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EXHIBIT 10.65
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of the 31st day
of May 2000, but effective as of January 1, 2000, is entered into in Richardson,
Texas by and between @TRACK Communications, Inc., a Delaware corporation, with
its principal place of business located at 0000 Xxx Xxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxx, 00000 ("Employer"), and Xxxx Xxxxxxxxx Xxxx, an individual
residing at 000 Xxxxxx Xxxxx, Xxxxxxx, Xxxxx, 00000 ("Employee").
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, Employer and Employee, intending to be legally bound, hereby agree as
follows:
1. Employment Relationship. Employer hereby employs Employee, and Employee
hereby accepts such employment, upon the terms and conditions set forth
in this Agreement. Such employment relationship shall continue for the
stated term of this Agreement, as described in Paragraph 8 hereof,
unless earlier terminated pursuant to Paragraph 5 hereof.
2. Position and Responsibilities of Employee. Employee shall be employed
as President and Chief Executive Officer with job responsibilities
related thereto, and such job responsibilities may be expanded at the
sole discretion of the Board of Directors of Employer. Employee shall
report to the Board of Directors of Employer and shall devote such
time, skill and attention to the business of Employer as shall be
required for the efficient management thereof, and shall manage and
supervise such business, and shall devote her full time best efforts to
the faithful performance of her duties on behalf of Employer. Employee
shall also perform such other duties, and may have job responsibilities
and titles modified from time to time as may be requested by the Board
of Directors of Employer, provided such duties and job titles are
generally consistent with the level of responsibility currently held by
Employee. Employee shall not engage in additional gainful employment of
any kind or undertake any role or position, whether or not for
compensation, with any competitor of Employer during the term of this
Agreement without advance written approval of the Board of Directors of
Employer.
3. Compensation. For all services rendered by Employee pursuant to this
Agreement, Employer shall pay to Employee, and Employee shall accept as
full compensation hereunder the following:
a. Salary. Employee shall receive a salary of $25,000.00 per
month payable by Employer in bi-monthly amounts in Richardson,
Texas. Employee's salary shall be subject to all appropriate
federal and state withholding taxes and shall be payable in
accordance with the normal payroll procedures of Employer.
b. Benefits and Perquisites. Employee shall be entitled to
participate in the employee benefit plans provided by Employer
for all employees generally, and for executive employees of
Employer. Employer shall be entitled to change such plans from
time to time, and the parties acknowledge that at the initial
date of this Agreement the fringe benefits provided to
Employee include a corporate 401(k)
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plan, health, dental, life, short and long-term disability
insurance for the Employee, and reimbursement of certain
expenses in accordance with the policies and procedures of
Employer.
c. Discretionary Bonuses. The Board of Directors of Employer
shall establish a discretionary incentive bonus plan for
Employee based on various targets and performance criteria to
be established by the Board of Directors of Employer. The
evaluation of the performance of Employee as measured by the
applicable targets and the awarding of applicable bonuses, if
any, shall be at the sole discretion of the Board of Directors
of Employer. The maximum annual bonus which may be awarded to
Employee shall be in the amount of fifty percent (50%) of
Employee's annual base salary at each fiscal year end of
Employer during the term of this Agreement, pro-rated for
partial years. The annual discretionary bonus may be awarded
in whole, in part, or withheld in its entirety based on the
level of incentive bonus plan performance criteria achieved by
Employee, in the sole judgement of the Board of Directors of
Employer. If Employee terminates this Agreement prior to the
expiration of the initial one (1) year term or if Employer
terminates this Agreement for cause as per Paragraph 5(b), the
Employee will not be paid any Discretionary Bonus, in whole or
in part. If Employer terminates this Agreement as per
Paragraph 5 (c) hereof prior to the expiration of the initial
one (1) year term, Employee shall be entitled to receive her
Discretionary Bonus on a prorated basis in such amount as
determined by the Board of Directors of Employer in their sole
discretion.
d. Stock Options. Employee previously executed Stock Option
Agreement(s) by which Employee has been granted the right to
purchase shares of common stock of Employer at a stated
exercise price as per the terms and conditions of the
HighwayMaster Communications, Inc.(f/k/a HM Holding
Corporation) 1994 Stock Option Plan (the "Plan")(such previous
option grants hereinafter referred to as "Previous Stock
Option Grants"). As per the Plan and the Previous Stock Option
Agreements, Employee's options vest in three (3) installments
with one third vesting upon the one year anniversary of the
grant date, and one third vesting on each of the next two (2)
yearly anniversaries of grant date. Notwithstanding the terms
of the Plan and the Previous Stock Option Agreements, upon the
occurrence of a Change in Control as defined in Paragraph 7 of
this Agreement, all stock options issued pursuant to the
Previous Stock Option Grants shall accelerate and be deemed
vested on the day prior to the Change in Control of Employer.
