EMPLOYMENT AGREEMENT
This Agreement is made this 6th day of June, 2005, between
ALLSTATES WORLD CARGO, INC., and ALLSTATES AIR CARGO, INC., both
New Jersey corporations (the "Company") and CRAIG D. STRATTON
("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, 2009, 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,
2009, 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 December 1, 2009, the Board of Directors notifies Executive
in writing of its determination to have this Agreement expire one
year from the date of such notification.
2. Duties
Executive shall be employed by the Company as an officer of
the Company as its Chief Financial Officer. Executive shall
report directly and solely to the Board of Directors. Executive
shall, except during periods of vacation, sick leave, disability,
personal time, or other duly authorized leaves of absence, devote
his full time and best efforts to the Company. The duties of the
Chief Financial Officer shall be limited to those generally
performed by a Chief Financial Officer.
3. Compensation
a. Salary. The minimum annual base salary payable to
Executive upon commencement of this Agreement shall be $185,000.
Said salary shall be paid in bi-weekly installments. Executive's
base salary shall increase each year at the anniversary date of
the Agreement, at the discretion of the Board and in proportion
to the other Executives, including the Chairman, President, Chief
Executive Officer, Executive Vice President and Chief Financial
Officer. 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. 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
greatest amount granted to any other individual, group, or entity
unless decided otherwise by the majority of the Board. 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, and the Executive so demands, the
Company shall register so much of Executive's shares as demanded,
pursuant to the appropriate form of registration statement under
the Securities Act of 1933 and shall maintain such registration
statement's effectiveness at all times required by the Executive.
The Company shall pay all costs related to the registration of
any and all common stock or options for Executive.
c 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.
d. Health and Life Insurance. During the Term and all
extensions thereof, Executive shall be enrolled in any welfare
benefit plan or program (including, without limitation, the
Company's health, medical, dental, prescription, disability, and
life insurance plan, and business travel insurance plans and
programs), as the Company may, from time to time, make available
generally to executive employees of the Company. The Company
shall pay the premiums for Executive for such plans and programs.
With respect to health, medical, dental and prescription
insurance, Executive shall be entitled to enroll for family
coverage to cover his immediate family, and the Company shall pay
the premiums therefor.
e. 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 Company benefits for the full term remaining of
this Agreement. Disability shall be deemed to have occurred if
Executive, in his sole discretion, makes application for
disability benefits to the Board.
f. 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.
g. Expense Reimbursements. Executive shall use his sole
discretion with respect to all business related expenses,
including but not limited 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 Executive , in
full, for any and all 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 $600 per
month for use of auto, payable monthly.
h. Financial and Tax Advice. During (i) the term of this
Agreement, as extended, (ii) the 12-month period following the
termination of the Agreement as a result of Death, and (iii) the
5-year period following a Change of Control Termination or a
Without Cause Termination, as those terms are defined
hereinbelow, 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 financial circumstances of Executive (or his estate).
The Executive (or his estate) shall have the sole right to choose
such professional advisor.
4. Tax "Gross-Up" Provision
If any payment or distribution by the Company, to or for the
benefit of Executive under this Agreement results 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. The
Company shall reimburse Executive for the cost of shipping and
installation of business related office equipment and services.
6. Location
Executive shall use his sole discretion with respect to
executing his duties at a location of his choice.
7. Termination
This Agreement shall be terminated on the following terms:
a. Upon the death of Executive.
i. In the event Executive dies during the term of
the Agreement or any extensions thereof, then for the
longer of (a) the remaining term of the Agreement, as
extended, or (b) 3 years (the "Succession Period)" the
Company shall continue to pay Executive's then current
Base Salary to Executive's designated
beneficiary/beneficiaries or estate (collectively, the
"Successor"), in the same bi-weekly installments as
when Executive was alive. Further, the Company shall
provide and pay for health, medical, prescription, and
dental insurance for Executive's surviving immediate
family during the Succession Period, equivalent to, or
better than, the coverage that was available at the
time of Executive's death. (For the purpose of the
foregoing, "immediate family" means those members of
Executive's family that would be entitled to coverage
if Executive were alive and enrolled for "family
coverage.") All of the provisions of Article 3h
(Financial and Tax Advice) shall apply to this section
to all other applicable sections throughout this
Agreement. (All of the foregoing shall be referred
to as the "Death Benefit").
ii. If at any time during the Succession Period the
Company fails to pay or provide any part of the Death
Benefit, without reservation of rights, the Succession
Period shall be suspended, and shall not begin running
again until the question of the Successor's rights
with respect to said Death Benefit is resolved
(including any and all appeals);
iii. The Company recognizes and acknowledges that the
Successor will suffer irreparable harm if the Company
fails to pay or provide any part of the Death Benefit.
