<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period from to
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Commission file number 0-26140
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HIGHWAYMASTER COMMUNICATIONS, INC.
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 51-0352879
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1155 Kas Drive, Suite 100, Richardson, Texas 75081
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (972) 301-2000
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Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Number of Shares Outstanding as of
Title of each class August 1, 1999
- ----------------------------- ----------------------------------
Common Stock, $.01 par value 24,985,860
<PAGE> 2
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
Form 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements:
Consolidated Balance Sheets at June 30, 1999
and December 31, 1998 1
Consolidated Statements of Operations for the
three months and six months ended June 30,
1999 and 1998 2
Consolidated Statements of Cash Flows for the six
months ended June 30,1999 and 1998 3
Consolidated Statement of Changes in Stockholders'
Equity (Deficit) for the six months ended
June 30, 1999 4
Notes to Consolidated Financial Statements 5-6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-9
Item 3 Quantitative and Qualitative Disclosures About
Market Risk 9
PART II. OTHER INFORMATION
Item 1 Legal Proceedings 10
Item 2 Changes in Securities 10
Item 3 Defaults Upon Senior Securities 10
Item 4 Submission of Matters to a Vote of Security Holders 10
Item 5 Other Information 10
Item 6 Exhibits and Reports on Form 8-K 11
Signatures 12
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
1999 1998
--------- ------------
<S> <C> <C>
Current assets:
Cash and short-term investments $ 22,376 $ 26,169
Accounts receivable, net 19,871 14,585
Inventory 9,248 12,921
Pledged securities - current portion 12,974 12,974
Other current assets 3,510 714
--------- ------------
Total current assets 67,979 67,363
Network, equipment and software, net 20,119 20,649
Pledged securities - long-term portion 6,049 11,814
Other assets, net 3,165 3,300
--------- ------------
Total assets $ 97,312 $ 103,126
========= ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 5,986 $ 11,362
Telecommunications costs payable 4,979 5,920
Accrued interest payable 3,784 3,784
Advance payments from customers 9,420 7,452
Other current liabilities 7,359 9,702
--------- ------------
Total current liabilities 31,528 38,220
Senior notes payable 91,893 91,697
--------- ------------
Total liabilities 123,421 129,917
--------- ------------
Stockholders' equity (deficit):
Preferred Stock -- --
Common Stock 254 252
Additional paid-in capital 149,583 149,481
Accumulated deficit (175,399) (175,977)
Treasury stock (547) (547)
--------- ------------
Total stockholders' equity (deficit) (26,109) (26,791)
Commitments and contingencies
--------- ------------
Total liabilities and stockholders' equity (deficit) $ 97,312 $ 103,126
========= ============
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 4
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Product $ 19,447 $ 5,459 $ 23,787 $ 10,086
Service 13,751 12,234 26,492 23,330
-------- -------- -------- --------
Total revenues 33,198 17,693 50,279 33,416
-------- -------- -------- --------
Cost of revenues:
Product 14,617 4,159 17,761 7,906
Service (Note 5) 6,636 8,555 9,913 17,270
-------- -------- -------- --------
Total cost of revenues 21,253 12,714 27,674 25,176
-------- -------- -------- --------
Gross profit 11,945 4,979 22,605 8,240
-------- -------- -------- --------
Expenses:
General and administrative 3,671 6,858 7,060 10,192
Customer service 2,006 3,061 3,824 6,425
Sales and marketing 1,171 2,328 2,085 4,507
Engineering 726 1,671 1,373 3,080
Network services center 387 438 806 835
Severance cost -- 445 -- 445
Depreciation and amortization 1,635 1,278 3,259 2,347
-------- -------- -------- --------
9,596 16,079 18,407 27,831
-------- -------- -------- --------
Operating income (loss) 2,349 (11,100) 4,198 (19,591)
Interest income 497 1,485 1,415 2,827
Interest expense (3,396) (4,452) (6,738) (8,892)
Other income (Note 5) 738 -- 1,703 --
-------- -------- -------- --------
Income (loss) before income taxes 188 (14,067) 578 (25,656)
Income tax provision -- -- -- --
-------- -------- -------- --------
Net income (loss) $ 188 $(14,067) $ 578 $(25,656)
======== ======== ======== ========
Per share:
Basic and diluted income (loss) $ 0.01 $ (0.56) $ 0.02 $ (1.03)
======== ======== ======== ========
Weighted average number of shares outstanding
Basic 24,981 24,899 24,956 24,899
======== ======== ======== ========
Diluted 25,308 24,899 25,340 24,899
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 5
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Six months ended
June 30,
----------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 578 $(25,656)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization 3,259 2,347
Amortization of discount on notes payable 196 260
(Increase) in accounts receivable (5,286) (2,048)
Decrease in inventory 3,673 1,112
(Decrease) in accounts payable (5,376) (3,097)
Increase (decrease) in accrued expenses and other current liabilities (1,316) 4,169
Other (2,856) 685
-------- --------
Net cash used in operating activities (7,128) (22,228)
-------- --------
Cash flows from investing activities:
Additions to network and equipment (2,109) (4,572)
Additions to capitalized software (425) (913)
Decrease in pledged securities 5,765 6,919
Decrease in temporary investments -- 4,391
Decrease in short-term investments 5,553 8,377
-------- --------
Net cash provided by investing activities 8,784 14,202
-------- --------
Cash flows from financing activities:
Proceeds from exercise of stock options 104 --
-------- --------
Net cash provided by financing activities 104 --
-------- --------
Increase (decrease) in cash and cash equivalents 1,760 (8,026)
Cash and cash equivalents, beginning of period 16,461 26,777
-------- --------
Cash and cash equivalents, end of period 18,221 18,751
Short-term investments 4,155 11,332
-------- --------
Cash and short-term investments $ 22,376 $ 30,083
======== ========
Supplemental cash flow information:
Interest paid $ 6,487 $ 8,212
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
(in thousands, except share information)
<TABLE>
<CAPTION>
Preferred Stock CommonStock Additional
----------------------- ------------------------- Paid-in
Shares Amount Shares Amount Capital
------------ -------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C>
Stockholders' equity (deficit) at December 31, 1998 1,000 $ -- 25,210,983 $ 252 $ 149,481
Exercise of stock options 86,874 2 102
Net income
------------ -------- ------------- --------- -----------
Stockholders' equity (deficit) at June 30, 1999 1,000 $ -- 25,297,857 $ 254 $ 149,583
============ ======== ============= ========= ===========
<CAPTION>
Treasury Stock
------------------------ Accumulated
Shares Amount Deficit Total
----------- ---------- ------------- ---------
<S> <C> <C> <C> <C>
Stockholders' equity (deficit) at December 31, 1998 311,997 $ (547) $ (175,977) $ (26,791)
Exercise of stock options 104
Net income 578 578
----------- ---------- ------------- ---------
Stockholders' equity (deficit) at June 30, 1999 311,997 $ (547) $ (175,399) $ (26,109)
=========== ========== ============= =========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 7
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
Notes To Consolidated Financial Statements
(Unaudited)
1. BUSINESS OVERVIEW
The Company develops and implements mobile communications
solutions, including integrated voice, data and position location
services, to meet the needs of its customers. The initial application
for the Company's wireless enhanced services has been developed for,
and is marketed and sold to, companies which operate in the long-haul
trucking market. The Company provides long-haul trucking companies with
a comprehensive package of mobile communications and management control
services at a fixed rate per minute, thereby enabling its trucking
customers to effectively monitor the operations and improve the
performance of their fleets. During the third quarter of 1998, the
Company began delivery of mobile communication units ("mobile units")
for use in a service vehicle application. The Company is currently
developing additional applications for its network to expand the range
of its commercial dispatch and tracking services to broader lines of
business.
The Company's revenues are derived primarily from the sales
and installation of mobile units and charges for its services.
2. BASIS OF PRESENTATION
The unaudited consolidated financial statements presented
herein have been prepared in accordance with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all footnote disclosures required by generally accepted accounting
principles. These consolidated financial statements should be read in
conjunction with the Company's audited consolidated financial
statements for the year ended December 31, 1998. The accompanying
consolidated financial statements reflect all adjustments (all of which
are of a normal recurring nature except as described in Note 5) which
are, in the opinion of management, necessary for a fair presentation of
the Company's financial position, results of operations and cash flows
for the interim periods. The results for any interim period are not
necessarily indicative of the results for the entire year.
3. EARNINGS PER SHARE
Basic earnings per share for the three and six months ended
June 30, 1998 and 1999 is computed using the weighted average number of
shares outstanding during the respective periods. Diluted earnings per
share for the three and six months ended June 30, 1999 is computed
using the weighted average shares from the basic calculation plus the
number of additional shares that would have been issued from the
exercise of in the money stock options, net of the shares that would be
able to be repurchased from the stock option proceeds (the "treasury
stock method"). The calculation of basic and diluted earnings per share
is identical for the three and six months ended June 30, 1998.
4. INVENTORIES
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
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<S> <C> <C>
Complete systems $ 705,000 $ 1,577,000
Component parts 518,000 826,000
Equipment shipped not yet accepted 8,025,000 10,518,000
----------- ------------
$ 9,248,000 $ 12,921,000
=========== ============
</TABLE>
5
<PAGE> 8
5. UNUSUAL ITEMS
During the three months ended March 31, 1999, the Company
recorded the benefit of credits due from cellular carriers related to
1997 and 1998 based on a settlement agreement reached with GTE
Wireless, Inc. and GTE Telecommunications Incorporated. These credits
had not been previously recognized because of significant uncertainty
as to their ultimate collectibility. The effect of these credits was to
increase income by $3,724,000, of which $3,580,000 is reflected as a
reduction in "cost of service revenue" in the accompanying Consolidated
Statements of Operations. During the three months ended June 30, 1999,
an additional $809,000 of credits related to this settlement were
recorded as a reduction in cost of service revenue. Total non-recurring
credits to cost of service revenue for the three months and six months
ended June 30, 1999 aggregated $809,000 and $4,389,000, respectively.
During 1997, the Company entered into a contract with a
customer for a new generation of mobile unit. Pending delivery of the
contracted units, the customer installed current-generation mobile
units. During the three months ended June 30, 1999, the Company and the
customer negotiated a settlement agreement, the terms of which include
termination of the contract and the return of approximately 2,800
mobile units to the Company that had been installed by the customer.
"Other income" for the three months and six months ended June 30, 1999
includes a gain of approximately $750,000 related to this settlement.
Also included in other income for the six months ended June 30, 1999 is
the benefit from the settlement of the litigation with AT&T Corp.,
representing the proceeds from the settlement, net of related expenses,
which was recorded in the first quarter of 1999.
6
<PAGE> 9
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended June 30, 1999 Compared to Three Months Ended June
30, 1998
Total revenues increased 87.6% to $33.2 million in 1999 from $17.7
million in 1998. Product revenues increased from $5.5 million in 1998 to $19.4
million in 1999. The increase in product revenues is as a result of recognizing
$14.8 million of revenues on the service vehicle contract entered into during
the third quarter of 1998 which required delivery of mobile units coupled with
development and delivery of additional features over the term of the
installation period. Delivery of all of the features required by the contract
and customer acceptance were obtained during the second quarter for 7,717 mobile
units. The Company currently expects to meet the acceptance criteria during 1999
for the remaining 6,861 mobile units installed under this contract at June 30,
1999, of which 1,455 units were shipped and placed in service during the three
months ended June 30, 1999. The increase in product revenues from the service
vehicle contract offset a 30.0% decrease in shipments of mobile units related to
the Company's long-haul trucking application. Service revenues increased 12.4%
to $13.8 million in 1999 as compared to $12.2 million in 1998 due to the
increased installed base of mobile units. The installed base of mobile units
increased 42.3% to 52,751 mobile units at June 30, 1999 from 37,082 mobile units
at June 30, 1998. Average monthly revenue per mobile unit decreased 24.2% to
$82.81 in 1999 from $109.31 in 1998. The decrease was attributable to: (i) the
Company's decision in the second quarter of 1998 to cancel the personal calling
accounts promotion and strengthen credit policies related to personal calling
accounts, thereby reducing personal calling revenues; and (ii) the increasing
proportion of service vehicles in the installed base. Average revenue for
service vehicles is less than that of long-haul trucking because of different
product functionality.
Service gross profit margin was 51.7% in 1999 compared to 30.1% in
1998. As more fully described in Note 5 to the accompanying consolidated
financial statements, during 1999 the Company recorded $0.8 million of credits
related to a contract settlement. Excluding the effect of these credits, service
gross profit margin would have been 45.9%. The increase in service margin from
30.1% to 45.9% is primarily as a result of: (i) the additional access fees
generated by the 42.2% increase in the average installed base of mobile units
from 1998 to 1999; (ii) the effect of a new lower cost contract with one of the
Company's major vendors; and (iii) the effect of technical adjustments and
modifications implemented to reduce the amount of airtime costs incurred that
are not billable to customers.
Operating expenses decreased 40.3% to $9.6 million in 1999 from $16.1
million in 1998. This decrease is primarily as a result of: (i) the
restructuring of operations implemented in the second and third quarters of
1998; and (ii) 1998 expenses being unusually high as the result of charges
aggregating $3.2 million for bad debt expense, sales tax liability, and
severance costs. Excluding these charges from 1998, the decrease in operating
expenses from 1998 to 1999 would have been 25.1%. The average number of
employees decreased 35.5% from 1998 to 1999. Sales and marketing expense and
engineering expense decreased significantly because 1998 included significant
advertising and development costs associated with products that were
discontinued in the third quarter of 1998.
Interest income was $0.5 million in 1999 compared to $1.5 million in
1998. Interest expense was $3.4 million in 1999 compared to $4.5 in 1998. The
change in these relationships reflects the lower average outstanding balances
during 1999 in cash and short-term investments and Senior Notes payable.
Other income reflects the gain from the settlement of a customer
contract as more fully described in Note 5 to the accompanying consolidated
financial statements.
7
<PAGE> 10
Six Months Ended June 30, 1999 Compared to Six Months Ended June 30,
1998
Total revenues increased 50.5% to $50.3 million in 1999 from $33.4
million in 1998. Product revenues increased from $10.1 million in 1998 to $23.8
million in 1999. The increase in product revenues is as a result of recognizing
$14.8 million of revenues on the service vehicle contract entered into during
the third quarter of 1998 which required delivery of mobile units coupled with
development and delivery of additional features over the term of the
installation period. Delivery of all of the features required by the contract
and customer acceptance were obtained during 1999 for 7,717 mobile units. The
Company currently expects to meet the acceptance criteria during 1999 for the
remaining 6,861 mobile units installed under this contract at June 30, 1999, of
which 3,650 units were shipped and placed in service during the six months ended
June 30, 1999. The increase in product revenues from the service vehicle
contract offset a 19.4% decrease in shipments of mobile units related to the
Company's long-haul trucking application. Service revenues increased 13.6% to
$26.5 million in 1999 as compared to $23.3 million in 1998 due to the increased
installed base of mobile units. The installed base of mobile units increased
42.3% to 52,751 mobile units at June 30, 1999 from 37,082 mobile units at June
30, 1998. Average monthly revenue per mobile unit decreased 22.5% to $82.69 in
1999 from $106.67 in 1998. The decrease was attributable to: (i) the decision in
the second quarter of 1998 to cancel the personal calling accounts promotion and
strengthen credit policies related to personal calling accounts, thereby
reducing personal calling revenues; and (ii) the increasing proportion of
service vehicles in the installed base. Average revenue for service vehicles is
less than that of long-haul trucking because of different product functionality.
Service gross profit margin was 62.6% in 1999 compared to 26.0% in
1998. As more fully described in Note 5 to the accompanying consolidated
financial statements, during 1999 the Company recorded $4.4 million of credits
related to a contract settlement. Excluding the effect of these credits, service
gross profit margin would have been 46.0%. The increase in service margin from
26.0% to 46.0% is primarily as a result of: (i) the additional access fees
generated by the 45.2% increase in the average installed base of mobile units;
(ii) the effect of a new lower cost contract with one of the Company's major
vendors, and (iii) the effect of technical adjustments and modifications
implemented to reduce the amount of airtime costs incurred that are not billable
to customers.
Operating expenses decreased 33.9% to $18.4 million in 1999 from $27.8
million in 1998. This decrease is primarily as a result of: (i) the
restructuring of operations implemented in the second and third quarters of
1998; and (ii) 1998 expenses being unusually high as the result of charges
aggregating $3.2 million for bad debt expense, sales tax liability, and
severance costs. Excluding these charges from 1998, the decrease in operating
expenses from 1998 to 1999 would have been 25.1%. The average number of
employees decreased 35.0% from 1998 to 1999. Sales and marketing expense and
engineering expense decreased significantly because 1998 included significant
advertising and development costs associated with products that were
discontinued in the third quarter of 1998.
Interest income was $1.4 million in 1999 compared to $2.8 million in
1998. Interest expense was $6.7 million in 1999 compared to $8.9 in 1998. The
change in these relationships reflects the lower average outstanding balances
during 1999 in cash and short-term investments and Senior Notes payable.
Other income reflects the gain from the settlement of a customer
contract, and the proceeds from the settlement of the litigation with AT&T
Corp., net of related expenses, as more fully described in Note 5 to the
accompanying consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and short-term investments balances decreased $3.8
million from $26.2 million at December 31, 1998 to $22.4 million at June 30,
1999. The Company's second quarter 1999 operating results, excluding unusual
items, are in line with the Company's expectations as a result of the
restructuring. However, essential to the Company's viability is the successful
completion of the remaining portion of the service vehicle application contract.
Should this contract not be successfully completed, the Company may be required
to refund the $9.4 million of advance payments received on this contract as
reflected in the accompanying Consolidated Balance Sheet. Management currently
expects this contract will be successfully completed during 1999. Based on the
Company's projected operating results, the Company believes its existing capital
resources will be sufficient to fund its currently anticipated operating needs
and capital expenditure requirements for the next twelve months. However, the
Company's future cash flow from operations and operating requirements may vary
depending on a number of factors in addition to the successful completion of the
8
<PAGE> 11
above referenced contract, including the rate of installation of mobile units,
the level of competition, success of new products, general economic conditions
and other factors beyond the Company's control.