4. Protective Covenants. Employee recognizes that her employment by
Employer is one of the highest trust and confidence because (i)
Employee will become fully familiar with all aspects of Employer's
business during the period of her employment with Employer, (ii)
certain information of which Employee will gain knowledge during her
employment by Employer is proprietary and confidential information and
is of special and peculiar value to Employer, and (iii) if any such
proprietary and confidential information were imparted to or became
known by any person, including Employee, engaging in a business in
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competition with that of Employer, hardship, loss and irreparable
injury and damage could result to Employer, the measurement of which
would be difficult if not impossible to ascertain. Employee further
acknowledges that Employer has developed unique skills, concepts, sales
presentations, marketing programs, marketing strategy, business
practices, methods of operation, pricing information, production cost
information, trademarks, licenses, technical information, proprietary
information, computer software programs, tapes and discs concerning its
operations systems, customer lists, customer leads, documents
identifying past, present and future customers, customer profile and
preference data, hiring and training methods, investment policies,
financial and other confidential and proprietary information concerning
its operations and expansion plans ("Trade Secrets"). Therefore,
Employee agrees that it is necessary for Employer to protect its
business and that of its affiliates from such damage, and Employee
further agrees that the following covenants constitute a reasonable and
appropriate means, consistent with the best interest of both Employee
and Employer, to protect Employer or its affiliates against damage due
to loss or disclosure of proprietary information or Trade Secrets and
shall apply to and be binding upon Employee as provided herein:
a. Trade Secrets. Employee recognizes that her position with
Employer is one of the highest trust and confidence by reason
of Employee's access to and contact with certain Trade Secrets
of Employer. Employee agrees and covenants that, except as may
be required by Employer in connection with this Agreement, or
with the prior written consent of Employer, Employee shall
not, either during the term of this Agreement or thereafter,
directly or indirectly, use for Employee's own benefit or for
the benefit of another, or disclose, disseminate, or
distribute to another, except as directed by Employer or as
required for the performance of Employee's duties on behalf of
the Employer, any Trade Secret (whether or not acquired,
learned, obtained, or developed by Employee alone or in
conjunction with others) of Employer or of others with whom
Employer has a business relationship. All Trade Secrets, and
all memoranda, notes, records, drawings, documents, or other
writings whatsoever made, compiled, acquired, or received by
Employee during the term of this Agreement, arising out of, in
connection with, or related to any activity or business of
Employer, including, but not limited to, the customers,
suppliers, or others with whom Employer has a business
relationship, the arrangements of Employer with such parties,
and the pricing and expansion policies and strategy of
Employer, are, and shall continue to be, the sole and
exclusive property of Employer and shall, together with all
copies thereof, any and all documents constituting or relating
to Employer's proprietary information and Trade Secrets, and
all advertising literature, be returned and delivered to
Employer by Employee immediately, without demand, upon the
termination of this Agreement, or at any time upon Employer's
demand.
Employee acknowledges that Employer would not provide
Employee access to Employer's Trade Secrets and proprietary
and confidential information but for Employee's covenants in
this Paragraph 4.
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Employee represents and warrants that she is not
bound by any agreement with any prior employer or other party
that will be breached by execution and performance of this
Agreement, or which would otherwise prevent her from
performing her duties with Employer as set forth in this
Agreement. Employee represents and warrants that she has not
retained any copies of proprietary and confidential
information of any prior employer, and she will not use or
rely on any confidential and proprietary information of any
prior employer in carrying out her duties for Employer.
b. Covenant Not to Compete. In consideration of the numerous
mutual promises contained in the Agreement between Employer
and the Employee, including, without limitation, those
involving access to Trade Secrets and confidential information
and training, and in order to protect Employer's Trade Secrets
and the confidential information and to reduce the likelihood
of irreparable damage which would occur in the event such
information is provided to or used by a competitor of
Employer, Employee agrees that during her employment and for
an additional period of eighteen (18) months immediately
following the voluntary or involuntary termination of her
employment (the "Non-Competition Term"), Employee will not,
without the prior written consent of Employer (which consent
may be withheld in its sole discretion), enter the employ of
any person or entity, either directly or indirectly either as
principal, agent, representative, shareholder (except owning
publicly traded stock for investment purposes only in which
Employee owns less than 5%) consultant, officer, business
partner, associate, employee or otherwise, with a place of
business in the United States of America and/or Canada, which
sells or offers to sell services and/or products which compete
directly with the services and/or products offered or to be
offered for sale by Employer.
