MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement (this "Services Agreement") is made effective
as of April 19, 1996, by and among DIGITAL RECORDERS, INC. ("Digital
Recorders"), a North Carolina corporation with offices at 0000 Xxxxxxxxxx Xxxxx,
Xxxxx 0000, Xxxxxx, Xxxxx Xxxxxxxx 00000, XXX, TRANSIT-MEDIA GmbH
("Transit-Media"), a German corporation and a wholly owned subsidiary of Digital
Recorders with offices at Xxxxxxxxxxxx 00, X-00000 Xxxxxxxxx, Xxxxxxx, and
XXXXXXXX XXXXXX INTERNATIONAL, INC. ("RTI"), a Texas corporation with offices at
000 Xxxx Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx 00000, XXX. Digital
Recorders and Transit-Media are referred to collectively herein as the "Client."
W I T N E S S E T H:
WHEREAS, RTI has knowledge and experience in and relating to the
worldwide public transportation and transit market and industry and is willing
to provide certain services to Transit-Media based on such knowledge and
experience, as hereinafter set forth; and
WHEREAS, the Client desires to receive such services from RTI on the
terms and conditions specified in this Services Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DESCRIPTION OF SERVICES: Beginning on March 15, 1996, RTI will provide
advisory, consulting and management services to Transit-Media, including
oversight and direction in areas such as business development, business and
manufacturing operations, marketing, acquisitions, mergers, strategic planning
and implementation, and technology, all as related to the public transportation
and transit related products and services of Transit-Media (collectively the
"Services").
2. PERFORMANCE OF SERVICES: The manner in which the Services are to be
performed, and the specific hours to be worked by RTI, shall be determined by
RTI. The Client will rely on RTI to work as many hours as may be reasonably
necessary to fulfill RTI's obligations under this Services Agreement.
3. COMPENSATION: As compensation for the Services, the Client will pay to RTI a
fee equal to a percentage of Transit-Media's Net Sales in the Territory (as
defined below) determined in accordance with the following schedule, based on
Net Sales volume achieved in each calendar year:
First $2,000,000 Net Sales----------------rate of 3%
Next $3,000,000 Net Sales----------------rate of 2%
Net Sales exceeding $5,000,000--------rate of 1%
Payment of this fee will be due by the 15th day of each month, without
further action by RTI to prompt or collect same, with respect to Net Sales
received by Transit-Media or any affiliate in the preceding month, and will
continue, following termination of this Services Agreement, until the fee has
been paid on all contracts and purchase orders, and contracts and purchase
orders resulting from proposals, dated prior to the date of termination of this
Services Agreement.
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For purposes of this Services Agreement, "Net Sales" means gross
revenues derived by Transit-Media and its affiliates from direct or indirect
sales, as contracted or invoiced, less returns, allowances and other adjustments
determined in accordance with generally accepted accounting principles,
consistently applied, which is the amount Transit-Media or an affiliate enters
in its records as the amount due and payable by a customer. For purposes of this
Services Agreement, "Territory" means Singapore, Hong Kong and Europe, which
includes but is not necessarily limited to the countries specified on Attachment
A attached hereto.
The Client shall maintain records in sufficient detail for purposes of
determining the fees payable to RTI. The Client shall provide to RTI with each
payment a written accounting that sets forth, in such detail as is reasonably
satisfactory to RTI, the manner in which the fee was calculated. RTI, or RTI's
agent, shall have the right to inspect the Client's records for the limited
purpose of verifying calculation of the amounts payable, subject to such
restrictions as the Client may reasonably impose to protect the confidentiality
of those records. Such inspections shall be made during reasonable business
hours as may be set by the Client.
4. EXPENSE REIMBURSEMENT: RTI shall be entitled to reimbursement from the Client
of all out-of-pocket expenses incurred in rendering the Services. RTI shall
obtain prior approval (which may be oral) from the Client of any expense that,
in a single instance, is expected to exceed Two Hundred Dollars ($200.00).
5. NEW PROJECT APPROVAL: RTI and the Client recognize that the Services may
include the development and implementation by RTI of various new projects for
Transit-Media. RTI shall obtain the approval of the Chairman and CEO of Digital
Recorders, after such officer has consulted with the managing director of
Transit-Media, prior to the commencement of any new project.
