreement by and between the Company and Vanetik and
Associates, Inc. dated June 22, 1998.
10.14+ Promissory Note dated September 30, 1997 issued by A-55,
L.P. for the benefit of R. W. Gunnerman.
10.15+ Form of Promissory Note in the aggregate amount of
$4,350,000 issued by A-55, L.P. for the benefit of R. W.
Gunnerman.
10.16+ Lease Agreement by and between the Company and Rudolf W.
Gunnerman dated April 16, 1997.
10.17+ Amendment Number One to Lease Agreement by and between the
Company and Rudolf W. Gunnerman dated June 2, 1997.
10.18* 1998 Stock Option Plan.
23.1+ Consent of Howard, Rice, Nemerovski, Canady, Falk & Rabkin,
A Professional Corporation (included in Exhibit 5.1).
23.2+ Consent of PricewaterhouseCoopers LLP.
24.1+ Powers of Attorney (included on page II-5).
</TABLE>
- ------------------------------
* To be filed by amendment
+ Previously filed
All other schedules are omitted because they are inapplicable or the
requested information is shown in the financial statements of the registrant or
related notes thereto.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such
II-3
<PAGE> 5
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was declared
effective.
(5) That for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therewith, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Registration Statement No. 333-65429 to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Reno, State of Nevada, on the 13th day of October, 1998.
A-55, Inc.
By: /s/ RUDOLF W. GUNNERMAN
--------------------------------------
Rudolf W. Gunnerman
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
/s/ RUDOLF W. GUNNERMAN Chief Executive October 13, 1998
- ----------------------------------------------------- Officer and
Rudolf W. Gunnerman Chairman of the
Board (principal
executive officer)
/s/ PATRICK M. GRIMES Acting Chief October 13, 1998
- ----------------------------------------------------- Financial Officer
Patrick M. Grimes and Treasurer
(principal
financial and
accounting
officer)
/s/ DANIEL J. KLAICH Director October 13, 1998
- -----------------------------------------------------
Daniel J. Klaich
* Director October 13, 1998
- -----------------------------------------------------
Peter W. Gunnerman
*By: /s/ DANIEL J. KLAICH
- -----------------------------------------------------
Daniel J. Klaich
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
2.1+ Agreement of Merger between the Company and A-55, L.P.
3.1+ Amended and Restated Certificate of Incorporation of the
Company.
3.2+ Amended and Restated Bylaws of the Company.
4.1+ Form of the Company's Common Stock Certificate.
5.1* Opinion of Howard, Rice, Nemerovski, Canady, Falk & Rabkin,
A Professional Corporation, as to the validity of the
issuance of the securities registered hereby.
10.1+ Exclusive License Agreement by and between the Company and
Rudolf W. Gunnerman, dated as of January 3, 1994.
10.2 First Amendment to Exclusive License Agreement by and
between the Company and Rudolf W. Gunnerman, dated as of
January 1, 1995.
10.3+ Second Amendment Exclusive License Agreement by and between
the Company and Rudolf W. Gunnerman, dated as of August 18,
1998.
10.4+ License Agreement by and between Advanced Fuels, L.L.C. and
Caterpillar Inc., dated as of July 7, 1994.
10.5+ Agreement of Dissolution of Advanced Fuels, L.L.C. by and
between A-55, L.P. and Caterpillar Inc., dated as of October
24, 1996.
10.6 Employment Agreement by and between the Company and Thomas
N. Harvey dated January 7, 1998.
10.7+ Employment Agreement by and between the Company and Dr.
William Charles Tao dated June 30, 1998.
10.8+ Employment Agreement by and between the Company and Dr.
Thomas M. Houlihan dated July 1, 1998.
10.9* Form of Indemnification Agreement entered into by and
between the Registrant and each of its directors and
executive officers.
10.10+ License (Republic of Korean & Democratic People's Republic
of Korea) by and between the Company and Stanton Energy Fund
Pty. Limited dated June 9, 1997.