If, during any period within the Noncompetition Term, Employee
is not in compliance with the terms of this Paragraph 4,
Employer shall be entitled to, among other remedies,
compliance by Employee with the terms of this Paragraph 4 for
an additional period equal to the period of such
noncompliance. For purposes of this Agreement, the term
"Noncompetition Term" shall also include this additional
period. Employee hereby acknowledges that the geographic
boundaries, scope of prohibited activities and the time
duration of the provisions of this Section 4 are reasonable
and are no broader than are necessary to protect the
legitimate business interests of the Employer.
The Employer and Employee agree and stipulate that the
agreements and covenants not to compete contained in Paragraph
4 hereof are fair and reasonable in light of all of the facts
and circumstances of the relationship between Employee and
Employer; however, Employee and Employer are aware that in
certain circumstances courts have refused to enforce certain
agreements not to compete. Therefore, in furtherance of, and
not in derogation of the provisions of Paragraph 4, Employer
and Employee agree that in the event a court should decline to
enforce the provisions of Paragraph 4, that Paragraph 4 shall
be deemed to be modified or reformed to restrict Employee's
competition with Employer or its
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affiliates to the maximum extent, as to time, geography and
business scope, which the court shall find enforceable;
provided, however, in no event shall the provisions of
Paragraph 4 be deemed to be more restrictive to Employee than
those contained herein.
c. Non-Solicitation. Employee agrees that during her employment,
and for a period of twenty four (24) months following the
termination of her employment (for whatever reason), that
neither she nor any individual, partner(s), limited
partnership, corporation or other entity or business with
which she is in any way affiliated, including, without
limitation, any partner, limited partner, director, officer,
shareholder, employee, or agent of any such entity or
business, will (i) request, induce or attempt to influence,
directly or indirectly, any employee of Employer to terminate
their employment with Employer or (ii) employ any person who
as of the date of this Agreement was, or after such date, is
an employee of Employer. Employee further agrees that during
the period beginning with the commencement of Employee's
employment with Employer and ending twenty-four (24) months
after the termination of Employee's employment with Employer
(for whatever reason), she shall not, directly or indirectly,
as an employee, agent, consultant, stockholder, director,
partner or in any other individual or representative capacity
of Employer or of any other person, entity or business,
solicit or encourage any present or future customer, supplier,
contractor, partner or investor of the Employer to terminate
or otherwise alter his, her or its relationship with Employer.
d. Work Product. For purposes of this Paragraph 4, "Work Product"
shall mean all intellectual property rights, including all
trade secrets, U.S. and international copyrights, patentable
inventions, discoveries and other intellectual property rights
in any programming, design, documentation, technology, or
other work product that is created in connection with
Employee's work. In addition, all rights in any preexisting
programming, design, documentation, technology, or other Work
Product provided to Employer during Employee's employment
shall automatically become part of the Work Product hereunder,
whether or not it arises specifically out of my "Work." For
purposes of this Agreement, "Work" shall mean (1) any direct
assignments and required performance by or for the Employer,
and (2) any other productive output that relates to the
business of the Employer and is produced during the course of
Employee's employment or engagement by Employer. For this
purpose, Work may be considered present even after normal
working hours, away from Employer's premises, on an
unsupervised basis, alone or with others. Unless otherwise
approved in writing by the Board of Directors of Employer,
this Agreement shall apply to all Work Product created in
connection with all Work conducted before or after the date of
this Agreement.
Employer shall own all rights in the Work Product. To this
end, all Work Product shall be considered work made for hire
for Employer. If any of the Work Product may not, by operation
of law or agreement, be considered Work made by
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Employee for hire for the Employer (or if ownership of all
rights therein do not otherwise vest exclusively in the
Employer immediately), Employee agrees to assign, and upon
creation thereof does hereby automatically assign, with
further consideration, the ownership thereof to the Employer.
Employee hereby irrevocably relinquishes for the benefit of
Employer and its assigns any moral rights in the Work Product
recognized by applicable law. Employer shall have the right to
obtain and hold, in whatever name or capacity it selects,
copyrights, registrations, and any other protection available
in the Work Product.