6. TERM & TERMINATION: This Services Agreement may be terminated as follows:
a. By either party for any reason upon 90 days' written notice to the
other party;
b. By either party upon 30 days' written notice to the other party if the
other party commits any material default or breach of any of its
agreements, obligations, representations or warranties contained in
this Services Agreement; or
c. By either party upon 30 days' written notice to the other party if the
other party (which, in the case of the Client, shall mean Digital
Recorders or Transit-Media) is declared bankrupt or becomes insolvent
or voluntarily institutes a bankruptcy proceeding under the Bankruptcy
Code, or a receiver is appointed for the assets of such other party, or
such other party makes a general assignment for the benefit of
creditors or admits in writing its inability to pay its debts as they
become due;
PROVIDED, HOWEVER, that this Services Agreement will not be terminated as
provided in paragraph (b) or (c) if, within such 30-day period, such other party
cures such breach, default, act or circumstance giving rise to the right of
termination to the reasonable satisfaction of the party delivering the notice.
The term of this Services Agreement shall be a period of three years
commencing on the date of its execution by RTI and the Client. This Services
Agreement shall automatically be renewed for an additional three-year term at
the end of the initial and each successive term,
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unless either party shall have given notice to the other party that it elects
not to renew this Services Agreement prior to end of the second year of the
initial or any subsequent three-year term.
7. RELATIONSHIP OF PARTIES: It is understood by the parties that RTI is an
independent contractor with respect to the Client, and not an employee, partner
or joint venturer of Digital Recorders or Transit-Media. Unless otherwise
specifically agreed with respect to any specific individual, the Client will not
provide a salary, fringe benefits, including health insurance benefits, paid
vacation, or any other employee benefit, for the benefit of RTI or RTI's
employees.
Each agreement, obligation, indemnity, representation and warranty of
the Client herein shall be a joint and several agreement, obligation, indemnity,
representation and warranty of Digital Recorders and Transit-Media, and Digital
Recorders and Transit-Media each shall have the authority to act on behalf of
and to bind the other in all matters relating to this Agreement and the
transactions contemplated hereby. RTI shall be entitled to rely on any notice,
instruction or other communication received from either of such corporations as
having been duly authorized by both. Any reference in this Agreement to the
Client, or to a "party" or any similar reference, shall, in the case of the
Client, be deemed to include Digital Recorders and Transit-Media, jointly and
severally, unless the context clearly requires otherwise. Any breach of this
Agreement by Digital Recorders or Transit-Media shall constitute a breach by
both. Without limiting the foregoing, Digital Recorders acknowledges that it
shall have the unconditional obligation in all cases to pay or cause to be paid
any and all amounts due RTI hereunder by the date on which such payments are
due.
8. DISCLOSURE: RTI is required to disclose any outside activities or interests
that, in the sole opinion of RTI, conflict or may conflict with the best
interests of Transit-Media. Notwithstanding RTI's opinion on such, prompt
disclosure is specifically required under this section if the activity is
directly or indirectly competitive with the public transportation and transit
business of Transit-Media. As of the date hereof, the only such item is the
beneficial holding, by Xxxxx X. Xxxxxx, a principal of RTI, of less than 5,000
shares of Trans Industries common stock.
9. EMPLOYEES: RTI's and the Client's employees, if any, who perform services
under this Services Agreement shall also be bound by the provisions of this
Services Agreement.
10. INJURIES: RTI acknowledges RTI's obligation to obtain appropriate insurance
coverage for the benefit of RTI (and RTI's employees, if any). RTI waives any
rights to recovery from the Client for any injuries that RTI (and/or RTI's
employees) may sustain while performing Services under this Services Agreement
or that are a result of the negligence of RTI or RTI's employees, unless such
injuries result from the intentional or reckless behavior or gross negligence of
the Client or its employees.
11. ASSIGNMENT AND RELIANCE ON CERTAIN PARTIES: Neither party's rights or
obligations under this Services Agreement may be assigned or transferred to any
other person, firm or corporation without the prior written consent of the other
party. RTI acknowledges that the Client is primarily, but not exclusively,
relying on the availability of Xxxxx X. Xxxxxx to perform Services under this
Services Agreement. RTI understands that the lack of such availability, at the
sole discretion of the Client, may be reason for termination of this Services
Agreement by the Client upon 90 days' written notice as provided in Section 6.