10.11+ License (Exclusive--Australia, New Zealand & New Guinea) by
and between the Company and A-55 Australia Ltd. dated March
4, 1997.
10.12+ License Agreement by and between the Company and Vanetik and
Associates, Inc. dated December 2, 1997.
10.13+ License Agreement by and between the Company and Vanetik and
Associates, Inc. dated June 22, 1998.
10.14+ Promissory Note dated September 30, 1997 issued by A-55,
L.P. for the benefit of R. W. Gunnerman.
10.15+ Form of Promissory Note in the aggregate amount of
$4,350,000 issued by A-55, L.P. for the benefit of R. W.
Gunnerman.
10.16+ Lease Agreement by and between the Company and Rudolf W.
Gunnerman dated April 16, 1997.
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<C> <S>
10.17+ Amendment Number One to Lease Agreement by and between the
Company and Rudolf W. Gunnerman dated June 2, 1997.
10.18* 1998 Stock Option Plan.
23.1* Consent of Howard, Rice, Nemerovski, Canady, Falk & Rabkin,
A Professional Corporation (included in Exhibit 5.1).
23.2+ Consent of PricewaterhouseCoopers LLP.
24.1+ Powers of Attorney (included on page II-5).
</TABLE>
- ------------------------------
* To be filed by amendment
+ Previously filed
<PAGE> 1
EXHIBIT 10.2
FIRST AMENDMENT TO EXCLUSIVE LICENSE AGREEMENT
This First Amendment is entered into this 2nd day of March, 1995,
based on the following facts:
A. Incident to its formation, A-55, L.P. was granted a license under that
certain Exclusive License dated November 2, 1992, and restated January 3, 1994.
B. Licensor and Licensee have agreed to clarify the Licensed Territory.
Based-on the foregoing, the parties agree as follows:
1. Section 1.5 of the Exclusive License Agreement is amended in its
entirety to read as follows:
"1.5 "Licensed Territory" means the world."
2. The effective date of this First Amendment is January 1, 1995.
LICENSEE: LICENSOR:
A-55, L.P., a Nevada /s/ Rudolf W. Gunnerman
Limited Partnership ----------------------------------------
Rudolf W. Gunnerman,
by RWG, Inc., a an individual
Nevada Corporation,
General Partner
By /s/ Daniel J. Klaich
-------------------------------
Daniel J. Klaich,
Senior Vice President
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<PAGE> 1
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of January 7, 1998 between A-55, Inc., a Delaware
corporation (the "Company"), and Thomas N. Harvey (the "Executive).
WHEREAS, on May l, 1998, Executive will be appointed by the Company's Board of
Directors ("the Board") to serve as the Company's President;
WHEREAS, the parties further desire to set forth in this Agreement the terms and
conditions of the Executive's employment by the Company as President, and
THEREFORE, in consideration of the mutual obligations contained in this
Agreement and the mutual benefits to be derived from those obligations, and
intending to be legally bound by this Agreement, the Executive and the Company
agree as follows:
SECTION 1. CAPACITY AND DUTIES
1.1 EMPLOYMENT: ACCEPTANCE OF EMPLOYMENT. Company hereby employs Executive and
Executive hereby accepts employment by the Company, as President effective May
1, 1998, upon the terms and conditions set forth below in this Agreement.
1.2 CAPACITY AND DUTIES.
(a) Executive shall be employed by Company as its President, subject
to the supervision of the Board in his President responsibilities,
and to the Chief Executive Officer in his President
responsibilities, and shall perform such duties and shall have such
authority as set forth in the Company's By-laws and as may from
time-to-time be specified by the Board, its Executive committee, its
Chairman, or the Chief Executive Officer. Executive shall report
directly to the Board and Chief Executive Officer and shall perform
his duties for Company principally from Company's office located in
Reno, Nevada, except for periodic travel that may be necessary or
appropriate in connection with the performance of Executive's duties
under this Agreement.
(b) Executive shall devote his full working time, energy, skill and best
efforts to the performance of his duties under this Agreement, in a
manner which will faithfully and diligently further the business and
interests of the Company and its affiliates (as defined below).