Employee agrees to perform upon the request of Employer,
during or after Employee's Work or employment, such further
acts as may be necessary or desirable to transfer, perfect,
and defend the Employer's ownership of the Work Product,
including by (1) executing, acknowledging, and delivering any
requested affidavits and documents of assignment and
conveyance, (2) obtaining and/or aiding in the enforcement of
copyrights, trade secrets, and (if applicable) patents with
respect to the Work Product in any countries, and (3)
providing testimony in connection with any proceeding
affecting the rights of the Employer in any Work Product.
Employee warrants that Employee's Work for Employer does not
and will not in any way conflict with any remaining
obligations Employee may have with any prior employer or
contractor. Employee also agrees to develop all Work Product
in a manner that avoids even the appearance of infringement of
any third party's intellectual property rights.
e. Survival of Covenants. Each covenant of Employee set forth in
this Paragraph 4 shall survive the termination of this
Agreement and shall be construed as an agreement independent
of any other provision of this Agreement, and the existence of
any claim or cause of action of Employee against Employer
whether predicated on this Agreement or otherwise shall not
constitute a defense to the enforcement by Employer of said
covenant. No modification or waiver of any covenant contained
in Paragraph 4 shall be valid unless such waiver or
modification is approved in writing by the Board of Directors
of Employer.
f. Remedies. In the event of breach or threatened breach by
Employee of any provision of this Paragraph 4, Employer shall
be entitled to relief by temporary restraining order,
temporary injunction, or permanent injunction or otherwise, in
addition to other legal and equitable relief to which it may
be entitled, including any and all monetary damages which
Employer may incur as a result of said breach, violation or
threatened breach or violation. Employer may pursue any remedy
available to it concurrently or consecutively in any order as
to any breach, violation, or threatened breach or violation,
and the pursuit of one of such remedies at any time will not
be deemed an election of remedies or waiver of the right to
pursue any other of such remedies as to such breach,
violation, or threatened breach or violation, or as to any
other breach, violation, or threatened breach or violation.
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Employee hereby acknowledges that Employee's
agreement to be bound by the protective covenants set forth in
this Paragraph 4 was a material inducement for Employer
entering into this Agreement, agreeing to pay Employee the
compensation and benefits set forth herein, and providing
Employee access to Employer's Trade Secrets and other
confidential information.
5. Termination. The employment relationship between Employee and Employer
created hereunder shall terminate before the expiration of the stated
term of this Agreement upon the occurrence of any one of the following
events:
a. Death or Permanent Disability. The employment relationship
shall be terminated effective on the death or permanent
disability of the Employee. However, Employee shall be
entitled to leaves of absence from the Company in accordance
with the policy of the Company generally applicable to
executives for illness or temporary disabilities for a period
or periods not exceeding six (6) months in any calendar year,
and her status as an employee shall continue during such
periods. However, if the Employee qualifies for short term
disability payments under Employer's standard short term
disability plan during such leave, Employee shall apply to
receive such short term disability payments. Employer shall
supplement such short term disability payments during the
first three (3) months of any such six (6) month period so
that Employee receives such monthly amounts when combined with
the short term disability payments to equal Employee's monthly
compensation as set forth in paragraph 3(a) of this Agreement.
However, during the last three (3) months of any such six (6)
month period, Employee shall accept payments under Employer's
standard short term disability plan in lieu of any salary
payments set forth in Section 3(a) above. If Employee is
incapacitated due to physical or mental illness and such
incapacity prevents Employee from satisfactorily performing
her duties for the Company on a full time basis for six (6)
months or more during a single fiscal year, Employee shall be
deemed to have experienced a permanent disability and the
Company may terminate this Agreement upon thirty (30) days
written notice.
b. Termination for Cause. The following events, which for
purposes of this Agreement shall constitute "cause" for
termination:
i. Any act of fraud, misappropriation or embezzlement by
Employee with respect to any aspect of Employer's
business;
ii. The breach by Employee of any provision of Paragraphs
1, 2 or 4 (including but not limited to a refusal to
follow lawful directives of the Board of Directors of
Employer or their designees which are not
inconsistent with the provisions of this Agreement)
of this Agreement;
iii. The conviction of Employee by a court of competent
jurisdiction of a felony or of a crime involving
moral turpitude;
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iv. The intentional and material breach by the Employee
of any non-disclosure or
non-competition/non-solicitation provision of any
agreement to which the Employee and Employer or any
of its subsidiaries are parties; or
v. The intentional and continual failure by the Employee
to perform in all material respects her duties and
responsibilities (other than as a result of death or
disability) and the failure of the Employee to cure
the same in all material respects within thirty (30)
days after written notice thereof from Employer;
vi. The illegal use of drugs by Employee during the term
of this Agreement that, in the determination of the
Board of Directors of Employer, substantially
interferes with Employee's performance of her duties
hereunder;
vii. acceptance of employment with any other employer
except upon written permission of the Board of
Directors of Employer.
