SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): August 24, 1999
AUDIOGENESIS SYSTEMS, INC.
(Exact name of registrant as specified in charter)
New Jersey 000-24991 22-3487471
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
7 Doig Road, Suite 3
Wayne, New Jersey 07470
(Address of principal executive offices)
Registrant's telephone number, including area code (973) 696-9400
<PAGE>
Item 1. CHANGES IN CONTROL OF REGISTRANT
See Item 5.
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
See Item 5.
Item 5. OTHER EVENTS
On August 24, 1999, Audiogenesis Systems, Inc. closing was held on the Stock
Purchase Agreement and Plan of Reorganization with Allstates Air Cargo, Inc.
and its sole shareholder, Joseph M. Guido, whereby Audiogenesis acquired 100%
of Allstates Air Cargo, Inc. The consideration paid to Joseph M. Guido was
18,000,000 shares of common stock of Audiogenesis (representing approximately
56.9% of the common stock of Audiogenesis), plus the assumption by
Audiogenesis of the obligation of Joseph M. Guido to pay, in installments,
$2,560,000 to the estate of a former stockholder of Allstates pursuant to a
certain Buy-Sell Agreement.
In furtherance of the said Stock Purchase Agreement, the Chairman of the
Board and Secretary of Audiogenesis, Robert R. Guinta, resigned to pursue
other business interests, and new officers and directors have been appointed.
The officers and directors of Audiogenesis are now as follows:
Name Age Position
- ---- --- --------
Joseph M. Guido 64 Chairman of the Board of Directors
Sam DiGiralomo 55 President, CEO, Director
Barton C. Theile 52 Executive Vice President, COO,
Director
Craig D. Stratton 46 Secretary, Treasurer, CFO
(principal financial officer),
Director
Joseph M. Guido, the founder of Allstates, served as its President and
CEO since 1961. Prior to forming Allstates Air Cargo, Inc., Mr. Guido served
as a freight supervisor with American Airlines, and as a sales and station
manager for Air Cargo Consolidators.
Sam DiGiralomo, a founder of Audiogenesis, President and a Director, has
been an officer and director of the Company since the inception of Genesis in
July 1981. During this time, Mr. DiGiralomo performed the management, sales
and marketing functions with respect to occupational safety products and
programs. He personally developed and sold Audiogenesis' SaveTvend(sm)
program to several major pharmaceutical companies. From 1975 to 1981, Mr.
DiGiralomo served as Vice President and General Manager of Guinta Associates,
Inc., a sales and service organization of electronic medical instruments.
Mr. DiGiralomo formed and operated the safety division of Guinta Associates
called GSP (Guinta Safety Products). This division sold occupational safety
products and programs, including training to many different companies. Mr.
DiGiralomo served as sales and marketing director of this division from 1975
to 1981. Prior to his position at Guinta Associates, Mr. DiGiralomo was
employed for 18 months by Industrial Products Company of Langhorn,
Pennsylvania, as territory manager, and was responsible for the management,
sales and marketing of occupational safety products to industrial customers.
Mr. DiGiralomo's territory encompassed area from the southern tip of New
Jersey to the Canadian border of New York. Mr. DiGiralomo has more than 20
years of management and marketing experience. He has lectured at various
trade associations and universities, and designed and authored several
employee training programs. Mr. DiGiralomo is a member of the American
Society of Safety Engineers.
Barton C. Theile has served Allstates as a sales representative,
operations manager, and Executive Vice President over a period of 19 years.
In addition to his experience at Allstates, Mr. Theile was President of Cargo
Logistics Group, LLC and has been involved in sales, marketing operations and
administration in the transportation industry for over 25 years.
Craig Stratton has been the Chief Financial Officer for Allstates since
November 1997. Before joining Allstates, Mr. Stratton held, for three years,
the position of Corporate Controller for Programmer's Paradise, Inc. a
cataloger and distributor of technical software. Beginning in 1990, he was
Controller for Baronet Corporation, an importer and distributor of leather
goods accessories. In 1971, he joined the finance department of Contel IPC,
a specialty telephone systems manufacturer and service provider, where he
held various positions of increasing responsibility in corporate accounting,
including an appointment to Assistant Controller in 1987. In 1973, Mr.
Stratton received his B.S. in accounting, and in 1980 he earned his MBA. Mr.
Stratton has been a CPA since 1986.
Employment Agreements have been entered into with Joseph M. Guido, Barton
Theile and Sam DiGiralomo. Such employment agreements are attached as
exhibits to this Form 8-K.
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.
Audiogenesis Systems, Inc.
/s/ Sam DiGiralomo
DATED: September 7, 1999
By: Sam DiGiralomo
President
<PAGE>
EXHIBIT 10.06
EMPLOYMENT AGREEMENT
JOSEPH M. GUIDO
EMPLOYMENT AGREEMENT
This Agreement is made this 24th day of August, 1999, between AUDIOGENESIS
SYSTEMS, INC. and ALLSTATES AIR CARGO, INC., both New Jersey corporations
(the "Company") and JOSEPH M. GUIDO ("Executive").
WITNESSETH:
The parties, for and in consideration of the mutual and reciprocal covenants
and agreements contained in this document, do contract and agree as follows:
1. TERM
The Company shall employ Executive and Executive accepts such employment for
a term beginning on the date of this Agreement and ending on December 31,
2004, upon the terms and conditions set forth herein, unless earlier
terminated in accordance with the provisions herein. Notwithstanding the
foregoing, if this Agreement shall not have been terminated in accordance
with the provisions herein on or before December 31, 2004, the remaining term
of the Agreement shall be extended such that at each and every moment of time
thereafter, the remaining term shall be one year unless (a) the Agreement is
terminated earlier in accordance with the provisions herein or (b) on or
after January 1, 2004, the Board of Directors notifies Executive in writing
of its determination to have the date of this Agreement expire one year from
the date of such notification.