The Company's capital resources may be insufficient to fund its
operating needs, capital expenditures and debt service requirements in the
long-term. The Company believes that, in order to address its long-term capital
requirements, it will need to take steps to: (i) increase the installed base of
mobile units in service and improve the efficiency of its operations, so as to
reduce or eliminate its operating losses; or (ii) obtain additional sources of
debt or equity financing. The Company's ability to obtain additional debt
financing is materially restricted under the terms of the Indenture governing
the Senior Notes. There can be no assurance that the Company would be able to
obtain additional debt or equity financing on satisfactory terms, if at all.
YEAR 2000
The Year 2000 problem, also known as "Y2K," refers to the inability of
some computer programs and microprocessors to interpret dates beyond December
31, 1999. The Y2K problem can be traced to the early days of computers when
memory and data storage were very expensive. To conserve these limited
resources, computer programmers decided to use just two digits in the date
fields to identify calendar year. Thus, for example, the year 1999 would be
identified as "99." The assumption is that the date is within the twentieth
century. In the year 2000, this assumption will be invalid and some systems will
not properly recognize dates. On January 1, 2000, many computer programs in
mainframes, microcomputers, client/servers, personal computers and embedded
systems may recognize the year "00" as 1900 rather than 2000. Because many
computer functions are date-sensitive, this error may cause such systems to
process data inaccurately or shut down if they do not recognize the date. If not
corrected, many computer applications could fail or create erroneous results as
of or prior to the Year 2000. Errors may occur in chronological sorting, in date
comparisons, duration calculations and other time and date sensitive processing.
The Company is taking the appropriate steps to insure its operations,
products and services will not be adversely impacted by potential Year 2000
failures. The Company has established a Year 2000 project team, which includes
employees with various functional responsibilities and outside consultants. The
Year 2000 readiness project is overseen by senior management of the Company with
regular progress reports made to the Board of Directors.
The project team has identified five phases in becoming Year 2000
compliant: (1) locating, listing, and prioritizing specific technology that is
potentially subject to Year 2000 challenges; (2) assessment and determining the
element of risk that exists through inquiry, research and testing; (3) resolving
Year 2000 related issues that were identified in previous phases by repair in a
testing environment; (4) validation testing, monitoring, obtaining
certification, and verifying the correct manipulation of dates and date related
data, including the systems of material third parties; and (5) implementation,
installation, integration and application of Year 2000 ready solutions by
replacement, upgrade or repair of technology systems, including those of
material third parties. Finally, the Company engaged two third party consulting
firms to assist the Company in assessing our products and internal systems.
State of Readiness. The Year 2000 project team in conjunction with the
third party consulting firms have jointly determined that: (1) the Company's
hardware and software products including embedded microprocessors are Year 2000
compliant with some minor exceptions; and (2) that the Company's internal
information processing systems including embedded microprocessors are Year 2000
compliant with non-material exceptions. Solutions for the minor issues with the
Company's hardware and software products are in place or in development for
deployment in the third quarter of 1999. Some upgrades will be required for
older versions of Company's products. The Company's Network Services Center
("NSC") is in the final stages of testing with no material Year 2000 issues yet
identified. The Company expects testing of the NSC to be completed in the third
quarter of 1999. The Company has not deferred any specific projects, goals, or
objectives relating to its operations as a result of Year 2000 compliance
efforts.
The Company has requested written Year 2000 compliance status reports
from each of its material vendors and suppliers. It is the policy of the Company
to continue to seek requests for Year 2000 compliance status reports from
material vendors and suppliers until such status reports are obtained. To date,
the Company has received such reports from the majority of its material vendors
and suppliers with no material non-compliance issues identified.
Costs. Management believes the cost of becoming Year 2000 compliant
will be approximately $650,000 during 1999. Year to date expenditures have
reached approximately $456,000 and we anticipate completing our compliance
efforts within budget. All costs associated with Year 2000 readiness and
remediation will be funded from operating cash flows.
Risks. While the Company does not anticipate delays or postponements in
implementing Year 2000 resolutions in a timely manner, there can be no certainty
that the implementation of solutions will be made in a timely manner. The
inability to address all issues in a timely and successful manner could have a
material adverse effect on the Company's financial condition and results of
operations. Although the Company does not expect the cost to have a material
adverse effect on its financial condition or results of operations, there can
be no assurance that the Company will not be required to incur significant
unanticipated costs in relation to its readiness obligations. The Company's
products and services are materially dependent upon third party service
providers including local telephone companies, cellular service providers and
long distance telephone companies for proper operation. Additionally, the
Company's ability to bill its customers for enhanced services is materially
dependent on third party billing companies. Finally, the Company's ability to
provide products for sale is materially dependent on third party manufacturers
and suppliers. The failure of these third parties to provide Year 2000
compliant products and/or services could have a material adverse effect on the
Company's financial condition and results of operations. Such risks include,
but are not limited to, the inability of the Company to provide services to its
customers, bill existing customers, accept new orders for products and
services, and/or perform other customer care tasks.
Contingency Plans. Contingency planning is an integral part of the
Company's Year 2000 preparedness. Because of the many uncertainties that exist,
the Company's readiness and remediation methodology dictates that contingency
plans be established for likely non-compliance scenarios. The Company is
continually developing contingency plans as new risks are uncovered and will
continue to plan and implement contingency plans throughout the third and
fourth quarters of 1999.
The foregoing discussion regarding Year 2000 project timing,
effectiveness, implementation and costs are based on management's current
evaluation using available information. Factors that might cause material
changes include, but are not limited to, the availability of resources, the Year
2000 readiness of material third party vendors and suppliers and the Company's
ability to respond to unforseen Year 2000 compliance issues.
FORWARD LOOKING STATEMENTS
This report includes "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact included in this report, including without
limitation, certain statements in this Item 2 under the captions "---Results of
Operations", "---Liquidity and Capital Resources," and "---Year 2000" may
constitute forward looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to be correct. There
can be no assurances that the Company will be able to obtain customer
acceptance during 1999 of the remaining regional service vehicle units, which
would have a material adverse effect on the Company's results of operations and
financial condition. Important factors that could cause actual results to
differ materially from the Company's expectations ("cautionary statements") are
disclosed in this report and the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 (under the caption "Business --- Risk Factors" and
elsewhere). All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by these cautionary statements.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not have any material exposure to market risk
associated with its cash and short-term investments. The Company's Senior Notes
payable are at a fixed rate and, thus, are not exposed to interest rate risk.
9
<PAGE> 12
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings --
Aeris Litigation. On February 23, 1999, Aeris Communications,
Inc. filed an Original Complaint against the Company in the
United States District Court for the Northern District of
California alleging that the certain of the Company's products
may infringe Aeris' United States Patent No. 5,594,740. On
June 17, 1999, Aeris and the Company concluded a formal
settlement agreement resolving all disputes raised in the
litigation. As part of the settlement agreement, the parties
dismissed the lawsuit and cross-licensed certain patents and
related pending patent applications involving
application-specific data messaging services on cellular
control channels.
Item 2. Changes in Securities -- None.
Item 3. Defaults Upon Senior Securities -- None.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders (the "Annual
Meeting") was held on May 25, 1999. At the Annual Meeting, the
stockholders of the Company: (i) elected each of the persons
listed below to serve as a director of the Company until the
next Annual Meeting of Stockholders or until their respective
successors have been duly elected and qualified; and (ii)
ratified the selection of PriceWaterhouseCoopers LLP as the
Company's independent accountants for the Company's fiscal
year ending December 31, 1999.
The Company had 24,967,960 shares of Common Stock outstanding
as of March 26, 1999, the record date for the Annual Meeting.
At the Annual Meeting, holders of a total of 18,479,893 shares
of Common Stock were present in person or represented by
proxy. The following sets forth information regarding the
results of the voting at the Annual Meeting:
Proposal 1: Election of Directors
<TABLE>
<CAPTION>
Shares Voting Shares
Director In Favor Withheld
-------- ------------- --------
<S> <C> <C>
Jana Ahlfinger Bell 18,455,510 24,383
William C. Kennedy, Jr. 18,442,860 37,033
Stephen L. Greaves 18,452,310 27,583
Terry S. Parker 18,441,060 38,833
Gerry C. Quinn 18,448,360 31,533
John Stupka 18,453,110 26,783
</TABLE>
Proposal 2: Ratification of PricewaterhouseCoopers LLP as the
Company's Independent Accountants
<TABLE>
<S> <C>
Votes in favor: 18,467,454
Votes against: 9,000
Abstentions: 3,439
</TABLE>
Item 5. Other Information -
GTE Wireless, Inc. ("GTE Wireless"). As previously reported, GTE Wireless and
the Company executed a Transition Agreement wherein GTE Wireless would continue
to provide administrative carrier services until the earlier of September 30,
1999 or the date that the Company actually transitions to Southwestern Bell
Mobile Systems, Inc. ("SBMS"), its new administrative carrier. The Company
currently expects to complete the transition to SBMS on or about August 16,
1999.
10
<PAGE> 13
There can be no assurances that the Company will be able to
transition to SBMS without incident and the failure to transition to
SBMS may have a material adverse effect on the Company's business,
financial condition or results of operations.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See the Index to Exhibits.
(b) Reports on Form 8-K - None
11
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HIGHWAYMASTER COMMUNICATIONS, INC.
Date: August 16, 1999
By: /s/ Jana Ahlfinger Bell
--------------------------------------------
Jana Ahlfinger Bell
President and Chief Executive Officer
By: /s/ W. Michael Smith
--------------------------------------------
W. Michael Smith
Executive Vice President and Chief Financial
Officer (Principal Financial Officer)
12
<PAGE> 15
(3) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER TITLE
-------- -----
<S> <C>
3.1 - Certificate of Incorporation of the Company, as amended.(1)(9)
3.2 - Amended and Restated By-Laws of the Company.(13)
4.1 - Specimen of certificate representing Common Stock, $.01 par value,
of the Company.(1)
4.2 - Warrant Certificate, dated September 27, 1996, issued to SBW.(7)
4.3 - Recapitalization Agreement, dated September 27, 1996, by and among
the Company, the Erin Mills Stockholders, the Carlyle Stockholders
and the other persons named therein.(7)
4.4 - Amended and Restated Stockholders' Agreement, dated September 27,
1996, by and among the Company, SBW, the Erin Mills Stockholders,
the Carlyle Stockholders, the By-Word Stockholders and the other
persons named therein.(7)
4.5 - Indenture dated September 23, 1997 by and among the Company,
HighwayMaster Corporation and Texas Commerce Bank, National
Association.(12)
4.6 - Pledge Agreement dated September 23, 1997 by and among the Company,
Bear, Stearns & Co. Inc. and Smith Barney Inc.(12)
4.7 - Registration Rights Agreement dated September 23, 1997 by and among
the Company, HighwayMaster Corporation, Bear, Stearns & Co. Inc.
and Smith Barney Inc.(12)
4.8 - Warrant Agreement dated September 23, 1997 by and among the
Company, Bear, Stearns & Co. Inc. and Smith Barney Inc.(12)
4.9 - Warrant Registration Rights Agreement dated September 23, 1997 by
and among the Company, Bear, Stearns & Co. Inc. and Smith Barney,
Inc.(12)
10.1 - License Agreement, dated April 23, 1992, by and between Voice
Control Systems and the Company (as successor to By-Word
Technologies, Inc.)(1)
10.2 - Second Amendment to Employment Agreement, dated September 1, 1998,
by and between HighwayMaster Corporation and William C. Saunders.
(16)
10.3 - Agreement and General Release, dated September 30, 1998, by and
between HighwayMaster Corporation and William C. Kennedy, Jr.(15)
10.4 - Release of HighwayMaster Communications, Inc. and HighwayMaster
Corporation by William C. Saunders, dated December 15, 1998. (16)
10.5 - Release of William C. Saunders by HighwayMaster Communications,
Inc. and HighwayMaster Corporation, dated December 15, 1998. (16)
10.6 - Amended and Restated 1994 Stock Option Plan of the Company, dated
February 4, 1994, as amended.(1)(5)(6)
10.7 - Purchase Agreement, dated September 27, 1996, between the Company
and SBW.(7)
10.8 - Mobile Communications (Voice and Data) Services Agreement, dated as
of July 15, 1993, between the Company and EDS Personal
Communications Corporation.(1)(2)
10.9 - Stock Option Agreement, dated June 22, 1998, by and between the
Company and John Stupka. (16)
10.10 - Services Agreement, dated March 20, 1996, between the Company and
GTE-Mobile Communications Service Corporation.(3)(4)
10.11 - Acknowledgment by William C. Saunders dated December 15, 1998. (16)
10.12 - Amendment dated November 16, 1995 to that certain Mobile
Communications (Voice and Data) Services Agreement, dated as of
July 15, 1993, between the Company and EDS Personal Communications
Corporation.(3)(4)
10.13 - Mutual Separation and Release, dated December 22, 1998, by and
between HighwayMaster Corporation and Gordon D. Quick. (16)
10.14 - Product Development Agreement, dated December 21, 1995, between
HighwayMaster Corporation and IEX Corporation.(3)(4)
</TABLE>
<PAGE> 16
<TABLE>
<S> <C>
10.15 - Technical Services Agreement, dated September 27, 1996, between
HighwayMaster Corporation and Southwestern Bell Wireless Holdings,
Inc.(7)
10.16 - Letter Agreement, dated February 19, 1996, between HighwayMaster
Corporation and IEX Corporation.(3)
10.17 - Form of Adoption Agreement, Regional Prototype Cash or Deferred
Profit-Sharing Plan and Trust Sponsored by McKay Hochman Co., Inc.,
relating to the HighwayMaster Corporation 401(k) Plan. (1)
10.18 - February 27, 1997 Addendum to Original Employment Letter dated
September 19, 1997 by and between the HighwayMaster Corporation and
Robert LaMere. (16)
10.19 - Software Transfer Agreement, dated April 25, 1997 between
HighwayMaster Corporation and Burlington Motor Carriers,
Inc.(9)(10)
10.20 - Employment Agreement, dated June 3, 1998, by and between
HighwayMaster Corporation and Todd A. Felker. (16)
10.21 - Employment Agreement, dated June 3, 1998, by and between
HighwayMaster Corporation and William McCausland.(16)
10.22 - Employment Agreement, dated May 29, 1998, by and between
HighwayMaster Corporation and Jana Ahlfinger Bell. (14)
10.23 - Lease Agreement, dated March 20, 1998, between HighwayMaster
Corporation and Cardinal Collins Tech Center, Inc.(15)
10.24 - First Amendment to Employment Agreement, dated September 15, 1998,
by and between HighwayMaster Corporation and Jana A. Bell. (16)
10.25 - Employment Agreement, dated November 24, 1998, by and between
HighwayMaster Corporation and Michael Smith. (16)
10.26 - September 18, 1998 Amended and Restated Stock Option Agreement of
May 29, 1998 by and between the Company and Jana Ahlfinger Bell.
(16)
10.27 - Stock Option Agreement, dated August 12, 1998, by and between the
Company and Jana Ahlfinger Bell. (16)
10.28 - Stock Option Agreement, dated September 18, 1998, by and between
the Company and Jana Ahlfinger Bell. (16)
10.29 - September 18, 1998 Amended and Restated Stock Option Agreement of
February 29, 1996, by and between the Company and William H.
McCausland. (16)
10.30 - Stock Option Agreement, dated September 18, 1998, by and between
the Company and William H. McCausland. (16)
10.31 - September 18, 1998 Amended and Restated Stock Option Agreement of
April 25, 1997, by and between the Company and Robert LaMere. (16)
10.32 - September 18, 1998 Amended and Restated Stock Option Agreement of
June 3, 1998, by and between the Company and Todd A. Felker (16)
10.33 - Stock Option Agreement dated November 24, 1998, by and between the
Company and Michael Smith. (16)
10.34 - Stock Option Agreement, dated April 4, 1995, by and between the
Company and Terry Parker. (16)
10.35 - Agreement No. 980427 between Southwestern Bell Telephone Company,
Pacific Bell, Nevada Bell, Southern New England Telephone and
HighwayMaster Corporation executed on January 13, 1999 (17)(18)
10.36 - Administrative Carrier Agreement entered into between HighwayMaster
Corporation and Southwestern Bell Mobile Systems, Inc. on March 30,
1999 (17)(18)
10.37 - Addendum to Agreement entered into between HighwayMaster
Corporation and International Telecommunications Data Systems, Inc.
on February 4, 1999 (17)(18)
10.38 - Second Addendum to Agreement entered into between HighwayMaster
Corporation and International Telecommunication Data Systems, Inc.
on February 4, 1999 (17)(18)
10.39 - Manufacturing and Equipment Purchase Agreement entered into between
HighwayMaster Corporation and Wireless Link Corporation on March 9,
1999 (17)(18)
</TABLE>
<PAGE> 17
<TABLE>
<S> <C>
10.40 - Agreement entered into between HighwayMaster Corporation and
Cellemetry LLC on January 19, 1999 (17)(18)
10.41 - Agreement entered into between HighwayMaster Corporation and
Cellemetry LLC on January 19, 1999 (17)(18)
10.42 - Agreement entered into between HighwayMaster Corporation and
Cellemetry LLC on January 19, 1999 (17)(18)
10.43 - Agreement entered into between HighwayMaster Corporation and
Cellemetry LLC on January 7, 1999 (17)(18)
10.44 Stock Option Agreement dated June 24, 1999, by and between the
Company and J. Raymond Bilbao (19)
10.45 Stock Option Agreement dated June 24, 1999, by and between the
Company and Marshall Lamm (19)
10.46 Stock Option Agreement dated June 14, 1999, by and between the
Company and Marc A. Bringman (19)
10.47 Transition Agreement entered into between GTE Wireless Services
Corporation and HighwayMaster Corporation on April 30, 1999
(19)(20)
10.48 Fleet-on-Track Services Agreement entered into between GTE
Telecommunications Services Incorporated and HighwayMaster
Corporation on May 3, 1999 (19)(20)
10.49 Confidential Memorandum of Understanding entered into between
Criticom International Corp. and HighwayMaster Corporation on April
16, 1999 (19)(20)
11 - Statement re Computation of Per Share Earnings (19)
27 - Financial Data Schedule.(19)
</TABLE>
- ---------
(1) Filed in connection with the Company's Registration
Statement on Form S-1, as amended (No. 33-91486) effective
June 22, 1995.