c. Termination by Employer with Notice. Employer may terminate
this Agreement without cause at any time upon thirty (30) days
written notice to Employee, during which period Employee shall
not be required to perform any services for Employer other
than to assist Employer in training her successor and
generally preparing for an orderly transition; PROVIDED,
HOWEVER, that Employee shall be entitled to compensation upon
such termination as provided in Paragraph 6(a), (b), (c) and
(d) below.
6. Compensation Upon Termination. Upon the termination of Employee's
employment under this Agreement before the expiration of the stated
term hereof for any reason, Employee shall be entitled to:
a. the salary earned by her before the effective date of
termination as provided in Paragraph 3(a) hereof (including
salary payable during any applicable notice period), prorated
on the basis of the number of full days of service rendered by
Employee during the salary payment period to the effective
date of termination;
b. any accrued, but unpaid, vacation benefits; and
c. any previously authorized but unreimbursed business expenses.
If Employee's employment hereunder terminates because of the
death or permanent disability of Employee, all amounts that may be due
to her under this
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Paragraph 6 shall be paid to her or her administrators, personal
representatives, heirs and legatees, as may be appropriate.
d. Additional Compensation Upon Termination Without Cause. If
Employee's employment hereunder terminates without cause
pursuant to Paragraph 5(c) above, Employer shall pay to
Employee in addition to the amounts set forth in Subparagraphs
6(a), 6(b) and 6(c) above:
i. salary payments for the duration of the initial term
of this Agreement, or any Renewal Term, as set forth
in Paragraph 8 below when and as such salary payments
would have come due had the Employee's employment not
been terminated;
The provisions of Paragraphs 4, 5 and 6 hereof shall survive
the termination of the employment relationship hereunder and this
Agreement to the extent necessary or reasonably appropriate to effect
the intent of the parties hereto as expressed in such provisions.
7. Compensation Upon Change in Control.
a. For purposes of the Agreement, "Change of Control" means the
occurrence of any of the following events:
i. any "person" or "group" as such terms are used under
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), other
than Employer, any trustee or any other fiduciary
holding securities under an employee benefit plan of
Employer, or any corporation owned, directly or
indirectly, by the stockholders of Employer in
substantially the same proportions as their ownership
of Common Stock of Employer, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange
Act), of securities of Employer representing
thirty-five percent (35%) or more of the combined
voting power of Employer's voting securities
then-outstanding;
ii. during any period of two (2) consecutive years,
individuals who at the beginning of such period
constituted the Board of Directors of Employer cease
for any reason to constitute a majority thereof
(unless the election, or nomination for election by
Employer's stockholders, of such director was
approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
directors at the beginning of such period or whose
election or nomination for election was previously so
approved);
iii. Employer completes a merger or consolidation of
Employer with another
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corporation, other than (A) a merger or consolidation
which would result in the voting securities of
Employer outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity) more than eighty
percent (80%) of the combined voting power of the
voting securities of Employer or such surviving
entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of Employer
(or similar transaction) in which no "person" (as
herein above defined) acquires more than thirty
percent (30%) of the combined voting power of
Employer's then-outstanding voting securities; or
iv. the stockholders of Employer approve a plan of
complete liquidation of Employer or any agreement for
the sale or disposition by Employer of all or
substantially all of Employer's assets.
b. For purposes of this Agreement, "Good Reason" means the
occurrence of any of the following events:
i. the reduction of the Employee's job title, position
or responsibilities without the Employee's prior
written consent;
ii. the change of the location where the Employee is
based to a location which is more than fifty (50)
miles from her present location without the
Employee's prior written consent; or
iii. the reduction of the Employee's annual base salary
and bonus by more than ten percent (10%) from the
highest annual base salary and bonus actually paid to
Employee during the two (2) years immediately
preceding the Change of Control.
