EXHIBIT 10.19
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("AGREEMENT") effective
the 1ST DAY OF OCTOBER, 2000, is by and between XATA Corporation, a
Minnesota corporation ("Company"), and XXXXXXX X. FLIES ("Executive"),
a Minnesota resident.
RECITALS:
WHEREAS, the Company desires to employ Executive
WHEREAS, Executive desires to be employed by the Company; and
WHEREAS, Company and Executive desire to set forth in writing
the terms and conditions of their agreements and understanding;
NOW THEREFORE, in consideration of the mutual covenants and
undertakings contained in this Agreement, the Company and the
Executive agree as follows:
A. Executive is employed by the Company in the capacity of
PRESIDENT & CHIEF EXECUTIVE OFFICER (CEO) effective the date
of this Agreement.
B. The Company is currently engaged in the development of onboard
information technology products. (the "Products") and in
marketing such Products to the transportation industry
(hereafter the "Company's Business").
C. Executive has certain unique skills, talents, contacts,
judgment, and knowledge, all to the benefit of the Company,
and has knowledge of the Company's Business, strategies, and
objectives.
1. DEFINITIONS. Capitalized terms used in this Agreement shall have
their defined meaning throughout the Agreement. The following terms
shall have the meanings set forth below, unless the context clearly
requires otherwise.
1.1 "AGREEMENT" means this Executive Employment Agreement, as from
time to time amended.
1.2 "BASE SALARY" means the total annual cash compensation payable
on a regular periodic basis, without regard to voluntary or
mandatory deferrals, as set forth at Section 3.1 of this
Agreement.
1.3 "BENEFICIARY" means the person or persons designated in
Exhibit "B" of this Agreement and signed by Executive to
receive any benefits payable after Executive's death pursuant
to this Agreement. In the absence of such designation or in
the event that all of the persons so designated predecease
Executive, Beneficiary means the executor, administrator or
personal representative of Executive's estate.
1.4 "BOARD" means the Board of Directors of the Company.
1.5 "CAUSE" has the meaning set forth at Section 4.2 of this
Agreement.
1.6 "COMPANY" means all of the following, jointly and severally:
(a) XATA Corporation and
(b) any Successor.
1.7 CONFIDENTIAL INFORMATION" means information that is
proprietary to the Company or proprietary to others and
entrusted to the Company that has not been published and/or
disclosed to the public, whether or not trade secrets, and
including, but not limited to, the Company's business plans,
advertising and/or marketing plans, financial performance,
financial projections, customer lists, pricing information,
personnel matters, or any other matter considered or
reasonably expected to be considered by the Company regarding
the Company's business and its employees.
1.8 "DATE OF TERMINATION" has the meaning set forth at Section
4.7.2 of this Agreement.
1.9 "DISABILITY" shall mean a physical or mental infirmity that
impairs the Executive's ability to substantially perform his
duties if it continues for a period of at least 180
consecutive days. Notwithstanding anything contained in this
Agreement to the
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contrary, until the Date of Termination specified in a Notice
of Termination relating to the Executive's Disability, the
Executive shall be entitled to return to his position with the
Company, in which event no Disability of the Executive will be
deemed to have occurred.
1.10 "GOOD REASON" has the meaning set forth at Section 4.4 of this
Agreement.
1.11 "INCENTIVE BONUS" means the actual cash bonus payable to the
Executive as set forth in Section 3.1 of this Agreement.
1.12 "NOTICE OF TERMINATION" has the meaning set forth at Section
4.7.1 of this Agreement.
1.13 "PLAN" means any bonus or incentive compensation agreement,
plan, program, policy or arrangement sponsored, maintained or
contributed to by the Company, to which the Company is a party
or under which employees of the Company are covered,
including, without limitation, any stock option, restricted
stock or any other equity-based compensation plan, annual or
long-term incentive (bonus) plan, and any employee benefit
plan, such as a thrift, pension, profit sharing, deferred
compensation, medical, dental, disability, accident, life
insurance, automobile allowance, perquisite, fringe benefit,
vacation, sick or parental leave, severance or relocation plan
or policy or any other agreement, plan, program, policy, or
any other agreement, plan, program, policy or arrangement
intended to benefit employees or executive officers of the
Company.
1.14 "SUBSIDIARY" means any corporation at least a majority of
whose securities having ordinary voting power for the election
of the directors (other than securities having such power only
by reason of the occurrence of a contingency) is at the time
owned by the Parent Corporation, the Company and/or one or
more Subsidiaries.
1.15 "SUCCESSOR" has the meaning set forth at Section 9.1.1 of this
Agreement.
1.16 "INVENTIONS" means ideas, improvements and discoveries,
whether or not such are patentable or copyrightable, and
whether or not in writing or reduced to practice.
1.17 "WORKS OF AUTHORSHIP" means writings, drawings, software, and
any other works of authorship, whether or not such are
copyrightable.
