Agreement
This Agreement ("Agreement"), dated as of August 6, 2002, is between
Titan EMS, Inc., a Delaware Corporation ("the "Company"), and Louis Xxxxx
Xxxxxx III ("Executive").
WHEREAS Company, to induce Executive to be employed by Company and enter
into this Agreement, on the effective date of this Agreement, Company has
agreed to issue 50,000 shares of its common stock to Executive for the
contribution of the intangible assets listed on Exhibit A, and to issue to
Executive options to purchase 350,000 shares of its common stock at $1.50 per
share for up to five years; and
WHEREAS, the Company desires to engage Executive as its President and
Chief Executive Officer, (referred to herein as "CEO"), for the period, and
upon the other terms and conditions, herein provided; and
WHEREAS, Executive is willing to be employed by the Company as its CEO
pursuant to the terms and conditions of this Agreement effective August 6,
2002;
NOW, THEREFORE, in consideration of the promises, the mutual covenants
and obligations herein contained, and for other good and valuable
consideration, the receipt, adequacy, and sufficiency of which are hereby
acknowledged, the parties hereto do hereby covenant and agree as follows:
1. EMPLOYMENT
1.1 Position. The Company hereby confirms Executive's
employment as its CEO. Executive shall report directly to the Company's
Board of Directors and shall perform the duties described in Section 1.2
hereof, subject to such limitations of authority as may be established
from time to time by the Company's Board of Directors and applicable
law.
1.2 Duties. Executive's duties will include all those duties
customarily associated with the position of CEO in an emerging growth
company, subject to a reasonable agreement with the Company's Board of
Directors. Such duties shall include overall management of Company.
Executive agrees to devote substantially his entire business time and
attention to the performance of his duties hereunder and to serve the
Company diligently and to the best of his abilities. Notwithstanding
the foregoing, Executive shall have the continuing right:
(a) to make passive investments in the securities of any
publicly-owned corporation;
(b) to make any other passive investments with respect to which
he is not obligated or required to, and does not in fact, devote any
substantial managerial efforts that interfere with the fulfillment of
his duties to the Company; and
(C) subject to the prior written approval of the Company's Board
of Directors (the "Board of Directors"), to serve as a director of or
consultant to other companies and entities Executive represents that he
is under no actual or alleged restriction, limitation, or other
prohibition (whether as a result of prior employment or otherwise) to
perform his duties as described herein.
1.3 Board Seat. Executive will be nominated for election to the
Company's Board of Directors and will continue to serve as a member of the
Board throughout the term of his employment with the Company. Executive shall
receive the same indemnification for his Board activities as the Company makes
available to other members of the Board.
2. COMPENSATION AND BENEFITS
2.1 Base Annual Salary. The Company shall pay Executive a base
annual salary of $165,000.00 (the "Base Annual Salary") periodically
throughout the year, commencing the date hereof, in accordance with its
customary payroll practices, as modified from time to time, subject to
all payroll and withholding deductions required by applicable law.
Executive shall be considered for changes in his Base Annual Salary on
an annual basis.
2.2 Stock.
2.2.1 On August 12, 2002, Company shall issue Executive 50,000
shares of the Company's common stock for the contribution of
the intangible assets listed on Exhibit A. Executive will
recognize this as a taxable event in 2002.
2.2.2 On August 12, 2002, Company shall issue Executive fully
vested options to purchase up to 350,000 shares of Company's
common stock at an exercise price of $1.50 per share with
these options expiring on July 31, 2007. Executive's rights
hereunder are more fully described in Company's stock option
agreement.
2.3 Other Benefits. Executive shall be entitled to other benefits and
perquisites no less favorable than those provided to the Company's employees
generally, as such benefits and perquisites may be modified from time to time
in the Company's discretion.
2.4 Expense Reimbursement. With respect to Executive's reasonable
out-of-pocket business expenses, including Company's standard car allowance,
Executive shall be reimbursed in accordance with Company's established
policies.
