Exhibit 10.1
EXECUTIVE EMPLOYMENT
AGREEMENT
THIS EXECUTIVE
EMPLOYMENT AGREEMENT (the “Agreement” ) dated
effective as of November 1, 2007 ( “Effective
Date” ), is made and entered into by and between EMRISE
CORPORATION, a Delaware corporation ( “Employer”
), and CARMINE T. OLIVA ( “Executive”
).
R E C I T A L S
Employer desires
that Executive enter into an employment relationship with Employer
in order to provide the necessary leadership and senior management
skills that are important to the success of Employer. Employer
believes that obtaining Executive’s services as an employee
of Employer and the benefits of his business experience are of
material importance to Employer and Employer’s
stockholders.
NOW, THEREFORE, in
consideration of Executive’s employment by Employer and the
mutual promises and covenants contained herein, the receipt and
sufficiency of which is hereby acknowledged, Employer and Executive
intend by this Agreement to specify the terms and conditions of
Executive’s employment relationship with Employer.
1.
General Duties of Employer and
Executive .
(a)
Employer agrees to employ Executive and Executive agrees to accept
employment by Employer and to serve Employer in an executive
capacity upon the terms and conditions set forth herein. Employer
hereby employs Executive as President and Chief Executive Officer
of Employer as of the Effective Date, reporting to the Board of
Directors of Employer (the “Board” ). Executive
will also serve as Chairman of the Board. Executive’s duties
and responsibilities shall be those normally assumed by the
President and Chief Executive Officer of a publicly-owned company
similarly situated to Employer, as well as such other or additional
duties, as may from time-to-time be assigned to Executive by the
Board. Such other or additional duties shall be consistent with the
senior executive functions set forth above.
(b)
While employed hereunder, Executive shall use his best efforts to
obey the lawful directions of the Board. Executive shall also use
his best efforts to promote the interests of Employer and to
maintain and to promote the reputation of Employer. While employed
hereunder, Executive shall devote his full business time, efforts,
skills and attention to the affairs of Employer and faithfully
perform his duties and responsibilities hereunder.
(c)
While this Agreement is in effect, Executive may from time to time
engage in any activities that do not compete directly with
Employer, provided that such activities do not interfere with his
performance of his duties. Executive shall be permitted to (i)
invest his personal assets as a passive investor in such form or
manner as Executive may choose in his discretion, (ii) participate
in various charitable efforts, and (iii) serve as a member of the
Board of Directors of other corporations which are not competitors
of Employer.
2.
Compensation and Benefits
.
(a)
As compensation for his services to Employer, Employer shall pay to
Executive an annual base salary of $350,000, payable in equal
semimonthly payments in accordance with Employer’s regular
payroll policy for salaried employees (the
“Salary” ). The Compensation Committee of the
Board (the “Compensation Committee” ) shall
perform an annual review of Executive’s Salary based on a
review of Executive’s performance of his duties and
Employer’s other compensation policies. The Compensation
Committee may, at its sole discretion, increase (but not decrease)
the Salary at any time, and from time to time.
(b)
In addition to the foregoing Salary, Executive shall be eligible
for an annual incentive bonus ( “Incentive
Bonus” ) based on criteria determined by the Compensation
Committee, at its sole discretion. The Incentive Bonus shall be
payable annually in cash, following the date on which
Employer’s Form 10-K for the previous fiscal year is filed
with the Securities and Exchange Commission, but in no event later
than the Short Term Deferral Date as defined in
Section 3(a) .
(c)
Upon Executive’s furnishing to Employer customary and
reasonable documentary support (such as receipts or paid bills)
evidencing costs and expenses incurred by him in the performance of
his services and duties hereunder (including, without limitation,
travel and entertainment, cellular telephone, computer and other
home office expenses) and containing sufficient information to
establish the amount, date, place and essential character of the
expenditure, Executive shall be reimbursed for such costs and
expenses in accordance with Employer’s normal expense
reimbursement policy.
