INTERNATIONAL TEST SYSTEMS, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made between
International Test Systems, Inc., a Delaware corporation (collectively referred
to as the "Company"), and Xxxxx Birmingham ("Birmingham"). Unless otherwise
indicated, all references to Sections are to Sections in this Agreement. This
Agreement is effective as of the "Effective Date" set forth in Section 11 (i)
below.
W I T N E S S E T H:
WHEREAS, the Company desires to obtain the services of Birmingham, and
Birmingham desires to be employed by the Company upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, the agreements herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as of the date hereof as follows:
1. Employment. The Company hereby agrees to employ Birmingham, and
Birmingham hereby agrees to serve the Company, as its President and Chief
Executive Officer ("Employment").
2. Scope of Employment.
(a) During the Employment, Birmingham will serve as President and Chief
Executive Officer and, subject to his election in accordance with the Company's
by-laws and with applicable law, as a member of the Board. In that connection,
Birmingham will (i) devote his full time, attention, and energies to the
business of the Company and will diligently and to the best of his ability
perform all duties incident to his employment hereunder; (ii) use his best
efforts to promote the interests and goodwill of the Company; and (iii) perform
such other duties commensurate with his office as the Board of Directors of the
Company may from time-to-time assign to him.
(b) Section 2(a) shall not be construed as preventing Birmingham from (i)
serving on corporate, civic or charitable boards or committees, or (ii) making
investments in other businesses or enterprises; provided in no event shall any
such service, business activity or investment require the provision of
substantial services by Birmingham to the operations or the affairs of such
businesses or enterprises such that the provision thereof would interfere in any
respect with the performance of Birmingham's duties hereunder. It is
acknowledged and understood by the parties that Birmingham serves as the
President of Chief Executive Officer of Pensar Technologies, LLC and will
continue to serve in this fashion throughout the term of this Agreement.
3. Compensation and Benefits During Employment. During the Employment, the
Company shall provide compensation to Birmingham as follows.
(a) The Company shall pay Birmingham an annual salary upon raising a
minimum of $125,000 as follows:
Year 1 $45,000
Year 2 $55,000
Year 3 $65,000
Year 4 $75,000
Year 5 $100,000
(b) The Company will reimburse Birmingham for reasonable business expenses
incurred by Birmingham in connection with the Employment in accordance with the
Company's then-current policies.
(c) Birmingham will be entitled to participate in any incentive program or
bonus program of the Company which may be implemented in the future.
(d) The Company shall pay for Birmingham's and Birmingham's family, if any,
major medical and dental coverage throughout the term of this Agreement.
(e) The Company shall pay for a $250,000 life insurance policy on the life
of Birmingham beginning June 1, 2002 with continual coverage while Birmingham
remains employed by the Company. Birmingham shall own such policy and freely
designate its beneficiaries.
Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by
Birmingham in good faith and in the best interests of the Company and thus shall
not be deemed grounds for termination for Cause.
4. Confidential Information.
(a) Birmingham acknowledges that the law provides the Company with
protection for its trade secrets and confidential information. Birmingham will
not disclose, directly or indirectly, any of the Company's confidential business
information or confidential technical information to anyone without
authorization from the Company's management. Birmingham will not use any of the
Company's confidential business information or confidential technical
information in any way, either during or after the Employment with the Company,
except as required in the course of the Employment.
(b) Birmingham will strictly adhere to any obligations that may be owed to
former employers insofar as Birmingham's use or disclosure of their confidential
information is concerned.
(c) Information will not be deemed part of the confidential information
restricted by this Section 4 if Birmingham can show that: (i) the information
was in Birmingham's possession or within Birmingham's knowledge before the
Company disclosed it to Birmingham; or (ii) the information was or became
generally known to those who could take economic advantage of it; or (iii)
Birmingham obtained the information from a party having the right to disclose it
to Birmingham without violation of any obligation to the Company, or (iv)
Birmingham is required to disclose the information pursuant to legal process
(e.g., a subpoena), provided that Birmingham notifies the Company immediately
upon receiving or becoming aware of the legal process in question. No
combination of information will be deemed to be within any of the four
exceptions in the previous sentence, however, whether or not the component parts
of the combination are within one or more exceptions, unless the combination
itself and its economic value and principles of operation are themselves within
such an exception.
(d) All originals and all copies of any drawings, blueprints, manuals,
reports, computer programs or data, notebooks, notes, photographs, and all other
recorded, written, or printed matter relating to research, manufacturing
operations, or business of the Company made or received by Birmingham during the
Employment are the property of the Company. Upon termination of the Employment,
whether or not for Cause, Birmingham will immediately deliver to the Company all
property of the Company which may still be in Birmingham's possession.
Birmingham will not remove or assist in removing such property from the
Company's premises under any circumstances, either during the Employment or
after termination thereof, except as authorized by the Company's management.
(e) For a period of six (6) months after the date of termination of the
Employment, Birmingham will not, either directly or indirectly, hire or employ
or offer or participate in offering employment to any person who at the time of
such termination or at any time during such year following the time of such
termination was an employee of the Company without the prior written consent of
the Company.
