SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) FEBRUARY 24, 2006
EMRISE CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 77-0226211
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(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
001-10346
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(Commission
File Number)
9485 HAVEN AVENUE, SUITE 100, RANCHO CUCAMONGA, CALIFORNIA 91730
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (909) 987-9220
NOT APPLICABLE
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
EXECUTIVE EMPLOYMENT AGREEMENT DATED EFFECTIVE AS OF JANUARY 1, 2006
BETWEEN EMRISE CORPORATION AND CARMINE T. OLIVA
On February 24, 2006, we entered into an employment agreement with
Carmine T. Oliva, our Chairman of the Board, President and Chief Executive
Officer. The agreement is effective as of January 1, 2006 and ends on January 1,
2011. This agreement provides for an initial base salary during the first
12-month period that the agreement is in effect of $350,000 per year and states
that Mr. Oliva is eligible to receive merit or promotional increases and bonuses
at the discretion of our compensation committee and to participate in other
benefit and incentive programs we may offer.
If we terminate Mr. Oliva's employment "for due cause" or due to Mr.
Oliva's breach of the agreement by refusing to continue his employment, our
obligation to pay any further compensation, severance allowance, or other
amounts payable under the agreement terminates on the date of termination, other
than (i) those benefits that are provided by retirement and benefit plans and
programs specifically adopted and approved by us for Mr. Oliva that are earned
and vested by the date of termination; (ii) Mr. Oliva's pro rata annual salary
through the date of termination; (iii) any stock options which have vested as of
the date of termination pursuant to the terms of the agreement granting the
options; and (iv) accrued vacation as required by California law.
If we terminate Mr. Oliva's employment without due cause, we must
provide Mr. Oliva with a written notice of termination and his employment shall
terminate immediately upon notice. Mr. Oliva may terminate the agreement at any
time for good reason within 30 days after Mr. Oliva learns of the event or
condition constituting "good reason." If termination without due cause by us or
for good reason by Mr. Oliva occurs prior to the expiration of the agreement on
January 1, 2011, Mr. Oliva will be entitled to (i) 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) a
severance payment in an amount equal to three times his then current annual
salary, net of all then applicable federal, state and local taxes; (iii) a
prorated incentive bonus if any, for the fiscal year during which termination
occurs; and (iv) all medical and life insurance benefits to which Mr. Oliva was
entitled immediately prior to the date of termination (or at the election of Mr.
Oliva in the event of a change in control, immediately prior to the date of the
change in control) for a period of three years or the date or dates that Mr.
Oliva's continued participation in our medical and/or life insurance plans is
not possible under the plans, whichever is earlier. If our medical and/or life
insurance plans do not allow Mr. Oliva's continued participation in the plan or
plans, then we will pay to Mr. Oliva, in monthly installments, the monthly
premium or premiums which had been payable by us covering the period stated in
the foregoing subsection (iv).
If Mr. Oliva is incapacitated by accident, sickness or otherwise so as
to render him mentally or physically incapable of performing the services
required under the agreement for a period of 240 consecutive days, and the
incapacity is confirmed by the written opinion of two practicing medical
doctors, we may terminate Mr. Oliva's employment under the agreement upon giving
Mr. Oliva or his legal representative written notice at least 30 days prior to
the termination date. In the event of Mr. Oliva's death, the agreement will
terminate immediately.
If Mr. Oliva's employment is terminated due to incapacity or by death,
Mr. Oliva or his estate or legal representative will be entitled to receive (i)
those benefits that are provided by retirement and benefits plans and programs
specifically adopted and approved by us for Mr. Oliva that are earned and vested
at the date of termination, (ii) a prorated incentive bonus for the fiscal year
in which incapacity or death occurs, and (iii) Mr. Oliva's annual salary then in
effect for one year following the date of termination, offset, however, by any
payments received by Mr. Oliva as a result of any disability insurance
maintained by us for Mr. Oliva's benefit.
2
The agreement contains non-competition provisions that prohibit Mr.
Oliva from engaging or participating in a competitive business or soliciting our
customer or employees during his employment with us and for two years afterward.
The agreement also contains provisions that restrict disclosure by Mr. Oliva of
our confidential information and assign ownership to us of inventions created by
Mr. Oliva in connection with his employment.
The term "for due cause" is defined in the agreement as (i) any
intentional misapplication by Mr. Oliva of our funds or other material assets,
or any other act of dishonesty injurious to EMRISE Corporation committed by Mr.