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2. EMPLOYMENT, DUTIES AND TERMS
2.1 EMPLOYMENT. Upon the terms and conditions set forth in this
Agreement, the Company hereby employs Executive, and Executive
accepts such employment as PRESIDENT & CHIEF EXECUTIVE OFFICER
(CEO) of the Company. Except as expressly provided herein,
termination of this Agreement by either party or by mutual
agreement of the parties shall also terminate the Executive's
employment by the Company.
2.2 DUTIES. During the term of this Agreement, and excluding any
periods of vacation, sick, disability or other leave to which
Executive is entitled, Executive agrees to devote reasonable
attention and time during normal business hours to the
business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to
Executive hereunder and under the Company's bylaws, as amended
from time to time, to use Executive's reasonable best efforts
to perform faithfully and efficiently such responsibilities.
2.3 CERTAIN PROPRIETARY INFORMATION. If Executive possesses any
proprietary information of another person or entity as a
result of prior employment or relationship, Executive shall
honor any legal obligation that Executive has with that person
or entity with respect to such proprietary information.
2.4 TERM. This Agreement shall be effective as of the date set
forth above, and shall be in effect until September 30, 2001,
provided that, commencing on October 1, 2001, and on each
October 1, thereafter, the term of this Agreement shall be
renewed automatically for the subsequent one-year period
unless either the Executive or the Company gives written
notice to the other party of its intent not to so extend this
Agreement at least 60 days prior to the end of the term of
this Agreement or the applicable renewal period, as the case
may be. At the time of renewal of this Agreement, the
Executive's compensation plan, as shown on Exhibit "A", and
Beneficiary Designation, as shown on Exhibit "B", will be
reviewed and updated by the Company and the Executive, which
updates will be dually noted by Signatures and dates by the
Executive and the Board's designated compensation
representative.
2.5 RETURN OF PROPRIETARY PROPERTY. Executive agrees that all
property in Executive's possession belonging to the Company,
including without limitation, all documents, reports, manuals,
memoranda,
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computer print-outs, customer lists, credit cards, keys,
identification, products, access cards, automobiles, and all
other property relating in any way to the business of the
Company are the exclusive property of the Company, even if
Executive authored, created or assisted in authoring or
creating such property. Executive shall return to the Company
all such documents and property immediately upon termination
or at such earlier time as the Company may reasonably request.
2.6 POSITION AND DUTIES.
(a) During the Employment Period, Executive shall serve as
the PRESIDENT AND CHIEF EXECUTIVE OFFICER (CEO) of the
Company, and shall have the normal duties,
responsibilities and authority of an executive serving
in such position, subject to supervision and control by
the Board of Directors of the Company (the "Board").
During the Employment Period, Executive may also serve
as a director of the Company providing the Shareholders
elect the Executive to that position. During the
Employment Period, Executive may also serve as a
director of any affiliate of the Company designated by
the Board for so long as the Board or the affiliate's
shareholders, whichever applies, causes the Executive to
be elected to or appointed to such position, as the case
may be.
(b) Executive shall report to THE BOARD OF DIRECTORS.
(c) During the Employment Period, Executive shall devote his
best efforts and his full business time and attention
(except for permitted vacation periods, reasonable
periods of illness, or other incapacity and provided
such activities do not interfere with the performance by
Executive of his duties and responsibilities hereunder,
participation in charitable and civic endeavors and
management of Executive's personal investments and
business interests) to the business and affairs of the
Company, its subsidiaries and affiliates. Executive
shall perform his duties and responsibilities hereunder
to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner.
(d) Executive shall perform his duties and responsibilities
hereunder principally in the Minneapolis, Minnesota
metropolitan area.
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3. COMPENSATION, BENEFITS AND EXPENSES.
3.1 BASE SALARY/INCENTIVE BONUS/STOCK OPTIONS. Subject to Section
4.8, during the term of Executive's employment under this
Agreement and for as long thereafter as required pursuant to
Section 4, the Company shall pay Executive a Base Salary at an
annual rate that is not less than ONE HUNDRED EIGHTY THOUSAND
DOLLARS ($ 180,000) or such higher annual rate as may from
time to time be approved by the Board, such Base Salary to be
paid in substantially equal regular periodic payments in
accordance with the Company's regular payroll practices. If
Executive's Base Salary is increased from time to time during
the term of Executive's employment under this Agreement, the
increased amount shall become the Base Salary for the
remainder of the term and any extensions of Executive's term
of employment under this Agreement and for as long thereafter
as required pursuant to Section 4, subject to any subsequent
increases. In addition, the Executive shall be entitled to an
annual Incentive Bonus as described on Exhibit "A", which may
be modified from year to year contingent upon and adjusted by
the Company's achievement of goals defined by the Compensation
Committee of the Board and approved by the Board. In addition,
the Executive may be entitled to an annual grant of stock
options.
3.2 BUSINESS EXPENSES. During the term of the Executive's
employment under this Agreement and as for as long thereafter
as required pursuant to Section 4, the Company shall, in
accordance with, and to the extent of its uniform policies in
effect from time to time, bear all ordinary and necessary
business expenses incurred by Executive in performing
Executive's duties as an executive officer of the Company,
including, without limitation, all travel and living expenses
while away from home on business in the service of the
Company, home telephone expenses incurred in service of the
Company, social and civic club membership and participation
expenses and entertainment expenses, provided that Executive
accounts promptly for such expenses to the Company in the
manner reasonably prescribed from time to time by the Company.