(d)
Executive shall be entitled to participate in the medical
(including hospitalization), dental, life and disability insurance
plans, to the extent offered by Employer, and in amounts consistent
with Employer’s policy for other senior executive officers of
Employer, with premiums for all such insurance for Executive and
his dependents to be paid by Employer, subject to customary
employee contributions. In addition, Employer shall purchase and
maintain in effect a life insurance policy on Executive’s
life, in the amount of $1,000,000, payable to Executive’s
estate in the event of his death during the time Executive is
employed by Employer, or as provided for in Paragraph
7(c)(vi).
(e)
Executive shall have the right to participate in any additional
compensation, benefit, bonus, pension, stock option, stock
purchase, 401(k) or other plan or arrangement of Employer now or
hereafter existing for the benefit of other senior executive
officers of Employer, to the extent offered by Employer, and in
amounts consistent with the Employer’s policy.
(f)
Executive shall be entitled to vacation (but in no event less than
four (4) weeks per year), holiday and other paid or unpaid leaves
of absence consistent with Employer’s normal policies for
other senior executive officers of Employer or as otherwise
approved by the Board. Executive shall be entitled to accrue
vacation time for one (1) year. If Executive does not take the
accrued vacation during the following year, he shall be paid for
the unused vacation at his Salary rate then in effect.
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(g)
Executive shall be provided a monthly car allowance in the amount
of at least $750.00.
(h)
Executive shall be entitled to the non-exclusive use of
Employer’s corporate residence.
(i)
Employer shall purchase and maintain in effect a directors’
and officers’ liability insurance policy with a minimum limit
of liability of $10,000,000 and shall enter into an indemnification
agreement with Executive upon terms and conditions mutually
acceptable to Employer and Executive.
(j)
Employer agrees, by action of its Board, to nominate Executive as a
Class III member of the Board and seek stockholder approval of such
nomination at the 2008 annual meeting of the stockholders of
Employer.
3.
Deferred Compensation
.
(a)
This Agreement is not intended to provide for any deferral of
compensation payable during Executive’s employment pursuant
to Section 409A of the Internal Revenue Code (the
“Code” ) and, accordingly, any compensation paid
to Executive pursuant to this Agreement during Executive’s
employment is intended to be paid not later than the later
of: (i) the fifteenth (15 th ) day of the third (3
rd ) month following the Executive’s first (1
st ) taxable year in which such benefit is no longer
subject to a substantial risk of forfeiture, and (ii) the fifteenth
(15 th ) day of the third (3 rd ) month
following the first (1 st ) taxable year of Employer in
which such benefit is no longer subject to a substantial risk of
forfeiture, as determined in accordance with Section 409A of
the Code and any Treasury Regulations and other guidance issued
thereunder. The date determined under this subsection is referred
to as the “Short-Term Deferral Date.”
Notwithstanding anything to the contrary herein, in the event that
any compensation paid pursuant to this Agreement during
Executive’s employment is not actually or constructively
received by Executive on or before the Short-Term Deferral Date, to
the extent such compensation, or any portion thereof, constitutes a
deferral of compensation subject to Code Section 409A, then,
subject to Section 3(b) , such benefit shall be paid
upon Executive’s separation from service, with respect to
Employer and its affiliates within the meaning of Section 409A
of the Code.
(b)
In the event that Executive is a “specified employee,”
as defined in Section 409A(a)(2)(B)(i) of the Code as of the
date of any separation from service with respect to Employer and
its affiliates, no payment of deferred compensation subject to Code
Section 409A may be made to Executive before the date that is
six (6) months after the date of separation from service (or, if
earlier, the date of death of the specified employee), and, in such
case, any payments shall be accumulated and paid on the first date
of the seventh (7 th ) month following separation from
service; provided , however , that any payment or
portion thereof which is subject to an exemption for separation pay
to specified employees as provided under Treasury Regulation §
1.409A, or is subject to any other exemption provided under
Treasury Regulation § 1.409A allowing for payment to a
specified employee prior to the date that is six (6) months after
the date of separation from service, may be paid to Executive upon
separation from service.
