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EXHIBIT 10.05 ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 1999
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of February 1,
1999 (the "Effective Date") between AmeriQuest Technologies, Inc., a Delaware
corporation with its principal offices located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ 19090 ("Company"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, a resident of Georgia
("Employee").
In consideration of the promises and the terms and conditions set forth in this
Agreement, the parties agree as follows:
1. POSITION. During the term of this Agreement, Company will employ
Employee, and Employee will serve Company as the Company's Vice
President, Sales and Marketing and as an Officer of the Company.
Employee will report directly to the Chief Executive Officer.
2. DUTIES. Employee will serve Company in such capacities and with such
duties and responsibilities as the Chief Executive Officer of Company
may from time to time determine. Employee will be bound by Company'
operating policies, procedures, and practices from time to time in
effect during Employee's employment. Employee will perform his duties
under this Agreement at the offices of Company, provided, that Employee
may be required to do extensive traveling in connection with the
performance of his duties hereunder. Employee hereby represents and
warrants that he is free to enter into and fully perform this Agreement
and the agreements referred to herein without breach of any agreement
or contract to which he is a party or by which he is bound.
3. EXCLUSIVE SERVICE. During his employment with Company, ▇▇▇▇▇▇▇▇ will
devote his full time and efforts exclusively to this employment and all
his skill and experience to the performance of his duties and advancing
of the Company's interests in accordance with Employee's experience and
skills. In addition, during his employment with Company, Employee will
not engage in any consulting activity except with the prior written
approval of the Company or at the direction of Company, and Employee
will otherwise do nothing inconsistent with the performance of his
duties hereunder.
4. OBLIGATION NOT TO COMPETE. Employee hereby agrees that while he is
employed by Company (the "Restricted Period"), Employee shall within
the territory of the United States not engage in or provide services to
any business that is competitive with or detrimental to any present or
contemplated business of Company known to Employee. Employee also
agrees that, during the Restricted Period, he shall not in any manner
attempt to induce or assist others to attempt to induce any customer or
client of Company to terminate his association with Company, nor do
anything directly or indirectly to interfere with the relationship
between Company and any such persons or concerns in the territory of
the United States. Each of the following activities shall, without
limitation, be
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deemed to constitute engaging in business within the meaning of Section
3 and 4: to engage in, work with, have an interest or concern in,
advise, lend money to, guarantee the debts or obligations of, or permit
one's name or any party thereof to be used in connection with, an
enterprise of endeavor, either individually, in partnership or in
conjunction with any person or persons, firms, associations, companies
or corporations, whether as a principal, agent, shareholder, employee,
officer, director, partner, consultant or in any other manner
whatsoever; provided, however, that Employee shall retain the right to
invest in or have an interest in entities traded on any public market
or offered by any national brokerage house, provided that said interest
does not exceed ten percent (10%) of the voting control of said entity.
In addition, Employee may make passive investments in privately held
entities that are determined by the Board of Directors of Company not
to be competitors of Company. Company may elect to extend the term of
this non-competition clause for a maximum period of six months
following the termination according to Section 8.1. (b) and 8.1. (c)
provided that a monthly fee in the amount of the last applicable
monthly base salary is paid to Employee.
5. TERM OF AGREEMENT. This Agreement will commence on the Effective Date,
and will continue for a period of twelve (12) months and thereafter
unless terminated pursuant to Section 8 thereof.
6. COMPENSATION AND BENEFITS.
6.1. BASE SALARY. Company agrees to pay Employee a base salary of
$5,769 bi-weekly (or $150,000 annualized). Employee's salary
will be payable as earned in accordance with Company'
customary payroll practice.
6.2. PERFORMANCE BONUS. - Employee will be eligible to earn a bonus
of up to $150,000 (the "Performance Bonus") annually during
his employment with Company. The performance criteria and
terms and conditions relative to the Performance Bonus shall
be in accordance with the attached "Incentive Plan"
(Attachment 1).
6.3. ADDITIONAL BENEFITS. Employee will be eligible to participate
in Company's employee benefit plans of general application,
including without limitation those plans covering profit
sharing, executive bonuses, stock options, and those plans
covering life, health, an dental insurance in accordance with
the rules established for individual participation in any such
plan and applicable law. Employee shall receive such other
benefits, including vacation, holidays, and sick leave, as
Company generally provides to its employee holding similar
positions as that of Employee.