12. INTELLECTUAL PROPERTY: The following provisions shall apply with respect to
copyrightable works, trademarks, trade secrets, ideas, discoveries, inventions,
applications for
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patents, and patents of Transit-Media and RTI (collectively, "Intellectual
Property"):
a. RTI's Intellectual Property: As of the effective date of this Services
Agreement, RTI does not hold any interest in any Intellectual Property
which relates to the products and technology of Transit-Media to which
this Services Agreement applies other than RTI's exclusive license and
distribution rights granted to it by Lite Vision Corporation relating
to a device used in passenger information display systems in public
transit and transportation-related applications, in accordance with
that certain Exclusive Distribution and License Agreement among RTI,
Lite Vision Corporation and UTM, Inc. dated as of April 19, 1996. RTI
has granted to TwinVision Corp. of North America, Inc., a wholly owned
subsidiary of Digital Recorders, a sublicense with respect to its
rights under such agreement, pursuant to an Exclusive Distribution and
Sublicense Agreement dated as of June 1, 1996 by and between RTI and
such company.
b. Development of Intellectual Property: Any improvements to any existing
Intellectual Property of Transit-Media, any other and further
inventions or improvements, and any new items of Intellectual Property
relating to the products and technology of Transit-Media to which this
Services Agreement applies shall be the sole and exclusive property of
Transit-Media.
13. CONFIDENTIALITY: RTI and the Client each acknowledge that the other has and
will have trade secrets and other proprietary information (such as, but not
limited to, future plans, business affairs, process information, technical
information, customer lists, inventions, price lists and other pricing
information, and information relating to costs, apparatus, products and
machinery) (collectively, "Information") which are valuable, special and unique
assets of RTI or the Client, respectively. RTI and the Client each agree to not
at any time or in any manner, either directly or indirectly, divulge, disclose
or communicate in any manner any Information of the other party to any third
party without the prior written consent of the other. Each party will protect
the Information of the other and treat it as strictly confidential.
Notwithstanding the foregoing, neither party shall be obligated to maintain any
Information of the other party as confidential and refrain from using or
disclosing it, if (a) the Information was in the receiving party's possession or
was known to it prior to its receipt from the other party, (b) the Information
is independently developed or learned by the receiving party without the
utilization of any Information provided by the other party, (c) the Information
is or becomes public knowledge without fault of the receiving party or (d) the
receiving party is required by applicable law or court order to disclose the
Information.
14. UNAUTHORIZED DISCLOSURE OF INFORMATION: Each party acknowledges that a
violation by it of Section 13 would be a material violation of this Services
Agreement and would cause irreparable harm to the other party for which money
damages would be an inadequate remedy. Accordingly, except as provided otherwise
in Section 13, if it appears that RTI or the Client has disclosed (or has
threatened to disclose) Information in violation of this Services Agreement, the
other party shall be entitled to an injunction to restrain the disclosing party
from disclosing, in whole or in part, such Information, or from providing any
services to any party to whom such Information has been disclosed or may be
disclosed.
15. CONFIDENTIALITY AFTER TERMINATION: The confidentiality provisions of this
Services Agreement shall remain in full force and effect for a period of six
months after the termination of this Services Agreement.
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16. SERVICES TO OTHER PARTIES: The Client and RTI each acknowledge and agree
that RTI may provide consulting or other services to other parties during the
term of this Services Agreement. However, RTI is bound by the confidentiality
and disclosure provisions of this Services Agreement, and RTI may not use the
Information of the Client, directly or indirectly, for the benefit of third
parties in violation of this Services Agreement.
17. NON-COMPETE AGREEMENT: RTI agrees and covenants that for a period of six
months following the termination of this Services Agreement, in the event of
RTI's voluntary termination of this Services Agreement, RTI will not directly or
indirectly engage in any business competitive with Transit-Media's public
transportation and transit products and services business, as conducted on the
effective date of this Services Agreement. This covenant shall apply to the
geographical areas included in the Territory, as described on Attachment A.
Directly or indirectly engaging in any competitive business means (i) engaging
in a business as owner, partner, or agent; or (ii) becoming an employee of any
third party that is engaged in such business; or (iii) soliciting any customer
of Transit-Media for the benefit of a third party that is engaged in such
business. In the event of termination of this Services Agreement by the Client,
RTI shall not be subject to this section.
18. RETURN OF RECORDS: Upon termination of this Services Agreement, RTI shall,
upon request, deliver all records, notes, data, memorandum, models and equipment
of any nature that are in RTI's possession or under RTI's control and that are
Transit-Media's property or relate to Transit-Media's business.
19. NOTICES: All notices required or permitted under this Services Agreement
shall be in writing and shall be sent by telecopy or by a courier service that
guarantees overnight delivery, addressed as follows:
If to the Client:
Digital Recorders, Inc.
X. Xxxxxxxx X. Xxxxxxxx, Chairman and CEO
0000 Xxxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx Xxxxxxxx 00000
Fax no.: 000-000-0000
If to RTI:
Xxxxxxxx Xxxxxx International, Inc.