3.3 FUTURE GRANT OF OPTIONS. The Company may grant to Executive
options to acquire shares of the Company's common stock as
described on Exhibit "A", which may be modified from year to
year as approved by the Board.
3.4 DISCRETIONARY BONUSES. Executive shall be eligible to receive
bonuses from time to time as may be awarded to Executive by
the
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Board or a compensation committee appointed by the Board which
recommendations will be approved by the Board in the Board's
sole discretion. The discretionary bonuses, if any, will be in
addition to any bonuses described in Exhibit "A".
3.5 TERM LIFE INSURANCE. During the term of this Agreement, the
Company shall pay the premiums to purchase and maintain term
life insurance on the life of the Executive in an amount equal
to four times the Executive's Base Salary as in effect from
time to time as recorded on Exhibit "A", the benefit to be
payable to such Beneficiary as Executive shall advise the
Company and the insurer from time to time.
3.6 NONASSIGNABILITY OF BENEFITS. Executive shall not transfer,
assign, encumber, or otherwise dispose of his right to receive
payments hereunder and, in the event of any attempted transfer
or assignment, the Company shall have no further liability to
Executive under this Agreement.
4. EARLY TERMINATION
4.1 EARLY TERMINATION. Subject to the respective continuing
obligations of the parties pursuant to Section 5, this Article
4 sets forth the terms for early termination of the
Executive's employment under this Agreement.
4.2 TERMINATION BY THE COMPANY FOR CAUSE. The company may
terminate this Agreement for Cause. A termination of
employment shall be for "Cause" if the Executive
(i) has been convicted of a felony
(ii) has engaged in an act or acts of personal dishonesty
intended to result in substantial personal enrichment of
the Executive at the expense of the Company, or
(iii) has intentionally engaged in other conduct that is
demonstrably and materially injurious to the Company,
monetarily or otherwise;
(iv) the commission by Executive of a fraud;
(v) the commission by Executive of any act involving
dishonesty or disloyalty with respect to the Company or
any of its subsidiaries or affiliates;
(vi) conduct by Executive tending to bring the Company or any
of its subsidiaries or affiliates into substantial
public disgrace or disrespect;
(vii) gross negligence or willful misconduct by Executive with
respect to the Company or any of its subsidiaries or
affiliates.
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4.3 TERMINATION BY COMPANY WITHOUT CAUSE. The Company may
terminate Executive's employment under this Agreement or any
renewal thereof at any time, provided that the Company shall
pay Executive all compensation due to Executive under this
Agreement for the remaining term of this Agreement or any
renewal thereof, as the case may be plus any compensation as
defined in Section 4.8.
4.4 TERMINATION BY EXECUTIVE FOR GOOD REASON. Executive may
terminate Executive's employment under this Agreement for Good
Reason. Termination by Executive for "Good Reason" shall mean
termination of employment based on any one or more of the
following:
4.4.1 POSITION AND DUTIES. Assignment to Executive by the
Company of duties which are inconsistent with
Executive's position, duties, responsibilities, and
status with the Company, or a change in Executive's
titles or offices, or any removal of Executive from, or
any failure to reelect or reappoint Executive to any
such positions, except in connection with the
termination of his employment for Disability or Cause or
as a result of Executive's death or by Executive other
than for Good Reason;
4.4.2 COMPARABLE BENEFIT PLAN. Any failure to the Company to
continue in effect, or to provide a comparable
substitute for, any benefit plan or arrangement
(including, without limitation, any profit sharing plan,
executive supplemental medical plan, group life
insurance plan, and medical, dental, accident, and
disability plans but excluding incentive plans or
arrangements, which are the subject of Section 4.4.4) in
which Executive is participating as in effect on the
date hereof, (or any other plans providing executive
with substantially similar benefits) (hereinafter
referred to as "BENEFIT Plans"), or by the taking of any
action by the Company that would adversely affect
Executive's participation in or materially reduce
Executive's benefits under any such Benefit Plan or
deprive Executive of any material fringe benefit enjoyed
by Executive as in effect on the date hereof.
4.4.3 COMPARABLE INCENTIVE PLAN. Any failure by the Company to
continue in effect, or to provide a comparable
substitute for any incentive plan or arrangement
(including, without limitation, any incentive
compensation plan, long-term incentive plan, bonus or
contingent bonus arrangements or credits, the right to
receive performance awards, or similar
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incentive compensation benefits) in which Executive is
participating, or is eligible to participate,
(hereinafter referred to as "INCENTIVE PLANS") or the
taking of any action by the Company which would
adversely affect Executive's participation in any such
Incentive Plan.
4.5 TERMINATION IN THE EVENT OF DEATH OF DISABILITY. The term of
Executive's employment under this Agreement shall terminate in
the event of Executive's death or Disability, subject to the
provisions of Section 4.8 hereof.