3. TERMINATION AND SEVERANCE PAY
3.1 At Will. Executive and the Company acknowledge and agree that
Executive's employment with the Company is "at will" during the term of this
Agreement. Accordingly, either party may terminate Executive's employment by
the Company, with or without cause, in which case Executive shall have no
claim for lost wages, although termination of Executive's employment shall be
subject to the terms and conditions of this Agreement regarding severance pay,
benefits and other obligations. Executive and the Company are not party to
any oral agreement relating to the Executive's employment by the Company.
3.2 Resignation without Good Reason. In the event that Executive's
employment with the Company terminates as a result of his resignation without
Good Reason, Executive shall be entitled to no severance pay or benefits.
3.3 Resignation with Good Reason.
(a) Severance Pay. In the event that Executive's employment
with the Company terminates as a result of his resignation with Good Reason,
(as defined in Section 3.3 (c) hereof), Executive shall be entitled to
severance pay in the form of continuation of Base Annual Salary, for a period
of three months following the date of his resignation.
(b) Additional Benefits. In the event that Executive's
employment with the Company terminates as a result of his resignation with
Good Reason, Executive shall be entitled to continue to participate in the
Company's employee benefit programs as and to the extent theretofore made
available to him pursuant to Section 2.3 above. Such benefits shall be
continued in accordance with the Company's employment policies then in effect
including customary co-payment obligation for health insurance. Such benefits
shall continue for the benefit of Executive for the entire period of his
severance pay continuation as provided in section 3.3 (a) above, in the same
manner and at the same level as in effect immediately prior to Executive's
resignation. In addition, upon any resignation by Executive for Good Reason,
any and all cash bonuses that would be payable to Executive at the end of a
period but for his earlier resignation shall be payable to him immediately and
pro rata (in accordance with the percentage of completion of the period in
question and with reference to the best available financial information
proximate to the time of resignation).
(c) Good Reason. For purposes of this Agreement, the term "Good
Reason" shall mean that Executive resigns his employment with the Company for
one or more of the following reasons:
(i) a material reduction in Executive's position,
authority or responsibilities;
(ii) any requirement that Executive relocate to a worksite
that would increase Executive's one-way commute by more than
30 miles from his then principal residence, unless Executive
accepts such relocation opportunity; or
(iii) any material breach by the Company of its obligations
under this Agreement.
3.4 Involuntary Termination.
Severance Pay. In the event that Company terminates Executive's
employment For Just Cause (as defined in Section 3.4 (c) hereof), Executive
shall not be entitled to severance pay or benefits. Excepting termination by
the Company For Just Case, in the event that Executive's employment with the
Company is terminated, Executive shall be entitled to severance pay in the
form of continuation of Base Annual Salary, for a period of six months
following the date of his termination.
(b) Additional Benefits. In the event that Company terminates
Executive's employment other than For Just Cause, Executive shall be entitled
to continue to participate in the Company's employee benefit programs as and
to the extent theretofore made available to him pursuant to Section 2.3 above.
Such benefits shall be continued in accordance with the Company's employment
policies then in effect including customary co-payment obligation for health
insurance. Such benefits shall continue for the benefit of Executive for the
entire period of his severance pay continuation as provided in section 3.4 (a)
above, in the same manner and at the same level as in effect immediately prior
to Executive's termination. In addition, upon any termination of Executive by
the Company other than For Just Cause, any and all cash bonuses that would be
payable to Executive at the end of a period but for is earlier termination
shall be payable to him immediately and pro rata (in accordance with the
percentage of completion of the period in question and with reference to the
best available financial information proximate to the time of termination).
(c) For Just Cause. For purposes of this Agreement, the term
"For Just Cause" shall mean any termination of employment of Executive for one
or more of the following reasons:
(i) the conviction of such person for a felony involving an act
of moral turpitude, which conviction has become final and
non-appealable;
(ii) recklessness in the performance of such person's duties to
the Company causing material harm to the Company; or
(iii) material dishonesty, material breach of fiduciary duty or
material breach by Executive of any representation, covenant
or other agreement contained in this Agreement.