(2) Certain confidential portions deleted pursuant to Order
Granting Application for Confidential Treatment issued in
connection with Registration Statement on Form S-1 (No.
33-91486) effective June 22, 1995.
(3) Filed in connection with the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995.
(4) Certain confidential portions deleted pursuant to
Application for Confidential Treatment filed in connection
with the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995.
(5) Indicates management or compensatory plan or arrangement
required to be identified pursuant to Item 14(a)(4).
(6) Filed in connection with the Company's Form 10-Q Quarterly
Report for the quarterly period ended June 30, 1996.
(7) Filed in connection with the Company's Current Report on
Form 8-K filed on October 7, 1996.
(8) Filed in connection with the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996.
(9) Filed in connection with the Company's Form 10-Q Quarterly
Report for the quarterly period ended March 31, 1997.
(10) Certain confidential portions deleted pursuant to Order
Granting Application for Confidential Treatment issued in
connection with the Company's Form 10-Q Quarterly Report
for the quarterly period ended March 31, 1997.
(11) Filed in connection with the Company's Form 10-Q Quarterly
Report for the quarterly period ended June 30, 1997.
(12) Filed in connection with the Company's Registration
Statement on Form S-4, as amended (No. 333-38361).
(13) Filed in connection with the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997.
(14) Filed in connection with the Company's Form 10-Q Quarterly
Report for the quarterly period ended June 30, 1998.
(15) Filed in connection with the Company's Form 10-Q Quarterly
Report for the quarterly period
<PAGE> 18
ended September 30, 1998.
(16) Filed in connection with the Company's Form 10-K for the
fiscal year ended December 31, 1998.
(17) Filed in connection with the Company's Form 10-Q Quarterly
Report for the quarterly period ended March 31, 1999.
(18) Certain confidential portions deleted pursuant to Order
Granting Application for Confidential Treatment issued June
22, 1999 in connection with the Company's Form 10-Q
Quarterly Report for the quarterly period ended March 31,
1999.
(19) Filed herewith.
(20) Certain confidential portions deleted pursuant to
Application for Confidential Treatment filed of even date
herewith.
<PAGE> 1
4 YEAR VESTING
HIGHWAYMASTER COMMUNICATIONS, INC.
STOCK OPTION AGREEMENT
This OPTION AGREEMENT is entered into by and between HighwayMaster
Communications, Inc., a Delaware corporation (the "Company"), and the
undersigned employee of the Company's subsidiary, HighwayMaster Corporation,
(the "Optionee").
1. Grant of Option. The Company hereby grants to the Optionee effective
as of the date set forth in Section 18 hereof (the "Date of Grant"), the right
and option (the "Option") to purchase up to the aggregate number of shares of
common stock, par value $.01 per share, of the Company (the "Common Stock") set
forth in Section 18 hereof, subject to adjustment pursuant to Section 3 hereof
and subject to the Optionee's acceptance and agreement to all of the terms and
conditions and restrictions described in the HighwayMaster Communications, Inc.
(formerly known as HM Holding Corporation) 1994 Stock Option Plan, as amended
(the "Plan"), a copy of which has been provided to the Optionee, and to the
further terms, conditions and restrictions set forth below.
2. Exercise Price. Subject to adjustment pursuant to Section 3, the
exercise price payable by the Optionee upon exercise of this Option is set forth
in Section 18 hereof.
3. Adjustments to Number of Shares and Option Price. The number of shares
of Common Stock exercisable under this Option and exercise price have been
adjusted to give effect to the purchase under that certain Subscription
Agreement dated February 4, 1994, by and among the Company and the Purchasers
listed therein by such Purchasers of an aggregate of 2,130.435 shares of Common
Stock of the Company. The number of shares and exercise price shall also be
adjusted as provided in Section 9.3 of the Plan.
<PAGE> 2
4. Tax Status. This Option will be treated as an "incentive stock option"
within the meaning of Section 422 of the Code to the extent that any portion of
this Option meets the requirements of Section 422 of the Code. To the extent
that any portion of this Option does not meet such Code requirements, this
Option shall be deemed a nonqualified stock option.
5. Exercise of Option. Subject to the terms of the Plan and this Option
Agreement, as of the Date of Grant and each of the first, second, third and
fourth anniversaries of the Date of Grant, Optionee may exercise (cumulatively)
rights to acquire one-fifth of the Common Stock subject to the Option.
6. Expiration of Option. This Option shall expire and cease to be
exercisable on the sixth anniversary of the Date of Grant or such earlier date
as may be specified in the Plan.
7. Termination of Affiliation.
(a) Subject to the following provisions of this Section 7 and Article
VI of the Plan, this Option may not be exercised unless at the time of
exercise the Optionee is an Employee of the Company or a Subsidiary.
(b) If the Optionee's position as an Employee of the Company or a
Subsidiary shall terminate for any reason other than death, the Optionee
may exercise this Option, to the same extent it was exercisable on the date
of such termination, during the 60-day period following the date of such
termination. In no event may the Optionee exercise this Option later than
the date on which the Option would have expired under Section 6 hereof.
(c) If the Optionee's position as an Employee of the Company or a
Subsidiary shall terminate by reason of the Optionee's death, the executor
or administrator of the Optionee's estate or the person to whom this Option
is transferred by will or the laws of descent or distribution may exercise
this Option with respect to any or all shares covered by this Option within
60 days after the date of the Optionee's death.
2
<PAGE> 3
8. Procedure to Exercise. This Option may be exercised only by delivery
of a written notice to the Company at its principal office, stating the number
of shares of Common Stock as to which the Option is being exercised and
accompanied by payment in full in cash or by certified check of the exercise
price for all such shares.
9. Nontransferability of Option. This Option shall not be assignable or
transferable other than by will or the laws of descent and distribution and
shall be exercisable only by the Optionee during his lifetime.
10. Continued Employment or Retention. Subject to the terms of any
employment agreement between the Company and the Optionee, nothing herein shall
confer upon the Optionee any right to be continued in the employ or retention of
the Company or a Subsidiary or shall prevent the Company or Subsidiary which
employs or retains the Optionee from terminating such employment at any time,
with or without cause.
11. Rights as Shareholder. Nothing herein is intended to or shall give to
the Optionee any right or status of any kind as a stockholder of the Company in
respect of any shares of Common Stock covered by this Option or entitle the
Optionee to any dividends or distributions thereon unless and until such shares
shall have been delivered to the Optionee and registered in the Optionee's name.
12. Interpretation. If and when questions arise from time to time as to
the intent, meaning or application of the provisions hereof or of the Plan, such
questions shall be decided by the Board of Directors or the Committee in its
sole discretion, and any such decision shall be conclusive and binding on the
Optionee. The Optionee hereby agrees that this Option is granted and accepted
subject to such condition and understanding.
13. Investment Representation. At such time or times as the Optionee may
exercise this Option, the Optionee shall, upon the request of the Company,
represent in writing (i) that the shares
3
<PAGE> 4
being acquired by the Optionee will not be sold except pursuant to an effective
registration statement, or applicable exemption from registration, under the
Securities Act of 1933, as amended, (ii) that it is the Optionee's intention to
acquire the shares being acquired for investment only and not with a view to
distribution thereof, and (iii) other customary representations as the Company
deems necessary or advisable. No shares will be issued unless and until the
Company is satisfied as to the accuracy of such representations.
14. Withholding of Taxes. Upon exercise of this Option (either wholly or
in part), the Optionee must pay to the Company, or make arrangements
satisfactory to the Company regarding payment of, any federal, state or local
taxes of any kind required to be withheld in connection with the issuance to the
Optionee of Common Stock upon exercise of this Option.
15. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
mailed certified mail (return receipt requested) or sent by overnight delivery
service, cable, telegram, facsimile transmission or telex to the Optionee at the
address on the signature page hereof and to the Company at the address set forth
below or at such other addresses as shall be specified by the parties by like
notice:
HighwayMaster Communications, Inc.
1155 Kas Drive
Richardson, Texas 75081
Fax: (972)301-2263
Attn: Secretary & General Counsel
16. Defined Terms. All capitalized terms used herein and not otherwise
defined shall have the meanings given them in the Plan.
17. Confidentiality. Unless otherwise permitted by the Chairman of the
Board or the President of the Company, Optionee agrees to keep confidential the
terms of this Option Agreement (and the terms of any other Option Agreement with
any other employee of the Company known to Optionee) and shall not disclose such
terms to any other employee or otherwise.
4
<PAGE> 5
18. Specified Information. This Option Agreement shall apply with respect
to the following specific information:
a. Date of Grant: JUNE 24, 1999
b. Name of Optionee: J. RAYMOND BILBAO
c. Adjusted Number of Shares Covered by Option: 25,000
d. Option Exercise Price Per Share: $1.41
IN WITNESS WHEREOF, the undersigned have executed this Option Agreement to
be effective as of the Date of Grant set forth above.
HIGHWAYMASTER COMMUNICATIONS, INC.
By: /s/ JANA BELL
-----------------------------------
Name: Jana Bell
---------------------------------
Title: President and CEO
--------------------------------
/s/ J. RAYMOND BILBAO
--------------------------------------
J. RAYMOND BILBAO, Optionee
5
<PAGE> 1
4 YEAR VESTING
HIGHWAYMASTER COMMUNICATIONS, INC.
STOCK OPTION AGREEMENT
This OPTION AGREEMENT is entered into by and between HighwayMaster
Communications, Inc., a Delaware corporation (the "Company"), and the
undersigned employee of the Company's subsidiary, HighwayMaster Corporation,
(the "Optionee").
1. Grant of Option. The Company hereby grants to the Optionee effective
as of the date set forth in Section 18 hereof (the "Date of Grant"), the right
and option (the "Option") to purchase up to the aggregate number of shares of
common stock, par value $.01 per share, of the Company (the "Common Stock") set
forth in Section 18 hereof, subject to adjustment pursuant to Section 3 hereof
and subject to the Optionee's acceptance and agreement to all of the terms and
conditions and restrictions described in the HighwayMaster Communications, Inc.
(formerly known as HM Holding Corporation) 1994 Stock Option Plan, as amended
(the "Plan"), a copy of which has been provided to the Optionee, and to the
further terms, conditions and restrictions set forth below.
2. Exercise Price. Subject to adjustment pursuant to Section 3, the
exercise price payable by the Optionee upon exercise of this Option is set forth
in Section 18 hereof.
3. Adjustments to Number of Shares and Option Price. The number of shares
of Common Stock exercisable under this Option and exercise price have been
adjusted to give effect to the purchase under that certain Subscription
Agreement dated February 4, 1994, by and among the Company and the Purchasers
listed therein by such Purchasers of an aggregate of 2,130.435 shares of Common
Stock of the Company. The number of shares and exercise price shall also be
adjusted as provided in Section 9.3 of the Plan.
<PAGE> 2
4. Tax Status. This Option will be treated as an "incentive stock option"
within the meaning of Section 422 of the Code to the extent that any portion of
this Option meets the requirements of Section 422 of the Code. To the extent
that any portion of this Option does not meet such Code requirements, this
Option shall be deemed a nonqualified stock option.
5. Exercise of Option. Subject to the terms of the Plan and this Option
Agreement, as of the Date of Grant and each of the first, second, third and
fourth anniversaries of the Date of Grant, Optionee may exercise (cumulatively)
rights to acquire one-fifth of the Common Stock subject to the Option.
6. Expiration of Option. This Option shall expire and cease to be
exercisable on the sixth anniversary of the Date of Grant or such earlier date
as may be specified in the Plan.
7. Termination of Affiliation.
(a) Subject to the following provisions of this Section 7 and Article
VI of the Plan, this Option may not be exercised unless at the time of
exercise the Optionee is an Employee of the Company or a Subsidiary.
(b) If the Optionee's position as an Employee of the Company or a
Subsidiary shall terminate for any reason other than death, the Optionee
may exercise this Option, to the same extent it was exercisable on the date
of such termination, during the 60-day period following the date of such
termination. In no event may the Optionee exercise this Option later than
the date on which the Option would have expired under Section 6 hereof.
(c) If the Optionee's position as an Employee of the Company or a
Subsidiary shall terminate by reason of the Optionee's death, the executor
or administrator of the Optionee's estate or the person to whom this Option
is transferred by will or the laws of descent or distribution may exercise
this Option with respect to any or all shares covered by this Option within
60 days after the date of the Optionee's death.
2
<PAGE> 3
8. Procedure to Exercise. This Option may be exercised only by delivery
of a written notice to the Company at its principal office, stating the number
of shares of Common Stock as to which the Option is being exercised and
accompanied by payment in full in cash or by certified check of the exercise
price for all such shares.
9. Nontransferability of Option. This Option shall not be assignable or
transferable other than by will or the laws of descent and distribution and
shall be exercisable only by the Optionee during his lifetime.
10. Continued Employment or Retention. Subject to the terms of any
employment agreement between the Company and the Optionee, nothing herein shall
confer upon the Optionee any right to be continued in the employ or retention of
the Company or a Subsidiary or shall prevent the Company or Subsidiary which
employs or retains the Optionee from terminating such employment at any time,
with or without cause.
11. Rights as Shareholder. Nothing herein is intended to or shall give to
the Optionee any right or status of any kind as a stockholder of the Company in
respect of any shares of Common Stock covered by this Option or entitle the
Optionee to any dividends or distributions thereon unless and until such shares
shall have been delivered to the Optionee and registered in the Optionee's name.
12. Interpretation. If and when questions arise from time to time as to
the intent, meaning or application of the provisions hereof or of the Plan, such
questions shall be decided by the Board of Directors or the Committee in its
sole discretion, and any such decision shall be conclusive and binding on the
Optionee. The Optionee hereby agrees that this Option is granted and accepted
subject to such condition and understanding.
13. Investment Representation. At such time or times as the Optionee may
exercise this Option, the Optionee shall, upon the request of the Company,
represent in writing (i) that the shares
3
<PAGE> 4
being acquired by the Optionee will not be sold except pursuant to an effective
registration statement, or applicable exemption from registration, under the
Securities Act of 1933, as amended, (ii) that it is the Optionee's intention to
acquire the shares being acquired for investment only and not with a view to
distribution thereof, and (iii) other customary representations as the Company
deems necessary or advisable. No shares will be issued unless and until the
Company is satisfied as to the accuracy of such representations.
14. Withholding of Taxes. Upon exercise of this Option (either wholly or
in part), the Optionee must pay to the Company, or make arrangements
satisfactory to the Company regarding payment of, any federal, state or local
taxes of any kind required to be withheld in connection with the issuance to the
Optionee of Common Stock upon exercise of this Option.
15. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
mailed certified mail (return receipt requested) or sent by overnight delivery
service, cable, telegram, facsimile transmission or telex to the Optionee at the
address on the signature page hereof and to the Company at the address set forth
below or at such other addresses as shall be specified by the parties by like
notice:
HighwayMaster Communications, Inc.
1155 Kas Drive
Richardson, Texas 75081
Fax: (972)301-2263
Attn: Secretary & General Counsel
16. Defined Terms. All capitalized terms used herein and not otherwise
defined shall have the meanings given them in the Plan.
17. Confidentiality. Unless otherwise permitted by the Chairman of the
Board or the President of the Company, Optionee agrees to keep confidential the
terms of this Option Agreement (and the terms of any other Option Agreement with
any other employee of the Company known to Optionee) and shall not disclose such
terms to any other employee or otherwise.
4
<PAGE> 5
18. Specified Information. This Option Agreement shall apply with respect
to the following specific information:
a. Date of Grant: JUNE 24, 1999
b. Name of Optionee: MARSHALL LAMM
c. Adjusted Number of Shares Covered by Option: 25,000
d. Option Exercise Price Per Share: $1.41
IN WITNESS WHEREOF, the undersigned have executed this Option Agreement to
be effective as of the Date of Grant set forth above.
HIGHWAYMASTER COMMUNICATIONS, INC.
By: /s/ JANA BELL
-----------------------------------
Name: Jana Bell
---------------------------------
Title: President and CEO
--------------------------------
/s/ MARSHALL LAMM
--------------------------------------
MARSHALL LAMM, Optionee
5
<PAGE> 1
4 YEAR VESTING
HIGHWAYMASTER COMMUNICATIONS, INC.
STOCK OPTION AGREEMENT
This OPTION AGREEMENT is entered into by and between HighwayMaster
Communications, Inc., a Delaware corporation (the "Company"), and the
undersigned employee of the Company's subsidiary, HighwayMaster Corporation,
(the "Optionee").
1. Grant of Option. The Company hereby grants to the Optionee effective
as of the date set forth in Section 18 hereof (the "Date of Grant"), the right
and option (the "Option") to purchase up to the aggregate number of shares of
common stock, par value $.01 per share, of the Company (the "Common Stock") set
forth in Section 18 hereof, subject to adjustment pursuant to Section 3 hereof
and subject to the Optionee's acceptance and agreement to all of the terms and
conditions and restrictions described in the HighwayMaster Communications, Inc.
(formerly known as HM Holding Corporation) 1994 Stock Option Plan, as amended
(the "Plan"), a copy of which has been provided to the Optionee, and to the
further terms, conditions and restrictions set forth below.
2. Exercise Price. Subject to adjustment pursuant to Section 3, the
exercise price payable by the Optionee upon exercise of this Option is set forth
in Section 18 hereof.
3. Adjustments to Number of Shares and Option Price. The number of shares
of Common Stock exercisable under this Option and exercise price have been
adjusted to give effect to the purchase under that certain Subscription
Agreement dated February 4, 1994, by and among the Company and the Purchasers
listed therein by such Purchasers of an aggregate of 2,130.435 shares of Common
Stock of the Company. The number of shares and exercise price shall also be
adjusted as provided in Section 9.3 of the Plan.