4.6 TERMINATION BY MUTUAL AGREEMENT. The parties may terminate
Executive's employment under this Agreement at any time by
mutual written agreement.
4.7 NOTICE OF TERMINATION; DATE OF TERMINATION; OFFER OF CONTINUED
EMPLOYMENT. The provisions in this Section 4.7 shall apply in
connection with any early termination of Executive's
employment under this Agreement pursuant to this Section 4.
4.7.1 For purposes of this Agreement, A "NOTICE OF
TERMINATION" shall mean a notice which shall indicate
the specific termination provisions in this Agreement
relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide the basis for
such termination. Any purported termination by the
Company or by the Executive pursuant to this Section 4
(other than a termination by mutual agreement pursuant
to Section 4.6 or death) shall be communicated by
written Notice of Termination to the other party hereto.
4.7.2 For purposes of this Agreement, "DATE OF TERMINATION"
shall mean: (a) if Executive's employment is terminated
due to death, the last day of the month first following
the month during which Executive's death occurs; (b) if
Executive's employment is to be terminated for
Disability, thirty (30) calendar days after Notice of
Termination is given; (c) if Executive's employment is
terminated by the Company for Cause or by Executive for
Good Reason, the date specified in the Notice of
Termination; (d) if Executive's employment is terminated
by mutual agreement of the parties, the date specified
in such agreement; or (e) if Executive's employment is
terminated for any other reason, the date specified in
the Notice of Termination, which in no event shall be a
date earlier than thirty (30) calendar days after the
date on which a Notice of Termination is given, unless
an
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earlier date has been expressly agreed to by Executive
in writing either in advance of, or after, receiving
such Notice of Termination.
4.8 COMPENSATION UPON TERMINATION, DEATH OR DURING DISABILITY.
4.8.1 If the Executive shall become disabled or incapacitated
to the extent that he is unable to perform his duties
hereunder, by reason of medically determinable physical
or mental impairment, as determined by a doctor mutually
acceptable to the Company and the Executive and retained
by the Company, Executive shall nevertheless continue to
receive the compensation and benefits provided under the
terms of this Agreement as follows: 100% of such
compensation and benefits for a period of 12 months, but
not beyond the Date of Termination, and 65% thereafter
until the Date of Termination. Such benefits noted
herein shall be reduced by any benefits otherwise
provided to the Executive during such period under the
provisions of disability insurance coverage in effect
for the Company's employees. Thereafter, Executive shall
be eligible to receive benefits provided by the Company
under the provisions of disability insurance coverage in
effect for the Company's employees. Upon returning to
active full-time employment, the Executive's full
compensation as set forth in this Agreement shall be
reinstated as of the date of commencement of such
activities. In the event that the Executive returns to
active employment on other than a full-time basis, then
his compensation (as set forth in Section 3 of this
Agreement) shall be reduced in proportion to the time
spent in said employment, or as shall otherwise be
agreed to by the parties.
4.8.2 If the Executive's employment under this Agreement is
terminated on account of Disability or death, the
Company shall, within ten (10) fiscal days following the
Date of Termination, pay any amounts due to Executive
under this Agreement through the Date of Termination,
pay any amounts due to Executive under this Agreement
through the Date of Termination, including, without
limitation, amounts to which Executive is entitled under
any Plan in accordance with the terms of such Plan, and
further including, without limitation, a pro rata
portion (prorated through the Date of Termination) of
any Target Incentive Bonus or other annual or long-term
bonus or incentive payments (for performance periods in
effect at the Date of Termination) to which
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Executive would have been entitled had Executive
remained continuously employed through the end of such
performance periods and continued to perform Executive's
duties in the same manner as performed immediately prior
to the Executive's death or Disability.
4.8.3 If Executive's employment under this Agreement is
terminated by the Company for Cause, or by Executive for
other than Good Reason, the Company shall pay Executive
only the Base Salary through the Date of Termination and
any amounts to which the Executive is entitled under any
Plan in accordance with the terms of such Plan.
4.8.4 If Executive's employment under this Agreement is
terminated by the mutual agreement of the parties under
Section 4.6, the Company shall provide Executive with
the payments and benefits specified in this Agreement.
4.8.5 If the Company terminates Executive's employment
hereunder without Cause other than in the event of death
or Disability (it being understood that a purported
termination for Disability or for Cause which is
disputed and finally determined not to have been proper
termination for Cause or Disability shall be a
termination by the Company without Cause) or if
Executive terminates his employment hereunder for Good
Reason in accordance with Section 4.4, the Company
shall:
4.8.5.1 continue to pay Executive's Base Salary in
accordance with Section 3.1 at the annual rate
in effect hereunder immediately prior to the
Date of Termination in the same manner as if
Executive had remained continuously employed
for one additional year of this Agreement (12
months);
4.8.5.2 cause Executive's continued participation in
all Plans in accordance with Section 3.2 of
this Agreement as if Executive remained
continuously employed with the Company for the
unexpired term of this Agreement for all
purposes, including, without limitation,
grants, awards, accruals and vesting
thereunder; provided that, if such continued
participation is not permissible under
applicable law, the Company shall provide
Executive with benefits substantially similar
to those to which Executive would have been
entitled
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under those Plans in which Executive's
continued participation is not permissible,
and
4.8.5.3 reimburse the Executive for outplacement
expenses up to $10,000, which amount shall be
payable for services provided within the first
twelve months following the Date of
Termination upon submission to the Company of
appropriate documentation evidencing
Executive's payment for such services.