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4.
Preservation of Business; Fiduciary
Responsibility .
Executive shall
use his best efforts to preserve the business and organization of
Employer and to preserve the business relations of Employer. So
long as the Executive is employed by Employer, Executive shall
observe and fulfill proper standards of fiduciary responsibility
attendant upon his service and office.
5.
No Specified Term; Employment at
Will .
The employment
relationship between Employer and Executive pursuant to this
Agreement is not for any specific term, but may be terminated with
or without cause, by Employer or by Executive, at any time and for
any reason, subject to the rights and obligations of Employer and
Executive as set forth in this Agreement. Any modification to the
nature of the at-will employment relationship between Employer and
Executive must be made in writing, and must be signed by Executive
and by Employer.
6.
Termination .
Employer or
Executive may terminate Executive’s employment under this
Agreement at any time, but only on the following terms:
(a)
Employer may terminate Executive’s employment under this
Agreement at any time for “Due Cause” (as
defined in Appendix I attached hereto and incorporated
herein by this reference) upon the good faith determination by the
Board that Due Cause exists for the termination of the employment
relationship.
(b)
If Executive is incapacitated by accident, sickness or otherwise so
as to render Executive either: (i) unable to engage in
any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period
of not less than twelve (12) months; or (ii) by reason of any
medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months is receiving
income replacement benefits for a period of not less than three (3)
months under an accident and health plan covering employees of
Employer; and such incapacity is confirmed by the U.S. Social
Security Administration or in accordance with a disability
insurance program maintained by Employer, Employer may terminate
Executive’s employment under this Agreement upon giving
Executive or his legal representative written notice at least 30
days prior to the termination date, subject to the provisions of
Section 7(b) . Notwithstanding anything expressed or
implied above to the contrary, Employer will fully comply with its
obligations under the Americans with Disabilities Act as well as
any other applicable federal, state, or local law, regulation, or
ordinance governing the protection of qualified individuals with
disabilities as well as Employer’s obligation to provide
reasonable accommodation thereunder.
(c)
This Agreement shall terminate immediately upon Executive’s
death, subject to the provisions of Section 7(b)
.
(d)
Subject to the provisions of Section 7(c) , Employer
may terminate Executive’s employment under this Agreement at
any time for any reason whatsoever, even
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without Due
Cause, by giving a written notice of termination to Executive, in
which case the employment relationship shall terminate immediately
upon the giving of the notice. If Employer terminates the
employment of Executive other than (i) pursuant to
Section 6(a) for Due Cause, (ii) due to incapacity
pursuant to Section 6(b) or due to Executive’s
death pursuant to Section 6(c) , or (iii)
Executive’s retirement, then the action by Employer, unless
consented to in writing by Executive, shall be deemed to be a
constructive termination by Employer of Executive’s
employment (a “Constructive Termination” ), and,
in that event, Executive shall be entitled to receive the
compensation set forth in Section 7(c) .
(e)
Executive may terminate this Agreement at any time within ninety
(90) days of the occurrence of any event comprising “ Good
Reason ” (as defined in Appendix I attached
hereto and incorporated herein by this reference); provided
, however , that Executive provides Employer with written
notice of the event or condition constituting Good Reason within
thirty (30) days of the initial existence of such event or
condition, and that Employer shall have a period of thirty (30)
days to cure such event or condition and, in the event that
Employer fails to cure such event or condition, Executive shall be
entitled to receive the compensation set forth in
Section 7(c) .
7.
Effect of Termination
.