Oliva; or (ii) Mr. Oliva's conviction of a felony or a crime involving moral
turpitude; or (iii) Mr. Oliva's use or possession of any controlled substance or
chronic abuse of alcoholic beverages, which use or possession the board
reasonably determines renders Mr. Oliva unfit to serve in his capacity as a
senior executive of EMRISE Corporation; or (iv) Mr. Oliva's breach,
nonperformance or nonobservance of any of the terms of the agreement, including
but not limited to Mr. Oliva's failure to adequately perform his duties or
comply with the reasonable directions of the board. Notwithstanding anything in
the foregoing subsections (iii) or (iv) to the contrary, we will not terminate
Mr. Oliva unless the Board of Directors first provides Mr. Oliva with a written
memorandum describing in detail how his performance under the agreement is not
satisfactory and Mr. Oliva is given a reasonable period of time (not less than
90 days) to remedy the unsatisfactory performance related by the board to Mr.
Oliva in that memorandum. A determination of whether Mr. Oliva has
satisfactorily remedied the unsatisfactory performance shall be promptly made by
a majority of the disinterested directors of the board at the end of the period
provided to Mr. Oliva for remedy and their determination shall be final.
The term "for good reason" is defined in the agreement as any of the
following which occur without Mr. Oliva's written consent: (i) the assignment of
duties by the board which is inconsistent with Mr. Oliva's position, duties,
responsibilities or status with EMRISE Corporation; a substantial change in Mr.
Oliva's title or offices; any removal of Mr. Oliva from or any failure to
reelect Mr. Oliva to any of his positions as an officer, except in connection
with the termination of his employment for disability, retirement, death or by
Mr. Oliva for good reason; or (ii) a purported reduction by us in Mr. Oliva's
base salary to an amount less than the greater of (a) the base salary as in
effect on the date of the agreement or (b) 10% below the base salary in effect
at the time of the purported reduction; or (iii) our failure to continue in
effect any benefits required under the agreement; or (iv) our failure to obtain
the assumption of the agreement by any successor or assign of EMRISE
Corporation; or (v) Mr. Oliva failure to comply with any material provision of
the agreement which has not been cured within 30 days after notice of
noncompliance has been given by Mr. Oliva to EMRISE Corporation or if the
failure is not capable of being cured in that time, a cure shall not have been
diligently initiated by us within the 30 day period; or (vi) a material
reduction in the highest level of support services and staff, office space and
accouterments available to Mr. Oliva during the term of the agreement and that
which is necessary to perform any additional duties assigned to Mr. Oliva
thereafter, which reduction is not generally effective for all officers employed
by us; or (vii) if we avail ourselves of, or we are subjected by any third party
to, a proceeding in bankruptcy in which we are the named debtor, an assignment
by us for the benefit of our creditors, the appointment of a receiver for EMRISE
Corporation, or any other proceeding involving insolvency or the protection of
or from creditors and the proceeding has not been discharged or terminated
within 90 days.
3
As used in the agreement, a "change in control" is deemed to have
occurred if (i) there shall be consummated any consolidation or merger of EMRISE
Corporation in which we are not the continuing or surviving corporation or
pursuant to which all or substantially all of the shares of our common stock
would be converted into cash, securities or other property, other than a merger
of EMRISE Corporation in which the holders of our common stock immediately prior
to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger; (ii) there shall be
consummated any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets of
EMRISE Corporation; (iii) the stockholders of EMRISE Corporation approve any
plan or proposal for the liquidation or dissolution of EMRISE Corporation; (iv)
any "person" (as such term is used in Sections 13(d) and 14(d) (2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than
"persons" who are stockholders of EMRISE Corporation on the date of the
employment agreement, becomes the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of 50% or more of EMRISE Corporation's outstanding
common stock after the date hereof; (v) during any period of two consecutive
years, individuals who at the beginning of such period constitute the entire
board shall cease for any reason to constitute a majority thereof unless the
election, or the nomination for election by EMRISE Corporation's stockholders,
of each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period; or (vi) there shall be any change of control of a nature required to be
reported in response to Item 6 (e) of Schedule 14A of Regulation 14A promulgated
under the Exchange Act or any successor regulation of substantially similar
import, regardless of whether we are subject to such reporting requirement.
EXECUTIVE EMPLOYMENT AGREEMENT DATED EFFECTIVE AS OF JANUARY 1, 2006
BETWEEN EMRISE CORPORATION AND RANDOLPH D. FOOTE
On February 24, 2006, we entered into an employment agreement with
Randolph D. Foote, our Senior Vice President, Chief Financial Officer and
Secretary. The agreement is effective as of January 1, 2006 and ends on January
1, 2008. This agreement provides for an initial base salary during the first
12-month period that the agreement is in effect of $175,000 per year and states
that Mr. Foote is eligible to receive merit or promotional increases and bonuses
at the discretion of our compensation committee and to participate in other
benefit and incentive programs we may offer.