4.8.6 The payments determined pursuant to Section 4.8.5 shall
be mitigated to the extent of Executive's "earned
income" within the meaning of Section 911(d)(2)(A) of
the Internal Revenue Code of 1986, as amended (the
"Code") during the remainder of the period with respect
to which such payments pursuant to Section 4.8.5 are
required to be paid.
5. RESTRICTIVE COVENANTS. Except as otherwise provided in this
Agreement, the Executive will not, during the period of his
employment with the Company, and for a period of one (1) year
thereafter (except for Section 5.1, with the time therein set
forth), directly or indirectly, for the Executive or on behalf of or
in conjunction with any other person, company, partnership,
corporation or business of whatever nature:
5.1 CONFIDENTIAL INFORMATION. Reveal to any person or entity
outside of the Company, except as may be explicitly necessary
as part of the direct responsibilities of the Executive's
position with the Company, any Confidential Information.
Executive shall keep the Company's confidential documents
secure and avoid the inadvertent or intentional disclosure of
the Company's business matters inside and/or outside the
Company. Disclosure of Confidential Information within the
Company shall only be on a need-to-know basis, as is required
or necessary to carry out the Executive's duties as an
employee of the Company. Executive will use reasonable and
prudent care to safeguard and protect and prevent the
unauthorized use and disclosure of Confidential Information.
The obligations contained in this Section 5.1 will survive for
as long as the company, in its sole judgment, considers the
information to be Confidential Information. The obligations
under this Section 5.1 will not apply to any Confidential
Information that is now or becomes generally available to the
public through no fault of Executive or to Executive's
disclosure of any Confidential Information required by law or
judicial or administrative process.
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5.2 NON-COMPETITION. Directly or indirectly, own (except as a
shareholder of up to 5% of the outstanding stock in a publicly
traded corporation), manage, operate, participate in
ownership, participate in management, participate in operation
or control, or be employed by, or act as a consultant to, or
become an independent contractor with, or become an adviser
to, or be connected in any manner with, any individual or
other entity which engages in or has an interest in a business
that meaningfully competes with the Company's Business.
Notwithstanding the foregoing, it is agreed that Executive
shall not be in violation of his Section 5.2 if he is
associated with (a) a company which develops or markets
onboard information technology products which compete,
directly or indirectly, with the Company's Business if such
products accounted for less than 10% of the gross sales of
such company in its last fiscal year and are reasonably
expected to account for less than10% of its gross sales in the
current fiscal year, or (b) a division or department of any
company (even if such company competes with the Company) that
is not involved, directly or indirectly, in developing,
manufacturing or selling products that compete with the
Company's Business.
5.3 NON-ENTICEMENT. Directly or indirectly interfere with the
contractual or other relationships between the Company and any
other employees, independent contractors, consultants,
prospective employees, prospective consultants, prospective
independent contractors to the Company, to be either employed
by or retained by the Company; or induce the Company's other
employees to leave the employ of the Company.
5.4 NON-CUSTOMER INTERFERENCE. Call upon any person or entity
which is/was a customer or prospective customer or vendor of
the Company (including the Subsidiaries thereof) in direct
competition with the current Business of the Company or known
planned products or services of the Company, or its
Subsidiaries. As used herein, the term "customer" means any
entity to whom the Company, or its Subsidiaries, has provided
services within the twelve (12) month period prior to the date
of Executive's termination; the term "prospective customer"
means any entity that has been subject to documented sales and
marketing activity, other than mass mailings. by the Company,
or its Subsidiaries, within the twelve (12) month period prior
to the date of the Executive's termination; and "vendor" means
any entity serving as a source for any products sold by the
Company or entity producing products or services for the
Company to enable it to provide products and services to the
Company's customers.
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5.5 NON-MERGER INTERFERENCE. Call upon, for the purpose of
acquiring or performing services for such entity, any
prospective acquisition or merger candidate which was either
called upon by the Company, or its Subsidiaries, or for which
the Company, or its Subsidiaries, made an acquisition or
merger analysis during the six (6) month period prior to the
date of Executive termination.
5.6 INTERPRETATION. It is agreed by the parties that the foregoing
covenants in Section 5.1 through 5.5, inclusive, impose a
reasonable restraint on Executive in light of the Company's
Business and related activities on the date of the execution
of this Agreement.