<PAGE> 2
4. Tax Status. This Option will be treated as an "incentive stock option"
within the meaning of Section 422 of the Code to the extent that any portion of
this Option meets the requirements of Section 422 of the Code. To the extent
that any portion of this Option does not meet such Code requirements, this
Option shall be deemed a nonqualified stock option.
5. Exercise of Option. Subject to the terms of the Plan and this Option
Agreement, as of the Date of Grant and each of the first, second, third and
fourth anniversaries of the Date of Grant, Optionee may exercise (cumulatively)
rights to acquire one-fifth of the Common Stock subject to the Option.
6. Expiration of Option. This Option shall expire and cease to be
exercisable on the sixth anniversary of the Date of Grant or such earlier date
as may be specified in the Plan.
7. Termination of Affiliation.
(a) Subject to the following provisions of this Section 7 and Article
VI of the Plan, this Option may not be exercised unless at the time of
exercise the Optionee is an Employee of the Company or a Subsidiary.
(b) If the Optionee's position as an Employee of the Company or a
Subsidiary shall terminate for any reason other than death, the Optionee
may exercise this Option, to the same extent it was exercisable on the date
of such termination, during the 60-day period following the date of such
termination. In no event may the Optionee exercise this Option later than
the date on which the Option would have expired under Section 6 hereof.
(c) If the Optionee's position as an Employee of the Company or a
Subsidiary shall terminate by reason of the Optionee's death, the executor
or administrator of the Optionee's estate or the person to whom this Option
is transferred by will or the laws of descent or distribution may exercise
this Option with respect to any or all shares covered by this Option within
60 days after the date of the Optionee's death.
2
<PAGE> 3
8. Procedure to Exercise. This Option may be exercised only by delivery
of a written notice to the Company at its principal office, stating the number
of shares of Common Stock as to which the Option is being exercised and
accompanied by payment in full in cash or by certified check of the exercise
price for all such shares.
9. Nontransferability of Option. This Option shall not be assignable or
transferable other than by will or the laws of descent and distribution and
shall be exercisable only by the Optionee during his lifetime.
10. Continued Employment or Retention. Subject to the terms of any
employment agreement between the Company and the Optionee, nothing herein shall
confer upon the Optionee any right to be continued in the employ or retention of
the Company or a Subsidiary or shall prevent the Company or Subsidiary which
employs or retains the Optionee from terminating such employment at any time,
with or without cause.
11. Rights as Shareholder. Nothing herein is intended to or shall give to
the Optionee any right or status of any kind as a stockholder of the Company in
respect of any shares of Common Stock covered by this Option or entitle the
Optionee to any dividends or distributions thereon unless and until such shares
shall have been delivered to the Optionee and registered in the Optionee's name.
12. Interpretation. If and when questions arise from time to time as to
the intent, meaning or application of the provisions hereof or of the Plan, such
questions shall be decided by the Board of Directors or the Committee in its
sole discretion, and any such decision shall be conclusive and binding on the
Optionee. The Optionee hereby agrees that this Option is granted and accepted
subject to such condition and understanding.
13. Investment Representation. At such time or times as the Optionee may
exercise this Option, the Optionee shall, upon the request of the Company,
represent in writing (i) that the shares
3
<PAGE> 4
being acquired by the Optionee will not be sold except pursuant to an effective
registration statement, or applicable exemption from registration, under the
Securities Act of 1933, as amended, (ii) that it is the Optionee's intention to
acquire the shares being acquired for investment only and not with a view to
distribution thereof, and (iii) other customary representations as the Company
deems necessary or advisable. No shares will be issued unless and until the
Company is satisfied as to the accuracy of such representations.
14. Withholding of Taxes. Upon exercise of this Option (either wholly or
in part), the Optionee must pay to the Company, or make arrangements
satisfactory to the Company regarding payment of, any federal, state or local
taxes of any kind required to be withheld in connection with the issuance to the
Optionee of Common Stock upon exercise of this Option.
15. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
mailed certified mail (return receipt requested) or sent by overnight delivery
service, cable, telegram, facsimile transmission or telex to the Optionee at the
address on the signature page hereof and to the Company at the address set forth
below or at such other addresses as shall be specified by the parties by like
notice:
HighwayMaster Communications, Inc.
1155 Kas Drive
Richardson, Texas 75081
Fax: (972)301-2263
Attn: Secretary & General Counsel
16. Defined Terms. All capitalized terms used herein and not otherwise
defined shall have the meanings given them in the Plan.
17. Confidentiality. Unless otherwise permitted by the Chairman of the
Board or the President of the Company, Optionee agrees to keep confidential the
terms of this Option Agreement (and the terms of any other Option Agreement with
any other employee of the Company known to Optionee) and shall not disclose such
terms to any other employee or otherwise.
4
<PAGE> 5
18. Specified Information. This Option Agreement shall apply with respect
to the following specific information:
a. Date of Grant: MAY 14, 1999
b. Name of Optionee: MARC BRINGMAN
c. Adjusted Number of Shares Covered by Option: 10,000
d. Option Exercise Price Per Share: $1.56
IN WITNESS WHEREOF, the undersigned have executed this Option Agreement to
be effective as of the Date of Grant set forth above.
HIGHWAYMASTER COMMUNICATIONS, INC.
By: /s/ JANA BELL
-----------------------------------
Name: Jana Bell
---------------------------------
Title: President & CEO
--------------------------------
/s/ MARC BRINGMAN
--------------------------------------
MARC BRINGMAN, Optionee
5
<PAGE> 1
[GTE LOGO]
TRANSITION AGREEMENT
dated April 29, 1999
BY AND BETWEEN
GTE WIRELESS SERVICE CORPORATION,
FORMERLY KNOWN AS GTE MOBILE COMMUNICATIONS SERVICE CORPORATION
AND
HIGHWAYMASTER CORPORATION
Transition Agreement GTE PROPRIETARY AND CONFIDENTIAL
<PAGE> 2
TRANSITION AGREEMENT
THIS TRANSITION AGREEMENT (the "Agreement"), dated as of March 19, 1999
is entered into by and between GTE Wireless Service Corporation f/k/a GTE Mobile
Communications Service Corporation, a Delaware corporation ("GTE") and
HighwayMaster Corporation, a Delaware corporation ("HighwayMaster").
WITNESSETH:
WHEREAS, HighwayMaster and GTE are parties to a Service Agreement dated
May 20, 1996; and
WHEREAS, both HighwayMaster and GTE wish to terminate the Service
Agreement between the Parties and transition the services provided under the
Service Agreement to a new Carrier;
NOW, THEREFORE, in consideration of the premises, the terms and
conditions set forth herein, the mutual benefits to be gained by the performance
thereof and other good, valuable, mutual and binding consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties agree as follows:
SECTION 1
DEFINITIONS
Unless the context otherwise requires, the terms defined in this
Section 1 shall have the meanings herein specified for all purposes of this
Agreement, applicable to both the singular and plural forms of any of the terms
herein defined:
"AFFILIATE" shall mean a Person, association, partnership, corporation
or joint-stock company or trust that directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with one
of the Parties to this Agreement. Control shall be defined as (i) ownership of a
majority of the voting power of all classes of voting stock or (ii) ownership of
a majority of the beneficial interests in income and capital of an entity other
than a corporation.
"BID" shall mean the billing identification code that allows an NPA/NXX
in a CGSA to be defined as a stand alone billing center.
"DESIGNATED GTE RECIPIENT" shall mean the General Counsel of GTE, or
any other individual designated by GTE in writing, pursuant to Section 13.4 of
this Agreement, to be the recipient of HighwayMaster Information.
"DESIGNATED HIGHWAYMASTER RECIPIENT" shall mean the General Counsel of
HighwayMaster, or any other individual designated by HighwayMaster in writing,
pursuant to Section 13.4 of this Agreement, to be the recipient of GTE
Information.
Transition Agreement GTE PROPRIETARY AND CONFIDENTIAL
<PAGE> 3
"CARRIER" shall mean an entity licensed by the Federal Communications
Commission ("FCC") to provide cellular service, broadband personal
communications services ("PCS"), or specialized mobile radio ("SMR") service
through the use of the entity's owned and operated licensed facilities.
"CGSA" shall mean a cellular geographic service area of a Carrier which
is defined by the FCC as either a metropolitan service area ("MSA") or a rural
service area ("RSA").
"CLIENT" shall mean the end user of the HighwayMaster System.
"CTS" shall mean cellular telephone service as available in any
designated and authorized CGSA.
"CTS USAGE" shall mean the use of any CTS for any purpose, including
but not limited to, voice, data and roaming.
"ESN" shall mean electronic serial number assigned to each individual
unit of the HighwayMaster System.
"FCC" shall mean the Federal Communication Commission.
"GTE CARRIER" shall mean a Carrier that is a GTE Affiliate or
subsidiary.
"GTE INFORMATION" shall mean any and all information, in any tangible
or electronic form, which bears a legend "GTE Confidential Information - Subject
to Use and Disclosure Restrictions Pursuant to Contract" and which has been
provided to the Designated HighwayMaster Recipient; provided, however, the
foregoing shall not include that portion of any information made available by
GTE without restrictions on use or disclosure or that portion of any information
which is readily discernable by the performance of this Agreement. All other
information, even if in writing or other tangible form, but which does not bear
the legend described above, shall not be considered "GTE Information." In
addition, this definition is subject to the limitations of Section 8.2(b) below.
"GTE MARKET" shall mean any CGSA, whether MSA or RSA, in which an
Affiliate of GTE holds the FCC license or has binding management authority in
such CGSA. Attached hereto as Exhibit A is a list of all current GTE Markets.
This shall not include any CGSA acquired or assimilated through the proposed
merger of Bell Atlantic Corporation and GTE Corporation.
"HIGHWAYMASTER CORE FUNCTIONALITY" shall mean any HighwayMaster System
or portion thereof currently in use by HighwayMaster in its operations that has
the following capabilities: (i) a mobile unit with capabilities that include the
monitoring of cellular overhead paging channels to determine from internal
tables the appropriate selection of A-side or B-side Carriers, automated
transmission of location notification to a central complex or a functional
equivalent of such process for call delivery purposes
Transition Agreement GTE PROPRIETARY AND CONFIDENTIAL
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<PAGE> 4
and the ability to answer incoming calls and automatically respond to data
exchange requests and (ii) central complex processing of such calls, which
include data store-and-forward and call delivery to and from such mobile units.
"HIGHWAYMASTER INFORMATION" shall mean any and all information, in any
tangible or electronic form, which bears a legend "HighwayMaster Confidential
Information - Subject to Use and Disclosure Restrictions Pursuant to Contract"
and which has been provided to the Designated GTE Recipient; provided, however,
the foregoing shall not include that portion of any information made available
by HighwayMaster without restrictions on use or disclosure or that portion of
any information which is readily discernable by the performance of this
Agreement. All other information, even if in writing or other tangible form, but
which does not bear the legend described above, shall not be considered
"HighwayMaster Information." In addition, this definition is subject to the
limitations of Section 8.2(b) below.
"HIGHWAYMASTER SYSTEM" shall mean the system module ("System Module"),
display module ("Display Module"), Network Services Center(s) ("NSC"),
HighwayMaster software provided to its Clients, interface between HighwayMaster
and the NSC, interface between the NSC and System Module.
"MATERIAL DEFAULT" means any Material Breach which has not been cured
within thirty (30) days after notice of such breach is given to the breaching
Party by the non-breaching Party.
"MATERIAL BREACH" means, with respect to either Party to this
Agreement, a breach of any obligation, representation, warranty, or covenant of
such Party contained in this Agreement.
"MINIMUM ROAMING REQUIREMENT" shall mean the minimum amount of roaming
that must be maintained by each HighwayMaster System or any portion thereof to
be measured as follows: During the Term of this Agreement and any extension,
renewal or continuation thereof, each HighwayMaster System's CTS Usage must be
in multiple SIDs for a minimum of seventy percent (70%) of all CTS Usage for
each and every Vehicle equipped with a HighwayMaster System during two (2)
consecutive months of each quarter in a calendar year. Such quarters to be
measured from January 1 through March 31, April 1 through June 30, July 1
through September 30 and October through December 31 for each calendar year in
the Term of this Agreement.
"NON-GTE CARRIER" shall mean a Carrier other than GTE or one of its
Affiliates that provides CTS for use with a HighwayMaster System under a Roaming
Addendum.
"NON-GTE MARKET" shall mean any CGSA, whether MSA or RSA, in which a
Non-GTE Carrier holds the FCC license or have binding management authority to
provide CTS in such CGSA.
Transition Agreement GTE PROPRIETARY AND CONFIDENTIAL
-3-
<PAGE> 5
"NPA/NXXS [TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.] Such
NPA/NXXs are not North American Numbering Plan Numbers.
"NUMBER" or "MIN" shall mean the numerical code or phone number
assigned to the cellular mechanism in the HighwayMaster.
"PARTIES" shall mean GTE and HighwayMaster.
"PARTY" shall mean either GTE or HighwayMaster.
"PERSON" shall mean any individual, corporation, partnership, firm,
joint venture, association, joint stock company, trust, estate, unincorporated
organization, governmental or regulatory body or other entity.
"ROAMING" shall mean the CTS provided from one Carrier to another
Carrier for the purpose of permitting a Carrier's end user's to have service
when such Carrier's end user is in a CGSA not owned or managed by such Carrier.
"ROAMING ADDENDUM" or "ROAMING ADDENDA" shall mean the addendums to
GTE's Roaming Agreements that enable GTE to provide HighwayMaster with CTS in
Non-GTE Markets.
"ROAMING AGREEMENTS" shall mean the Roaming Agreements between GTE or
one of its Affiliates and a Non-GTE Carrier for the provision of Roaming.
"ROAMING RATE" shall mean the agreed upon rate set forth in the Roaming
Addenda by each Non-GTE Carrier in a CGSA operated by such Carrier for use of
CTS in that Carrier's CGSA and the rate charged by GTE for use of CTS in GTE
Markets with the HighwayMaster System.
"SERVICE PROVIDER" shall mean the Carrier that replaces GTE for
provision of all or any portion of Services under the Services Agreement.
"SERVICES" shall mean the services to be provided to HighwayMaster by
GTE for use with the HighwayMaster System as described or identified in this
Agreement.
"SERVICE AGREEMENT" shall mean that certain Service Agreement entered
into between HighwayMaster and GTE on March 20, 1996.
"SID" shall mean the five digit system identification code assigned to
each Carrier by the FCC.
"VEHICLES" shall mean modes of transportation such as trucks, vans,
recreational vehicles or waterway barges that are equipped with all or a portion
of an activated and in use HighwayMaster System that has the HighwayMaster Core
Functionality.
Transition Agreement GTE PROPRIETARY AND CONFIDENTIAL
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<PAGE> 6
"VOICE CTS" shall mean the use of any cellular airtime for the purpose
of transmitting voice communications via cellular networks.
SECTION 2
GENERAL PURPOSE
This Agreement is for the purpose of setting forth the obligations of
each Party from the date of execution of this Agreement until its termination on
September 30, 1999. Both Parties acknowledge and agree that this Agreement will
supercede any and all other Agreements prior to this date between the Parties,
and that the Service Agreement is hereby terminated and of no further force or
effect as of the date of this Agreement. HighwayMaster acknowledges and agrees
that GTE has discontinued the program under the Service Agreement, and that it
is no longer available from GTE. Neither Party has any expectation or right of
renewal with respect to this Agreement beyond September 30, 1999, and GTE will
continue the provision of the following Services only through the earlier of (i)
the expiration of this Agreement on September 30, 1999; (ii) termination of this
Agreement prior to September 30, 1999 or (iii) the transition of the Services to
a new Service Provider.
SECTION 3
GTE OBLIGATIONS
3.1 RESTRICTION ON SERVICES. GTE is providing the Services hereunder
only for use by HighwayMaster with Clients who employ the HighwayMaster Core
Functionality with a HighwayMaster System in North America. Further, such
Services will only be available in CGSAs for which CTS is provided to GTE for
use with the HighwayMaster System.
3.2 NPA/NXXS. GTE will maintain the One Hundred Thousand (100,000)
designated NPA/NXXs combinations already used by HighwayMaster to be used solely
in connection with the HighwayMaster System during the term of this Transition
Agreement. HighwayMaster agrees and understands that such NPA/NXXs are not
dialable from the public switched telephone network. GTE will not issue and
HighwayMaster will not request any additional Numbers under this Agreement.
3.3 BID. During the Term of this Agreement, GTE will maintain the
current BID, 30445, solely for the NPA/NXXs under this Agreement as permitted by
any laws, rules or regulations. Such BID permits identification of Vehicles in
each CGSA and the tracking identification for CTS usage as permitted by any
laws, rules or regulations.
3.4 BILLING SERVICES.
(a) GTE shall maintain a detailed record of CTS Usage by
HighwayMaster on a magnetic billing tape (the "Tape") in the format currently
sent to HighwayMaster. Such Tape will include call detail records for
HighwayMaster's usage of CTS, but in no instance will GTE be required to provide
HighwayMaster with any tape or documents that reflect CTS Usage by entities not
utilizing a HighwayMaster System.
Transition Agreement GTE PROPRIETARY AND CONFIDENTIAL
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<PAGE> 7
Within thirty (30) days of the end of each billing cycle GTE will provide
HighwayMaster with a summary invoice (the "Invoice") of charges for CTS Usage
during that billing cycle and the Tape. Such Invoices will provide a summary of
the charges by GTE Carriers and Non-GTE Carriers for CTS Usage in each Carriers
respective CGSAs. GTE shall not be liable for any inaccuracies in a Carrier's
billing of HighwayMaster in a Non-GTE market under any circumstances.
HighwayMaster expressly acknowledges that some charges incurred in a billing
cycle will not appear on the Invoice or in the Tape for such billing cycle and
that such charges will appear on subsequent Invoices. HighwayMaster will be
responsible for payment of any and all charges that are delayed or appear on
subsequent Invoices. HighwayMaster will be responsible for payment of the full
amount of each Invoice in accordance with the provisions of Section 9 of this
Agreement even if HighwayMaster has not received payment from its Clients or any
other third party.