Xxxxx X. Xxxxxx, Principal
000 Xxxx Xxxxxxxx Xxxx
Xxxxx 000, Xxx 00
Xxxxxxxxxx, Xxxxx 00000
Fax no.: 000-000-0000
Such address may be changed from time to time by either party by
providing written notice to the other in the manner set forth above. The date of
delivery to such a courier service or of telecopying shall be deemed to be the
effective date on which notice was given, provided that all telecopies shall
contain a provision requiring confirmation of receipt and shall not be effective
unless confirmation of receipt is received within 24 hours of transmission.
Except to the extent expressly stated otherwise in this Agreement,
notice to Digital
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Recorders at such address shall be deemed to be notice to both
Digital Recorders and Transit Media and shall satisfy any obligation hereunder
of RTI to provide notice to the Client.
20. ENTIRE AGREEMENT: This Services Agreement contains the entire agreement of
the parties related to the Services. This Services Agreement supersedes any
prior written or oral agreements between the parties.
21. AMENDMENT: This Services Agreement may be modified or amended only by means
of a written instrument signed by the parties.
22. SEVERABILITY: If any provision of this Services Agreement shall be held to
be invalid or unenforceable for any reason, the remaining provisions shall
continue to be valid and enforceable. If a court finds that any provision of
this Services Agreement is invalid or unenforceable, but that by limiting such
provision it would become valid and enforceable, then such provision shall be
deemed to be written, construed and enforced as so limited.
23. WAIVER OF CONTRACTUAL RIGHT: The failure of either party to enforce any
provision of this Services Agreement shall not be construed as a waiver or
limitation of that party's right to subsequently enforce and compel strict
compliance with such provision or any other provision of this Services
Agreement.
24. APPLICABLE LAW: This Services Agreement shall be governed by the laws of the
State of Texas. Exclusive venue and jurisdiction of any dispute or suit arising
hereunder shall lie with the courts of the State of Texas located in Dallas
County, Texas, or the federal courts located in the Northern District of Texas
and, without limiting the foregoing, such courts shall have authority to enforce
the injunctive relief provisions of Section 14 and the dispute resolution
provisions of Section 25.
25. DISPUTE RESOLUTION: Except for the provision for injunctive relief contained
in Section 14, the parties agree to engage in binding arbitration for resolution
of all disputes arising out of or relating to this Services Agreement or the
performance or failure of performance hereunder. Such arbitration shall be
conducted in Dallas County, Texas pursuant to the expedited procedures of and in
accordance with the rules of the American Arbitration Association. The
arbitrator shall be mutually selected by the parties or, if they cannot agree on
such selection, the Client and RTI each shall designate one arbitrator to
represent it in the selection process and the two arbitrators shall appoint a
third arbitrator who shall arbitrate such dispute. Such selection process shall
be completed within 30 days from the date on which arbitration is requested by
either party. The arbitrator selected shall, if reasonably possible, be one who
is familiar with the commercial and manufacturing practices of the public
transportation and transit passenger information display industry. The
arbitrator's award shall be final and binding on the parties hereto and
enforceable by either party in any court of competent jurisdiction. The parties
agree that each party will bear its own costs of such arbitration (including
attorneys' fees and expenses), regardless of the decision rendered by the
arbitrator.
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IN WITNESS WHEREOF, the parties hereto have executed this Services
Agreement as of the date first written above.
DIGITAL RECORDERS, INC.
By:
X. Xxxxxxxx X. Xxxxxxxx
Chairman and CEO
TRANSIT-MEDIA GmbH
By:
Xxxxxx Xxxxx, Managing Director
XXXXXXXX XXXXXX INTERNATIONAL, INC.
By:
Xxxxx X. Xxxxxx, Principal
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Attachment A
The Territory
HONG KONG
SINGAPORE
EASTERN AND WESTERN EUROPE
Albania Greece Russia
Andorra Hungary Serbia
Armenia Iceland Slovakia
Austria Ireland Slovenia
Azerbaijan Italy Spain
Belarus, Republic of Latvia, Republic of Sweden
Belgium Liechtenstein Switzerland
Bosnia and Herzegovina Lithuania Turkey
Bulgaria Luxembourg Ukraine
Byelarus Macedonia United Kingdom - list of
Croatia Madeira political entities included
Cyprus Malta Channel Islands
Czech Republic Moldova England
Denmark Monaco Gibraltar
Greenmark (has Montenegro Isle of Man
home rule) Netherlands, The Northern Ireland
Estonia Norway Scotland
Finland Poland Wales
France Portugal Yugoslavia
Germany Romania
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