5.7 REMEDIES. Executive agrees that any breach or threatened
breach of the covenants set forth in this Section 5 will cause
the Company irreparable harm for which there is no adequate
remedy at law, and, without limiting other rights and remedies
the Company may have at law or under and pursuant to this
Agreement, Executive consents to remedies pursuant to this
Section 5.7, including, but not limited to, the issuance of an
injunction in favor of the Company enjoining the breach of any
of the aforesaid covenants by any court of appropriate
jurisdiction. Such injunction shall provide the Company with
at least a one (1) year contractual protection agreed to by
the parties, and in the event the Executive violates the terms
of the injunction, Executive agrees that a court of
appropriate jurisdiction shall have the power to extend the
length or breadth of the injunction to provide the Company
with the full measure of protection intended by this
Agreement, including, but not limited to, the extension of
such injunction for a reasonable period of time in order to
eliminate any commercial advantage which may be derived from a
misappropriation of Confidential Information or a breach or
default of the covenants set forth in Sections 5.2 through
5.5, inclusive. If any or all of the aforesaid covenants are
held not to be enforceable because of the scope or duration of
such covenant, or if applicable, the area covered by such
covenants, the parties agree that a court of appropriate
jurisdiction shall make such determination, and the court
shall have the power to reduce the scope, duration, and area
of any covenant (or one or more of the foregoing) to the
extent which allows maximum scope, duration and area as
permitted by applicable law. The covenants in this Section 5
protect not only the Company but also any operations
controlled by the Company or controlling the Company, whether
a Parent Corporation, Subsidiary, brother/sister corporation
or affiliate. The Executive shall pay reasonable attorneys'
fees, costs and expenses that may be incurred by the Company
in enforcing one or more of the covenants set forth in this
Section 5. Section 5 shall have
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independent legal significance and shall survive termination
of this Agreement.
6. INVENTIONS
6.1 DISCLOSURE AND ASSIGNMENT OF INVENTIONS AND OTHER WORKS.
Executive shall promptly disclose to the Company in writing
all inventions and Works of Authorship which are conceived,
made, discovered, written or created by Executive alone or
jointly with another person, group or entity, whether during
the normal hours of his employment at the company or on
Executive's own time, during the term of this Agreement and
for one year after termination of this Agreement except as
exempted as described in 6.2 below. Executive shall assign all
rights to all such inventions and Works of Authorship to the
Company. Executive shall give the Company considers necessary
or desirable in order to transfer or record the transfer of
Executive's entire right, title and interest in such
inventions and Works of Authorship; and in order to enable the
Company to obtain exclusive patent, copyright, or other legal
protection for Inventions and Works of Authorship. The Company
shall bear any reasonable expenses in this regard.
6.2 NOTICE: MINNESOTA LAW EXEMPTS FROM THIS AGREEMENT "AN
INVENTION FOR WHICH NO EQUIPMENT, SUPPLIES, FACILITY OR TRADE
SECRET INFORMATION OF THE COMPANY WAS USED AND WHICH WAS
DEVELOPED ENTIRELY ON THE EXECUTIVE'S OWN TIME, AND (1) WHICH
DOES NOT RELATE (A) TO THE BUSINESS OF THE COMPANY, OR (B) TO
THE COMPANY'S ACTUAL OR DEMONSTRABLY ANTICIPATED RESEARCH OR
DEVELOPMENT, OR (2) WHICH DOES NOT RESULT FROM ANY WORK
PERFORMED BY EXECUTIVE FOR THE COMPANY."
6.3 ADDITIONAL EXCLUSIONS. The inventions and Works of Authorship
set forth in Exhibit C (if no Exhibit C is attached, there is
nothing to disclose) to this Agreement which Executive owns or
controls shall also be excluded from operation of Section 6.1
of this Agreement, and Executive represents that such
inventions and Works of Authorship were conceived, made,
written, or created by the Executive prior to the employment
with the Company (although they may be useful to the Company),
its Subsidiaries or affiliates. Other than the Inventions and
Works of Authorship listed in Exhibit C, Executive does not
own or control rights in any inventions or Works of Authorship
and Executive shall not assert any such rights against the
Company.
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7. EXCISE TAX PAYMENTS
7.1 In the event that any payment or benefit (within the meaning
of Section 280G(b)(2) of the Code), paid or payable to the
Executive or for his benefit or distributed pursuant to the
terms of this Agreement or otherwise in connection with, or
arising out of, his employment with the Company (a "PAYMENT"
or "PAYMENT") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties become
payable by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "EXCISE TAX"),
then the Executive will be entitled to receive an additional
payment (a "GROSS-UP PAYMENT") in an amount such that after
payment by the Executive of all taxes (including any interest
or penalties imposed by reason of the Executive's failure to
file timely a tax return or pay taxes shown as due on his
return, imposed with respect to such taxes and the Excise
Tax), including any Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments,
PROVIDED HOWEVER, that in no event shall the amount of the
Gross-Up Payment exceed an amount equal to 100% of the
Executive's Base Salary and Target Incentive Bonus in effect
at the Date of Termination.