2. DUTIES
Executive shall be employed by Company as its Chairman. Executive shall
report directly and solely to the Company's Board of Directors ("Board").
Executive shall devote his full time and best efforts to the Company.
Company agrees to nominate Executive for election to the Board as a member of
the management slate at each annual meeting of stockholders during his
employment hereunder at which Executive's director class comes up for
election. Executive agrees to serve on the Board if elected.
3. COMPENSATION
a. Salary. The minimum annual base salary payable to Executive upon
commencement of this Agreement shall be $308,000. Executive's base salary
shall increase each year (i) in accordance with any cost of living increase
or (ii) at the discretion of the Board, and the increase shall be the higher
of the two. Upon any such increase in Executive's base salary, such
increased amount shall thereafter constitute Executive's minimum annual base
salary for all purposes of this Agreement.
b. Bonus. Executive shall receive 3% of the increase of the Net Profit
before taxes from the fiscal year end 1998 to the fiscal year end 1999. This
bonus arrangement shall continue for Executive for each fiscal year up to and
including the last fiscal year within the term of this Agreement, including
any extensions as provided herein. The bonus shall be paid in cash to
Executive within 30 days of the completion of the Company's year end
certified financial statements. Executive shall have the right to defer up
to 75% of any amount due him with respect to the bonus.
c. Common Stock and Options. Executive shall be granted stock options in
accordance with the terms and conditions of the Company's Stock Option Plan.
The amount of stock options granted to Executive at any given time shall be
no less than 95% of the amount granted to any other individual, group, or
entity. In the event that Executive chooses to exercise any of his stock
options, the Company shall, to the extent permitted by law, make loans to
Executive for the amount of money needed to exercise such options and these
loans shall be paid back to the Company by Executive within 30 days after
Executive receives the revenues from the sale of stock. At the time that the
Company is permitted by law to do so, the Company shall register Executive's
shares pursuant to the appropriate form of registration statement under the
Securities Act of 1933 and shall maintain such registration statement's
effectiveness at all required times. The Company shall pay all costs related
to the registration of any and all common stock and or options for Executive.
d. Retirement. Executive shall have the right to participate in the
Company's 401(k) plan and to receive, to the fullest extent, all the benefits
of the plan.
e. Health and Life Insurance. Executive shall be enrolled in the Company's
health, dental, prescription, and life insurance plan. The Company shall
pay the premiums for Executive for such plans.
f. Disability. In the event that Executive should become disabled to the
extent of not being able to carry out his duties as described herein,
Executive shall be paid 75% of his base salary and all benefits for the full
term remaining of this Agreement. Disability shall be deemed to have
occurred if Executive makes application for disability benefits to the Board.
g. Use of Time. Executive shall use his sole discretion in deciding the
date, frequency, and length of time required for his personal use.
Executive shall continue to receive his full benefits and compensation during
this time.
h. Expense Reimbursements. Executive shall use his sole discretion with
respect to the purchase of any and all equipment and/or supplies that he
requires to perform his duties for the Company. The Company shall reimburse
in full Executive for any of these purchases within 10 days from the date
that Executive provides proof of purchase to the Company. In addition to
full reimbursement of all business related expenses, including but not
limited to meals, travel, lodging, auto fuel, tolls, auto insurance, motor
vehicle fees, phone charges, and credit card fees, Executive shall be
provided with an auto similar to Executive's current auto.
i. Financial and Tax Advice. During (i) the Period of Employment, (ii) the
12-month period following the termination of the Period of Employment as a
result of Death, and (iii) the 3- year period following the voluntary
termination by Executive, the Company shall provide Executive (or, if
Executive shall have died, his estate) at the Company's expense, third-party
professional financial and tax advisory services, primarily oriented to
planning in light of Executive's entitlement to compensation and employee
benefits and appropriate in light of the financial circumstances of Executive
(or his estate).
4. TAX "GROSS-UP" PROVISION
If any payment or distribution by the Company, to or for the benefit of
Executive under this Agreement result in Executive's liability for an excise
tax ("parachute tax") under section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), the Company will pay to Executive, after
deducting any Federal, state or local income tax imposed on the payment, an
amount sufficient to fully satisfy the "parachute tax" liability, including
any interest or penalties with respect to such "parachute tax." Such
payment shall be made to Executive no later than 30 days prior to the due
date of the "parachute tax."
5. RESIDENCE
Executive shall use his sole discretion with respect to his place of
residence during the term of this Agreement.
6. LOCATION
Executive shall use his sole discretion with respect to executing his duties
at a location of his choice that Executive deems to be in the best interest
of the Company.
7. EXECUTIVE ASSISTANCE
Executive shall use his sole discretion, in hiring and firing, with respect
to the individual that shall assist Executive in the performance of his
duties on behalf of the Company. The Company shall fully compensate
Executive's assistant commensurate with the experience of the assistant.
This individual will report only and directly to Executive and perform
services exclusively for Executive.