Employee shall give Employer fifteen (15) business days notice
of an intent terminate this Agreement for "Good Reason" as
defined in this Paragraph 7, and provide the Employer with ten
(10) business days after receipt of such notice from Employee
to remedy the alleged violation of subparagraphs 7(b)(i)(ii),
or (iii).
c. BENEFITS UPON CHANGE IN CONTROL
x. Xxxxxxxxx Benefits. If the Employee's employment with
Employer is terminated (i) by Employer (or by the
acquiring or successor business entity following a
Change of Control) other than for Cause or death, or
(ii) by the Employee for Good Reason, in either event
within a period beginning one hundred and eighty
(180) days before, and ending two (2) years after,
the date of a Change of Control (the "Change
Period"), the Employee shall receive a severance
benefit in an amount equal to the sum of:
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(1) the Employee's highest annual cash base
salary in effect within two (2) years
immediately preceding the Change of Control;
plus
(2) the average of the Employee's annual bonuses
paid for the two (2) calendar years
immediately preceding the Change of Control.
In addition, for eighteen (18) months following the
date of termination of the Employee's employment in
circumstances in which a severance payment is due
hereunder, Employer shall provide the Employee health
and other welfare benefits that are not less
favorable to the Employee than those to which she was
entitled immediately prior to the Change in Control.
Provided however, Employer shall have no obligation
to provide Employee with any compensation under this
Paragraph 7 if Employee is in breach or violation of
any of the covenants contained in Paragraph 4.
ii. Form of Payment. The amount of the severance benefit
provided in Paragraph 7(c)(i) hereof shall be paid to
Employee in two (2) equal installments, the first
installment payable as soon as practicable after the
occurrence of the event giving rise to the payment of
the severance benefit by Employer hereunder, but in
no event more than thirty (30) days thereafter, and
the second installment payable one (1) year following
the occurrence of such event, provided, however, that
the severance benefit payable by Employer pursuant to
Paragraph 7(c)(i) hereof will be reduced by any other
cash payments made to the Employee under a written
employment agreement between the Employee and
Employer for periods after the date on which the
Employee's employment was terminated. Provided
however, Employer shall have no obligation to provide
Employee with any compensation under this Paragraph 7
if Employee is in breach or violation of any of the
covenants contained in Paragraph 4.
iii. Gross-Up Payments. Anything in this Agreement to the
contrary notwithstanding, in the event that a
severance payment is made under this Agreement and it
shall be determined (as hereafter provided) that any
payment (other than the Gross-Up Payments provided
for herein) or distribution by Employer or any of its
affiliates to or for the benefit of the Employee,
whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement
or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, or
the lapse or termination of any restriction on, or
the vesting or exercisability of any of the foregoing
(a "Payment"), excluding, however, any stock option
or right in respect of restricted stock, would be
subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the
"Code") (or any successor provision thereto), by
reason of being considered "contingent on a change in
ownership or control" of Employer, within the meaning
of Section 280G of the Code (or any
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successor provision thereto) or to any similar tax
imposed by state or local law, or any interest or
penalties with respect to such tax (such tax or
taxes, together with any such interest and penalties,
being hereafter collectively referred to as the
"Excise Tax"), then the Employee shall be entitled to
receive an additional payment or payments
(collectively, a "Gross-Up Payment"); provided,
however, that no Gross-Up Payment shall be made with
respect to the Excise Tax, if any, imposed upon (i)
any stock option, including without limitation any
incentive stock option, as defined by Section 422 of
the Code ("ISO") granted prior to the execution of
this Agreement or (ii) any stock appreciation or
similar right, whether or not limited, granted in
tandem with an ISO described in clause (i). The
Gross-Up Payment shall be in an amount such that,
after payment by the Employee of all taxes (including
any interest or penalties imposed with respect to
such taxes), including an Excise Tax imposed upon the
Gross-Up Payment, the Employee retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed
upon the Payment. The procedural provisions relating
to Gross-Up Payments set forth in Annex A hereto are
hereby incorporated herein by this reference.
d. Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Paragraph 7 of this
Agreement by seeking other employment or otherwise. However,
the amount of any payment or benefit provided for in this
Paragraph 7 shall be reduced by any compensation earned by the
Employee as a result of employment by another employer and as
provided in Paragraph 7(c)(ii) hereof.