Executive is allowed to continue his relationships with Roy F.
Weston, Inc., The Columbus Group, Global Environment & Technology
Foundation, Global Initiatives, Inc., and GlobeQuest International
as long as these activities do not conflict with the best interests
of A-55, Inc.
SECTION 2. TERM OF EMPLOYMENT
2.1 TERM. The Executive's employment under this Agreement shall commence as of
May 1, 1998, and shall continue at will until terminated in accordance with the
provisions of this Agreement.
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<PAGE> 2
SECTION 3. COMPENSATION
3.1 BASIC COMPENSATION. As compensation for Executive's services under this
Agreement, Company shall pay to Executive a salary at the annual rate of
$250.000 (the "Base Salary") for the First year of employment, payable in
periodic installments in accordance with the Company's regular payroll practices
in effect from time-to-time. The Base Salary. After the first year of
employment, the Executive shall be paid an annual salary of $300,000.
3.2 INCENTIVE COMPENSATION: STOCK OPTIONS *.
(a) Stock Option Grants. As an inducement to the Executive to increase
shareholder value, the Company desires that the Executive acquire a
substantial number of shares of the Company's common stock. To carry
out this purpose, the following stock options grants will be
provided by the Company to Executive:
(i) One-Time Stock Purchase at Initial Public Offering (IPO). The
Executive shall be given the opportunity to purchase up to
15,000 shares at the time of A-55 Inc.'s IPO under the
"friends-of-the-family" share allotment at the initial
offering price.
(ii) One-Time Grant. On May 1, 1998 or thereabout, the Company
will grant a five year, non-qualified stock option to the
Executive to purchase no less than 150,000 shares of the
Company's common stock ("Stock") pursuant to a separate stock
options agreement made under and subject to A-55, Inc.'s stock
option plan with the exercise price under the option to be the
initial price at the initial public offering exercisable in
five equal lots of 30,000 shares each, the first exercisable
on the date of grant and an equal lot subsequently on March 1,
1999, 2000, 2001, and 2002.
(iii) Annual Stock Option Grants. Subject to approval by the
Company's Board and/or its Compensation Committee, during the
Executive's employment under this Agreement, the Company may
make, commencing in 1998, annual grants of non-qualified stock
options to the Executive for shares of Stock or such other
number of shares of stock as may be approved by the Board
and/or its Compensation Committee. Such annual grants shall be
made generally at such times, at such exercise prices, and in
a manner consistent with and under the same terms and
conditions as are contained in, options granted to other
senior officers of the Company, as determined by the Board
and/or its Compensation Committee, and shall be made under and
subject to the Stock Option Plan, or any successor plan. All
such options shall terminate on the Employment Ending Date.
* (The stock option grants are based on the following estimations:
1. The Company's valuation at the time of the IPO is estimated to range from
$1.5 to $2.0 billion.
2. The Company's initial stock offering to the public is estimated to be
$100 million more or less, and the initial offering price is estimated to
be $20/share more or less.
3. Based on estimations 1 and 2 above, there will likely be 75 to 100 million
shares of A-55, Inc. common stock issued and outstanding at the time of
the IPO, of which approximately 5 to 6 million will likely be publicly
held.
4. It is estimated that approximately 1 million shares will be allocated to
the Company's employee stock option plan as identified in the S-I
registration filing.)
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<PAGE> 3
3.3 EXECUTIVE BENEFITS. In addition to the compensation provided for in
Sections 3.1 and 3.2 hereof, the Executive shall be entitled during the term of
his employment under this Agreement to participate in all benefit plans
maintained by the Company in which senior corporate officers are entitled to
participate. Such benefit plans include, among others, the Company's Group Life,
Disability and Medical Plans. The Executive will be provided an allowance to
purchase up to $2,000,000 in term life insurance, not to exceed $4,000/year.
Executive shall be paid the allowance upon submitting invoices for the insurance
to the Company.