8. TERMINATION
This Agreement shall be terminated on the following terms:
a. Upon the death of Executive. In the event Executive dies while
receiving his base salary, his base salary shall continue to be paid, for a
period not to exceed the term of this Agreement, or for 3 years, whichever is
longer, to his designated beneficiary/beneficiaries or estate.
b. Upon Change of Control. "Change of Control" shall be deemed to have
occurred if at
any time or from time to time after the date of this Agreement any of the
following events should occur:
i. 25% outside buy out
ii. Unapproved change in Board majority
iii. Sale, liquidation, or dissolution of the Company
iv. Merger or reorganization involving more than a 40% change in
shareholders
If, within 24 months following a Change of Control, as herein defined,
Executive voluntarily resigns or retires the termination shall be deemed to
be a "Change of Control Termination." In the event of a Change of Control
Termination, the Company shall pay to Executive a lump-sum payment of 299% of
Executive's average annual Base Salary and annual Bonus during the preceding
five-year period and all benefits as listed and described in Article 3 of
this Agreement (Compensation) and that these benefits shall continue for an
additional 5 year period. In the event that a Change of Control Termination
occurs before Executive completes 5 years of service, the lump-sum payment
will be valued at 299% of Executive's average annual Base Salary and annual
Bonus during all years of service. Additionally, any options and/or
restricted stock granted to Executive shall become fully vested and
registered, according to all state and federal regulations, as of the date of
Change of Control Termination. Provided further, Executive shall receive a
cash payment equal to the value of any options anticipated to be granted
within the 3 years following the Change of Control Termination. All the
provisions of Article 4 of this Agreement (Tax "Gross-Up" Provision) shall
apply to this section and to all other applicable sections throughout this
Agreement.
c. Cause. "Cause" shall mean (i) willful refusal by Executive to follow a
lawful written demand of the Board, (ii) Executive's willful and continued
failure to perform his duties under this Agreement (except due to Executive's
incapacity due to physical or mental illness) after a written demand is
delivered to Executive by the Board specifically identifying the manner in
which the Board believes that Executive has failed to perform his duties,
(iii) Executive's willful engagement in conduct materially injurious to the
Company. For purposes of clauses (i), (ii), and (iii) of this section, no
act, or failure to act on Executive's part shall be deemed "willful" unless
done, or omitted to be done, by Executive not in good faith and without
reasonable belief that Executive's act, or failure to act, was in the best
interests of the Company.
9. NON-COMPETE
Executive shall not willfully compete with the Company during the term of
this Agreement. Competing with the Company is defined as Executive being
willfully employed by a competitor of the Company during the term of this
Agreement.
10. SEVERANCE
If the Company breaches any of the terms of this Agreement or reduces
Executive's title or responsibilities below Chairman, the Executive may, at
his option, decide to leave the Company and be paid severance pay equal to
100% of all items in Article 3 (Compensation) including all benefits for a
period of 5 years after Executive leaves the Company.
11. PAYMENT OF LEGAL FEES
The Company shall pay all legal fees for Executive should Executive become
involved in litigation, either criminal or civil, arising out of this
Agreement, Executive's duties, and/or the Company's business. Executive
shall have the sole right to choose the law firm that would represent him.
12. INDEMNIFICATION
The Company shall indemnify and hold harmless Executive from any and all
civil or criminal actions that may arise out of the Company's business
and/or Executive's duties on behalf of himself and the Company.
13. DISPUTE RESOLUTION
Any disputes, controversies or claims arising out of this Agreement shall be
settled by arbitration in New Jersey, under the rules of the American
Arbitration Association and paid for by the Company for both parties. The
parties shall select one arbitrator from the panel provided by the AAA, and
the arbitrator shall refer to the laws of New Jersey for interpretation and
enforcement of this Agreement. Judgment may be entered in any court having
jurisdiction to enforce the specific and final award or decision of the
arbitrator.
14. JURISDICTION
The Company and Executive agree to the jurisdiction and venue of the court in
the county of Ocean in the state of New Jersey. The parties also agree to
the jurisdiction and venue of the United States District Court for the
District of New Jersey with respect to any proceedings which may arise out of
this Agreement or its performance.
15. MISCELLANEOUS PROVISIONS
a. All notices, requests, and demands given to or made upon the parties
hereto shall, except as otherwise specified herein, be in writing and be
delivered by fax, express delivery, in person, or mailed to any such party at
the address of such party. Any party may, by notice hereunder to the other
party, designate a changed address for such party. Any notice, if faxed,
shall be deemed received upon confirmation of the receipt thereof; is sent by
express delivery, shall be deemed received upon delivery as set forth on the
express delivery receipt; if personally delivered, shall be deemed received
upon delivery; and if mailed properly addressed, postage prepaid, registered
or certified mail, shall be deemed dispatched on the registered date or that
stamped on the certified mail receipt, and shall be deemed received the fifth
business day thereafter, or when it is actually received, whichever is
sooner. Attempted delivery, in person or by express delivery at the correct
address, shall be deemed received on the date of such attempted delivery.