7.2 An initial determination as to whether a Gross-Up Payment is
required pursuant to this Agreement and the amount of such
Gross-Up Payment shall be made at the Company's expense by an
accounting firm selected by the Company and reasonably
acceptable to the Executive which is designated as one of the
largest accounting firms in the United States (the "ACCOUNTING
FIRM"). The Accounting Firm shall provide its determination
(the "DETERMINATION"), together with detailed supporting
calculations and documentation, to the Company and the
Executive within five days of the of the Date of Termination,
if applicable, or such other time as requested by the company
or by the Executive (provided the Executive reasonably
believes that any of the Payments may be subject to the Excise
Tax). If the Accounting Firm determines that no Excise Tax is
payable by the Executive with an opinion reasonably acceptable
to the Executive that no Excise Tax will be imposed with
respect to any such Payment or Payments. Within ten days of
the delivery of the Determination to the Executive, the
Executive shall have the right to dispute the Determination
(the "DISPUTE"). The Gross-Up Payment, if any, as determined
pursuant to this Section 7.2 shall be paid by the Company to
the Executive within five days of the receipt of the
Determination. The
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existence of the Dispute shall not in any way affect the
Executive's right to receive the Gross-Up Payment in
accordance with the Determination. Upon the final resolution
of a Dispute, the Company shall promptly pay to the Executive
any additional amount required by such resolution, or if it is
determined that the Excise Tax is lower than originally
determined, the Executive shall repay to the Company the
excess amount of the Gross-Up Payment, if there is no Dispute,
the Determination shall be binding, final and conclusive upon
the Company and the Executive subject to the application of
Section 7.3 below.
7.3 Notwithstanding anything contained in this Agreement to the
contrary, in the event that, according to the Determination,
an Excise Tax will be imposed on any Payment or Payments, the
Company shall pay to the applicable government taxing
authorities as Excise Tax withholding, the amount of the
Excise Tax that the Company has actually withheld from the
Payment or Payments.
8. ARBITRATION
Each party retains the right to bring an action in a court of law
for the interpretation and/or enforcement of the terms of this
Agreement. The Executive and the Company shall also have the right
and option to mutually agree (in lieu of litigation) to have a
dispute or controversy arising under or in connection with this
Agreement settled by arbitration, conducted before one arbitrator
mutually agreed upon by the Executive and the Company, sitting in a
location selected by the Company within 25 miles from the location
of the Company's principal place of business. To the extent not
otherwise inconsistent with the express provisions of this
Agreement, the rules of the American Arbitration Association then in
effect shall apply unless the Executive and the Company otherwise
agree. In the event the Company and the Employee cannot agree upon
an arbitrator within 60 days of the receipt of a written request for
arbitration under this Agreement, the parties shall apply to the
District Court for Hennepin County for the Court to appoint an
arbitrator pursuant to Minnesota Statutes Section 572.10, as
amended. Judgment may be entered on the award of the arbitrator in
any court having jurisdiction. The arbitrator, in its discretion,
may award attorneys fees and costs for the party in whose favor the
arbitrator rules.
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9. GENERAL PROVISIONS
9.1 SUCCESSORS AND ASSIGNS:
9.1.1 This Agreement shall be binding upon and shall inure to
the benefit of the Company, its successors and assigns
and the Company shall require any successor or assign to
expressly assume 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 or
assignment had taken place. The term "COMPANY" as used
herein shall include such successors (including a
Surviving Corporation) and assigns. The terms
"SUCCESSORS" or "SUCCESSORS AND ASSIGNS" as used herein
each shall mean a corporation or other entity acquiring
all or substantially all the assets and business of the
Company (including this Agreement) whether by operation
or law or otherwise.
9.1.2 Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the
Executive, his beneficiaries or legal representatives,
except by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal
representative.
9.2 NO OFFSETS. In no event shall any amount payable to Executive
pursuant to this Agreement be reduced for purposes of
offsetting, either directly or indirectly, any indebtedness or
liability of Executives to the Company.
9.3 NOTICES. All notices, requests, and demands given to or made
pursuant hereto shall except as otherwise specified herein, be
in writing and be personally delivered or mailed postage
prepaid, registered or certified US mail to any party at its
address set forth on the last page of this Agreement. Either
party may, by notice hereunder, designate a changed address.
Any notice hereunder shall be deemed effectively given and
received: (1) if personally delivered, upon delivery; or (2)
if mailed, on the registered date or the date stamped on the
certified mail receipt.
9.4 WITHHOLDING. To the extent required by an applicable law,
including, without limitation, any federal, state or local
income tax or excise tax law or laws, the Federal Insurance
Contributions Act, the Federal Unemployment Tax Act or any
comparable federal, state or local laws, the Company retains
the right to withhold such portion of
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any amount or amounts payable to Executive under this
Agreement as the Company (on the written advice of outside
counsel) deems necessary.
9.5 CAPTIONS. The various headings or captions in this Agreement
are for convenience only and shall not affect the meaning or
interpretation of this Agreement.