3.4 VACATION/BENEFIT. Executive shall be entitled to 3 weeks paid vacation in
accordance with the Company's vacation policy for officers for the first year of
employment. Beginning February 1, 1999, Executive shall be entitled to 4 weeks
paid vacation. Executive shall be reimbursed the actual costs of health
insurance premiums, under COBRA options from the time of employment at A-55.
Inc. until the company's medical plan is in effect.
3.5 EXPENSE REIMBURSEMENT. During the term of his employment under this
Agreement, Company shall reimburse Executive for all reasonable expenses
incurred by him in connection with the performance of his duties under this
Agreement, in accordance with Company's regular reimbursement policies in effect
from time-to-time, and upon receipt of itemized vouchers for such expenses and
such other supporting information as Company may reasonably require. The Company
shall reimburse Executive for moving expenses incurred by him in moving his
family's residence from Virginia to Reno, Nevada to commence employment under
this Agreement, including specifically the cost of the physical move of
household goods; $500 temporary living expenses, and the cost of travel expenses
of no more than one trip from Virginia to Nevada for two.
3.6 AUTOMOBILE. During his employment by Company, Company shall pay Executive an
automobile allowance of $400 per month.
3.7 AIR TRAVEL. Executive shall be entitled to travel either Business Class or
First Class.
SECTION 4. TERMINATION OF EMPLOYMENT
4.1 DEFINITIONS.
a) For Cause. As used in this Agreement "for cause" shall mean that
the Executive committed or engaged in an intentional act of (i)
fraud, embezzlement, dishonesty or theft in connection with his
duties under this Agreement or in the course of his employment with
Company, (ii) wrongful damage to Company's property, (iii) wrongful
disclosure of Company's secret processes or confidential
information, or (iv) any other kind which is materially harmful to
Company. No act, or failure to act, shall be deemed "intentional" if
it was due primarily to an error in judgement or to negligence, but
shall be deemed "intentional" only if done, or omitted to be done,
by Executive not in good faith and without reasonable belief that
his act or omission was in Company's best interest.
b) Good Reason Resignation. As used in this Agreement, Executive shall
be deemed to have resigned his employment by Company for "good
reason" if either:
(i) Executive, at any time elects in good faith to discontinue his
employment with Company because his responsibilities, duties
or authority have
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<PAGE> 4
changed materially from their level at the time of
commencement of his employment under this Agreement, which
change substantially reduces the rank or level, responsibility
or scope of Executive's position with Company (or its
successor in the case of a merger, consolidation, acquisition
or transfer of substantially all of its business assets) below
that which he has on the effective date of this Agreement as
Company's President or
(ii) Executive elects to discontinue his employment with the
Company within 365 days after there is a change in control of
the Company within two (2) years of the date hereof.
If Executive elects to end his employment by Company for a reason which
Executive believes is a good reason as defined by this section 4.3 (b), he shall
provide the Company with written notice of such resignation and shall state in
that notice the specific matter or matters which he asserts constitute the "good
reason" for his resignation.
c) Disability. As used in this Agreement, "Disability" or "Disabled" shall
mean a physical or mental disability which is either (i) a total and permanent
disability as defined in any disability benefit plan offered by the Company to
its senior officers and in effect at the time Executive becomes disabled
(whether or not Executive has selected to purchase such disability insurance),
or (ii) determined to be a total and permanent disability by a physician who is
selected by the Company and is acceptable to Executive or his legal
representative ( which acceptance shall not be unreasonably withheld).