All references to hours of the day shall mean the official time in effect on
the date in question in the State of New Jersey.
b. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns, and legal
representatives.
c. Right to Assign. Neither party shall have the right to assign this
Agreement without the express written consent of the other party.
d. Captions of the sections of this Agreement are for convenience and
reference only, and the words contained shall not be held to modify, amplify,
or aid in the interpretation of the provisions of this Agreement.
e. This Contract may be executed in any number of counterparts, including
counterparts transmitted by telecopier or FAX, any one of which shall
constitute an original of this contract. When counterparts of facsimile
copies have been executed by all parties, they shall have the same effect as
if the signatures to each counterpart or copy were upon the same document and
copies of such documents shall be deemed valid as originals. The parties
agree that all such signatures may be transferred to a single document upon
the request of any party.
f. This Agreement shall be deemed to be an agreement made under the laws of
the State of New Jersey, and for all purposes it shall be construed in
accordance with and governed by the laws of the State of New Jersey.
g. No delay or failure by a party to exercise any right under this
Agreement, and no partial or single exercise of that right, shall constitute
a waiver of that or any other right, unless otherwise expressly provided
herein.
h. Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
i. This Agreement may not be and shall not be deemed or construed to have
been modified, amended, rescinded, cancelled, or waived in whole or in part,
except by a written instrument signed by the parties hereto.
j. This Agreement constitutes and expresses the entire agreement and
understanding between the parties hereto in reference to all the matters
referred to herein, and any previous discussions, promises, representations,
and understanding relative thereto are merged into the
terms of this Agreement and shall have no further force and effect.
AUDIOGENESIS SYSTEMS, INC.
By:
ALLSTATES AIR CARGO, INC.
By:
Joseph M. Guido
<PAGE>
EXHIBIT 10.07
EMPLOYMENT AGREEMENT
SAM DI GIRALOMO
EMPLOYMENT AGREEMENT
This Agreement is made this 24th day of August, 1999, between AUDIOGENESIS
SYSTEMS, INC. and ALLSTATES AIR CARGO, INC., both New Jersey corporations
(the "Company") and SAM DI GIRALOMO ("Executive").
WITNESSETH:
The parties, for and in consideration of the mutual and reciprocal covenants
and agreements contained in this document, do contract and agree as follows:
1. TERM
The Company shall employ Executive and Executive accepts such employment for
a term beginning on the date of this Agreement and ending on December 31,
2004, upon the terms and conditions set forth herein, unless earlier
terminated in accordance with the provisions herein. Notwithstanding the
foregoing, if this Agreement shall not have been terminated in accordance
with the provisions herein on or before December 31, 2004, the remaining term
of the Agreement shall be extended such that at each and every moment of time
thereafter, the remaining term shall be one year unless (a) the Agreement is
terminated earlier in accordance with the provisions herein or (b) on or
after January 1, 2004, the Board of Directors notifies Executive in writing
of its determination to have the date of this Agreement expire one year from
the date of such notification.
2. DUTIES
Executive shall be employed by Company as its President and Chief Executive
Officer. Executive shall report directly and solely to the Company's Board
of Directors ("Board"). Executive shall devote his full time and best
efforts to the Company. Company agrees to nominate Executive for election to
the Board as a member of the management slate at each annual meeting of
stockholders during his employment hereunder at which Executive's director
class comes up for election. Executive agrees to serve on the Board if
elected.
3. COMPENSATION
a. Salary. The minimum annual base salary payable to Executive upon
commencement of this Agreement shall be $208,000. Executive's base salary
shall increase each year (i) in accordance with any cost of living increase
or (ii) at the discretion of the Board, and the increase shall be the higher
of the two. Upon any such increase in Executive's base salary, such
increased amount shall thereafter constitute Executive's minimum annual base
salary for all purposes of this Agreement.
b. Bonus. Executive shall receive 3% of the increase of the Net Profit
before taxes from the fiscal year end 1998 to the fiscal year end 1999. This
bonus arrangement shall continue for Executive for each fiscal year up to and
including the last fiscal year within the term of this Agreement, including
any extensions as provided herein. The bonus shall be paid in cash to
Executive within 30 days of the completion of the Company's year end
certified financial statements. Executive shall have the right to defer up
to 75% of any amount due him with respect to the bonus.
c. Royalties. Executive shall continue to receive his royalty income
weekly from all existing Site Licensing Agreements. Furthermore, Executive
shall be a party to all future Site Licensing Agreements and continue to
receive his royalty income as provided for in each of the Site Licensing
Agreements. This Agreement shall in no way change any of the terms or
provisions of the Site Licensing Agreements of which Executive is party to.
d. Common Stock and Options. Executive shall be granted stock options in
accordance with the terms and conditions of the Company's Stock Option Plan.
The amount of stock options granted to Executive at any given time shall be
no less than 95% of the amount granted to any other individual, group, or
entity. In the event that Executive chooses to exercise any of his stock
options, the Company shall, to the extent permitted by law, make loans to
Executive for the amount of money needed to exercise such options and these
loans shall be paid back to the Company by Executive within 30 days after
Executive receives the revenues from the sale of stock. At the time that the
Company is permitted by law to do so, the Company shall register Executive's
shares pursuant to the appropriate form of registration statement under the
Securities Act of 1933 and shall maintain such registration statement's
effectiveness at all required times. The Company shall pay all costs related
to the registration of any and all common stock and or options for Executive.
e. Retirement. Executive shall have the right to participate in the
Company's 401(k) plan and to receive, to the fullest extent, all the benefits
of the plan.
f. Health and Life Insurance. Executive shall be enrolled in the Company's
health, dental, prescription, and life insurance plan. The Company shall
pay the premiums for Executive for such plans.
g. Disability. In the event that Executive should become disabled to the
extent of not being able to carry out his duties as described herein,
Executive shall be paid 75% of his base salary and all benefits for the full
term remaining of this Agreement. Disability shall be deemed to have
occurred if Executive makes application for disability benefits to the Board.
h. Use of Time. Executive shall use his sole discretion in deciding the
date, frequency, and length of time required for his personal use.
