EXHIBIT 10.27
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("AGREEMENT") effective the 1st Day of
October, 2002, is by and between XATA Corporation, a Minnesota corporation
("Company"), and Xxxxxxx X. Flies ("Executive).
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 Chairman and
Chief Technology Officer 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.
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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 "CHANGE OF CONTROL" means any of the following events:
1.6.1 A sale, consolidation, merger, acquisition or
affiliation which results in the Executive not remaining
as President and Chief Executive Officer with
essentially the same duties and responsibilities as
prior to the sale, consolidation, merger, acquisition or
affiliation; or
1.6.2 A sale, consolidation, merger, or acquisition in which
the Company becomes accountable to, or a part of, a
newly created company or controlling organization where
at least 50% of the members of the Board of the newly
created Company or controlling organization were not
members of the Company's Board immediately prior to such
sale, consolidation, merger, or acquisition.
1.7 "COMPANY" means all of the following, jointly and severally:
(a) XATA Corporation and
(b) any Successor.
1.8 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.
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1.9 "DATE OF TERMINATION" has the meaning set forth at Section 4.7.2 of
this Agreement.
1.10 "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
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.
1.11 "GOOD REASON" has the meaning set forth at Section 4.4 of this
Agreement.
1.12 "INCENTIVE BONUS" means the actual cash bonus payable to the
Executive as set forth in Section 3.1 of this Agreement.
1.13 "NOTICE OF TERMINATION" has the meaning set forth at Section 4.7.1
of this Agreement.
1.14 "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.
1.15 "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.
1.16 "SUCCESSOR" has the meaning set forth at Section 9.1.1 of this
Agreement.
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1.17 "INVENTIONS" means ideas, improvements and discoveries, whether or
not such are patentable or copyrightable, and whether or not in
writing or reduced to practice.
1.18 "WORKS OF AUTHORSHIP" means writings, drawings, software, and any
other works of authorship, whether or not such are copyrightable.
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 Chairman and Chief Technical Officer 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, 2004, provided
that, commencing on October 1, 2004, 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,
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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,
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
Chairman and Chief Technical Officer 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.
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(d) Executive shall perform his duties and responsibilities
hereunder principally in the Minneapolis, Minnesota
metropolitan area.
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 $200,000 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.
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3.4 DISCRETIONARY BONUSES. Executive shall be eligible to receive
bonuses from time to time as may be awarded to Executive by the
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;
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(vii) gross negligence or willful misconduct by Executive with
respect to the Company or any of its subsidiaries or
affiliates.
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
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limitation, any incentive compensation plan, long-term
incentive plan, bonus or contingent bonus arrangements or
credits, the right to receive performance awards, or similar
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
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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 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 CHANGE OF CONTROL, 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
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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 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
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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 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.
4.8.5.4 Cause to immediately vest all unvested stock
options or rights under any stock option, stock
appreciation rights or other similar plan
maintained by Employer in which Employee is a
participant without regard to whether any
applicable performance criteria has been
satisified by Employee.
4.8.6 If a Change of Control Termination occurs, then the
Company shall provide to the Executive 12 months of
severance benefits identical to the severance benefits
available in Section 4.8.5.1, 4.8.5.2 and 4.8.5.3.
4.8.7 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
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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.
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 than 10%
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.
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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.
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
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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 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
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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.
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
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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 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
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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.
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
18
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 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.
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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.
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.
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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/ Xxxxx Xxxxxx
---------------------------------------
Name Xxxxx Xxxxxx
------------------------------------
Its Chair Compensation Committee
-------------------------------------
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 2002 THROUGH 30 SEPTEMBER 2003
BASE COMPENSATION: $200,000
INCENTIVE BONUS: To Be Paid Based on FY2003 Audited Financials Within 10 Days of
the Availability of Such Financials;
The Annual Incentive Opportunity is 45% of base salary at target performance
levels, representing $90,000 in annual incentive opportunity.
Objective Incentive Weight Measurement Threshold Target
--------- ---------------- ----------- --------- ------
Revenue 50% Fiscal 2002 Revenue $21.0 Million $23.1 Million
Profitability 30% EBITA $1.6 Million $1.76 Million
On Time Product Release 20% Release Date vs. Plan 50% of time 75% on time
STOCK OPTIONS: The executive will be awarded an initial stock option grant of
70,707 shares and additional grants of 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: 12/7/02
-------------------------
Executive: /s/ Xxxxxxx X. Flies
---------------------
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EXHIBIT B TERM LIFE INSURANCE BENEFICIARY DECLARATION
Executive: Xxxxxxx X. Flies
Address: 00000 Xxxx Xxxxxx Xxx
Xxxxxxxxx, XX 00000
Beneficiary: Xxxxx Xxxx Flies
Address: 00000 Xxxx Xxxxxx Xxx
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Death Benefit: $800,000
Carrier: -------------------------------------
Address -------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
Contact:
-------------------------------------
Phone:
-------------------------------------
Date: 12/7/02
-------------------------------------
Signed: /s/ Xxxxxxx X. Flies
-------------------------------------
(Xxxxxxx X. Flies)
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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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