Therefore, until the question of Successor's rights
with respect to the Death Benefit is finally resolved
(including any appeals) (during which conflict the
Succession Period is suspended as provided above), the
Successor shall be entitled to a preliminary mandatory
injunction requiring the Company to make payments
equal to the amount of such periodic payments, or to
provide benefits equal in nature to such benefit(s),
as this Agreement provides, to the Successor, without
the necessity of proving the traditional elements of
such an injunction;
iv. The Successor shall not be required under any
circumstance to return any payments received, or to
provide compensation for any benefit received, while
the Succession Period is suspended;
v. Any final judgment that the Successor may obtain
that determines that the Successor is entitled to any
or all of the Death Benefit shall provide (a) that the
running of the Succession Period shall resume from the
time it was suspended, (b) require the Company, by way
of permanent injunction, to make such payments, and
provide such benefits, as are required by the
judgment, and (c) provide that in the event the
Company fails to make any required periodic payment,
or provide any benefit, as provided in the judgment,
the total of the remaining payments shall become
immediately due and payable, and shall, along with the
required benefits, be subject to enforcement by way of
motion in aid of litigant's rights, and that the
outstanding balance shall bear interest at the higher
of seven percent per annum, or the statutory interest
rate on judgments. Anything to the contrary
notwithstanding, the Succession Period shall be
suspended during any period that the Company fails to
pay or provide any payment or benefit required by the
Judgment.
vi. In the event of litigation, arbitration, or other
proceeding, in which the Company contends that the
Successor is not entitled to receive any or all of the
Death Benefit, the Company must prove all of the
elements of its claim by a standard of clear and
convincing evidence.
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). An acquisition by a third party of 25% or more
of the Company's stock, that Executive does not
approve;
ii). A change in the majority of the Board, that
Executive does not approve;
iii).An approval by the Board or the shareholders of
the Company of an agreement for the sale or
disposition of all or substantially all of the
assets of the Company, that Executive does not
approve;
iv).An approval by the Board or the shareholders of
the Company to liquidate or dissolve the Company,
that Executive does not approve;
v).An approval by the Board or the shareholders of
the Company of a merger or similar combination
following which a vote of 40% of the shares entitled
to vote prior to the merger does not control the
surviving entity;
For the purposes of this provision, Executive shall not be
deemed to have "approved" any of the foregoing unless such
"approval" is in writing, and delivered to the Board of
Directors. If, within 24 months following a Change of
Control, as herein defined, Executive voluntarily resigns or
retires, the resignation or retirement shall be deemed to be
a "Change of Control Termination."
In the event of a Change of Control Termination:
i) The Company shall pay to Executive (a) no later
than the next scheduled bi-weekly payday, all
compensation and benefits due to him up to the date
of his termination, including but not limited to
Base Salary and Expense Reimbursement, and (b)
within one month of said termination a lump-sum
payment equal to 299% of Executive's then current
Base Salary, of Executive's Bonus for the fiscal
year end 2004, and of the amount reimbursed to
Executive for business-related expenses (limited to
auto fuel, tolls, auto insurance, motor vehicle
fees, and auto allowance) for the calendar year
preceding the termination. 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. Executive shall
have the right to exercise all of his options for a
period of five years from the date of the
termination. Additionally, the benefits set forth
in Article 3d hereof ("Health and Life Insurance")
shall continue for a period of five years from the
date of termination, which benefits shall be
equivalent to or better than those in effect during
fiscal year 2004. To the extent the Executive
(and/or his family, as applicable) shall not be
eligible for inclusion in any benefit plan or
program referred to in Article 3d ("Health and Life
Insurance") because he is no longer employed by the
Company, then the Company shall provide and pay for
such benefits equivalent to, or better than, the
coverage that was available during at the time of
Executive's termination. All of the provisions of
Article 4 of this Agreement (Tax "Gross-Up"
Provision), and Article 3h (Financial and Tax
Advice) shall apply to this section and to all other
applicable sections throughout this Agreement. All
of the foregoing shall be referred to as "Change of
Control Termination Compensation."