Executive shall continue to receive his full benefits and compensation during
this time.
i. Expense Reimbursements. Executive shall use his sole discretion with
respect to the purchase of any and all equipment and/or supplies that he
requires to perform his duties for the Company. The Company shall reimburse
in full Executive for any of these purchases within 10 days from the date
that Executive provides proof of purchase to the Company. In addition to
full reimbursement of all business related expenses, including but not
limited to meals, travel, lodging, auto fuel, tolls, auto insurance, motor
vehicle fees, phone charges, and credit card fees, Executive shall receive
$500. per month for use of auto.
j. Financial and Tax Advice. During (i) the Period of Employment, (ii) the
12-month period following the termination of the Period of Employment as a
result of Death, and (iii) the 3- year period following the voluntary
termination by Executive, the Company shall provide Executive (or, if
Executive shall have died, his estate) at the Company's expense, third-party
professional financial and tax advisory services, primarily oriented to
planning in light of Executive's entitlement to compensation and employee
benefits and appropriate in light of the financial circumstances of Executive
(or his estate).
4. TAX "GROSS-UP" PROVISION
If any payment or distribution by the Company, to or for the benefit of
Executive under this Agreement result in Executive's liability for an excise
tax ("parachute tax") under section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), the Company will pay to Executive, after
deducting any Federal, state or local income tax imposed on the payment, an
amount sufficient to fully satisfy the "parachute tax" liability, including
any interest or penalties with respect to such "parachute tax." Such
payment shall be made to Executive no later than 30 days prior to the due
date of the "parachute tax."
5. RESIDENCE
Executive shall use his sole discretion with respect to his place of
residence during the term of this Agreement.
6. LOCATION
Executive shall use his sole discretion with respect to executing his duties
at a location of his choice that Executive deems to be in the best interest
of the Company.
7. EXECUTIVE ASSISTANCE
Executive shall use his sole discretion, in hiring and firing, with respect
to the individual that shall assist Executive in the performance of his
duties on behalf of the Company. The Company shall fully compensate
Executive's assistant commensurate with the experience of the assistant.
This individual will report only and directly to Executive and perform
services exclusively for Executive. This individual will also oversee
shareholder relations, stock transfers, shareholder records, news releases,
and perform other shareholder functions required by a public company.
8. TERMINATION
This Agreement shall be terminated on the following terms:
a. Upon the death of Executive. In the event Executive dies while
receiving his base salary, his base salary shall continue to be paid, for a
period not to exceed the term of this Agreement, or for 3 years, whichever is
longer, to his designated beneficiary/beneficiaries or estate.
b. Upon Change of Control. "Change of Control" shall be deemed to have
occurred if at any time or from time to time after the date of this Agreement
any of the following events should occur:
I. 25% outside buy out
ii. Unapproved change in Board majority
iii. Sale, liquidation, or dissolution of the Company
iv. Merger or reorganization involving more than a 40% change in
shareholders
If, within 24 months following a Change of Control, as herein defined,
Executive voluntarily resigns or retires the termination shall be deemed to
be a "Change of Control Termination." In the event of a Change of Control
Termination, the Company shall pay to Executive a lump-sum payment of 299% of
Executive's average annual Base Salary and annual Bonus during the preceding
five-year period and all benefits as listed and described in Article 3 of
this Agreement (Compensation) and that these benefits shall continue for an
additional 5 year period. In the event that a Change of Control Termination
occurs before Executive completes 5 years of service, the lump-sum payment
will be valued at 299% of Executive's average annual Base Salary and annual
Bonus during all years of service. Additionally, any options and/or
restricted stock granted to Executive shall become fully vested and
registered, according to all state and federal regulations, as of the date of
Change of Control Termination. Provided further, Executive shall receive a
cash payment equal to the value of any options anticipated to be granted
within the 3 years following the Change of Control Termination. All the
provisions of Article 4 of this Agreement (Tax "Gross-Up" Provision) shall
apply to this section and to all other applicable sections throughout this
Agreement.
c. Cause. "Cause" shall mean (i) willful refusal by Executive to follow a
lawful written demand of the Board, (ii) Executive's willful and continued
failure to perform his duties under this Agreement (except due to Executive's
incapacity due to physical or mental illness) after a written demand is
delivered to Executive by the Board specifically identifying the manner in
which the Board believes that Executive has failed to perform his duties,
(iii) Executive's willful engagement in conduct materially injurious to the
Company. For purposes of clauses (i), (ii), and (iii) of this section, no
act, or failure to act on Executive's part shall be deemed "willful" unless
done, or omitted to be done, by Executive not in good faith and without
reasonable belief that Executive's act, or failure to act, was in the best
interests of the Company.
9. NON-COMPETE
Executive shall not willfully compete with the Company during the term of
this Agreement. Competing with the Company is defined as Executive being
willfully employed by a competitor of the Company during the term of this
Agreement.
10. SEVERANCE
If the Company breaches any of the terms of this Agreement or reduces
Executive's title or responsibilities below President/CEO, the Executive may,
at his option, decide to leave the Company and be paid severance pay equal to
100% of all items in Article 3 (Compensation) including all benefits for a
period of 5 years after Executive leaves the Company.
11. PAYMENT OF LEGAL FEES
The Company shall pay all legal fees for Executive should Executive become
involved in litigation, either criminal or civil, arising out of this
Agreement, Executive's duties, and/or the Company's business. Executive
shall have the sole right to choose the law firm that would represent him.
12. INDEMNIFICATION
The Company shall indemnify and hold harmless Executive from any and all
civil or criminal actions that may arise out of the Company's business
and/or Executive's duties on behalf of himself and the Company.