(a)
If the employment relationship is terminated (i) by Employer for
Due Cause pursuant to Section 6(a) , (ii) by Executive
breaching this Agreement by refusing to continue his employment, or
(iii) by Executive without Good Reason, then all compensation and
benefits shall cease as of the date of termination, other than:
(A) those benefits that are provided by retirement and benefit
plans and programs specifically adopted and approved by Employer
for Executive that are earned and vested by the date of
termination; (B) Executive’s pro rata annual Salary (as
in effect as of the date of termination, payable in the manner as
prescribed in the first sentence of Section 2(a)
through the date of termination; (C) any stock options which
have vested as of the date of termination pursuant to the terms of
the agreement granting the options; and (D) accrued vacation
as required by California law.
(b)
If Executive’s employment relationship is terminated due to
Executive’s incapacity pursuant to Section 6(b)
or due to Executive’s death pursuant to
Section 6(c) , Executive or Executive’s estate or
legal representative, shall, subject to Section 3 of
this Agreement, be entitled to (i) those benefits that are provided
by retirement and benefits plans and programs specifically adopted
and approved by Employer for Executive that are earned and vested
at the date of termination, (ii) a prorated Incentive Bonus,
payable in the manner as prescribed in the second sentence of
Section 2(b) (to the extent Executive would otherwise
be eligible) for the fiscal year in which incapacity or death
occurs, and (iii) a lump-sum cash payment, payable within ten (10)
business days of separation from service due to death or
disability, but in any event, not later than the Short-Term
Deferral Date, in an amount equal to one (1) year of
Executive’s then current annual Salary as set forth in
Section 2(a) , which amount shall be net of all then
applicable federal, state and local taxes payable by Executive
relating to such payment (said payment taking into consideration
the full gross-up effect of additional taxes payable with respect
to tax payments).
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(c)
In the event of a termination of this Agreement as a result of
Constructive Termination, or by Executive for Good Reason, then
Employer shall, subject to Section 3 of this
Agreement:
(i)
pay to Executive on the date of termination his Salary in effect as
of the date of termination through the end of the month during
which the termination occurs plus credit for any vacation earned
but not taken;
(ii)
pay to Executive on the first business day following the expiration
of the revocation period described in Section 7(d) (provided
Executive has not tendered his revocation), but in any event, not
later than the Short-Term Deferral Date, as severance pay an amount
equal to three (3) times Executive’s then current annual
Salary, which amount shall be net of all then applicable federal,
state and local taxes payable by Executive relating to such payment
(said payment taking into consideration the full gross-up effect of
additional taxes payable with respect to tax payments);
(iii)
pay to Executive the prorated Incentive Bonus, to the extent
Executive would otherwise be eligible for any, for the fiscal year
during which termination occurs, payable as provided in
Section 2(a) ; and
(iv)
maintain, at Employer’s expense, in full force and effect,
for Executive’s continued benefit, all medical insurance to
which Executive was entitled immediately prior to the date of
termination until the earliest of (i) eighteen (18) months or (ii)
the date or dates that Executive’s continued participation in
Employer’s medical insurance plan is not possible under the
terms of the plans (the earliest of (i) and (ii) is referred to
herein as the “Benefits Date”). If Employer’s
medical insurance plan does not allow Executive’s continued
participation in the plan, then Employer will pay to Executive, in
monthly installments, from the date on which Executive’s
participation in the medical insurance is prohibited until the date
that is eighteen (18) months after the date of termination, an
amount equal to the monthly premium or premiums for COBRA coverage
with respect to Executive for the discontinued medical insurance;
and
(v)
pay to Executive on the date of termination a lump-sum cash payment
equal to eighteen (18) times the estimated monthly COBRA premiums
at the time of termination (taking into account all known or
anticipated premium increases) to be used by Executive to maintain
Executive’s continued medical insurance coverage for an
additional period of eighteen (18) months, pursuant to Cal-COBRA,
following the expiration of the COBRA reimbursement payments set
forth in Section 7(c)(iv) ; and
(vi)
pay to Executive on the date of termination a lump-sum cash payment
equal
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