4.2 TIME AND MANNER OF TERMINATION OR RESIGNATION. Executive's employment by
Company, including his office as President, shall be at will. Executive's
employment shall terminate immediately upon Executive's death or Disability, or
upon written notice to Executive that the Board is terminating Executive's
employment for cause. Otherwise, Executive's employment shall terminate on the
date selected by the party initiating termination or resignation, which date
shall be specified in a written notice to the other party, and which (i) in the
event of termination of Executive by the Company for any reason other than for
cause, shall be 30 days after delivery of such notice unless a longer period is
approved by the Board in its sole discretion, and (ii) in the event of
resignation by Executive, shall be 30 days after delivery of such notice unless
a longer or shorter period is approved by the Board and Executive. The date on
which Executive's employment by Company terminates is referred to in this
Agreement as the "Employment Ending Date." As of the Employment Ending Date, if
Executive is a member of Company's Board of or the Board of Directors of any
affiliate, he shall provide Company with his written resignation from each such
Board and from his position as an officer of any affiliate.
4.3 BENEFITS PAYABLE.
(a) Severance Amount. If either (1) Company terminates Executive's
employment for any reason other than for cause, death or disability,
or (2) Executive resigns his employment by Company for good reason,
executive shall be paid the following severance amount:
(i) If such termination or resignation occurs on or before March
1, 2003, Executive shall be paid his base monthly, salary at
the time of such termination or resignation, for 36 months;
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(ii) If such termination or resignation occurs on or after March 1,
2003, Executive shall be paid his base monthly salary, at the
time of such termination or resignation for 12 months.
For purposes of this section 4.3 (a), Executive's base monthly salary shall be
one-twelfth of his annual Base Salary at the rate in effect on the Employment
Ending Date. Company shall make the severance payments under this section 4.3
(a) beginning with the first calendar month after the Employment Ending Date, in
accordance with Company's regular pay policies for employees. If Executive dies
before the last monthly payment, the remaining payments shall be paid to his
estate. The number of months that the severance amount under this section 4.3
(a) are payable to Executive under section 4.3 (i) or (ii) above is referred to
below as the "severance period."
(b) Additional Severance Benefits. If severance payments are payable to
Executive under subsection 4.3 (a) above, the following additional
severance benefits shall be provided to Executive by Company:
(i) Company shall pay Executive the amount earned under its
pension plan (or any applicable replacement of pension plan in
effect at the time of the Employment Ending Date) for the
portion of the calendar quarter to and including the
Employment Ending Date. Company shall make such payment on or
about the date company makes such payments to other
participating employees;
(ii) Company shall provide medical, dental and prescription plan
benefits for Executive, on the same cost-sharing and other
basis as is then in effect for active employees, during the
severance period or until Executive elects that such coverages
sooner cease. After such coverages cease in accordance with
the previous sentence, Executive may elect continuation
coverage completely at this own expense as provided by law;
(iii) Company shall pay Executive his automobile allowance and
reimbursement, at the level in effect on the Employment Ending
Date, during the severance period.
(iv) Executive shall have the right to exercise any stock options
or purchase rights, which have vested as of the Employment
Ending Date.
(c) When Severance Benefits Not Payable. None of the severance benefits
described in this section 4.3 shall be payable to Executive if (i)
Executive's employment with Company terminates as a result of
Executive's death or Disability or for cause, or (ii) Executive
voluntarily ends his employment with Company other than by resigning
for good reason. The compensation and benefits which the Company is
required to pay Executive pursuant to this section 4.3 are the only
compensation and benefits to which the Executive is entitled upon a
termination or resignation of employment.
(d) Cooperation. As a condition to receipt of the severance benefits
described in this section 4.3, Executive shall provide Company with
such information pertaining to his employment with Company as he may
have and shall assist Company to transfer his duties to such
successor or successors as Company may designate.
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Company shall reimburse Executive for all reasonable out-of-pocket
expenses he incurs in fulfilling his obligation under the preceding
sentience.
(e) Release. As a condition to receipt of the severance benefits
described in this section 4.3, Executive shall deliver an effective,
executed release to Company.
(f) Acceleration Election. Company may, at its sole option and in it
sole an absolute discretion, at any time or from time-to-time,
accelerate the time and the manner of making any one or more
payments required under this section 4.3.
(g) Taxes. Company shall withhold from payments to Executive and remit
to the appropriate government agencies such payroll taxes and income
withholding as Company determines is or may be necessary under
applicable law with respect to amounts paid to Executive under this
section 4.3.