13. DISPUTE RESOLUTION
Any disputes, controversies or claims arising out of this Agreement shall be
settled by arbitration in New Jersey, under the rules of the American
Arbitration Association and paid for by the Company for both parties. The
parties shall select one arbitrator from the panel provided by the AAA, and
the arbitrator shall refer to the laws of New Jersey for interpretation and
enforcement of this Agreement. Judgment may be entered in any court having
jurisdiction to enforce the specific and final award or decision of the
arbitrator.
14. JURISDICTION
The Company and Executive agree to the jurisdiction and venue of the court in
the county of Ocean in the state of New Jersey. The parties also agree to
the jurisdiction and venue of the United States District Court for the
District of New Jersey with respect to any proceedings which may arise out of
this Agreement or its performance.
15. MISCELLANEOUS PROVISIONS
a. All notices, requests, and demands given to or made upon the parties
hereto shall, except as otherwise specified herein, be in writing and be
delivered by fax, express delivery, in person, or mailed to any such party at
the address of such party. Any party may, by notice hereunder to the other
party, designate a changed address for such party. Any notice, if faxed,
shall be deemed received upon confirmation of the receipt thereof; is sent by
express delivery, shall be deemed received upon delivery as set forth on the
express delivery receipt; if personally delivered, shall be deemed received
upon delivery; and if mailed properly addressed, postage prepaid, registered
or certified mail, shall be deemed dispatched on the registered date or that
stamped on the certified mail receipt, and shall be deemed received the fifth
business day thereafter, or when it is actually received, whichever is
sooner. Attempted delivery, in person or by express delivery at the correct
address, shall be deemed received on the date of such attempted delivery.
All references to hours of the day shall mean the official time in effect on
the date in question in the State of New Jersey.
b. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns, and legal
representatives.
c. Right to Assign. Neither party shall have the right to assign this
Agreement without the express written consent of the other party.
d. Captions of the sections of this Agreement are for convenience and
reference only, and the words contained shall not be held to modify, amplify,
or aid in the interpretation of the provisions of this Agreement.
e. This Contract may be executed in any number of counterparts, including
counterparts transmitted by telecopier or FAX, any one of which shall
constitute an original of this contract. When counterparts of facsimile
copies have been executed by all parties, they shall have the same effect as
if the signatures to each counterpart or copy were upon the same document and
copies of such documents shall be deemed valid as originals. The parties
agree that all such signatures may be transferred to a single document upon
the request of any party.
f. This Agreement shall be deemed to be an agreement made under the laws of
the State of New Jersey, and for all purposes it shall be construed in
accordance with and governed by the laws of the State of New Jersey.
g. No delay or failure by a party to exercise any right under this
Agreement, and no partial or single exercise of that right, shall constitute
a waiver of that or any other right, unless otherwise expressly provided
herein.
h. Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
i. This Agreement may not be and shall not be deemed or construed to have
been modified, amended, rescinded, cancelled, or waived in whole or in part,
except by a written instrument signed by the parties hereto.
j. This Agreement constitutes and expresses the entire agreement and
understanding between the parties hereto in reference to all the matters
referred to herein, and any previous discussions, promises, representations,
and understanding relative thereto are merged into the terms of this
Agreement and shall have no further force and effect.
AUDIOGENESIS SYSTEMS, INC.
By:
ALLSTATES AIR CARGO, INC.
By: Sam Di Giralomo
<PAGE>
EXHIBIT 10.08
EMPLOYMENT AGREEMENT
BARTON C. THEILE
EMPLOYMENT AGREEMENT
This Agreement is made this 24th day of August, 1999, between AUDIOGENESIS
SYSTEMS, INC. and ALLSTATES AIR CARGO, INC., both New Jersey corporations
(the "Company") and BARTON C. THEILE ("Executive").
WITNESSETH:
The parties, for and in consideration of the mutual and reciprocal covenants
and agreements contained in this document, do contract and agree as follows:
1. TERM
The Company shall employ Executive and Executive accepts such employment for
a term beginning on the date of this Agreement and ending on December 31,
2004, upon the terms and conditions set forth herein, unless earlier
terminated in accordance with the provisions herein. Notwithstanding the
foregoing, if this Agreement shall not have been terminated in accordance
with the provisions herein on or before December 31, 2004, the remaining term
of the Agreement shall be extended such that at each and every moment of time
thereafter, the remaining term shall be one year unless (a) the Agreement is
terminated earlier in accordance with the provisions herein or (b) on or
after January 1, 2004, the Board of Directors notifies Executive in writing
of its determination to have the date of this Agreement expire one year from
the date of such notification.
2. DUTIES
Executive shall be employed by Company as its Executive Vice President and
Chief Operating Officer. Executive shall report directly and solely to the
Company's Board of Directors ("Board"). Executive shall devote his full time
and best efforts to the Company. Company agrees to nominate Executive for
election to the Board as a member of the management slate at each annual
meeting of stockholders during his employment hereunder at which Executive's
director class comes up for election. Executive agrees to serve on the Board
if elected.