3.4 Death. In the event of Executive's death, this Agreement
shall automatically terminate and shall be of no further force or effect;
provided, however, the Company shall be obligated to make all the payments and
to provide all the benefits due to Executive hereunder to the time of his
death. Company will maintain term life insurance of $4,000,000.00 on
Executive. Both Company and Executive's spouse will be equal beneficiaries of
said policy.
3.5 Disability. In the event of Executive's Disability (as defined
below) during the term of this Agreement for any period of at least three (3)
consecutive months, the Company shall have the right, exercisable in its
discretion, to terminate this Agreement. In the event that the Company does
elect to terminate this Agreement, Executive shall receive the Severance Pay
set forth in Section 3.3(a) above, and shall be entitled to normal disability
benefits in accordance with such policies of the Company as may then be in
effect. For purposes of this Agreement, "Disability" shall mean the inability
of Executive to perform the essential functions of his employment hereunder by
reason of physical or mental illness or incapacity as determined by a
physician chosen by the Company and reasonably satisfactorily to Executive or
his legal representative.
4. TERM
This Agreement shall become effective as of the date hereof and shall
terminate on the date that is five (5) years after the date hereof, unless
earlier terminated pursuant to Article 3 hereof.
5. NON-SOLICITATION, NON-DISCLOSURE, RESTRICTIVE COVENANTS, AND NON-
DISPARAGEMENT
5.1 Non-Disclosure. During the Executive's term of employment
and except as is reasonably necessary in the performance of his duties
hereunder, Executive shall not disclose to any person or entity, or use
for his own direct or indirect benefit, any Confidential Information (as
defined below) pertaining to the Company obtained by him in connection
with his employment with the Company. For purposes of this Agreement,
the term "Confidential Information" shall include information with
respect to the Company's products, services, processes, suppliers,
customers, customers' account executives, suppliers and distribution
information, price lists, identity and list of actual and potential
customers, trade secrets, technical information, business plans, and
strategies and financial records or condition; provided, however, that
such information shall not be treated as Confidential Information to the
extent that it has been publicly disclosed by the Company (other than by
Executive through a breach of this Section 5.1)
5.2 Restrictive Covenants. Executive agrees that after
his voluntary termination or involuntary termination with six
months of severance of Executive's employment and for the one year
period after the date hereof, provided the Company is not in
default of any obligation to Executive under this Agreement or
otherwise, he shall not:
(a) directly or indirectly, alone or as a partner, joint venturer,
officer, director, employee, consultant, agent, independent contractor or
stockholder of any company or business, engage in any business activity in
the State of California ("Restricted Territory"), and which is directly or
indirectly in competition with the business conducted by the Company as of
the date of the termination of Executive's employment; provided however,
that, the beneficial ownership of less than 5% of the shares of stock of any
corporation having a class of equity securities actively traded on a
national securities exchange or over-the-counter market shall not be deemed,
in and of itself, to violate the prohibitions of this Section.
(b) directly or indirectly:
(i) induce any customer to patronize any business directly or
indirectly in competition with the business conducted by Company;
(ii) canvass, solicit or accept from any entity any such
competitive business; or
(iii) request or advise any customer to withdraw, curtail, or
cancel any such customer's business with Company;
(C) employ any person who was employed by Company at or within
twelve (12) months prior to the termination of Executive's employment or in
any manner seek to induce any such person to leave his or her employment with
the company; or
(d) directly or indirectly, in any way utilize, disclose, copy,
reproduce, or retain in his possession's any of Company's proprietary rights
or records, including, but not limited to, any of its customer lists.