6.4. VACATION. Four (4) weeks.
6.5. EXPENSES. Company will reimburse Employee for all reasonable
and necessary expenses incurred by Employee in connection with
Company's business, provided that such expenses are deductible
to Company, are in
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accordance with Company's applicable policy and are properly
documented and accounted for in accordance with the
requirements of the Internal Revenue Service.
7. PROPRIETARY RIGHTS. Employee hereby agrees to execute an Employee
Confidentiality Agreement with Company in substantially the form
attached hereto as Attachment 2.
8. TERMINATION.
8.1 EVENTS OF TERMINATION. Employee's employment with the Company
shall terminate upon any one of the following:
a) the Company's determination made in good faith that
it is terminating Employee for "cause" as defined
under Section 8.2 below ("Termination for Cause");
b) six months after the effective date of a written
notice sent to Employee stating that Company is
terminating his employment, without cause, which
notice can be given by Company at any time after the
Effective Date at Company's sole discretion, for any
reason or for no reason; or
c) six months after the effective date of a written
notice sent to Company from Employee stating that
Employee is electing to terminate his employment with
Company.
d) If a change of control occurs and the employee's
responsibilities are reduced within the following
twelve (12) months thereafter. This termination on
the part of the employee must be effected within six
(6) months of the significant reduction in
responsibilities. A "change in control" is deemed to
have taken place when any of the following events
occurs: (1) shareholder approval of a merger or
consolidation of the Company with any other
corporation resulting in a change in fifty percent
(50%) or more of the total voting power of the
Company; (2) shareholder approval of a plan of
complete liquidation of the Company or an agreement
for the sale or disposition of all or substantially
all of the Company assets; or (3) any person becomes
the beneficial owner of more than fifty percent (50%)
of the Company's total outstanding securities); and
such reduction in responsibilities is not for cause.
Any resignation of employment by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
as a consequence of such reduction in
responsibilities will be treated as a termination of
employment without cause.
8.2 "CAUSE" DEFINED. For purposes of this Agreement, "cause" for
Employee's termination will exist any time after the happening
of one or more of the following events;
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a) a failure or refusal to comply in any material
respect with the reasonable policies, standards or
regulations of the Company;
b) a failure or a refusal in any material respect,
faithfully or diligently, to perform his duties
determined by the Company in accordance with this
Agreement or the customary duties of Employee's
employment;
c) unprofessional, unethical or fraudulent conduct or
conduct that materially discredits the Company or is
materially detrimental to the reputation, character
or standing of the Company;
d) dishonest conduct or a deliberate attempt to do an
injury to the Company;
e) Employee's material breach of a term of this
Agreement;
f) an unlawful or criminal act which would reflect badly
on the Company in the Company's reasonable judgment;
or
g) employee's death.
9. EFFECT OF TERMINATION.
9.1 TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION. In the event
of any termination of this Agreement pursuant to Sections
8.1(a) or 8.1( c), the Company shall pay Employee the
compensation and benefits otherwise payable to Employee under
Section 6 through the effective date of termination.
Employee's rights under the Company's benefit plans of general
application shall be determined under the provisions of those
plans.
9.2 TERMINATION WITHOUT CAUSE. In the event of any termination of
this Agreement pursuant to Section 8.1(b), the Company shall
pay Employee the compensation and benefits according to
Section 6 through the last day of the six (6) months period
following the effective date that the notice referred to in
Section 8.1(b) is given.
9.3 TERMINATION WITHOUT CAUSE DUE TO CHANGE IN CONTROL. In the
event of any termination of this Agreement pursuant to Section
8.1(d), the Company shall pay Employee the compensation and
benefits according to Section 6 through the last day of the
twelve (12) months period following the date that the notice
referred to in Section 8.1(d) is given.
10. MISCELLANEOUS.
10.1 ARBITRATION. Employee and Company shall submit to mandatory
binding arbitration in any controversy or claim arising out
of, or relating to, this Agreement or any breach hereof,
provided, however, that Company retains its right to, and
shall not be prohibited, limited or in any other way
restricted from, seeking or obtaining equitable relief from a
court having jurisdiction over the parties. Such arbitration
shall be conducted in accordance with the commercial
arbitration rules of the American Arbitration Association in
effect at that time, and judgment upon the determination or
award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.