(h) General Obligation. The rights and benefits of Executive to receive
payments under this section 4.3 shall be solely those of an
unsecured creditor of Company.
SECTION 5. RESTRICTIVE COVENANTS
5.1 CONFIDENTIALITY. Executive acknowledges a duty of confidentiality owed to
Company and shall not, at any time during or after his employment by Company,
retain in writing, use, divulge, furnish, or make accessible to anyone, without
the express authorization of the Board, any trade secret, private or
confidential information or knowledge of Company or any of its affiliates
obtained or acquired by while so employed. All computer software, address books,
rolodexes, business cards, telephone lists, customer lists price lists, contract
forms, catalogs, books, records, and files and know-how acquired while an
employee of company, are acknowledged to be the property of Company and shall
not be duplicated, removed from Company's possession or made use of other than
in pursuit of Company's business. Upon the Employment Ending Date, Executive
shall deliver to Company, without further demand, all copies thereof which are
then in his possession or under his control.
5.2 INVENTIONS AND IMPROVEMENTS. During the term of his employment, Executive
shall promptly communicate to Company all ideas, discoveries and inventions that
are or may be useful to Company or its business. Executive acknowledges that all
ideas, discoveries, inventions, and improvements which are made, conceived, or
reduced to practice by him and every item of knowledge relating to Company's
business interests (including potential business interests) gained by him during
his employment hereunder are the property of the Company, and Executive hereby
irrevocably assigns all such ideas, discoveries, inventions, improvements, and
knowledge to Company for its sole use and benefit, without additional
compensation. The provisions of this Section shall apply whether such ideas,
discoveries, inventions or knowledge are conceived, made or gained by him alone
or with others; whether during or after usual working hours, whether on or off
the job, whether applicable to matters directly or indirectly related to
Company's business interests (including potential business interests), and
whether or not within the specific realm of his duties. Any of Executive's
ideas, inventions and improvements relating to Company's business interests or
potential business interests and conceived during the severance period shall for
the purposes of this Agreement, be deemed to have been conceived before the
Employment Ending Date. Executive shall, up on request of Company, but at no
expense to Executive, at any time during or after his employment with Company,
sign all instruments and documents requested by Company and otherwise cooperate
with Company to protect its right to such ideas,
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discoveries, inventions, improvements, and knowledge, including applying for,
obtaining, and enforcing patents and copyrights thereon in any and all
countries.
5.3 NON COMPETITION; NON SOLICITATION. Executive shall not, without Company's
prior written approval, either directly or indirectly, for his own account or
for the account of another person or entity, for a period of two years from and
after the Employment Termination Date:
(a) acquire or hold a significant financial interest in any competitor
of Company of any affiliate;
(b) compete with Company or any affiliate in soliciting any business
from any person or entity that was at any time during the two years
immediately preceding the Employment Ending Date a client or
potential client of Company or any affiliate, as to which client or
potential client Company or an affiliate had rendered a significant
volume of service or had a significant amount of direct business
contact for the purpose of soliciting future business; or
(c) Render services to any competitor of Company or an affiliate, if
such services are similar in nature (in whole or in part) to
services Executive rendered to Company or any affiliate at any time
during the two years immediately preceding the Employment Ending
Date.
(d) Solicit, hire or otherwise induce any employee of Company or an
affiliate to leave the employment of Company or the affiliate, or
induce any such employee to become an employee of, or otherwise
become associated with, any company or business other than Company
or the affiliate. This paragraph shall apply to inducement, hiring
or solicitation of any employee of Company or an affiliate,
regardless of position.
Upon the breach by Executive of his obligations under this section 5.3, in
addition to Company's right to obtain appropriate injunctive relief as set
forth in section 5.4 of this Agreement, Company obligation to make
severance payments or provide severance benefits to Executive under
section 4 of this Agreement shall terminate immediately and Executive
shall, within 10 days after written demand by Company, repay to Company
all severance payments previously made to Executive as well as an amount
equal to the cost of severance benefits previously provided to Executive.