3. COMPENSATION
a. Salary. The minimum annual base salary payable to Executive upon
commencement of this Agreement shall be $207,922. Executive's base salary
shall increase each year (i) in accordance with any cost of living increase
or (ii) at the discretion of the Board, and the increase shall be the higher
of the two. Upon any such increase in Executive's base salary, such
increased amount shall thereafter constitute Executive's minimum annual base
salary for all purposes of this Agreement.
b. Bonus. Executive shall receive 3% of the increase of the Net Profit
before taxes from the fiscal year end 1998 to the fiscal year end 1999. This
bonus arrangement shall continue for Executive for each fiscal year up to and
including the last fiscal year within the term of this Agreement, including
any extensions as provided herein. The bonus shall be paid in cash to
Executive within 30 days of the completion of the Company's year end
certified financial statements. Executive shall have the right to defer up
to 75% of any amount due him with respect to the bonus.
c. Commissions. Executive shall continue to receive his commission income
from GTD Trucking Division. Executive shall continue to receive 33% of GTD's
profits after all expenses have been deducted.
d. Common Stock and Options. Executive shall be granted stock options in
accordance with the terms and conditions of the Company's Stock Option Plan.
The amount of stock options granted to Executive at any given time shall be
no less than 95% of the amount granted to any other individual, group, or
entity. In the event that Executive chooses to exercise any of his stock
options, the Company shall, to the extent permitted by law, make loans to
Executive for the amount of money needed to exercise such options and these
loans shall be paid back to the Company by Executive within 30 days after
Executive receives the revenues from the sale of stock. At the time that the
Company is permitted by law to do so, the Company shall register Executive's
shares pursuant to the appropriate form of registration statement under the
Securities Act of 1933 and shall maintain such registration statement's
effectiveness at all required times. The Company shall pay all costs related
to the registration of any and all common stock and or options for Executive.
e. Retirement. Executive shall have the right to participate in the
Company's 401(k) plan and to receive, to the fullest extent, all the benefits
of the plan.
f. Health and Life Insurance. Executive shall be enrolled in the Company's
health, dental, prescription, and life insurance plan. The Company shall
pay the premiums for Executive for such plans.
g. Disability. In the event that Executive should become disabled to the
extent of not being able to carry out his duties as described herein,
Executive shall be paid 75% of his base salary and all benefits for the full
term remaining of this Agreement. Disability shall be deemed to have
occurred if Executive makes application for disability benefits to the Board.
h. Use of Time. Executive shall use his sole discretion in deciding the
date, frequency, and length of time required for his personal use.
Executive shall continue to receive his full benefits and compensation during
this time.
i. Expense Reimbursements. Executive shall use his sole discretion with
respect to the purchase of any and all equipment and/or supplies that he
requires to perform his duties for the Company. The Company shall reimburse
in full Executive for any of these purchases within 10 days from the date
that Executive provides proof of purchase to the Company. In addition to
full reimbursement of all business related expenses, including but not
limited to meals, travel, lodging, auto fuel, tolls, auto insurance, motor
vehicle fees, phone charges, and credit card fees, Executive shall be
provided with an auto similar to Executive's current auto.
j. Financial and Tax Advice. During (i) the Period of Employment, (ii) the
12-month period following the termination of the Period of Employment as a
result of Death, and (iii) the 3- year period following the voluntary
termination by Executive, the Company shall provide Executive (or, if
Executive shall have died, his estate) at the Company's expense, third-party
professional financial and tax advisory services, primarily oriented to
planning in light of Executive's entitlement to compensation and employee
benefits and appropriate in light of the financial circumstances of Executive
(or his estate).
4. TAX "GROSS-UP" PROVISION
If any payment or distribution by the Company, to or for the benefit of
Executive under this Agreement result in Executive's liability for an excise
tax ("parachute tax") under section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), the Company will pay to Executive, after
deducting any Federal, state or local income tax imposed on the payment, an
amount sufficient to fully satisfy the "parachute tax" liability, including
any interest or penalties with respect to such "parachute tax." Such
payment shall be made to Executive no later than 30 days prior to the due
date of the "parachute tax."
5. RESIDENCE
Executive shall use his sole discretion with respect to his place of
residence during the term of this Agreement.
6. LOCATION
Executive shall use his sole discretion with respect to executing his duties
at a location of his choice that Executive deems to be in the best interest
of the Company.
7. EXECUTIVE ASSISTANCE
Executive shall use his sole discretion, in hiring and firing, with respect
to the individual that shall assist Executive in the performance of his
duties on behalf of the Company. The Company shall fully compensate
Executive's assistant commensurate with the experience of the assistant.
This individual will report only and directly to Executive and perform
services exclusively for Executive.
8. TERMINATION
This Agreement shall be terminated on the following terms:
a. Upon the death of Executive. In the event Executive dies while
receiving his base salary, his base salary shall continue to be paid, for a
period not to exceed the term of this Agreement, or for 3 years, whichever is
longer, to his designated beneficiary/beneficiaries or estate.
b. Upon Change of Control. "Change of Control" shall be deemed to have
occurred if at any time or from time to time after the date of this Agreement
any of the following events should occur:
i. 25% outside buy out
ii. Unapproved change in Board majority
iii. Sale, liquidation, or dissolution of the Company
iv. Merger or reorganization involving more than a 40% change in
shareholders
If, within 24 months following a Change of Control, as herein defined,
Executive voluntarily resigns or retires the termination shall be deemed to
be a "Change of Control Termination." In the event of a Change of Control
Termination, the Company shall pay to Executive a lump-sum payment of 299% of
Executive's average annual Base Salary and annual Bonus during the preceding
five-year period and all benefits as listed and described in Article 3 of
this Agreement (Compensation) and that these benefits shall continue for an
additional 5 year period. In the event that a Change of Control Termination
occurs before Executive completes 5 years of service, the lump-sum payment
will be valued at 299% of Executive's average annual Base Salary and annual
Bonus during all years of service. Additionally, any options and/or
restricted stock granted to Executive shall become fully vested and
registered, according to all state and federal regulations, as of the date of
Change of Control Termination. Provided further, Executive shall receive a
cash payment equal to the value of any options anticipated to be granted
within the 3 years following the Change of Control Termination. All the
provisions of Article 4 of this Agreement (Tax "Gross-Up" Provision) shall
apply to this section and to all other applicable sections throughout this
Agreement.