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10.2 SEVERABILITY. If any provision of this Agreement shall be
found by any arbitrator or court of competent jurisdiction to
be invalid or unenforceable, then the parties hereby waive
such provision to the extent that it is found to be invalid or
unenforceable and to the extent that do so would not deprive
one of the parties of the substantial benefit of its bargain.
Such provision shall, to the extent allowable by the law and
the preceding sentence be modified by such arbitrator or court
so that it becomes enforceable and, as modified, shall be
enforced as any other provision hereof, all the other
provisions continuing in full force and effect.
10.3. REMEDIES. Company and Employee acknowledge that the service to
be provided by Employee is of a special, unique, unusual,
extraordinary, and intellectual character, which give it
peculiar value the loss of which cannot be reasonably or
adequately compensated in damages in an action at law.
Accordingly, Employee hereby consents and agrees that for any
breach or violation by Employee of any of the provisions of
this Agreement including, without limitation, Section3, a
restraining order and/or injunction may be issued against
Employee, in addition to any other rights and remedies Company
may have, at law equity, including without limitation the
recovery of money damages.
10.4. NO WAIVER. The failure by either party at any time to require
performance or compliance by the other of any of its
obligations or agreements shall in no way affect the right to
require such performance or compliance at any time thereafter.
The waiver by either party of a breach of such provision
hereof shall not be taken or held to be a waiver or any
preceding or succeeding breach of such provision or as a
waiver of the provision itself. No waiver of any kind shall be
effective or binding, unless it is in writing and is signed by
the party against whom such waiver is sought to be enforced.
10.5. ASSIGNMENT. This Agreement and all rights hereunder are
personal to Employee and may not be transferred or assigned by
Employee at any time. Company may assign its rights, together
with its obligations thereunder, to any parent, subsidiary
affiliate or successor or in connection with any sale,
transfer or other disposition of all or substantially all of
its business and assets, provided, however, that any such
assignee assumes Company's obligations hereunder.
10.6 WITHHOLDING. All sums payable to Employee thereunder shall be
reduced by all federal, state, local, and other withholding
and similar taxes and payments required by applicable law.
10.7 ENTIRE AGREEMENT. This Agreement and the Employee
Confidentiality Agreement constitute the entire and only
agreements between the parties relating to employment of
Employee with Company, and this Agreement
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supersedes and cancels any and all previous contracts,
arrangements or understandings with respect thereto.
10.8 AMENDMENT. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended only by an
agreement in writing executed by both parties hereto.
10.9 NOTICES. All notices and other communications required or
permitted under this Agreement shall be in writing and
hand-delivered, sent by Fax, sent by certified first-class
mail, postage pre-paid, or sent by nationally recognized
express courier service. Such notices and other communications
shall be effective upon receipt if hand-delivered or sent by
Fax, five (5) days after mailing if sent by mail, and one (1)
day after dispatch if sent by express courier, to the
following address, or such other addresses as any party shall
notify the other parties:
If to the Company: AmeriQuest Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇. ▇▇▇▇▇▇
Corporate Secretary
If to the Employee: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
10.10 BINDING NATURE. This Agreement shall be binding upon, and
inure to the benefit of the successors and personal
representatives of the respective parties hereto.
10.11 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall in no way affect the meaning
or interpretation of this Agreement. In this Agreement, the
singular includes the plural, the plural includes the
singular, the masculine gender includes both male and female
referents, and the word "or" is used in the inclusive sense.
10.12 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original
but all of which, taken together, constitute one and the same
agreement.
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10.13 GOVERNING LAW. This Agreement and rights and obligations of
the parties hereto shall be construed in accordance with the
laws of the State of Pennsylvania, without giving effect to
the principles of conflict of laws.
IN WITNESS WHEREOF, Company and Employee have executed this Agreement as of the
date first above written.
"COMPANY" "EMPLOYEE"
AMERIQUEST TECHNOLOGIES, INC.