8. Term. This Agreement shall be binding and enforceable against Employer
and Employee immediately upon its execution by both such parties. The
stated term of this Agreement and the employment relationship created
hereunder shall begin on January 1, 2000 (with employee to be bound by
confidentiality and other provisions set forth in Paragraph 4 herein to
the extent confidential information is provided to Employee prior to
such date), and shall remain in effect for one (1) year thereafter,
unless sooner terminated in accordance with Paragraph 5 hereof. This
Agreement shall be deemed to be renewed for a month-to-month term after
its initial term ("Renewal Term") unless the parties execute an express
written renewal agreement which specifies a different term.
a. Notwithstanding any provision of this Agreement to the
contrary, the parties' respective rights and obligations under
Paragraph 7 shall survive any termination or expiration of
this Agreement or the termination of the Employee's employment
following a Change of Control for any reason whatsoever.
9. Remedies. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover
damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in its favor. Notwithstanding
Paragraph 10 below, the parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions
of this
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Agreement and that any party may in its sole discretion apply to any
court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
10. Arbitration. Except as Provided in Paragraph 9 above, any controversy
or claim arising out of or relating to this Agreement or relating to
Employee's rights, compensation and responsibilities as an employee
shall be determined by arbitration in Dallas County, Texas in
accordance with the rules of the American Arbitration Association then
in effect. The arbitration shall be submitted to a single arbitrator
selected in accordance with the American Arbitration Association's
procedures then in effect for the selection of employment arbitrators.
This Paragraph 10 shall survive termination of this Agreement for any
reason.
11. Assignment. This Agreement is personal to Employee and may not be
assigned in any way by Employee without the prior written consent of
Employer. This Agreement shall not be assignable or delegable by
Employer, other than to an affiliate of Employer; provided, however,
that in the event of the merger or consolidation of Employer the
obligations of Employer hereunder shall be binding upon the surviving
or resulting entity of such merger of consolidation. The rights and
obligations under this Agreement shall inure to the benefit of and
shall be binding upon the heirs, legatees, administrators and personal
representatives of Employee and upon the successors, representatives
and assigns of Employer.
12. Severability and Reformation. The parties hereto intend all provisions
of this Agreement to be enforced to the fullest extent permitted by
law. If, however, any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future law, such
provision shall be fully severable, and this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable
provision were never a part hereof, and the remaining provisions shall
remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance.
13. Notices. All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, mailed by certified mail (return
receipt requested) or sent by overnight delivery service, cable,
telegram, facsimile transmission or telex to the parties at the
following addresses or at such other addresses as shall be specified by
the parties by like notice:
If to Employer: J. Xxxxxxx Xxxxxx
General Counsel & Secretary
0000 Xxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
If to Employee: Xxxx X. Xxxx
000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxx, 00000
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Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth calendar day after
posting, in the case of notice so given by overnight delivery service,
on the date of actual delivery and, in the case of notice so given by
cable, telegram, facsimile transmission, telex or personal delivery, on
the date of actual transmission or, as the case may be, personal
delivery.
14. Further Actions. Whether or not specifically required under the terms
of this Agreement, each party hereto shall execute and deliver such
documents and take such further actions as shall be necessary in order
for such party to perform all of her or its obligations specified
herein or reasonably implied from the terms hereof.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAWS (RULES) OR CHOICE OF LAWS (RULES) THEREOF.
16. Entire Agreement and Amendment. This Agreement contains the entire
understanding and agreement between the parties, and supersedes any
other agreement between Employee and Employer, whether oral or in
writing, with respect to the subject matter hereof. This Agreement may
not be altered, amended, or rescinded, nor may any of its provisions be
waived, except by an instrument in writing signed by both parties
hereto or, in the case of an asserted waiver, by the party against whom
the waiver is sought to be enforced. Any modification of this Agreement
may only be signed on behalf of Employer by the General Counsel and
Secretary of Employer and approved by the Board of Directors of
Employer.
17. Counterparts. This Agreement may be executed in counterparts, with the
same effect as if both parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together
and shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EMPLOYER:
@TRACK COMMUNICATIONS, INC.