(b) Notwithstanding the above subsection (a), GTE agrees that
in a GTE Market, GTE will not bill HighwayMaster for any CTS Usage in GTE
Markets if the CTS Usage is more than ninety (90) days old; unless the delay is
caused by HighwayMaster or resulting from any action or omission by
HighwayMaster's failure to provide information on installations, activations,
and deactivations in a timely manner. For example, if CTS Usage in a GTE Market
is a call record generated on May 31, 1998, GTE must bill HighwayMaster for that
call prior to August 30, 1998.
(c) With respect to the cellular usage records and the charges
therefore in Non-GTE markets ("Non-GTE Market Charges"), GTE will include such
Non-GTE Market Charges in an invoice to HighwayMaster no later than forty-five
(45) days after receipt of such Non-GTE Market Charges by GTE. HighwayMaster
acknowledges that some of the Non-GTE Market Charges may be more than forty-five
(45) days old when HighwayMaster receives them in an invoice because GTE does
not control when a Non-GTE Carrier submits its records, and HighwayMaster shall
still pay such Non-GTE Market Charges if GTE has sent such Non-GTE Market
Charges no later than forty-five (45) days after receipt of such charges by GTE.
(d) GTE agrees that as of September 16, 1998, HighwayMaster
has paid all amounts due under the Service Agreement to GTE other than CTS Usage
in Non-GTE Markets that has not passed through the billing process, and GTE
shall not bill HighwayMaster for any CTS Usage in GTE Markets prior to September
16, 1998. GTE has loaded the NPA/NXXs into its billing system, and HighwayMaster
is not required to send the weekly customer database file to the extent only the
NPA/NXXs defined herein are used by HighwayMaster.
3.5 PAYMENT OF CARRIERS. On behalf of HighwayMaster, GTE agrees to pay
any amounts due Carriers by HighwayMaster for use of Carrier's CTS; provided,
however, that HighwayMaster will reimburse GTE for all amounts paid to any
Carrier ("Carrier Airtime Reimbursement") hereunder even if HighwayMaster has
requested credits from a Carrier or disputes the charges in any manner; provided
that GTE has invoiced HighwayMaster for the Non-GTE Market Charges as set forth
in 3.4(c) above. HighwayMaster hereby acknowledges that GTE's obligation to make
any such payments
Transition Agreement GTE PROPRIETARY AND CONFIDENTIAL
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<PAGE> 8
is only part of the Services provided to HighwayMaster under this Agreement and
that HighwayMaster is ultimately responsible for any payments owed to Carriers.
HighwayMaster agrees to indemnify and hold harmless GTE from any and all claims,
losses, damages, causes of action, costs (including reasonable attorneys fees)
or expenses incurred by GTE as a result of any claim or action brought by a
third party and arising from the payment of amounts to Carriers under this
Agreement; provided that HighwayMaster has the right to appoint counsel and
direct the litigation.
3.6 PROVISION OF CTS.
(a) GTE Markets. In GTE Markets, GTE agrees to provide
HighwayMaster with CTS at the rates set forth in Section 9; provided, however,
that HighwayMaster must maintain the Minimum Roaming Requirement and use such
CTS solely with the HighwayMaster System. To the extent a GTE Market is
divested, sold or otherwise transferred ("Divested Market"), GTE shall use
reasonable efforts to insure that the entity acquiring such Divested Market
continues to provide CTS to HighwayMaster at the rate charged at the time of the
divestiture; provided, however, that GTE shall not guarantee a provision of CTS
at any rate in a Divested Market and HighwayMaster will have the right to obtain
alternative coverage arrangements in such Divested Market. To the extent a GTE
Market loses the required FCC license or other necessary approvals, such GTE
Market shall have no obligation to provide CTS to HighwayMaster.
(b) Non-GTE Markets. GTE has Roaming Addenda under which GTE
provides CTS in Non-GTE Markets to HighwayMaster under this Agreement. The
Parties acknowledge and agree that the majority of these Roaming Addenda are
currently on a month-to-month basis or expired, and that GTE will not take any
action to renew, maintain or continue such Roaming Addenda. As part of the
transition of the Services to a new Service Provider, either HighwayMaster or
its new Service Provider will obtain Roaming Addenda for the provision of CTS to
HighwayMaster. To the extent any Carrier terminates its Roaming Addenda, GTE
shall notify HighwayMaster, but GTE will have no further obligation to provide
service in the terminated CGSA. Subject to the above, GTE will continue to
execute new Roaming Addenda for CGSAs that are currently not providing CTS for
use with the HighwayMaster System to the extent the Roaming Addenda are in the
form attached hereto as Exhibit B and the term of such Roaming Addenda is
month-to-month. Upon the earlier of (i) transition to a new Service Provider or
(ii) the expiration or termination of this Agreement, GTE will terminate all of
the existing Roaming Addenda.
(c) Restrictions on CTS. With respect to the restrictions
under the Roaming Addenda, whether a GTE Market or a Non-GTE Market, GTE shall
inform the Carrier that HighwayMaster requires restricted 1-800 dialing to its
complex and the use of an authorized security algorithm ("SA") or modem to modem
validation process ("MVM"); provided, however, that HighwayMaster acknowledges
and agrees that it will be solely responsible for any amounts owed for CTS Usage
or any other costs incurred in Non-GTE Markets where the Carrier does not
provide or install such call restriction. To the extent GTE has the technical
ability to implement such call restriction ("Call Restriction") in a GTE Market
with no cost to itself, GTE shall have thirty (30) days from
Transition Agreement GTE PROPRIETARY AND CONFIDENTIAL
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<PAGE> 9
the date it commences providing CTS to HighwayMaster to implement the call
restriction in a GTE Market. If GTE fails to implement such call restriction,
GTE shall not charge HighwayMaster for any fraudulent use of CTS caused by GTE's
failure to install the call restriction in a GTE Market. To the extent any
equipment, software or modification is required to provide the requested call
restriction in any CGSA, the Carrier, at its option, may agree to install such
equipment, software or modification but any cost associated therewith shall be
borne by HighwayMaster at its option. HighwayMaster agrees to maintain its
current security and fraud prevention systems and validation procedures in place
and active, and to the extent its ceases any such security protections,
HighwayMaster will be liable for fraudulent CTS Usage. The Parties agree that
the HighwayMaster Systems may be permitted to dial 911 emergency calls, but
HighwayMaster acknowledges that neither GTE nor the GTE Markets provide or
control the provision of 911 emergency services in any CGSAs.
3.7 PRIMARY POINT OF CONTACT. GTE and HighwayMaster shall each identify
in writing, subject to substitution at any time, a primary point of contact to
coordinate activations, to identify existing problems with the provision of the
Services by GTE and billing (the "Contact"). The Parties agree that the Contact
will have adequate technical knowledge and understanding of the mutual
obligations hereunder and will be available on a regular basis Monday through
Friday from 8:00 a.m. to 5:00 p.m.
eastern standard time.
3.8 ACTIVATIONS/IDENTIFICATION CHANGES. HighwayMaster is no longer
required to provide the weekly customer database file to GTE that shows the
NPA/NXXs activated; provided, however, that HighwayMaster agrees to verify which
NPA/NXXs are active within five (5) business days of a written request from GTE.
Further, GTE shall have full access to the Database to confirm any status of any
of the NPA/NXXs. HighwayMaster acknowledges and agrees that it can obtain this
information from GTE TSI. As stated in Section 3.10, HighwayMaster will be
permitted to use Visibility Services for the Term of this Agreement to conduct
activations and deactivations.
3.9 CHARM REPORTS. Upon the written request of HighwayMaster, GTE will
provide HighwayMaster with historical CHARM reports for the NPA/NXXs each month
on or about the same date as receipt of an Invoice.
3.10 DATABASE. The NPA/NXXs shall be maintained in a designated
numbering system compatible with GTE Telecommunications Systems Incorporated
("GTE TSI") for purposes of validation. Such NPA/NXXs shall be stored and
maintained in a validation database at GTE TSI (the "Database") at the direction
of GTE. HighwayMaster acknowledges and agrees that GTE has the right to contact
GTE TSI and direct the Database, subject to the notice requirements in this
section. Subject to Section 12.4 (iv), HighwayMaster and GTE shall have access
to the Database at all times during the Term of this Agreement and for a
reasonable period after expiration or termination of this Agreement; provided,
however that HighwayMaster acknowledges and agrees that it has no right to make
changes or request GTE TSI to make changes to the Database without obtaining
prior written consent from GTE to make changes to the Database. Notwithstanding
the above, for the Term of this Agreement, GTE will continue to permit
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HighwayMaster access to the Database through Visibility Services solely for the
purposes of (i) viewing the NPA/NXXs used by HighwayMaster and (ii) activating
and deactivating such NPA/NXXs. HighwayMaster acknowledges and agrees that it
may not make any other changes or modifications in, or to, the Database without
the prior written consent of GTE. To the extent HighwayMaster requests a
modification to the Database, GTE, in its sole discretion, will determine if the
requested modification is acceptable and such determination will be made within
two (2) business days of the request; provided that HighwayMaster has provided
the request in writing and indicated in detail the reason for such request. To
the extent GTE intends to make any changes to the Database that would affect the
calling capability of the Numbers used by HighwayMaster, GTE will notify
HighwayMaster two (2) days prior to making any such changes. To the extent
HighwayMaster reasonably believes such proposed changes will adversely affect
HighwayMaster or cause Fraudulent Usage, HighwayMaster must notify GTE in
writing within twenty-four (24) hours of receipt of notice of any proposed
changes with an explanation of the issues. To the extent GTE receives such a
notice from HighwayMaster, the Parties agree to discuss the proposed changes,
and GTE will determine in its reasonable discretion whether or not any changes
will be made to the Database.
SECTION 4
CREDITS
4.1 CREDITS.
(a) Existing Credits. As of the date of this Agreement the
Parties acknowledge and agree that the status of the credits sought by GTE on
the behalf of HighwayMaster from Carriers for the period October 15, 1996
through the settlement period ending December 15, 1998 is as set forth in
Exhibit C to this Agreement ("Existing Credits"). With respect to the Existing
Credits and any other credits currently requested by HighwayMaster or that may
be requested by HighwayMaster hereunder, GTE and HighwayMaster agree as follows:
(i) Post January 15, 1999 Credits. Except for the credit
balance existing with Bell Atlantic Mobile Systems
("BAMS Account") which is addressed in subsection (iii)
of this provision, for all credits that have previously
been requested by HighwayMaster from January 15, 1999
through April 15, 1999 from the Carriers ("Post January
15 Credits"), HighwayMaster will take full
responsibility for any collection of such credits and
GTE shall not be responsible for the collection of any
such Post January 15 Credits. GTE will transfer its
files to HighwayMaster to pursue these credits, but GTE
will maintain a copy of such files for its records.
With respect to the Post January 15 Credits, no
litigation or Cibernet dispute resolution process will
be permitted or pursued by either Party.
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(ii) Pre January 15, 1999 Credits. For all credits that
have been requested by HighwayMaster before January
15, 1999, HighwayMaster agrees and acknowledges that
it has no right to collect, attempt to collect or
make any claim to such credits from GTE or any other
Carrier. GTE has the right to close all issues and
the books and records with respect to such credits
and to write off such credits in the records of GTE.
Further, GTE has the right to notify any and all
Carriers that such Pre January 15, 1999 credits are
null and void by the agreement of GTE of
HighwayMaster.
(iii) BAMS Account. [TEXT HAS BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
Such efforts by HighwayMaster to collect on the BAMS
Account will be subject to the Collection Expiration
Date set forth in subsection (c).
(iv) Other Credits. With respect to any other credits or
adjustments requested by, paid to or due
HighwayMaster prior to execution of the Agreement,
HighwayMaster acknowledges and agrees that there are
no other issues, claims or credits due HighwayMaster.
(b) Post Execution Credit Process. For all credits requested
by HighwayMaster after the execution of this Agreement for any
period after January 15, 1999 ("Post Execution Credits"), the
process will be as follows:
(i) Credit Requests. HighwayMaster will provide GTE with
a written summary of the Post Execution Credit
requests for each Carrier with the supporting call
detail records in a format acceptable to both
Parties, but at a minimum capable of transmission on
a form of electronic media in addition to the written
summary clearly designating its requested Post
Execution Credits by Carrier and the reason for each
credit within thirty (30) days of receipt of a Tape
from GTE;
(ii) Process. GTE will take the provided Post Execution
Credit requests from HighwayMaster and will draft the
first request (the "First Request") for such credits
to a Carrier within fourteen (14) business days of
receipt of the detailed credit requests from
HighwayMaster. GTE will base its First Request on the
information and data provided by HighwayMaster, and
HighwayMaster is solely responsible and liable for
the accuracy, validity and timeliness of any such
information or data. The First Request will be sent
to the Carrier with a duplicate to HighwayMaster.
Upon receipt of the First Request by HighwayMaster,
HighwayMaster will have full responsibility for the
collection of any credit requested and GTE will have
no
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responsibility or liability in connection therewith;
provided, however, that HighwayMaster will have no
right to sue or initiate a CIBERNET dispute
resolution process with a Carrier without the prior
written consent of GTE. GTE will only provide this
consent if in GTE's reasonable discretion
HighwayMaster's claims for credits are valid,
HighwayMaster has adequate documentation to prove its
claim for credits and the Carrier has wrongfully
rejected the request for such credits. GTE shall
provide HighwayMaster with its decision on whether to
permit a CIBERNET dispute within five (5) business
days of a request to GTE by HighwayMaster to commence
a CIBERNET dispute. HighwayMaster will be responsible
for all costs and expenses associated with this
credit process except for GTE's expenses in
connection with its duties for the First Request.
(iii) Liability. HighwayMaster acknowledges and agrees that
GTE shall have no obligation to attempt collection
and no liability whatsoever if HighwayMaster is
unable to collect any credits from Non-GTE Carriers
if GTE has complied with its obligation to send the
First Request. Further, after the First Request, GTE
shall have no obligation to track, monitor, process,
or maintain records with respect to any credits or
payments in connection therewith.
(c) Expiration Date for Collection Efforts. Notwithstanding anything to
the contrary in this Agreement, with respect to the Post January 15 Credits, the
Post Execution Credits and any other credits under the GTE BID or Roaming
Addenda ("GTE Credit Claims"), [TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SEC.] As of the Collection Expiration Date, HighwayMaster acknowledges and
agrees that any rights it may have in the GTE Credit Claims shall cease and be
null and void. GTE will have the right to close all issues and the books and
records for such GTE Credit Claims and to write off all such amounts in its
records. Further, GTE shall have the right to notify any and all Carriers that
such GTE Credit Claims are null and void by the agreement of GTE and
HighwayMaster. GTE will send HighwayMaster a copy of the notice sent to
Carriers.
SECTION 5
HIGHWAYMASTER OBLIGATIONS
In addition to the other covenants, terms and conditions set forth in
this Agreement, HighwayMaster hereby accepts and agrees to perform the
obligations and abide by the responsibilities set forth in this Section 4.
5.1 HIGHWAYMASTER'S USE OF SERVICES. HighwayMaster agrees to use the
Services and CTS only in connection with the use, sale, distribution or
operation of a HighwayMaster System with the HighwayMaster Core Functionality.
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5.2 MINIMUM VOLUME. HighwayMaster must at all time during this
Agreement have a [TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.] (the
"Minimum Volume") equipped with an operational and in use HighwayMaster System.
To the extent HighwayMaster does not meet and maintain the Minimum Volume at any
time during this Agreement, GTE shall have the right to terminate this Agreement
with one hundred twenty (120) days prior written notice to HighwayMaster.
5.3 CTS RATES AND ROAMING RATES ACKNOWLEDGMENTS. HighwayMaster hereby
acknowledges that GTE is not authorized and cannot establish Roaming Rates for
any Non-GTE Market. HighwayMaster acknowledges and agrees that it shall pay GTE
an amount including, but not limited to, the full amount of all Roaming Rates as
established and charged by each Carrier for CTS used in such Carrier's CGSA. In
the event a Carrier should increase any roamer charges or initiate new rates for
other uses of its CTS such as Data CTS, status coding or *19 validation
transactions, GTE shall bill HighwayMaster for such increases or new rates and
HighwayMaster shall be obligated to reimburse GTE for all such increases and new
charges in full. Nothing herein shall be construed as requiring GTE to offset
any difference between the Roaming Rates charged by a Carrier in a particular
CGSA and the rate requested by HighwayMaster. HighwayMaster further acknowledges
that the current Roaming Addenda between Non-GTE Carriers and GTE is subject to
termination. To the extent any of such Roaming Rate agreements are terminated,
GTE is not obligated to provide CTS or the Services in the CGSA(s) governed by
such terminated Roaming Addenda and GTE shall have no obligation to
HighwayMaster for any damages, losses or other effects of such termination.
5.4 PROTECTION OF CELLULAR USAGE. [TEXT HAS BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SEC.] To the extent HighwayMaster breaches this provision,
HighwayMaster will be responsible for any fraudulent use of CTS.
5.5 HIGHWAYMASTER SYSTEM. HighwayMaster agrees to maintain and operate
the HighwayMaster System or any related equipment, software, hardware or other
technology used in connection therewith in such a manner so that GTE is able to
provide and perform the Services hereunder by the method used by GTE to provide
such Services as of the date of this Agreement.
5.6 TRANSLATION OF MESSAGES. HighwayMaster will be responsible for any
translations of messages or data or other connections transmitted by the use of
CTS with the HighwayMaster System.
5.7 REGULATORY AND LEGAL APPROVALS. To the extent HighwayMaster is
required to obtain any federal, state, local or regulatory approvals, licenses
or certifications to operate the HighwayMaster System or perform under this
Agreement, HighwayMaster is solely responsible for obtaining such approvals,
licenses or certifications. HighwayMaster agrees to indemnify and hold harmless
GTE from any and all claims, losses, damages, causes of action, costs (including
reasonable attorneys fees)
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or expenses incurred by GTE as a result of any claim or action brought by a
third party and arising from the HighwayMaster's failure to obtain any required
licenses, approvals or other certifications.