Signature: Signature
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: COO, CFO and Secretary Title: V. P., Sales and Marketing
Signature:
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Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and CEO
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"INCENTIVE PLAN"
(ATTACHMENT 1)
1) The Employee shall be entitled to a payment under the Incentive Plan for
the financial year commencing 1st October, 1998 ("the incentive scheme")
calculated in accordance with and subject to the conditions set out below
("the incentive payments"). The incentive payments shall comprise the
variable compensation parts determined in accordance with paragraph 4.
Subject to paragraph 3 below, the achievements shall form the basis of the
calculation of the variable compensation parts. All references in this
incentive scheme are to gross figures. The Compensation Committee of the
Board of Directors of AmeriQuest Technologies ("the Committee") reserves
the right in its absolute discretion to change the base salary and variable
compensation parts for future years and/or to terminate the incentive
scheme at the end of the fiscal year commencing October 1, 1998.
2) The following incentive scheme applies for the fiscal year ended September
30, 1999:
a) The TARGET COMPENSATION (100% compensation) amounts to
US$300,000.
b) 50% of the target compensation (US$150,000) is fixed as the
BASE SALARY which is payable bi-weekly.
c) The MAXIMUM COMPENSATION amounts to 100% of the target
compensation.
d) The variable compensation parts are:
i) Target Incentive: up to 50% of the target
compensation, depending on the achievement of the
targets in paragraph 3b.
3) Basis for calculation: The targets for the 1999 fiscal year and the weights
of the individual targets are quantified below. The target achievement will
be calculated for each individual target. The total target achievement will
be calculated, depending on the given weights.
a) The TARGETS for the 1999 fiscal year are:
i) REVENUE target for the year ended September 30, 1999
= US$80,000,000.
(1) SIX MONTH CUMULATIVE target for the quarter
ended March 31=$37,600,000.
(2) NINE MONTH CUMULATIVE target for the quarter
ended June 30 = $58,200,000.
ii) GROSS PROFIT target for the year ended September 30,
1999 = US$7,200,000.
(1) SIX MONTH CUMULATIVE target for the quarter
ended March 31=$3,300,000.
(2) NINE MONTH CUMULATIVE target for the quarter
ended June 30 = $5,100,000.
b) The WEIGHTING of each target in 3a above is 50% equally.
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c) The audited financial statements of the Company will form the
basis of the actual target achievement ("the calculation").
The Committee may, in its absolute discretion, exclude
extraordinary events from the calculation.
4) The variable compensation parts will be determined by comparing the actual
cumulative quarterly target achievement referred to at paragraph 3d above
with the cumulative quarterly targets shown in paragraph 3a. Any incentive
payments for the fiscal year 1999 shall comprise the following parts and
each shall be determined as follows:
a) If the total target achievement is less than 65%, no incentive
payment will be made, except that, a minimum payment of
$25,000 is guaranteed and payable for the quarter ended March
31, 1999 in accordance with paragraph 6.
b) If the total target achievement is more than 65% but less than
90%, the incentive payment will be US$5,000 for each
percentage point above 65%, but not less than the minimum
guaranteed payment of $25,000 in 4a above (equal to 70%
achievement).
c) If the total target achievement is between 90% and 100%, the
incentive payment will be $125,00 plus US$2,500 for each
percentage point above 90%.
5) In the event that the Employee shall be employed by the Company for only
part of the remainder of the fiscal year, the Employee shall be entitled to
have the incentive payments referred to at paragraph 4 above calculated on
a pro rata basis by reference to that part of the fiscal year during which
he/she was employed by the Company.
6) The variable compensation part will be calculated quarterly by the Chief
Financial Officer and approved by the Committee.
a) For 1999 only, one third of the above paragraph 4 determined
incentive payment or $25,000, whichever is greater, will be
made for the quarter ended March 31. Two thirds of the above
paragraph 4 determined incentive payment less the previous
quarterly payment, will be made for the quarter ended June 30.
All of the above paragraph 4 determined incentive less the
previous quarterly payments, will be made for the year ended
September 30.
b) In future fiscal years, 25%, 50%, 75% and 100% of the above
paragraph 4 determined incentive less the previous quarterly
payments, will be made for the respective quarters.
c) They becomes payable to the Employee on the first bi-weekly
pay period following approval by the Committee.
7) In the event there is disagreement as to the calculation of the variable
compensation parts, the parties will try to come to an amicable solution.
Should such an amicable solution not be possible, the decision of the
outside auditor of the Company will be final and binding.