Executive agrees and acknowledges that the restrictions contained
in this Section 5.2 are reasonable in scope and duration and are necessary
to protect Company after the termination of Executive's employment. If a
court adjudges any provision of this Section as applied to any party or to
any circumstance to be invalid or unenforceable, same will in no way affect
any other circumstance or the validity or enforceability of any other
provision of this Agreement. If any such provision, or any part, thereof,
is held to be unenforceable because of the duration of such provision or the
area covered thereby, the parties agree that the court making such
determination shall have the power to reduce the duration and/or area of
such provision, and/or to delete specific words or phrases, and in its
reduced form, such provision shall then be enforceable and shall be
enforced. The parties agree and acknowledge that the breach of this Section
will cause irreparable damage to Company and upon breach of any provision of
this Section, Company shall be entitled to injunctive relief, specific
performance or other equitable relief; provided, however, that this shall in
no way limit any other remedies which Company may have including, without
limitation, the right to seek monetary damages.
5.3 Defamatory Statement. Executive agrees from the date hereof he
shall not make any written or oral statements that are slanderous, libelous
or defamatory concerning the company or any of its affiliates, including
without limitation, any or all of the Company's or affiliate's executive
officers and directors.
6. MISCELLANEOUS
6.1 No Waiver. The waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed as a waiver
of any subsequent breach thereof.
6.2 Notices. Any and all notices referred to herein shall be
furnished in writing and shall be delivered by hand or sent by registered or
certified mail, postage prepaid, to the respective parties at the following
addresses) or at such other address as either party may from time to time
designate to the other by like notice):
To the Company: Titan EMS, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
To Executive: Louis Xxxxx Xxxxxx III
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Xxx Xxxx, XX 00000
6.3 Assignment. This Agreement may not be assigned by Executive and
may not be assigned by the Company otherwise than by operation of law. This
Agreement shall be binding upon the Company's successors and assigns.
6.4 Entire Agreement. This Agreement supersedes any and all prior
written or oral agreements between Executive and the Company and evidences the
entire understanding of the parties hereto with respect to the terms and
conditions of Executive's employment with the Company.
6.5 Governing Law. This Agreement shall be enforced in accordance
with the laws of the State of California and shall be construed in accordance
therewith. The parties hereto agree that all actions or proceedings arising
in connection with this Agreement shall be tried and litigated exclusively in
the State and Federal courts located in the County of Santa Xxxxx, State of
California. The aforementioned choice of venue is intended by the parties to
be mandatory and not permissive in nature thereby precluding in the
possibility of litigation between the parties with respect to or arising out
of this Agreement in any jurisdiction other than that specified in this
paragraph. Each party hereby waives any right it may have to assert the
doctrine of forum non conveniens or similar doctrine or to object to venue
with respect to any proceeding brought in accordance with this paragraph, and
stipulates that the State and Federal courts located in the County of Santa
Xxxxx, State of California shall have in personam jurisdiction and venue over
each of them for the purpose of litigating any dispute, controversy, or
proceeding arising out of or related to this Agreement. Each party hereby
authorizes and accepts service of process sufficient for personal mail, return
receipt requested, postage prepaid, to its address for the giving of notices
as set forth in this Agreement. Any final judgment rendered against a party
in any action of proceeding shall be conclusive as to the subject of such
final judgment and may be enforced in other jurisdictions in any manner
provided by law.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
Titan EMS, Inc.
By: /s/ Xxxxx X. Xxxxx /s/ Louis Xxxxx Xxxxxx
Director Louis Xxxxx Xxxxxx III
EXHIBIT A
Titan Flex Solutions,Inc. and\or xxx.XxxxxXxxxXxxxxxxxx.xxx
TitanFlexDesign, Inc. and\or xxx.XxxxxXxxxXxxxxx.xxx
TitanFlexFab, Inc. and\or xxx.XxxxxXxxxXxx.xxx
TitanFlexBox, Inc. and\or xxx.XxxxxXxxxXxx.xxx
Titan Flex Power, Inc. and\or xxx.XxxxxXxxxXxxxx.xxx
Titan Defense, Inc. & and\or xxx.XxxxxXxxxxxx.xxx