c. Cause. "Cause" shall mean (i) willful refusal by Executive to follow a
lawful written demand of the Board, (ii) Executive's willful and continued
failure to perform his duties under this Agreement (except due to Executive's
incapacity due to physical or mental illness) after a written demand is
delivered to Executive by the Board specifically identifying the manner in
which the Board believes that Executive has failed to perform his duties,
(iii) Executive's willful engagement in conduct materially injurious to the
Company. For purposes of clauses (i), (ii), and (iii) of this section, no
act, or failure to act on Executive's part shall be deemed "willful" unless
done, or omitted to be done, by Executive not in good faith and without
reasonable belief that Executive's act, or failure to act, was in the best
interests of the Company.
9. NON-COMPETE
Executive shall not willfully compete with the Company during the term of
this Agreement. Competing with the Company is defined as Executive being
willfully employed by a competitor of the Company during the term of this
Agreement.
10. SEVERANCE
If the Company breaches any of the terms of this Agreement or reduces
Executive's title or responsibilities below Executive Vice President/COO, the
Executive may, at his option, decide to leave the Company and be paid
severance pay equal to 100% of all items in Article 3 (Compensation)
including all benefits for a period of 5 years after Executive leaves the
Company.
11. PAYMENT OF LEGAL FEES
The Company shall pay all legal fees for Executive should Executive become
involved in litigation, either criminal or civil, arising out of this
Agreement, Executive's duties, and/or the Company's business. Executive
shall have the sole right to choose the law firm that would represent him.
12. INDEMNIFICATION
The Company shall indemnify and hold harmless Executive from any and all
civil or criminal actions that may arise out of the Company's business
and/or Executive's duties on behalf of himself and the Company.
13. DISPUTE RESOLUTION
Any disputes, controversies or claims arising out of this Agreement shall be
settled by arbitration in New Jersey, under the rules of the American
Arbitration Association and paid for by the Company for both parties. The
parties shall select one arbitrator from the panel provided by the AAA, and
the arbitrator shall refer to the laws of New Jersey for interpretation and
enforcement of this Agreement. Judgment may be entered in any court having
jurisdiction to enforce the specific and final award or decision of the
arbitrator.
14. JURISDICTION
The Company and Executive agree to the jurisdiction and venue of the court in
the county of Ocean in the state of New Jersey. The parties also agree to
the jurisdiction and venue of the United States District Court for the
District of New Jersey with respect to any proceedings which may arise out of
this Agreement or its performance.
15. MISCELLANEOUS PROVISIONS
a. All notices, requests, and demands given to or made upon the parties
hereto shall, except as otherwise specified herein, be in writing and be
delivered by fax, express delivery, in person, or mailed to any such party at
the address of such party. Any party may, by notice hereunder to the other
party, designate a changed address for such party. Any notice, if faxed,
shall be deemed received upon confirmation of the receipt thereof; is sent by
express delivery, shall be deemed received upon delivery as set forth on the
express delivery receipt; if personally delivered, shall be deemed received
upon delivery; and if mailed properly addressed, postage prepaid, registered
or certified mail, shall be deemed dispatched on the registered date or that
stamped on the certified mail receipt, and shall be deemed received the fifth
business day thereafter, or when it is actually received, whichever is
sooner. Attempted delivery, in person or by express delivery at the correct
address, shall be deemed received on the date of such attempted delivery.
All references to hours of the day shall mean the official time in effect on
the date in question in the State of New Jersey.
b. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns, and legal
representatives.
c. Right to Assign. Neither party shall have the right to assign this
Agreement without the express written consent of the other party.
d. Captions of the sections of this Agreement are for convenience and
reference only, and the words contained shall not be held to modify, amplify,
or aid in the interpretation of the provisions of this Agreement.
e. This Contract may be executed in any number of counterparts, including
counterparts transmitted by telecopier or FAX, any one of which shall
constitute an original of this contract. When counterparts of facsimile
copies have been executed by all parties, they shall have the same effect as
if the signatures to each counterpart or copy were upon the same document and
copies of such documents shall be deemed valid as originals. The parties
agree that all such signatures may be transferred to a single document upon
the request of any party.
f. This Agreement shall be deemed to be an agreement made under the laws of
the State of New Jersey, and for all purposes it shall be construed in
accordance with and governed by the laws of the State of New Jersey.
g. No delay or failure by a party to exercise any right under this
Agreement, and no partial or single exercise of that right, shall constitute
a waiver of that or any other right, unless otherwise expressly provided
herein.
h. Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
i. This Agreement may not be and shall not be deemed or construed to have
been modified, amended, rescinded, cancelled, or waived in whole or in part,
except by a written instrument signed by the parties hereto.
j. This Agreement constitutes and expresses the entire agreement and
understanding between the parties hereto in reference to all the matters
referred to herein, and any previous discussions, promises, representations,
and understanding relative thereto are merged into the
terms of this Agreement and shall have no further force and effect.
AUDIOGENESIS SYSTEMS, INC.
By:
ALLSTATES AIR CARGO, INC.
By: Barton C. Theile