By: /S/ J. XXXXXXX XXXXXX
---------------------
J. XXXXXXX XXXXXX,
General Counsel & Secretary
EMPLOYEE:
/S/ XXXX XXXXXXXXX XXXX
-----------------------
Xxxx Xxxxxxxxx Xxxx
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ANNEX A
GROSS-UP PAYMENT PROCEDURAL PROVISIONS
(a) Subject to the provision of Paragraph (e) hereof, all
determinations required to be made under Paragraph 7(c)(iii) of the Agreement,
including whether an Excise Tax is payable by the Employee and the amount of
such Excise Tax and whether a Gross-Up Payment is required to be paid by
Employer to the Employee and the amount of such Gross-Up Payment, if any, shall
be made by a Top 5 accounting firm (the "Accounting Firm") selected by the
Employee in her sole discretion. The Employee shall direct the Accounting Firm
to submit its determination and detailed supporting calculations to both
Employer and the Employee within thirty (30) calendar days after the Termination
Date, if applicable, and any such other time or times as may be requested by
Employer or the Employee. If the Accounting Firm determines that any Excise Tax
is payable by the Employee, Employer shall pay the required Gross-Up Payment to
the Employee within fifteen (15) business days after receipt of such
determination and calculations with respect to any Payment to the Employee. If
the Accounting Firm determines that no Excise Tax is payable by the Employee, it
shall, at the same time as it makes such determination, furnish Employer and the
Employee an opinion that the Employee has substantial authority not to report
any Excise Tax on her federal, state or local income or other tax return. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which shall
not have been made by Employer should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that Employer exhausts or fails to pursue its remedies pursuant to Paragraph (e)
hereof and the Employee thereafter is required to make a payment of any Excise
Tax, the Employee shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both Employer and the Employee as promptly as
possible. Any such Underpayment shall be promptly paid by Employer to, or for
the benefit of, the Employee within fifteen (15) business days after receipt of
such determination and calculations.
(b) Employer and the Employee shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of Employer or the Employee, as the case may be, reasonably requested
by the Accounting Firm, and otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the determinations and
calculations contemplated by Paragraph (a) hereof. Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment shall be binding upon
Employer and the Employee.
(c) The federal, state and local income or other tax returns
filed by the Employee shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Employee. The Employee shall make proper payment of the amount of any Excise
Payment, and at the request of Employer, provide to Employer true and correct
copies (with any amendments) of her federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by
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Employer, evidencing such payment. If prior to the filing of the Employee's
federal income tax return, or corresponding state or local tax return, if
relevant, the Accounting Firm determines that the amount of the Gross-Up Payment
should be reduced, the Employee shall within fifteen (15) business days pay to
Employer the amount of such deduction.
(d) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Paragraph (a) hereof shall be paid by Employer. If such fees and expenses are
initially paid by the Employee, Employer shall reimburse the Employee the full
amount of such fees and expenses within fifteen (15) business days after receipt
from the Employee of a statement therefor and reasonable evidence of her payment
thereof.
(e) The Employee shall notify Employer in writing of any claim
by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by Employer of a Gross-Up Payment. Such
notification shall be given as promptly as practicable but no later than ten
(10) business days after the Employee actually receives notice of such claim and
the Employee shall further apprise Employer of the nature of such claim and the
date on which such claim is requested to be paid (in each case, to the extent
known by the Employee). The Employee shall not pay such claim prior to the
earlier of (i) the expiration of the thirty (30) calendar-day period following
the date on which she gives such notice to Employer and (ii) the date that any
payment of amount with respect to such claim is due. If Employer notifies the
Employee in writing prior to the expiration of such period that it desires to
contest such claim, the Employee shall:
(i) provide Employer with any written records or documents in
her possession relating to such claim reasonably requested by Employer;
(ii) take such action in connection with contesting such claim
as Employer shall reasonably request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by Employer;
(iii) cooperate with Employer in good faith in order
effectively to contest such claim, and
(iv) permit Employer to participate in any proceedings
relating to such claim;
provided, however, that Employer shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Employee, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Paragraph (e), Employer shall control all proceedings taken in connection with
the contest of any claim contemplated by this Paragraph (e) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Employee may participate therein at her own
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cost and expense) and may, at its option, either direct the Employee to pay the
tax claimed and xxx for a refund or contest the claim in any permissible manner,
and the Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as Employer shall determine; provided, however, that if
Employer directs the Employee to pay the tax claimed and xxx for a refund,
Employer shall advance the amount of such payment to the Employee on an
interest-free basis and shall indemnify and hold the Employee harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Employee with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, Employer's control of any such contested claim
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Employee shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(f) If, after the receipt by the Employee of an amount
advanced by Employer pursuant to Paragraph (e) hereof, the Employee receives any
refund with respect to such claim, the Employee shall (subject to Employer's
complying with the requirements of Paragraph (e) hereof) promptly pay to
Employer the amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by Employer pursuant to Paragraph (e) hereof, a
determination is made that the Employee shall not be entitled to any refund with
respect to such claim and Employer does not notify the Employee in writing of
its intent to contest such denial or refund prior to the expiration of thirty
(30) calendar days after such determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount of any such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid by Employer to the Employee pursuant to this Paragraph 7(c)(iii) of the
Agreement.
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