If we terminate Mr. Foote's employment "for due cause" or due to Mr.
Foote's breach of the agreement by refusing to continue his employment, our
obligation to pay any further compensation, severance allowance, or other
amounts payable under the agreement terminates on the date of termination, other
than (i) those benefits that are provided by retirement and benefit plans and
programs specifically adopted and approved by us for Mr. Foote that are earned
and vested by the date of termination; (ii) Mr. Foote's pro rata annual salary
through the date of termination; (iii) any stock options which have vested as of
the date of termination pursuant to the terms of the agreement granting the
options; and (iv) accrued vacation as required by California law.
If we terminate Mr. Foote's employment without due cause, we must
provide Mr. Foote with a written notice of termination and his employment shall
terminate immediately upon notice. Mr. Foote may terminate the agreement at any
time for good reason within 30 days after Mr. Foote learns of the event or
condition constituting "good reason." If termination without due cause by us or
for good reason by Mr. Foote occurs prior to the expiration of the agreement on
January 1, 2008, Mr. Foote will be entitled to (i) 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) a
severance payment in an amount equal to one and one-half times his then current
annual salary, net of all then applicable federal, state and local taxes; (iii)
a prorated incentive bonus if any, for the fiscal year during which termination
occurs; and (iv) all medical and life insurance benefits to which Mr. Foote was
entitled immediately prior to the date of termination (or at the election of Mr.
Foote in the event of a change in control, immediately prior to the date of the
change in control) for a period of 18 months or the date or dates that Mr.
Foote's continued participation in our medical and/or life insurance plans is
not possible under the plans, whichever is earlier. If our medical and/or life
insurance plans do not allow Mr. Foote's continued participation in the plan or
plans, then we will pay to Mr. Foote, in monthly installments, the monthly
premium or premiums which had been payable by us covering the period stated in
the foregoing subsection (iv).
4
If Mr. Foote is incapacitated by accident, sickness or otherwise so as
to render him mentally or physically incapable of performing the services
required under the agreement for a period of 180 consecutive days, and the
incapacity is confirmed by the written opinion of two practicing medical
doctors, we may terminate Mr. Foote's employment under the agreement upon giving
Mr. Foote or his legal representative written notice at least 30 days prior to
the termination date. In the event of Mr. Foote's death, the agreement will
terminate immediately.
If Mr. Foote's employment is terminated due to incapacity or by death,
Mr. Foote or his estate or legal representative will be entitled to receive (i)
those benefits that are provided by retirement and benefits plans and programs
specifically adopted and approved by us for Mr. Foote that are earned and vested
at the date of termination, (ii) a prorated incentive bonus for the fiscal year
in which incapacity or death occurs, and (iii) Mr. Foote's annual salary then in
effect for one year following the date of termination, offset, however, by any
payments received by Mr. Foote as a result of any disability insurance
maintained by us for Mr. Foote's benefit.
The agreement contains non-competition provisions that prohibit Mr.
Foote from engaging or participating in a competitive business or soliciting our
customer or employees during his employment with us and for two years afterward.
The agreement also contains provisions that restrict disclosure by Mr. Foote of
our confidential information and assign ownership to us of inventions created by
Mr. Foote in connection with his employment.
The terms "for due cause," "good reason" and "change in control" have
the same meanings as in Mr. Oliva's employment agreement described above.
EXECUTIVE EMPLOYMENT AGREEMENT DATED EFFECTIVE AS OF JANUARY 1, 2006
BETWEEN EMRISE CORPORATION AND GRAHAM JEFFERIES
On February 24, 2006, we entered into an employment agreement with
Graham Jefferies, our Executive Vice President and Chief Operating Officer. The
agreement is effective as of January 1, 2006 and ends on January 1, 2009. This
agreement provides for an initial base salary of (pound)152,800 per year during
the first 12-month period that the agreement is in effect to be paid by our
subsidiary, EMRISE Electronics, Ltd., and states that Mr. Jefferies is eligible
to receive merit or promotional increases and bonuses at the discretion of our
compensation committee and to participate in other benefit and incentive
programs we may offer.
If we terminate Mr. Jefferies' employment "for due cause" or due to Mr.
Jefferies' breach of the agreement by refusing to continue his employment, our
obligation to pay any further compensation, severance allowance, or other
amounts payable under the agreement terminates on the date of termination, other
than (i) those benefits that are provided by retirement and benefit plans and
programs specifically adopted and approved by us for Mr. Jefferies that are
earned and vested by the date of termination; (ii) Mr. Jefferies' pro rata
annual salary through the date of termination; (iii) any stock options which
have vested as of the date of termination pursuant to the terms of the agreement
granting the options; and (iv) accrued vacation as required by applicable law.