5.8 FRAUDULENT CTS USAGE. HighwayMaster acknowledges and agrees that it
shall be solely responsible and shall pay GTE for any and all amounts owed for
CTS Usage hereunder, whether such CTS Usage is deemed to be or is fraudulent
including, but not limited to, outbound/inbound calls, unauthorized SA use,
unauthorized MVM use or misuse of the 1-800 Complex unless such fraudulent use
is the result of GTE's failure to implement the Call Restriction mechanism as
set forth in Section 3.6(c). GTE and HighwayMaster agree to cooperate with each
other in identifying and preventing any fraudulent use of the HighwayMaster
Systems; provided, however, that GTE shall have no financial obligation
resulting from such assistance and shall not be required to implement or install
any technology, whether patented or not, to prevent such fraud. To the extent
HighwayMaster notifies GTE that a particular MIN/ESN needs to be deactivated due
to fraud or any other reason, GTE will deactivate such MIN/ESN within
twenty-four (24) hours. To the extent GTE discovers or reasonably believes that
it has discovered fraud, GTE will have the right to deactivate any effected
NPA/NXXS within 24 hours after notifying HighwayMaster in writing of such fraud
and its intention to disconnect the NPA/NXXs. To the extent HighwayMaster
instructs GTE not to deactivate the NPA/NXXs within the twenty-four (24) hours
of receipt of such notice, GTE will not deactivate the NPA/NXXs and
HighwayMaster will be liable for all charges for usage on such NPA/NXXs even if
the usage is fraudulent.
SECTION 6
COVERAGE IN GTE MARKETS
During the Term of this Agreement, HighwayMaster agrees that its
HighwayMaster Systems will be programmed to use only CTS provided by a GTE
Affiliate, subsidiary or related GTE entity ("GTE CTS") in all GTE Markets;
provided, however, that HighwayMaster can enter into agreements with Non-GTE
Carriers for secondary CTS coverage ("Secondary Coverage") in GTE Markets, and
HighwayMaster will not be required to add a GTE Market as primary to the extent
it is acquired by GTE after the date of this Agreement. Secondary Coverage shall
mean that a HighwayMaster System can be programmed to use the CTS of a Non-GTE
Carrier in a GTE Market only at times when the GTE CTS in such GTE Market does
not have CTS coverage in a specific area or is experiencing an outage of CTS
coverage for any reason. HighwayMaster covenants and guarantees that the use of
GTE CTS in each GTE Market by HighwayMaster Systems shall never be less than
ninety five percent (95%) during any one month unless GTE does not have the
coverage in a specific GTE Market to meet the 95% requirement. To the extent the
use of GTE CTS does not meet such required percentage, GTE can either (i)
exercise its rights of termination hereunder, (ii) request an adjustment in
compensation for the lost CTS Usage or (iii) require that HighwayMaster
terminate the secondary coverage as permissible under its agreements with
Non-GTE Carriers.
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SECTION 7
OWNERSHIP OF INTELLECTUAL PROPERTY
7.1 NO LICENSE OF INTELLECTUAL PROPERTY.
(a) Nothing herein shall be construed to grant HighwayMaster
any license, express or implied, under any patents, copyrights, or trademarks of
GTE or any of its Affiliates or any improvements, modifications or improvements
thereto, except as may be necessary for HighwayMaster's performance of its
obligations under this Agreement and its Client's use of Services provided
pursuant to this Agreement, and then only for the term of this Agreement. GTE
agrees, however, to indemnify and hold harmless HighwayMaster from any and all
claims, losses, damages, causes of action, costs (including reasonable attorneys
fees) or expenses incurred by HighwayMaster as a result of any claim or action
brought by a third party arising out of or resulting from the use of any
software or hardware provided by GTE to HighwayMaster or used by GTE in
connection with the Services provided pursuant to this Agreement. This indemnity
shall not extend to any use of such software or hardware other than when used in
connection with the Services under this Agreement; modifications to such
software or hardware made by or for HighwayMaster; combinations of such Software
and/or hardware with other software, hardware or functionality not provided by
GTE; or compliance with HighwayMaster provided specifications. The foregoing
indemnity shall not extend to any technical assistance given by GTE in the
course of performing this Agreement because this Agreement does not encompass or
contemplate such technical assistance.
(b) Nothing herein shall be construed to grant GTE any
license, express or implied, under any patents, copyrights, or trademarks of
HighwayMaster or any of its Affiliates or any improvements, modifications or
improvements thereto, except as may be necessary for GTE's performance of its
obligations under this Agreement, and then only for the term of this Agreement.
HighwayMaster agrees, however, to indemnify and hold harmless GTE from any and
all claims, losses, damages, causes of action, costs (including reasonable
attorneys fees) or expenses incurred by GTE as a result of any claim or action
brought by a third party arising out of or resulting from the use of any
software or hardware provided by HighwayMaster to GTE or used by HighwayMaster
or Clients in connection with this Agreement. This indemnity shall not extend
to: any use of such software or hardware other than when used in connection with
the Services under this Agreement; modifications to such software or hardware
made by or for GTE; combinations of such software and/or hardware with other
software, hardware or functionality not provided by HighwayMaster; or compliance
with GTE provided specifications. The foregoing indemnity further shall not
extend to any technical assistance given by HighwayMaster or Clients in the
course of performing this Agreement because the Agreement does not encompass or
contemplate such technical assistance.
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7.2 MARKS. Neither Party shall have the right to use the other Party's
tradenames, service marks, or other protected marks without the prior written
consent of the other Party.
7.3 NO TRANSFER OF OWNERSHIP. Nothing in this Agreement shall be
construed as transferring ownership of or rights in any property, tangible or
intangible, including without limitation intellectual property. Subject to the
license rights set forth in Sections 7.1(a) and 7.1(b), nothing in this
Agreement shall be construed as transferring license rights in any property,
tangible or intangible, including without limitation intellectual property.
SECTION 8
CONFIDENTIALITY
8.1 HIGHWAYMASTER INFORMATION.
(a) Use. Except and to the extent set forth in this Agreement,
nothing herein shall constitute a grant of license to GTE of HighwayMaster
Information. GTE may only use the HighwayMaster Information to the extent set
forth herein or as required to perform its obligations under this Agreement,
unless GTE obtains prior written consent from HighwayMaster to use the
HighwayMaster Information for another purpose. GTE may not disclose the
HighwayMaster Information to any third party (other than to contractors
performing services for GTE, provided such contractors enter into written
agreements with GTE restricting further use and disclosure of HighwayMaster
Information) without the prior written consent of HighwayMaster. If GTE receives
or is served with any order, subpoena, demand or other request from any
governmental agency, court or other legal forum to produce HighwayMaster
Information ("Request for Production"), GTE will provide HighwayMaster with
prompt notice of such Request for Production so that HighwayMaster, at its
expense, may seek a protective order or such other remedy to prevent production
of the HighwayMaster Information. If GTE is ultimately compelled, by a court or
other legal forum, which has authority, to comply with the Request for
Production, GTE will not be in violation of this Section. Upon termination or
expiration of this Agreement or, with respect to any HighwayMaster Information,
on such earlier date that GTE in its opinion, shall no longer require the
HighwayMaster Information to provide the Services hereunder, GTE will , at
HighwayMaster's request, either erase the HighwayMaster Information from any
files maintained by GTE or return the HighwayMaster Information to
HighwayMaster. GTE agrees to protect and safeguard the confidentiality of the
HighwayMaster Information to the same degree and extent as GTE protects and
safeguards its own confidential information.
(b) Exclusions to Obligations Relating to HighwayMaster
Information. Notwithstanding Section 8.1(a) above, HighwayMaster Information
shall not include, and this Agreement shall impose no obligation on GTE to
protect, not disclose or not use that portion of any HighwayMaster Information
that:
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(1) Prior to its disclosure by HighwayMaster, is
lawfully and rightfully known by or available to GTE or its Affiliates
(from other than HighwayMaster or its Affiliates), without restriction
on use or disclosure;
(2) Through no breach of this Agreement or fault on
the part of GTE, is or hereafter becomes part of the public domain
(i.e., without restriction on use or disclosure);
(3) Is developed by or for GTE independently from and
without access to HighwayMaster Information;
(4) Is lawfully received by GTE from a third party
without restriction on use or disclosure and without breach of this
Agreement or any other agreement, or breach of any fiduciary obligation
or obligation of confidentiality; or
(5) Is approved in writing by HighwayMaster for
disclosure to third parties or for other uses.
8.2 GTE INFORMATION.
(a) Use. Except and to the extent set forth in this Agreement, nothing
herein shall constitute a grant of license to HighwayMaster of GTE Information.
HighwayMaster may only use the GTE Information to the extent set forth herein or
as required to perform its obligations under this Agreement, unless
HighwayMaster obtains prior written consent from GTE to use the GTE Information
for another purpose. HighwayMaster may not disclose the GTE Information to any
third party (other than to contractors performing services for HighwayMaster,
provided such contractors enter into written agreements with HighwayMaster
restricting further use and disclosure of GTE Information) without the prior
written consent of GTE. If HighwayMaster receives or is served with any order,
subpoena, demand or other request from any governmental agency, court or other
legal forum to produce GTE Information ("Request for Production"), HighwayMaster
will provide GTE with prompt notice of such "Request for Production" so that
GTE, at its expense, may seek a protective order or such other remedy to prevent
production of the GTE Information. If HighwayMaster is ultimately compelled, by
a court or other legal forum, which has authority, to comply with the Request
for Production, HighwayMaster will not be in violation of this Section. Upon
termination or expiration of this Agreement or, with respect to any GTE
Information, on such earlier date that HighwayMaster in its opinion, shall no
longer require the GTE Information to perform its obligations under this
Agreement, HighwayMaster will, at GTE's request, either erase the GTE
Information from any files maintained by HighwayMaster or return the GTE
Information to GTE. HighwayMaster agrees to protect and safeguard the
confidentiality of the GTE Information to the same degree and extent as
HighwayMaster protects and safeguards its own confidential information.
(b) Exclusions to Obligations Relating to GTE Information.
Notwithstanding Section 8.2(a) above, GTE Information shall not include, and
this
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Agreement shall impose no obligation on HighwayMaster to protect, not disclose
or not use that portion of any GTE Information that:
(1) Prior to its disclosure by GTE, is lawfully and
rightfully known by or available to HighwayMaster or its Affiliates
(from other than GTE or its Affiliates), without restriction on use or
disclosure;
(2) Through no breach of this Agreement or fault on
the part of HighwayMaster, is or hereafter becomes part of the public
domain (i.e., without restriction on use or disclosure);
(3) Is developed by or for HighwayMaster
independently from and without access to GTE Information;
(4) Is lawfully received by HighwayMaster from a
third party without restriction on use or disclosure and without breach
of this Agreement or any other agreement, or breach of any fiduciary
obligation or obligation of confidentiality; or
(5) Is approved in writing by GTE for disclosure to
third parties or for other uses.
8.3 EXCEPTIONS. The Parties acknowledge and agree that the above
Confidentiality provisions do not limit either Party from disclosing this
Agreement to GTE TSI or obtaining information from GTE TSI regarding the
Services or Numbers. The parties further acknowledge that the GTE Information
and the HighwayMaster Information may be disclosed by the receiving party to (i)
the receiving party's attorneys, accountants, and financial advisors, and (ii) a
prospective purchaser or merger partner, provided such recipients agree in
writing not to further use or disclose the GTE Information/HighwayMaster
Information consistent with the provisions of this Agreement.
SECTION 9
COMPENSATION AND PAYMENT PROCESS
9.1 COMPENSATION.
a) Monthly Compensation. In exchange for the Services provided
hereunder HighwayMaster shall pay GTE the amounts set forth in this section
within thirty (30) days of receipt of an Invoice for the Services. Such
compensation is effective as of the date of execution of this Agreement and will
commence after receipt by HighwayMaster of the first Invoice from GTE:
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE
OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
9.2 PROCESS FOR COMPENSATION. HighwayMaster will compensate GTE for the
Services in accordance with the terms, rates and charges set forth herein. GTE
will
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prepare and send to HighwayMaster monthly statements of the amounts owed by
HighwayMaster to GTE including without limitation the charges set forth in the
Invoice referenced in Section 3.4. HighwayMaster will pay GTE within net thirty
(30) days following receipt of such Invoice ("Due Date"). Receipt shall be
deemed to have occurred three (3) days after such Invoice has been deposited in
the U.S. Mail. If HighwayMaster fails to pay GTE by the Due Date, any and all
outstanding amounts due GTE shall accrue interest at the rate of one percent
(1.0 %) per month or the maximum amount of interest allowed by law, whichever is
less.
9.3 FINANCIAL PROTECTIONS. To the extent the amounts owed to GTE by
HighwayMaster in any given month exceed a total of Five Hundred Thousand Dollars
($500,000), HighwayMaster, upon the written request of GTE, must establish an
escrow account with terms and conditions satisfactory to GTE or provide GTE with
a performance bond or an irrevocable letter of credit from a nationally
recognized financial institution, to be determined by GTE, with GTE as the sole
beneficiary in an amount equal to no less than Three Million Dollars
($3,000,000) (the "Financial Protection"). Such Financial Protection must be
provided within thirty (30) days of the request by GTE or GTE will have the
right to terminate the Agreement by written notice to HighwayMaster. If GTE
exercises this right of termination, HighwayMaster will have no rights to a
transition period if any Material Default exists or is continuing at the time
the Financial Protection is not provided by HighwayMaster in accordance
herewith. Such termination to be effective immediately upon receipt of the
written notice. GTE has the right to require an increase of the amount of the
bond or letter of credit at any time during the Term of this Agreement to the
extent HighwayMaster's monthly obligations to GTE increase significantly as
determined by GTE.
9.4 DISPUTES REGARDING COMPENSATION. To the extent HighwayMaster has a
legitimate dispute regarding amounts owed to GTE (the "Disputed Amount"),
HighwayMaster agrees that it shall continue to pay GTE all amounts, whether
disputed or otherwise by the Due Date. HighwayMaster shall simultaneously with
payment of any Disputed Amount notify GTE of the dispute and then shall rely
upon the Dispute Resolution Provisions in Sections 13.18 and 13.19 of this
Agreement. HighwayMaster must notify GTE in writing of any dispute on or with an
Invoice within one hundred twenty (120) days after HighwayMaster has received
such Invoice. To the extent HighwayMaster prevails in a dispute regarding
amounts owed to GTE and GTE must reimburse any amounts to HighwayMaster, GTE
shall pay a rate of interest equal to one percent (1.0 %) per month or the
maximum amount of interest allowed by law, whichever is less.
9.5 [TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
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SECTION 10
TERM OF AGREEMENT; RENEWAL OPTION
10.1 TERM. The term of this Agreement shall be from the date of
execution until September 30, 1999 (the "Term"). HighwayMaster acknowledges and
agrees that it has no right to renew this Agreement under any circumstances, and
that it is currently in the process of finding a new Service Provider.
SECTION 11
TERMINATION
11.1 TERMINATION FOR CAUSE. Subject to the other rights of termination
hereunder, in the event of a Material Default by either Party under this
Agreement, the nondefaulting Party may terminate this Agreement by giving notice
of such termination to the other Party to this Agreement. To the extent the
defaulting Party cures the Material Default within the thirty (30) day cure
period provided for in the definition of Material Default, this Agreement cannot
be terminated unless a subsequent notice of Material Default is provided
hereunder, which notice of termination shall specify a date no earlier than
thirty (30) days after the date such notice is given for termination.
11.2 TERMINATION FOR NONPAYMENT. In the event that HighwayMaster fails
to pay GTE any amounts owed for the Services by the Due Date and HighwayMaster
fails to fully cure such payment default within thirty (30) days of such payment
default, then GTE may terminate this Agreement by giving notice of such
termination to HighwayMaster, which notice of termination shall specify a date
no earlier than ten (10) days after the date such notice is given for such
termination. To the extent HighwayMaster cures the payment default in full prior
to expiration of the ten (10) day notice period, GTE will not terminate this
Agreement for the payment default.
11.3 TERMINATION FOR INSOLVENCY. If HighwayMaster makes an assignment
for the benefit of creditors or files a voluntary petition under Title 11 of the
United States Code or under any similar state insolvency laws or if Agent shall
have an involuntary petition for bankruptcy filed against it under Title 11 of
the United States Code and such involuntary petition is not dismissed within
thirty (30) days; or a trustee or receiver is appointed to administer Agent's
business or assets, GTE shall have the right to terminate this Agreement
effective upon notification of such termination to HighwayMaster.
11.4 TERMINATION FOR FAILURE TO MAINTAIN MINIMUM ROAMING PERCENTAGE. To
the extent HighwayMaster fails to maintain the Minimum Roaming Requirement, GTE,
in its sole discretion, may elect to (i) terminate CTS to any ESN/MIN wherein
the CTS Usage does not meet the Minimum Roaming Requirement or (ii) adjust the
amount of compensation to be paid by HighwayMaster for the ESN/MIN provided that
the amount of adjustments or terminations shall be no more than necessary to
bring HighwayMaster into compliance with the Minimum Roaming Requirement. To the
extent HighwayMaster does not have the documentation to prove that it is meeting
the Minimum Roaming Requirement either in the aggregate or on an ESN/MIN level,
GTE
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may terminate this Agreement with thirty (30) days prior written notice.
HighwayMaster will have the right to cure such a default within such thirty (30)
day period.
11.5 TERMINATION BASED ON LEGAL OR REGULATORY RULINGS. To the extent
any final nonappealable order or ruling is issued by a court, agency, commission
or other forum that has jurisdiction over either GTE or HighwayMaster, that
rules that any of the terms of this Agreement are unenforceable, require
modification or are against governing statutes, regulations, codes or law, GTE
shall have the right to terminate this Agreement with thirty (30) days prior
written notice. Further, GTE will not be liable to HighwayMaster for any default
or nonperformance under this Agreement to the extent such nonperformance or
default is a result of adherence or compliance with any regulatory, legal or
agency regulation, requirement, order or ruling.
11.6 TERMINATION FOR DISCONTINUED BUSINESS. To the extent GTE ceases to
operate all or substantially all of its business operations, GTE shall not be
obligated to provide the Services under this Agreement.