5.4 INJUNCTIVE AND OTHER RELIEF.
(a) Executive acknowledges and agrees that his obligations contained in
this Agreement are fair and reasonable in light of the consideration
paid under this Agreement, and that damages alone shall not be an
adequate remedy for any breach by Executive of those obligations.
Accordingly, Executive expressly agrees that, in addition to any
other remedies which Company may have, Company shall be entitled to
injunctive relief in any court of competent jurisdiction for any
breach or threatened breach of any of those obligations by
Executive. Nothing contained in this Agreement, including, without
limitation, Section 6.1 hereof, shall prevent or delay Company from
seeking, in any court of competent jurisdiction, specific
performance or other equitable remedies in the event of any breach
of intended breach by Executive of any of his obligations under this
Agreement.
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(b) Notwithstanding the equitable relief available to Company, the
Executive, in the event of a breach of his obligations contained in
Section 5 hereof, understands and agrees that the uncertainties and
delay inherent in the legal process would result in a continuing
breach for some period of time, and therefore, continuing injury to
Company until and unless Company can obtain appropriate equitable
relief. Therefore, in addition to such equitable relief, Company
shall be entitled to monetary damages for any such period of breach
until the termination of such breach, in an amount deemed reasonable
to cover all actual and consequential losses, plus all moneys
received by Executive as a result of said breach, and all costs and
attorneys' fees incurred by Company in enforcing this Agreement. If
Executive should use of reveal to any other person or entity any
confidential information in violation of this Agreement, this will
be considered a continuing violation on a daily basis for so long a
period of time as such confidential information is made use of by
Executive or any such other person or entity.
SECTION 6. MISCELLANEOUS
6.1 ARBITRATION.
(a) Except as set forth in the last sentence of this Paragraph 6.2, all
disputes arising out of or relating to this Agreement which cannot
be settled by the parties shall promptly be submitted to and settled
exclusively by arbitration in Reno, Nevada in accordance with the
laws of the State of Nevada by three arbitrators, one of whom shall
be appointed by the Company, one by the Executive and the third of
whom shall be appointed by the first two arbitrators. The
arbitration shall be conducted in accordance with the rules of the
American Arbitration Association, except with respect to the
selection of arbitrators which shall be as provided in this section
6.1. Judgment upon the award rendered by a majority decision of the
arbitrators may be entered in any court having jurisdiction thereof.
The Company shall, however, have the right to seek and obtain
preliminary injunctive relief, in a court of competent jurisdiction,
for any existing or threatened violation by Executive of Section 5
of this Agreement.
(b) The arbitrators shall award to the prevailing party in any such
arbitration or preliminary injunction proceeding, in addition to any
other appropriate relief, the costs and expenses (including
reasonable attorneys fees) incurred by that party in connection with
the enforcement of that party's rights under this Agreement, unless
the arbitrators shall determine that under the circumstances such an
award would be unjust.
6.2 PRIOR EMPLOYMENT. Executive represents and warrants that he is not a party
to any other employment, non-competition or other agreement or restriction
which could interfere with his employment with Company or wit his or
Company's rights and obligations under this Agreement; and that his
acceptance of employment with Company and the performance of his duties
under this Agreement will not breach the provisions of any contract,
agreement, or understanding to which he is party or any duty owed by him
to any other person.
It is understood that Executive can continue to his professional relationships
with Roy F. Weston, Inc., IPAC, Global Environment & Technology Foundation,
Global Initiatives, Inc. and GlobeQuest International as long as there are no
conflicts of interests with the Executive's professional obligations and duties
to A-55, Inc.
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6.3 SEVERABILITY. The invalidity or unenforceability of any particular
provision or part of any provision of this Agreement shall not affect the
other provisions or parts of this Agreement.