ii) If at any time during the five year period
the Company shall fail to make any payment or
provide any benefit required during that period, the
five year period shall be suspended, and shall not
begin running again until the question of
Executive's rights with respect to said benefits is
resolved (including any appeals).
iii) The Company recognizes and acknowledges that
the Executive will suffer irreparable harm if the
Company fails to pay or provide such Change of
Control Termination Compensation, without
reservation of rights. Therefore, until the
question of Executive's rights with respect to such
Change of Control Termination Compensation is
finally resolved (including any and all appeals)
(during which conflict the five year period is
suspended as provided above), and/or until all such
Change of Control Termination Compensation is paid
or provided in full, the Executive shall be entitled
to a preliminary mandatory injunction requiring the
Company to continue to pay Executive's base salary
(at the same bi-weekly rate), and to continue all
employment benefits to which Executive is entitled
hereunder, as if he had not resigned or retired,
without the necessity of proving the traditional
elements of such an injunction.
iv) The Executive shall not be required to return
any payments received, or to provide compensation
for any benefit received, during the determination
of Executive's rights.
v) Any final judgment that the Executor may obtain
that determines that he is entitled to any or all of
the Change of Control Termination Compensation shall
(a) require the Company, by way of permanent
injunction, to make such payments, and provide such
benefits, as are required by the judgment, (b)
provide that in the event the Company fails to make
any required payment, or provide any benefit, as
provided in the judgment, the Company's obligation
to do so shall be subject to enforcement by way of
motion in aid of litigant's rights, and (c) provide
that the outstanding balance shall bear interest at
the higher of seven percent per annum, or the
statutory interest rate on judgments. Anything to
the contrary notwithstanding, the five year period
shall be suspended during any period that the
Company fails to pay or provide any payment or
benefit required by the Judgment.
vi) In the event of litigation, arbitration, or
other proceeding, in which the Company contends that
Executive is not entitled to receive such Change of
Control Termination Compensation, the Company must
prove all of the elements of its claim by a standard
of clear and convincing evidence.
c. For Cause.
i. "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 purpose of the foregoing, 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. A termination for
Cause shall be deemed a "For Cause Termination."
i) In the event of a For Cause Termination, the
Company shall pay to Executive, no later than the
next scheduled bi-weekly payday, all compensation
and benefits due to him up to the date of his
termination, including but not limited to Base
Salary and Expense Reimbursement. All of the
foregoing shall be referred to as "For Cause
Termination Compensation."
ii) The Company recognizes and acknowledges that
the Executive will suffer irreparable harm if the
Company fails to pay such For Cause Termination
Compensation, without reservation of rights.
Therefore, until the question of Executive's rights
with respect to such For Cause Termination
Compensation is finally resolved (including any and
all appeals), and/or until all such For Cause
Termination Compensation is paid in full, the
Executive shall be entitled to a preliminary
mandatory injunction requiring the Company to
continue to pay Executive's base salary (at the same
bi-weekly rate), and to continue all employment
benefits to which Executive is entitled hereunder,
as if he had not been terminated, without the
necessity of proving the traditional elements of
such an injunction.
iii) The Executive shall not be required to return
any payments received during the determination of
Executive's rights.
iv) Any final judgment that the Executor may
obtain that determines that he is entitled to any or
all of the For Cause Termination Compensation shall
(a) require the Company, by way of permanent
injunction, to make such payments, and provide such
benefits, as are required by the judgment, (b)
provide that in the event the Company fails to make
any required payment, or provide any benefit, as
provided in the judgment, the Company's obligation
to do so shall be subject to enforcement by way of
motion in aid of litigant's rights, and (c) provide
that the outstanding balance shall bear interest at
the higher of seven percent per annum, or the
statutory interest rate on judgments.
v) In the event of litigation, arbitration, or
other proceeding, in which the Company contends that
Executive was terminated for Cause, the Company must
prove all of the elements of its claim by a standard
of clear and convincing evidence.