SECTION 12
TRANSITION OBLIGATIONS
12.1 TRANSITION TO NEW SERVICE PROVIDER. HighwayMaster and GTE both
desire to transition the Services provided hereunder to a new Service Provider.
HighwayMaster agrees to use its best efforts to find a new Service Provider by
no later than June 30, 1999. HighwayMaster acknowledges and agrees that the
Service Provider must be a Carrier as defined in this Agreement or GTE will not
proceed with this Section 12 of this Agreement. Upon designation of the new
Service Provider, HighwayMaster will transition to such Service Provider by no
later than September 30, 1999. Upon written identification of a new Service
Provider that has entered into an agreement with HighwayMaster to provide the
Services, GTE and HighwayMaster will commence with the transition of the
Services to the new Service Provider. It is the sole responsibility of
HighwayMaster to find a new Service Provider and enter into an agreement with
such Service Provider. To the extent HighwayMaster fails to find a new Service
Provider, HighwayMaster shall have no right to renew this Agreement and GTE
shall cease all Services hereunder as of September 30, 1999.
12.2 TRANSITION OF ROAMING ADDENDA. Subsequent to the execution of this
Agreement, HighwayMaster is solely responsible for the negotiation and execution
of any new Roaming Addenda for use with its new Service Provider. GTE shall not
be obligated to implement or use any such Roaming Addenda.
12.3 COOPERATION. HighwayMaster agrees to cooperate with GTE in the
transition and either HighwayMaster or the new Service Provider will provide any
information reasonably requested by GTE to perform the transition to a new
Service Provider. GTE agrees to cooperate with HighwayMaster in the transition
and to provide any information reasonably requested by HighwayMaster to perform
the transition to a new Service Provider. HighwayMaster will give GTE at least
sixty (60) days' written notice of its planned transition date, and will
cooperate with GTE in the creation of a
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written transition plan to be issued jointly by GTE and HighwayMaster and
provided to GTE TSI and the new Service Provider. HighwayMaster further
authorizes GTE to discuss the transition with the new Service Provider and GTE
TSI as GTE may reasonably require.
12.4 TRANSITION OBLIGATIONS. Upon HighwayMaster executing an agreement
with a new Service Provider to provide the Services and such Service Provider
being a Carrier as defined herein, GTE will assist in the transition of the
Services by taking the following actions:
(i) GTE will assign the NPA/NXXs to HighwayMaster's new
Service Provider and will announce such assignment as
appropriate in the industry;
(ii) GTE will assign the current BID, 30445, to
HighwayMaster's new Service Provider and will
announce such assignment to the industry. Upon this
assignment GTE shall have no further liability for
any activity under such BID and GTE will inform the
industry of the effective date of the assignment
prior to such assignment;
(iii) GTE will enter into a wireless service agreement with
the new Service Provider in the form attached hereto
as Exhibit D. To the extent the new Service Provider
refuses to enter into such an agreement GTE will not
be obligated to enter into an agreement with the new
Service Provider to continue any wireless service to
HighwayMaster; and
(iv) GTE will no longer have access or control of the
Database referenced in Section 3.10 above, except
with respect to wireless service provided over GTE's
or one of its affiliates' networks or facilities
("GTE Facilities") or as otherwise negotiated between
GTE and any new Service Provider. GTE acknowledges
that HighwayMaster is not a party to any agreement in
the form of Exhibit D and cannot agree to its terms
on behalf of the new Service Provider. GTE is not
obligated to enter into any agreement with a new
Service Provider other than the one set forth in
Exhibit D.
12.5 ELECTRONIC RETURN PROCESS. To the extent an electronic return
process is developed for the purpose of electronically identifying and returning
erroneous CTS records such as rate errors to a Carrier, GTE will review such
process once it is completed, but GTE is under no obligation to implement such
process.
12.6 TRANSITION PRESS RELEASE. Upon the earlier of (i) expiration of
this Agreement or (ii) transition to a new Service Provider, the Parties will
jointly coordinate a press release; provided, that neither Party may make any
press release using the other Parties' name or logo without the prior written
consent of the other Party.
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12.7 TRANSITION DATE. Both Parties will use their best efforts to
transition to the new Service Provider on the sixteenth (16th) day of a calendar
month.
12.8 OPPOSITION. To the extent GTE receives a written opposition to the
transition to a new Service Provider from any Carrier, GTE will inform
HighwayMaster of such opposition.
12.9 EXPENSES; TRANSITION OBLIGATIONS. Except as expressly set forth
herein, GTE shall have no other obligations to assist in the transition.
HighwayMaster shall bear any expenses with its transition.
SECTION 13
MISCELLANEOUS PROVISIONS
13.1 FORCE MAJEURE. Each Party hereto shall be excused from performance
hereunder for any period and to the extent that it is prevented from performing
any action pursuant hereto, in whole or in part, as a result of delays beyond
its control caused by the other Party or by an act of God or the public enemy,
fire, floods, epidemics, quarantine restrictions, civil disturbance, court
order, labor dispute, third party nonperformance (except to the extent such
third party nonperformance is wrongfully caused by a Party to this Agreement),
or other cause beyond its control, including without limitation failures or
fluctuations in electrical power, heat, light, air conditioning, lack of
capacity on the networks or network outages. Additionally, GTE shall not be
liable to HighwayMaster if changes, alterations or modifications in the
HighwayMaster System, HighwayMaster's facilities, operations, network equipment,
or procedures made in the ordinary course of business render the Services
obsolete or unusable.
13.2 SEVERABILITY. Any provision of this Agreement which is prohibited,
unenforceable or is declared or found to be illegal, unenforceable or void, in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.
13.3 NONDISCLOSURE/MEDIA RELEASES. All media releases, public
announcements and public disclosures by any Party hereto relating to this
Agreement or its subject matter, including without limitation promotional or
marketing material, but not including any announcement intended solely for
internal distribution or any disclosure required by legal, accounting or
regulatory requirements beyond the reasonable control of such Party, shall be
coordinated with and approved by the other Party hereto prior to the release
thereof, which approval shall not be unreasonably withheld or delayed. The terms
of this Agreement are confidential except that either Party may disclose the
terms of this Agreement to any of its wholly owned affiliates, employees,
consultants or professionals on a "need to know basis" to permit performance
hereunder. Neither Party shall announce or disclose to any third party, the
terms and conditions contained herein without the prior written consent of the
other Party, except as required by law, in which
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case the Party required to make disclosure shall give the other Party prompt
notice of any such requirement so that the other Party can take any actions it
deems appropriate to protect the information from disclosure.
13.4 NOTICES. Any notice required by this Agreement must be given by
depositing a copy of such notice (i) in the United States mail, postage prepaid,
certified return receipt requested or (ii) in overnight delivery via Federal
Express or Airborne or (iii) via facsimile. Any such notice will be deemed to be
received upon the earlier of verification of delivery or the fifth (5th) day
after depositing a copy of such notice in the mail or overnight delivery, except
that notices received by facsimile shall only be deemed effective upon actual
receipt by the individual with the title set forth below as confirmed solely by
such individual. Any such notice will be given at the following addresses or to
such later addresses of which the sending Party has received actual or
constructive notice:
If to HighwayMaster: HighwayMaster Corporation
1155 Kas Drive
Richardson, Texas 75081
Attn: President
Fax: (972) 301-2588
With a copy to: General Counsel
Fax: (972) 301-2263
If to GTE: GTE Wireless Service Corporation
245 Perimeter Center Parkway
Atlanta, Georgia 30346
Attn: AVP - Wholesale Marketing
Fax: (770) 395-8511
With a copy to: Legal Department
Fax: (770) 391-8250
13.5 LEGAL REPRESENTATION. HighwayMaster acknowledges that GTE has
offered no legal advice or counsel to HighwayMaster nor made any representations
to HighwayMaster regarding any matter, including without limitation
HighwayMaster's exemption from the jurisdiction of federal, state, or local
governmental agencies with potential jurisdiction over the Parties herein and
the Services to be rendered hereunder and GTE has not offered HighwayMaster any
legal advice or counsel regarding the subject matter of this Agreement. GTE
acknowledges that HighwayMaster has offered no legal advice or counsel to GTE
nor made any representations to GTE regarding GTE's exemption from the
jurisdiction of federal, state, or local governmental agencies with potential
jurisdiction over the Parties herein and the Services and obligations to be
rendered hereunder and HighwayMaster has not offered GTE any legal advice or
counsel regarding the subject matter of this Agreement.
13.6 INTERPRETATION; CONSTRUCTION. Headings used in this Agreement are
for convenience only and will not be deemed to be operative text. Terms of
gender will be
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deemed inter-changeable, as will singular and plural terms, in each case unless
the context otherwise requires. This Agreement and the provisions contained
herein shall not be construed or interpreted for or against any Party because
that Party drafted or caused its legal representative to draft any of its
provisions.
13.7 EXECUTION. This Agreement shall be deemed to be executed at such
time as all Parties hereto have signed a counterpart hereof and each Party
hereto has received from each of the other Parties hereto an originally-signed
counterpart or a facsimile transmission or other replication of an
originally-signed counterpart.
13.8 WAIVER. The failure of either Party to enforce, in any one or more
instances, performance of any of the terms, covenants or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right or
claim granted or arising hereunder or of the future performance of any such
term, covenant, or condition, and such failure shall in no way affect the
validity of this Agreement or the rights and obligations of the Parties hereto.
The Parties acknowledge that a waiver of any term or provision hereof may only
be given by a written instrument executed by each Party intended to be benefited
by the same.
13.9 WARRANTY DISCLAIMER. GTE'S AND HIGHWAYMASTER'S OBLIGATIONS
HEREUNDER ARE IN LIEU OF ALL WARRANTIES, EXPRESS OR IMPLIED. GTE MAKES NO
WARRANTIES, EXPRESS OR IMPLIED REGARDING THE GOODS, SERVICES OR EQUIPMENT TO BE
PROVIDED HEREIN, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
13.10 NO LIABILITY FOR INDIRECT DAMAGES. GTE SHALL NOT BE LIABLE TO
HIGHWAYMASTER, AND HIGHWAYMASTER SHALL NOT BE LIABLE TO GTE, OR ANY THIRD PARTY
FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, RELIANCE, OR SPECIAL OR PUNITIVE
DAMAGES, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOST PROFITS, REGARDLESS OF
THE FORM OF ACTION WHETHER IN CONTRACT, INDEMNITY, WARRANTY, STRICT LIABILITY OR
TORT ARISING FROM OR RELATED TO THE PERFORMANCE OF THE DUTIES OR OBLIGATIONS OF
GTE OR HIGHWAYMASTER IN ACCORDANCE WITH THE TERMS SET FORTH HEREIN OR THE
RENDERING OF SERVICES HEREUNDER.
13.11 LIMITATION OF LIABILITY. WITH THE EXCEPTION OF THE INDEMNITIES IN
SECTIONS 3.5 AND 5.7 AND ANY OUTSTANDING AMOUNTS OWED BY HIGHWAYMASTER FOR
SERVICES PROVIDED HEREUNDER, THE LIABILITY OF EITHER PARTY FOR ANY CLAIM
ASSERTED BY THE OTHER PARTY SHALL BE LIMITED TO AN AMOUNT EQUAL TO THE TOTAL
AMOUNTS PAID BY HIGHWAYMASTER TO GTE, OTHER THAN THE CARRIER AIRTIME
REIMBURSEMENT AMOUNTS, IN THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING THE
EVENT GIVING RISE TO THE CLAIM.
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13.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument notwithstanding that all
Parties are not signatories to each counterpart.
13.13 ASSIGNABILITY AND BINDING EFFECT. This Agreement shall inure to
the benefit of and be binding upon the Parties hereto and their respective
successors and permitted assigns. No Party may assign this Agreement without the
prior written consent of the other Party hereto.
13.14 AMENDMENTS. This Agreement may not be modified, amended or
supplemented except by an agreement in writing signed by all of the Parties
hereto. GTE shall not accept nor act upon any instructions, directions, and/or
modifications concerning GTE's performance hereunder which would affect the
terms, conditions, and/or pricing of this Agreement unless authorized by
HighwayMaster's representative.
13.15 EXPENSES, TAXES, ETC. Each of the Parties hereto shall pay all
fees and expenses incurred by it in connection with the preparation and
negotiation of this Agreement. There shall be added to any charges incurred and
payable by HighwayMaster under this Agreement, an amount equal to any tariff,
duty, or levy tax including but not limited to sales, ad valorem and use tax or
any tax in lieu thereof imposed by any local, state, or federal government or
governmental agency with respect to the Services, CTS or with respect to this
Agreement, but in no event will taxes be paid by HighwayMaster which are based
on the income or net worth of GTE.
13.16 THIRD PARTIES. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any Person other than the parties
hereto and their successors or permitted assigns, any rights, benefits or
remedies of any kind or character whatsoever under or by reason of this
Agreement.
13.17 ATTORNEYS' FEES. Except as herein expressly provided, in any
arbitration, suit, action or proceeding brought by one Party against the other
Party under this Agreement, or where any provision hereof is validly asserted as
a defense, the prevailing Party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy, subject to the
limitation of liabilities set forth herein.
13.18 DISPUTE RESOLUTION PROCEDURES. Except as provided in Section
13.18(d) below, for all disputes relating to this Agreement, prior to
instituting litigation, in any forum, including, but not limited to, state,
federal, or regulatory proceedings, each Party agrees to the following
procedures:
(a) In the event a Party has a dispute with the other Party
relating to this Agreement, the aggrieved Party shall give the other Party
detailed written notice of any acts, occurrences and/or omissions giving rise to
the dispute. The aggrieved Party, in its sole discretion, may include copies of
documents which it believes support its claim(s).
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(b) Within fifteen (15) days after receipt of notice, the
Party receiving the notice shall tender to the other Party a written response,
including an offer of settlement, if it so desires. Any offer of settlement not
accepted or rejected within fifteen (15) days shall be deemed rejected.
(c) In the event the Parties are unable to settle their
dispute after following the procedures set forth in this Section 13.18, and
fifteen (15) days following the receipt of the response made pursuant to (b)
above (or the lapse of the fifteen (15) day period specified therein in the
event no response is made), the Parties shall submit their dispute to mediation.
Compliance with the procedures on dispute resolution and mediation shall be a
condition precedent to initiating any judicial, quasi-judicial and/or regulatory
or legal proceeding. Any lawsuit filed prior to the exhaustion of the mediation
procedures provided for in this Agreement shall be dismissed, notwithstanding
any later exhaustion of mediation and the subsequent filing of any lawsuit by
the other party. A Party seeking and obtaining dismissal of a lawsuit pursuant
to this provision shall recover all of its costs and attorneys' fees incurred in
obtaining such dismissal.
(d) Notwithstanding Section 13.18 (a) (c) above, if either
Party seeks to obtain a temporary restraining order or preliminary injunction to
prevent the imminent disclosure of HighwayMaster Information or GTE Information,
as the case may be, the dispute resolution provisions of this Section 13.18 will
not apply. However, if the Party seeking the temporary restraining order or
preliminary injunction is unsuccessful, such Party shall be required to pay all
costs and expenses (including reasonable attorney's fees) of the other Party
within thirty (30) days of the denial of the requested relief. To the extent
either Party seeks any relief not provided for by this Section 13.18(d), the
dispute resolution provisions of Section 13.18(a) (c) shall control.
13.19 RULES FOR MEDIATION.
(a) Consent to Mediator. Both Parties shall share equally the
cost of mediation. The Mediator shall act as an advocate for resolution and
shall use his or her best efforts to assist the Parties in reaching a mutually
agreeable settlement. The Parties agree to select the Mediator within three (3)
business days following the procedure set forth in 13.18 above. In the event the
Parties are unable to agree on a Mediator, the matter shall be referred to the
American Arbitration Association for the appointment of a Mediator pursuant to
its Commercial Mediation Rules.
(b) Conditions Precedent to Service as a Mediator. The
Mediator shall not serve as a mediator in any dispute in which he or she has a
financial or personal interest in the result of mediation. Prior to accepting an
appointment, the Mediator shall disclose any circumstance likely to create
presumption of bias or prevent prompt meeting with the Parties. In the event the
Parties disagree as to whether the Mediator shall serve, the Mediator shall not
serve.
(c) Authority of Mediator. The Mediator shall not have the
authority to decide any issue for the Parties, but will attempt to facilitate
voluntary resolution of the dispute by the Parties. The Mediator is authorized
to conduct joint and separate meetings
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with the Parties and to offer suggestions to assist the Parties achieve
settlement. If necessary, the Mediator may also obtain expert advice concerning
technical aspects of the dispute, provided the Parties agree and assume the
expenses of obtaining the advice. Arrangements for obtaining such advice shall
be made by the Mediator or the Parties, as the Mediator shall determine.
(d) Date, Time and Place of Mediation. The Mediator shall fix
the date and the time of each mediation session.
(e) Identification of Matters in Dispute. At least ten (10)
days prior to the first scheduled mediation session, each Party shall provide
the Mediator with a brief memorandum setting forth its position with regard to
the issues that need to be resolved. At the discretion of the Mediator, such
memoranda may be mutually exchanged by the Parties. At the first session, the
Parties will be expected to produce all information reasonably required for the
Mediator to understand the issues presented. The Mediator may require any Party
to supplement such information.
(f) Privacy. Mediation sessions are private. The Parties and
their representatives may attend mediation sessions. Other persons may attend
only with the permission of the Parties and with the consent of the Mediator.
(g) Confidentiality. Confidential information disclosed to a
Mediator by the Parties or by witnesses in the course of the mediation shall not
be divulged by the Mediator. All records, reports or other documents received by
a Mediator while serving in that capacity shall be confidential. The Mediator
shall not be compelled to divulge such records or to testify in regard to the
mediation in any adversary proceeding or judicial forum.
The Parties shall maintain the confidentiality of the
mediation and shall not rely on or introduce as evidence in any arbitral,
judicial or other proceeding:
(i) views expressed or suggestions made by another
Party with respect to a possible settlement of
the dispute;
(ii) admissions made by another Party in the course
of the mediation proceedings;
(iii) proposals made or views expressed by the
Mediator; or
(iv) the fact that another Party had or had not
indicated willingness to accept a proposal for
settlement made by the Mediator.