6.4 ASSIGNMENT. This Agreement shall not be assignable by Executive, and shall
be assignable by Company only to any person or entity which may become a
successor in interest (by purchase of assets or stock, or by merger, or
otherwise) to Company in the business or a portion of the business
presently operated by it. Subject to the foregoing, this Agreement and the
rights and obligations set forth herein shall inure to the benefit of, and
be binding upon, the parties hereto and each of their respective permitted
successors, assigns, heirs, executors and administrators.
6.5 NOTICES. All notices hereunder shall be in writing and shall be
sufficiently give if hand delivered, sent by documented overnight delivery
service, or by registered or certified mail, postage prepaid, return
receipt requested (confirmed by US Mail), addressed as set forth below or
to such other person and/or at such other address as may be furnished in
writing by any party hereto to the other. Any such notice shall be deemed
to have been given as of the date received, in the case of personal
delivery, or on the date shown on the receipt or confirmation therefor, in
all other cases. Any and all service of process and any other notice in
any such action, suit or proceeding shall be effective against any party
if given as provided in this Agreement; provided that nothing herein shall
be deemed to affect the right of any party to serve process in any other
manner permitted by law.
If to Company A-55, Inc.
Corporate Headquarters
5270 Neil Road
Reno, Nevada 89502
Attention: Director, Human Resources
If to Executive: Thomas N. Harvey
6841 Pacific Lane
Annandale, Va. 22003
6.6 ENTIRE AGREEMENT AND MODIFICATION. This Agreement constitutes the entire
agreement between the Company and the Executive with respect to the matter
contemplated herein and supersedes all prior agreements and understandings
with respect thereto. Any amendment, modification, or waiver of this
Agreement shall not be effective unless in writing and signed by the party
against whom enforcement is sought. The failure by any party to insist
upon strict compliance with any of the terms, covenants or conditions
hereof shall not be deemed a waiver of such term, covenant or condition,
nor shall a party's waiver or relinquishment of any right or power
hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
6.7 GOVERNING LAW. This Agreement is made pursuant to, and shall be construed
and enforced in accordance with, the internal laws of the State of Nevada
(and United States federal law, to the extend applicable), without giving
effect to otherwise applicable principles of conflicts of law.
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6.8 HEADINGS; COUNTERPARTS. The headings of paragraphs in this Agreement are
for convenience only and shall not affect its interpretation. This
Agreement may be executed in tow or more counterparts, each of which shall
be deemed to be an original and all of which, when taken together, shall
be deemed to constitute but one and the same Agreement.
6.9 FURTHER ASSURANCES. Each of the parties hereto shall execute such further
instruments and take such other actions as any other party shall
reasonably require in order to effectuate the purposes of this Agreement.
6.10 NON-ALIENATION. None of the rights or payments contemplated under this
Agreement may be sold, given away, assigned, transferred, pledged,
mortgaged, alienated, hypothecated or in any way encumbered or disposed of
by Executive, or any executor, administrator, heir, legatee, distribute,
relative or any other person or entity, whether or not in being, claiming
under Executive virtue of this Agreement, and none of the rights or
benefits contemplated by this Agreement shall be subject to execution,
attachment or similar process. Any sale, gift, assignment, transfer,
pledge, mortgage, alienation, hypothecation or encumbrance, or other
disposition of this Agreement or of such rights or benefits contrary to
the foregoing provisions, or the levy or any attachment or similar process
thereon, shall be null and void and without effect.
6.11 RIGHT TO USE LIKENESS. Executive hereby grants to Company the absolute
right and permission to copyright and use, re-use and/or publish for
lawful business purposes, any photographic portraits or pictures of
Executive (and printed matter in conjunction therewith) in which Executive
may be included in whole or in part or composite, for art, advertising, or
trade.
IN WITNESS WHEREOF, the parties have executed Agreements of the date flat above
written.
ATTEST: /s/ Rudolf W. Gunnerman DATE: March 25, 1998
---------------------------- ----------------
A-55, Inc.
Chief Executive Officer
ATTEST: /s/ Thomas N. Harvey DATE: March 25, 1998
---------------------------- ----------------
Thomas N. Harvey
Executive
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