9.6 GOVERNING LAW. The validity, interpretation, construction,
performance, enforcement and remedies of or relating to this
Agreement, and the rights and obligations of the parties
hereunder shall be governed by the substantive laws of the
State of Minnesota (without regard to the conflict of laws,
rules or statutes of any jurisdiction), and any and every
legal proceeding arising out of or in connection with this
Agreement shall be brought in the appropriate courts of the
State of Minnesota, each of the parties hereby consenting to
the exclusive jurisdiction of said courts for this purpose.
9.7 CONSTRUCTION. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
9.8 WAIVERS. No failure on the part of either party to exercise,
and no delay in exercising, any right or remedy hereunder
shall operate as a waiver thereof; nor shall any single or
partial exercise of any right or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other
right or remedy granted hereby or by any related document or
by law.
9.9 MODIFICATION. This Agreement may not be modified or amended
except by written instrument signed by the parties hereto.
9.10 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding between the parties hereto in
reference to all the matters herein agreed upon. This
Agreement replaces in full all prior employment agreements or
understandings of the parties hereto, except stock option
agreements, and any and all such prior agreements or
understandings, except stock option agreements, are hereby
rescinded by mutual agreement.
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9.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same
instrument.
9.12 SURVIVAL. The parties expressly acknowledge and agree that the
provisions of this Agreement which by their express or implied
terms extend beyond the termination of Executive's employment
hereunder, shall continue in full force and effect
notwithstanding Executive's termination of employment
hereunder or the termination of this Agreement, respectively.
9.13 RIGHT TO COUNSEL. Executive acknowledges he is aware of his
right to obtain independent legal counsel of his own choosing
with respect to any matter or issue made or created by or
under this Agreement. Execution of this Agreement by the
Executive is an acknowledgement by the Executive that either
he has had the opportunity to review this Agreement to his own
satisfaction, has read and understood the terms and conditions
of this Agreement, has consulted with an attorney and has had
the terms and conditions of this Agreement satisfactorily
explained to the Executive, or has waived the right to seek
his own independent counsel, but nonetheless, acknowledges
that he understands the terms of this Agreement, and this
Agreement is executed and delivered freely and voluntarily by
the Executive without any force or coercion from the Company
or any other third party.
IN WITNESS WHEREOF, the parties hereto have caused this Executive Employment
Agreement to be duly executed and delivered as of the day and year first above
written.
COMPANY: XATA Corporation, a Minnesota Corporation
By /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------------------
Name Xxxxxxx X. Xxxxxxxx
------------------------------------------------
Its Chairman
-------------------------------------------------
EXECUTIVE: /s/ Xxxxxxx X. Flies
---------------------------------------------------
XXXXXXX X. FLIES
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EXHIBIT A
BASE COMPENSATION, INCENTIVE PLAN, AND STOCK OPTIONS
FOR PERIOD OF 1 OCTOBER 2000 THROUGH 30 SEPTEMBER 2001
BASE COMPENSATION: $180,000
INCENTIVE BONUS: To Be Paid Based on FY2001 Audited Financials Within 10 Days of
the Availability of Such Financials;
For Attainment of 100% of Target FY2001 EBIT*
25% of Base Compensation
For Attainment of 125% of Target FY2001 EBIT*
50% of Base Compensation
For Attainment of 150% of Target FY2001 EBIT*
100% of Base Compensation
* EBIT - Earnings Before Interest and Taxes
STOCK OPTIONS: The executive will be granted additional stock options as set by
the XATA Board of Directors in the Executive Stock Option Plan that is in effect
at the beginning of each new fiscal year in which this Agreement is in effect
for this Executive.
Date: ___________________
Company: ______________________________________________
Executive: ____________________________________________
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EXHIBIT B
TERM LIFE INSURANCE BENEFICIARY DECLARATION
Executive: Xxxxxxx Xxxx Flies
00000 Xxxx Xxxxxx Xxx
Xxxxxxxxx, XX 00000
Beneficiary: Xxxxx Xxxx Flies
00000 Xxxx Xxxxxx Xxx
Xxxxxxxxx, XX 00000
Phone: (000) 000-0000
Death Benefit: $ 720,000
Carrier: _____________________________________
Address _____________________________________
_____________________________________
_____________________________________
Contact: _____________________________________
Phone: _____________________________________
Executive: _______________________________________
XXXXXXX X. FLIES
Date: ___________________
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EXHIBIT C
PATENTS & TRADEMARKS GRANTED TO EXECUTIVE PRIOR TO DATE OF AGREEMENT
US Patent Office Patents & Trademarks Described in US Patent Documents:
265049
274126
1255901
1293547
4297569
4326125
4379966
4436993
EUROPEAN Community Patents & Trademarks Described in ECO Documents:
277343
CANADIAN Patents & Trademarks Described in Canadian Documents:
275691
277343
1141841
1161559
STATE of Minnesota Trademarks Described in State of Minnesota Documents:
7275
7669
7861
and Any Other Patents & Trademarks Granted to Xxxxxxx Xxxx Flies, Xxxxxxx X.
Flies, or Xxxxxxx Flies by United States, European, Japanese, and/or
Minnesota Jurisdictions Prior to 1 January 1985
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