d. Without Cause. A termination that is neither a Change
of Control Termination, a For Cause Termination, is due to
Executive's death, nor a termination by Executive as provided
hereinbelow, is a "Without Cause Termination." In the event of a
Without Cause Termination, Executive shall be entitled to, and
the Company shall pay and provide, such compensation that is
equal to the Change of Control Termination Compensation provided
for herein as if there had been a Change of Control Termination,
and shall do so for the same time periods. Executive shall be
entitled to all of the remedies and protections he would have as
if there had been a Change of Control Termination. Article 4 of
this Agreement (Tax "Gross-Up" Provision) and Article 3h
(Financial and Tax Advice) shall apply to this section and to all
other applicable sections throughout this Agreement.
8. Termination by Executive
At any time after 180 days have elapsed from the date of
this Agreement, Executive shall have the right to terminate this
Agreement on 90 days written notice to the Company. In the event
of such termination, Executive shall be entitled to, and the
Company shall pay, such compensation that is equal to the For
Cause Termination Compensation provided herein as if there had
been a For Cause Termination. Executive shall be entitled to all
of the remedies he would have as if there had been a For Cause
Termination.
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 material term of this Agreement
or reduces Executive's title or responsibilities (as defined in
Article 2 hereinabove) below Chief Financial Officer, the
Executive may, at his option, elect to leave the Company, in
which case he shall be entitled to, and the Company shall pay and
provide, all of benefits and all of the Change of Control
Termination Compensation provided for herein as if there had been
a Change of Control Termination, provided, however, that the lump
sum payment to be paid to the Executive shall be 100% (and not
400%) of Executive's Base Salary and Bonus. Executive shall be
entitled to all of the remedies and protections he would have as
if there had been a Change of Control Termination. Article 4 of
this Agreement (Tax "Gross-Up" Provision) and Article 3h
(Financial and Tax Advice) shall apply to this section and to all
other applicable sections throughout this Agreement.
11. Payment of Legal Fees
The Company shall pay all legal fees for Executive should
Executive (or, in the event Executive shall have died, his
designated beneficiary or estate) reasonably seek legal advice,
or become involved in litigation (as plaintiff, defendant, or in
any other capacity), either criminal or civil, arising out of
this Agreement, Executive's duties, and/or the Company's
business. Executive (or, in the event Executive shall have died,
his designated beneficiary or estate) shall have the sole right
to choose the law firm that would represent him, her or it. The
Company's obligation to pay legal fees shall not be dependent
upon the outcome of any litigation in which Executive shall
become involved, or upon the resolution of any matter for which
Executive (or his beneficiary or estate) shall have sought
counsel). The Company shall be required to make periodic
payments of such fees as they become due.
12. Indemnification
The Company shall indemnify, defend, and hold Executive
harmless from and against any and all losses, damages, expenses,
claims, fines, penalties, forfeitures, liquidated damages and
causes of action of every type and character, civil or criminal,
arising out of, or in connection with, the Company's business
and/or Executive's duties on behalf of himself and the Company.
13. 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.
14. 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, by registered or
certified mail, return receipt requested, 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; if 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 that
is unsuccessful, in person, by express delivery, or by registered
or certified mail, at the correct address or fax number, shall be
deemed received on the date of such attempted delivery or
attempted fax. 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. Notices, requests, and demands given to or made upon
the parties hereto shall be addressed as follows (unless a
different address is designated in writing by the party hereto):
If to the Company:
Allstates WorldCargo, Inc.
4 Lakeside Drive South
Forked River, NJ 08731
Fax No. (609)693-3579
If to the Executive:
Craig D. Stratton
25 Sam Dr.
Tinton Falls, NJ 07724
c. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors,
assigns, and legal representatives.
d. Right to Assign. Neither party shall have the right to
assign this Agreement without the express written consent of the
other party.
e. 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.
f. 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, and the other parties have received
copies thereof, 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.
g. This Agreement shall be deemed to be an agreement made
under the laws of the State of New Jersey, and for all purpose it
shall be construed in accordance with and governed by the laws of
the State of New Jersey.
h. 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.
i. 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.
j. 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.
k. 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.
ALLSTATES WORLD CARGO, INC.
By:________________________
Its
ALLSTATES AIR CARGO, INC.
By:________________________
Its
________________________
Craig D. Stratton
Executive