5. Ownership of Intellectual Property. The following provisions apply
except to the extent expressly stated otherwise in Schedule 1.
(a) The Company will be the sole owner of any and all of Birmingham's
Inventions that are related to the Company's business, as defined in more detail
below.
(b) For purposes of this Agreement, "Inventions" means all inventions,
discoveries, and improvements (including, without limitation, any information
relating to manufacturing techniques, processes, formulas, developments or
experimental work, work in progress, or business trade secrets), along with any
and all other work product relating thereto.
(c) An Invention is "related to the Company's business" ("Company-Related
Invention") if it is made, conceived, or reduced to practice by Birmingham (in
whole or in part, either alone or jointly with others, whether or not during
regular working hours), whether or not potentially patentable or copyrightable
in the U.S. or elsewhere, and it either: (i) involves equipment, supplies,
facilities, or trade secret information of the Company; (ii) involves the time
for which Birmingham was or is to be compensated by the Company; (iii) relates
to the business of the Company or to its actual or demonstrably anticipated
research and development; or (iv) results, in whole or in part, from work
performed by Birmingham for the Company.
(d) Birmingham will promptly disclose to the Company, or its nominee(s),
without additional compensation, all Company-Related Inventions.
(e) Birmingham will assist the Company, at the Company's expense, in
protecting any intellectual property rights that may be available anywhere in
the world for such Company-Related Inventions, including signing U.S. or foreign
patent applications, oaths or declarations relating to such patent applications,
and similar documents.
(f) To the extent that any Company-Related Invention is eligible under
applicable law to be deemed a "work made for hire," or otherwise to be owned
automatically by the Company, it will be deemed as such, without additional
compensation to Birmingham. In some jurisdictions, Birmingham may have a right,
title, or interest ("Right," including without limitation all right, title, and
interest arising under patent law, copyright law, trade-secret law,
semiconductor chip protection law, or otherwise, anywhere in the world,
including the right to xxx for present or past infringement) in certain
Company-related Inventions that cannot be automatically owned by the Company. In
that case, if applicable law permits Birmingham to assign Birmingham's Right(s)
in future Company-Related Inventions at this time, then Birmingham hereby
assigns any and all such Right(s) to the Company, without additional
compensation to Birmingham; if not, then Birmingham agrees to assign any and all
such Right(s) in any such future Company-Related Inventions to the Company or
its nominee(s) upon request, without additional compensation to Birmingham.
(g) To the extent that Birmingham retains any so-called "moral rights" or
similar rights in a Company-Related Invention as a matter of law, Birmingham
authorizes the Company or its designee to make any changes it desires to any
part of that Company-Related Invention; to combine any such part with other
materials; and to withhold Birmingham's identity in connection with any business
operations relating to that Company-Related Invention; in any case without
additional compensation to Birmingham.
6. Noncompetition. As a condition to, and in consideration of, the
Company's entering into this Agreement, and giving Birmingham access to certain
confidential and proprietary information, which Birmingham recognizes is
valuable to the Company and, therefore, its protection and maintenance
constitutes a legitimate interest to be protected by the provisions of this
Section 6 as applied to Birmingham and other employees similarly situated to
Birmingham, Birmingham hereby agrees as follows:
(a) Birmingham acknowledges that the obligations of this Agreement are
directly related to the Employment and are necessary to protect the Company's
legitimate business interests. Birmingham acknowledges that the Company's need
for the covenants set forth in this Agreement is based on the following: (i) the
substantial time, money and effort expended and to be expended by the Company in
developing technical designs, computer program source codes, marketing plans and
similar confidential information; (ii) the fact that Birmingham will be
personally entrusted with the Company's confidential and proprietary
information; (iii) the fact that, after having access to the Company's
technology and other confidential information, Birmingham could become a
competitor of the Company; and (iv) the highly competitive nature of the
Company's industry, including the premium that competitors of the Company place
on acquiring proprietary and competitive information.
(b) Notwithstanding the foregoing, Birmingham may acquire an ownership
interest, directly or indirectly, of not more than 5% of the outstanding
securities of any corporation which is engaged in a business competitive with
the Company and which is listed on any recognized securities exchange or traded
in the over the counter market in the United States; provided, that such
investment is of a totally passive nature and does not involve Birmingham
devoting time to the management or operations of such corporation.
7. Legal Fees and Expenses. In the event of a lawsuit, arbitration, or
other dispute-resolution proceeding between the Company and Birmingham arising
out of or relating to this Agreement, the prevailing party, in the proceeding as
a whole and/or in any interim or ancillary proceedings (e.g., opposed motions,
including without limitation motions for preliminary or temporary injunctive
relief) will be entitled to recover its reasonable attorneys' fees and expenses
unless the court or other forum determines that such a recovery would not serve
the interests of justice.