5
If we terminate Mr. Jefferies' employment without due cause, we must
provide Mr. Jefferies with a written notice of termination and his employment
shall terminate immediately upon notice. Mr. Jefferies may terminate the
agreement at any time for good reason within 30 days after Mr. Jefferies learns
of the event or condition constituting "good reason." If termination without due
cause by us or for good reason by Mr. Jefferies occurs prior to the expiration
of the agreement on January 1, 2009, Mr. Jefferies will be entitled to (i) 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) a severance payment in an amount equal to two times his then current
annual salary, net of all then applicable taxes; (iii) a prorated incentive
bonus if any, for the fiscal year during which termination occurs; and (iv) all
medical and life insurance benefits to which Mr. Jefferies was entitled
immediately prior to the date of termination (or at the election of Mr.
Jefferies in the event of a change in control, immediately prior to the date of
the change in control) for a period of two years or the date or dates that Mr.
Jefferies' continued participation in our medical and/or life insurance plans is
not possible under the plans, whichever is earlier. If our medical and/or life
insurance plans do not allow Mr. Jefferies' continued participation in the plan
or plans, then we will pay to Mr. Jefferies, in monthly installments, the
monthly premium or premiums which had been payable by us covering the period
stated in the foregoing subsection (iv).
If Mr. Jefferies is incapacitated by accident, sickness or otherwise so
as to render him mentally or physically incapable of performing the services
required under the agreement for a period of 180 consecutive days, the agreement
will terminate; provided, however, that Mr. Jefferies will remain an employee of
EMRISE Electronics, Ltd. and shall be entitled to remuneration in an amount
equal to the amount paid under EMRISE Electronics, Ltd.'s permanent health
scheme, subject to the paragraph immediately below. In the event of Mr.
Jefferies' death, the agreement will terminate immediately.
If Mr. Jefferies' employment is terminated due to incapacity or by
death, Mr. Jefferies or his estate or legal representative will be entitled to
receive (i) those benefits that are provided by retirement and benefits plans
and programs specifically adopted and approved by us for Mr. Jefferies that are
earned and vested at the date of termination, (ii) a prorated incentive bonus
for the fiscal year in which incapacity or death occurs, and (iii) Mr.
Jefferies' annual salary then in effect for one year following the date of
termination, offset, however, by any payments received by Mr. Jefferies as a
result of any permanent insurance scheme maintained by us for Mr. Jefferies'
benefit.
The agreement contains non-competition provisions that prohibit Mr.
Jefferies from engaging or participating in a competitive business or soliciting
our customer or employees during his employment with us and for two years
afterward. The agreement also contains provisions that restrict disclosure by
Mr. Jefferies of our confidential information and assign ownership to us of
inventions created by Mr. Jefferies in connection with his employment.
The terms "for due cause," "good reason" and "change in control" have
the same meanings as in Mr. Oliva's employment agreement described above.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS.
Effective March 1, 2006, our Board of Directors, by action taken by
unanimous written consent, appointed Richard E. Mahmarian to serve as a Class
III director. Mr. Mahmarian's term as a Class III director will expire at our
2008 annual meeting of stockholders or until he is succeeded by another
qualified director who has been duly elected. The Board of Directors also
appointed Mr. Mahmarian as a member of our audit committee effective as of March
1, 2006.
There are no arrangements or understandings between Mr. Mahmarian and
any other persons pursuant to which Mr. Mahmarian was appointed as a director
and as a member of the audit committee.
6
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Shell Company Transactions.
Not applicable.
(d) Exhibits.
Number Description
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10.1 Executive Employment Agreement dated February 24,
2006 by and between the Company and Carmine T. Oliva
10.2 Executive Employment Agreement dated February 24,
2006 by and between the Company and Randolph D. Foote
10.3 Executive Employment Agreement dated February 24,
2006 by and between the Company and Graham Jefferies
7
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 1, 2006 EMRISE CORPORATION
By: /s/ RANDOLPH D. FOOTE
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Randolph D. Foote, Chief Financial Officer
8
EXHIBITS FILED WITH THIS REPORT
Number Description
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10.1 Executive Employment Agreement dated February 24, 2006 by and
between the Company and Carmine T. Oliva
10.2 Executive Employment Agreement dated February 24, 2006 by and
between the Company and Randolph D. Foote
10.3 Executive Employment Agreement dated February 24, 2006 by and
between the Company and Graham Jefferies
9