8. Successors.
(a) This Agreement shall inure to the benefit of and be binding upon (i)
the Company and its successors and assigns and (ii) Birmingham and Birmingham's
heirs and legal representatives, except that Birmingham's duties and
responsibilities under this Agreement are of a personal nature and will not be
assignable or delegable in whole or in part.
(b) the Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "the Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
9. Arbitration.
(a) Except as set forth in paragraph (b) of this Section 9 or to the extent
prohibited by applicable law, any dispute, controversy or claim arising out of
or relating to this Agreement will be submitted to binding arbitration before a
single arbitrator in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association in effect on the
date of the demand for arbitration. The arbitration shall take place before a
single arbitrator, who will preferably but not necessarily be a lawyer but who
shall have at least five years' experience in working in or with computer
software companies. Unless otherwise agreed by the parties, the arbitration
shall take place in the city in which Birmingham's principal office space is
located at the time of the dispute or was located at the time of termination of
the Employment (if applicable). The arbitrator is hereby directed to take all
reasonable measures not inconsistent with the interests of justice to expedite,
and minimize the cost of, the arbitration proceedings.
(b) To protect Inventions, trade secrets, or other confidential
information, and/or to enforce the noncompetition provisions of Section 5, the
Company may seek temporary, preliminary, and/or permanent injunctive relief in a
court of competent jurisdiction, in each case, without waiving its right to
arbitration.
(c) At the request of either party, the arbitrator may take any interim
measures s/he deems necessary with respect to the subject matter of the dispute,
including measures for the preservation of confidentiality set forth in this
Agreement.
(d) Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction.
10. Indemnification.
(a) Company shall to the full extent permitted by law or as set forth in
the Articles of Incorporation, and any future amendments, and the Bylaws of the
Company, indemnify, defend and hold harmless Birmingham from and against any and
all claims, demands, liabilities, damages, losses and expenses (including
attorney's, court costs and disbursements) arising out of the performance of
duties hereunder except in the case of willful misconduct.
(b) Birmingham shall indemnify the Company with respect to the payment of
any and all taxes owed under this Agreement.
11. Other Provisions.
(a) All notices and statements with respect to this Agreement must be in
writing. Notices to the Company shall be delivered to the Chairman of the Board
or any vice president of the Company. Notices to Birmingham may be delivered to
Birmingham in person or sent to Birmingham's then-current home address as
indicated in the Company's records.
(b) This Agreement sets forth the entire agreement of the parties
concerning the subjects covered herein; there are no promises, understandings,
representations, or warranties of any kind concerning those subjects except as
expressly set forth in this Agreement.
(c) Any modification of this Agreement must be in writing and signed by all
parties; any attempt to modify this Agreement, orally or in writing, not
executed by all parties will be void.
(d) If any provision of this Agreement, or its application to anyone or
under any circumstances, is adjudicated to be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability will not affect any other
provision or application of this Agreement which can be given effect without the
invalid or unenforceable provision or application and will not invalidate or
render unenforceable such provision or application in any other jurisdiction.
(e) This Agreement will be governed and interpreted under the laws of the
United States of America and of the State of Texas law as applied to contracts
made and carried out in Texas by residents of Texas.
(f) No failure on the part of any party to enforce any provisions of this
Agreement will act as a waiver of the right to enforce that provision.
(g) Termination of Birmingham's employment by the Company, with or without
cause, will not affect the continued enforceability of this Agreement and
Birmingham shall be entitled to receive as severance pay, an amount equal to 12
months of salary based on the salary schedule described in Section 3 (a) at such
time as this Agreement is terminated, health insurance and life insurance for
the remainder of this Agreement, and Birmingham shall have the rights to all
Options, vested or not vested, under the same terms as if this Agreement had not
terminated.
(h) Section headings are for convenience only and shall not define or limit
the provisions of this Agreement.
(i) This Agreement may be executed in several counterparts, each of which
is an original. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.
A copy of this Agreement signed by one party and Faxed to another party shall be
deemed to have been executed and delivered by the signing party as though an
original. A photocopy of this Agreement shall be effective as an original for
all purposes.
Effective Date Upon Raising $125,000
Term Five years
Office / Position President and Chief Executive Officer
Initial Salary $45,000 per year
This Agreement contains provisions requiring binding arbitration of
disputes. By signing this Agreement, Birmingham acknowledges that he (i) has
read and understood the entire Agreement; (ii) has received a copy of it (iii)
has had the opportunity to ask questions and consult counsel or other advisors
about its terms; and (iv) agrees to be bound by it.
Executed to be effective as of the Effective Date.
International Test Systems, Inc., by:
/s/ Xxxx Xxxxx
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Signature
Xxxx Xxxxx, Director
Printed name & Title
/s/ H. Xxxxxx Xxxxxx
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Signature
H. Xxxxxx Xxxxxx, Director
Printed name & Title
/s/ Xxxxx X. Birmingham
------------------------------
Signature
Xxxxx X. Birmingham, Director
Printed name & Title
Employee:
/s/ Xxxxx X. Birmingham
-------------------------
Signature
Xxxxx X. Birmingham, President & CEO
Printed name & Title