(h) No Stenographic Record. There shall be no stenographic
record of the mediation process.
(i) Termination of Mediation. The mediation shall be
terminated:
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(i) by the execution of a settlement agreement by
the Parties;
(ii) by a written declaration of the Mediator to the
effect that further efforts at mediation are no
longer worthwhile; or
(iii) by a written declaration of a Party or Parties
to the effect that the mediation proceedings
are terminated, but then only after a good
faith participation in mediation consisting of
at least eight hours of mediation. Written
certification by the mediator that a Party has
not participated in good faith in the mediation
shall prevent termination of the mediation
proceedings.
Any mediation awards resulting from the invocation of this
paragraph shall be governed by the provisions set forth in Sections 13.10 and
13.11.
(j) Duration. Either Party may require that mediation be
completed within forty five (45) days from the submission of the first notice
set forth in 13.18(a) above. In the event substantial potential damages continue
to accrue pending mediation, the mediator shall have the authority to amend all
of the procedures and time periods as may be reasonable to expedite the
procedure.
13.20 INDEPENDENT CONTRACTOR. GTE is providing the Services as an
independent contractor. This Agreement shall not be construed to create a joint
venture, partnership, employment relationship, franchise or any other legal
relationship between the Parties other than that of independent contractor.
Neither Party shall share or be responsible for the debts and liabilities of the
other Party, or have the authority to bind the other Party in any manner.
13.21 ENTIRE AGREEMENT. This Agreement, together with the Exhibits
attached hereto and expressly made a part of this Agreement, shall constitute
the entire agreement between the Parties hereto with respect to the Services and
shall supersede all prior proposals, negotiations, understandings and
agreements, whether oral or written.
13.22 REMEDIES CUMULATIVE. Subject to the limitations of liability set
forth herein, all rights of termination, cancellation, or other remedies in this
Agreement are cumulative. Use of any remedy shall not preclude any other remedy
in this Agreement.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the date first above written.
<TABLE>
<S> <C>
GTE WIRELESS SERVICE CORPORATION HIGHWAYMASTER CORPORATION
By: (x) Michael J. McDonough By: (x) Jana Bell
--------------------------------------- ----------------------------
Name: Michael J. McDonough Name: Jana Bell
--------------------------------------- ----------------------------
Title: Senior Vice President - Marketing & Title: President & CEO
Sales
--------------------------------------- ----------------------------
Date: April 30, 1999 Date: April 29, 1999
--------------------------------------- ----------------------------
By: (x) Catherine H. LaFiandra
---------------------------------------
Name: Catherine H. LaFiandra
---------------------------------------
Title: Asst. Secretary
---------------------------------------
Date: April 30, 1999
---------------------------------------
</TABLE>
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EXHIBIT A
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE
OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
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[EXHIBIT B]
INTERCARRIER ROAMER SERVICE ADDENDUM
This Addendum to the Intercarrier Roamer Service Agreement ("Roamer
Agreement") between GTE Wireless Incorporated ("GTE") and __________________
("Carrier") as managing agent for the entities set forth in Appendix I attached
hereto and made a part hereof, is made and entered into effective as of
_________, 1999. The provisions set forth in this Addendum are controlling and
shall supersede any conflicting provisions in the Roamer Agreement as they may
relate to the specific provision of Roamer Service to roamers using the
HighwayMaster system ("HMS").
RECITAL
WHEREAS, the undersigned, in conjunction with other cellular providers,
desires to facilitate the provision of cellular roamer service to the long haul
trucking industry and other roamers with similar roaming patterns;
WHEREAS, in recognition of the unique requirements of the long haul
trucking industry, and other similarly situated industries, namely those with
nomadic travel patterns, the parties hereto have agreed to amend their existing
Roamer Agreement in accordance with the provisions set forth herein;
WHEREAS, it is the express intent of the Parties hereto that the
provisions of this Agreement shall be limited as set forth hereunder;
NOW THEREFORE, in consideration of mutual covenants set forth below the
receipt and sufficiency of which are hereby acknowledged, the parties enter into
the Addendum;
ARTICLE I: DESCRIPTION OF SERVICE
The HMS is a mobile communications system utilizing cellular technology
to provide communication and tracking services. The service is available to the
trucking industry and similar industries where the majority of airtime usage
utilizes multiple cellular SID's (System Identifications). The system combines a
patented smart phone voice recognition technology and special provisions from
cellular carriers throughout the United States and Canada.
A key component of the HMS is a "smart phone", which is a cellular
telephone connected to a proprietary software processor placed in each vehicle.
The phone, which utilizes voice recognition technology as a safety feature,
interfaces with a front end processor or PC-based system which resides at the
control dispatch center. As vehicles travel around the country, special
transmissions from the HighwayMaster unit provide tracking information to the
dispatch center showing the location, special information and roamer access
information. The tracking information and call validation is provided by GTE
Telecommunications Services ("TSI") located in Tampa, Florida. TSI processes a
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special signal that is automatically transmitted each time the vehicle enters a
new SID. The cellular network system, in conjunction with the cellular networks
of other cellular carriers, will provide the communications medium over which
tracking will be accomplished.
Only those roamers who engage in frequent multistate/multimarket
travel, wherein during two (2) consecutive months of each quarter in a calendar
year, seventy percent (70%) of airtime usage, including *19 validation, occurs
in multiple SIDs and whose tracking system can perform the restrictive call
delivery and other technical network interfaces described in this Addendum shall
be eligible to receive the roamer rates herein referenced.
ARTICLE II: GTE'S ROLE AS AN ADMINISTRATIVE SERVICE PROVIDER
ESTABLISHMENT OF NPA/NXX
GTE shall be responsible for establishing NPA/NXX combinations created
solely for use by roamers as defined herein. The NPA/NXX's are not dialable from
the Public Switched Telephone Network and can only be successfully called
through the Roamer Access Port of the serving system or via IS-41 Call Delivery
to the extent that is the Carrier's standard configuration. GTE has established
a designated NPA/NXX numbering system in conjunction with TSI for purposes of
validating *19 generated calls. GTE has a separate billing identification
("BID") for all numbers utilized by vehicles hereunder. The BID will be used
nationally to identify vehicles equipped with the HighwayMaster system. GTE will
notify the carriers of the BID and provide all updates of NPA/NXX used for the
purpose of this application. GTE will provide Industry Standard Updates which
shall be listed on GTE's Technical Data Sheets. All assigned numbers will be
stored in a validation database, jointly maintained by TSI and GTE. GTE shall
provide activations, ESN changes and updates to the database. The number block
utilized by vehicles equipped with the HighwayMaster system will be accessed via
the "valid foreign group" of all participating carriers which will allow
vehicles to make 1+800 calls and 911 emergency calls. All calls, except
emergency 911 calls, generated by users of the HighwayMaster system will be
routed to a billing and dispatch platform via a 1-800 number which will require
an authorized personal identification number (PIN) or modem to modem validation
process for completion.
ARTICLE III: COST OF SERVICE
Pursuant to the provisions herein stated, Carrier agrees for the term
of this Addendum to provide roaming service in accordance herewith in those
markets set forth on Appendix I at $_____ per minute. Carrier will not assess a
daily roamer access charge to users described hereunder for system use. It is
acknowledged that the provision of service at the rate set forth herein may be
subject to regulatory approval in various states. Carrier agrees that in those
service areas set forth in Appendix II requiring regulatory approval for the
roaming rate set forth herein, Carrier shall make reasonable good faith efforts
to obtain approval from the appropriate regulatory bodies. In the event
regulatory approval for the rates set forth herein is not obtained, the parties
hereto may elect to
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terminate this Agreement in those service areas or negotiate in good faith to
determine alternative rates. Notwithstanding any provision contained herein to
the contrary, Carrier shall not be required to provide rates to GTE which are
contrary to its overall business objectives and strategies or which are not
approved by the reviewing regulatory body.
ARTICLE IV: BILLING AND SETTLEMENT
GTE shall be liable to Carrier for all cost of services for system
usage at a rate in accordance with Article III of this Addendum. All charges
shall be invoiced by Carrier to GTE as specified in Appendix III of the Roamer
Agreement.
ARTICLE V: CALL RESTRICTION
Carrier agrees that in order to eliminate incidences of fraud as it
relates to the provision of service hereunder in conjunction with the
HighwayMaster system, Carrier shall institute call restrictive dialing. Inbound
and outbound calls in service areas set forth on Appendix II shall be routed via
a 1-800 platform which will require an authorized Personal Identification Number
(PIN) or another modem to modem validation method for call completion. Carrier
acknowledges and agrees that its liability for fraudulent airtime charges as set
forth herein or systems failure is relieved and shall be borne by GTE only if
Carrier has in place the call restrictive mechanism and procedures described
herein; otherwise, Carrier shall be solely liable for fraudulent airtime charges
incurred in areas set forth on Appendix II. Liability for losses, damages,
charges or expenses arising from or out of the fraudulent use of the
HighwayMaster system, including, but not limited to, outbound/inbound calls,
cloned phones, unauthorized PIN use, modem to modem validation and the 1+800
platform resulting from or attributable to Customers of the HighwayMaster system
shall be borne by GTE.
ARTICLE VI: TERM AND TERMINATION
This Agreement shall commence on the date of execution, and shall be
month to month terminated by either party with the provision of ten (10) days
prior written notice.
Notwithstanding any provisions contained herein to the contrary, GTE
may suspend or otherwise terminate this Agreement as it relates to those markets
set forth in Appendix II in the event GTE should terminate its relationship with
HighwayMaster Corporation for the provision of administrative service as
provided therein.
ARTICLE VII: LIMITATIONS OF LIABILITY
Neither Party hereto shall be liable to the other party or any third
party, including affiliate subsidiaries or partnership interest, for indirect,
incidental, consequential, reliance, punitive or special damages, including,
without limitation, damages for lost profits, regardless of the form of action
whether in contract, indemnify, warranty, strict liability or tort arising from
or related to the performance of the duties of either party as set forth herein
or the rendering of services hereunder.
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ARTICLE VIII: GTETSI INTERFACE
A key component of the HighwayMaster System application is the ability
of carriers to validate and provide for call delivery through TSI. In order for
this to be implemented the carrier must have a link to TSI or the validation
system of any other clearinghouse service provider. In the event the carrier is
not linked to any of the above services, Carrier understands that its
participation herein would be limited to markets which adhere to the
requirements set forth in this paragraph.
Agreed to by:
<TABLE>
<S> <C>
GTE WIRELESS INCORPORATED [CARRIER]
By: By:
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Name: Name:
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Title: Title:
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Date: Date:
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By:
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Name:
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Title:
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Date:
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</TABLE>
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EXHIBIT C
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE
OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
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<PAGE> 37
[Exhibit D]
ADDENDUM TO THE INTERCARRIER ROAMER SERVICE AGREEMENT
This Addendum ("Addendum") to the Intercarrier Roamer Service Agreement
("Roamer Agreement") between GTE Wireless Incorporated, on behalf of itself and
its wireless affiliates that are a party to the Roamer Agreement ("GTE") and
__________________ ("Carrier") is made as of this ___ day of _____, 1999. To the
extent any of the provisions of this Addendum are contrary to the provisions in
the Roamer Agreement, the provisions in this Addendum shall control with respect
to any usage of wireless roaming service ("Roaming") for the Numbers (as defined
herein) associated with a HighwayMaster System (as defined herein) or used by
HighwayMaster Corporation ("HighwayMaster") or one of its Customers
("Customers"). HighwayMaster is not a party to, nor does this Addendum make them
a party to, GTE's Roamer Agreement with the Carrier. This Addendum supercedes
and replaces any existing Intercarrier Roamer Service Addendum between GTE and
Carrier with regard to wireless service provided to HighwayMaster.
RECITALS
Whereas, GTE and Carrier, in conjunction with other wireless providers,
desire to facilitate the provision of Roaming to the long haul trucking industry
and other similarly situated entities with similar Roaming patterns (the
"Trucking Industry") in which the majority of wireless usage is in multiple
System Identifications ("SIDs");
Whereas, HighwayMaster and Carrier have a separate Service Agreement
(the "Service Agreement") that defines the relationship between Carrier and
HighwayMaster; and
Whereas, in recognition of the unique requirements of the Trucking
Industry, GTE and Carrier have agreed to amend their existing Roamer Agreement
in accordance with the provisions of this Addendum for purposes of implementing
the HighwayMaster System only in accordance with the terms and conditions of
this Addendum;
NOW, THEREFORE, for and in consideration of these premises and the
mutual covenants, agreements, representations and warranties herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, GTE and Carrier agree as follows:
SECTION 1
GTE AND CARRIER AGREEMENTS
1.1 Technical Specifications and Changes. Carrier and HighwayMaster
have entered into a Service Agreement under which Carrier provides HighwayMaster
certain services which assist HighwayMaster in the operation of its business.
Carrier has established a separate BID# 30445 for the tracking of the Roaming
usage by
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HighwayMaster and Carrier has obtained certain numbers (the "Numbers") that it
uses only in connection with the Service Agreement.
1.2 Validation. Carrier, either itself or through GTE
Telecommunications Services Incorporated ("GTE TSI") or another similar
Clearinghouse, will maintain the Numbers in a database ("Database") that will
permit standard validation of the calls in GTE Markets as communicated by GTE.
GTE TSI shall manage such database at the Carrier's request, and no changes or
modifications shall be made to the database that effect GTE's network, GTE's
wireless service or GTE's validation procedures.
1.3 Billing and Settlement. Subject to Section 1.6, Carrier shall be
liable to GTE for the amount of Roaming usage at the rate set forth in this
Addendum. GTE and Carrier shall use the standard net settlement process for
charges hereunder as specified in Appendix III of the Roamer Agreement. Neither
Carrier, HighwayMaster nor any other entity may edit or adjust the charges under
this Agreement other than as permitted by the standard net settlement procedures
or as authorized in writing by the Carrier.
1.4 Roaming Charge. GTE has entered into this Addendum in reliance upon
(i) the representation and warranties in Section 2 and (ii) the other terms and
conditions of this Addendum. Further, GTE is providing the rates for Roaming set
forth herein only for use with a HighwayMaster System that meets the criteria
and restrictions set forth in this Addendum, including without limitation
Sections 2.2, 2.3, 2.4 and 2.5. Pursuant to the provisions herein stated, GTE
agrees for the term of this Addendum to provide Roaming service in accordance
herewith in those markets set forth on Appendix I at the [TEXT HAS BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SEC.] provided, however, that Carrier may, in its sole
discretion, either terminate this Addendum or increase the rates with sixty (60)
days prior written notice if any of the representations and warranties set forth
in Section 2 are, or become, inaccurate, misleading or untrue. Notwithstanding
any provision contained herein to the contrary, Carrier shall not be required to
provide Roaming Rates to GTE which are contrary to its overall business
objectives and strategies or which are not approved by any regulatory body with
jurisdiction over the matter.
1.5 Territories and Status of GTE. The territories in which GTE shall
provide Roaming to Carrier in accordance herewith are set forth on Appendix I.
Appendix I also sets forth GTE's status as either a preferred Carrier or
secondary Carrier. If GTE is preferred, the HighwayMaster System shall use GTE's
Roaming in the Territories unless such Roaming is inoperable or out of
compliance in which case HighwayMaster will use the Roaming of a secondary
Carrier in that Territory.
1.6 GTE Call Restrictions. GTE agrees that in order to eliminate
incidences of fraud as it relates to the provision of Roaming hereunder in
conjunction with the HighwayMaster System, GTE shall institute, and program its
switches, so that any call, whether inbound or outbound, on a Number associated
with a HighwayMaster System will be routed to one of the 800 Numbers as defined
in Section 2.4 ("Carrier Switch Restrictions"). GTE acknowledges and agrees that
its liability for fraudulent airtime charges as set forth herein is relieved and
shall be borne by Carrier if GTE has in place
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the Carrier Switch Restrictions. To the extent GTE does not institute and
maintain the Carrier Switch Restrictions at all times and neither Carrier,
HighwayMaster or GTE TSI have made any modifications or changes to the Database
that affect the service, programming or restrictions in GTE's facilities,
switches or networks, GTE shall be liable for fraudulent airtime charges
incurred in its Territories. To the extent Carrier's claims for credits for
airtime based on fraud or any other claim exceed ten percent (10%) of airtime
charges under this Addendum in any month, GTE may suspend service under this
Agreement until the reason for such fraud is identified.
1.7 Term. The term of this Addendum shall commence on the date first
written above and shall continue thereafter for a period of one (1) year (the
"Term"). Upon the expiration of the Term, this Addendum shall continue on a
month to month basis unless terminated by either GTE or Carrier with sixty (60)
days prior written notice. Notwithstanding any provisions contained herein to
the contrary, GTE or Carrier may suspend or otherwise terminate this Addendum
upon the termination or expiration of the Service Agreement or relationship
between Carrier and HighwayMaster or upon failure of GTE to be paid for the
Roaming on the due date.
1.8 Limitation of Liability. Neither GTE nor Carrier shall be liable to
the other party or any third party for indirect, incidental, consequential,
punitive, reliance or special damages, including, without limitation, damages
for lost profits, regardless of the form of action whether in contract,
indemnity, warranty, equity, strict liability or tort arising from or related to
the performance of the duties of either GTE or Carrier as set forth herein.
1.9 GTE TSI Interface. A key component of the HighwayMaster System is
the ability of carriers to validate through GTE TSI. Carrier agrees that it has
a link to GTE TSI or another clearinghouse service provider with a gateway to
GTE TSI, or to an IS-41 connection with a gateway to GTE TSI If the Carrier has
consented to use of the IS-41 connection. In the event the Carrier is not linked
to any of the above services, GTE understands that its participation herein
would be limited to markets which adhere to the requirements set forth in this
paragraph.
1.10 Amendment. This Addendum may only be modified or amended by
execution of a written amendment by both GTE and Carrier.
1.11 Additional Applications. To the extent the Parties wish to expand
the use of the Roaming in connection with a specific application or account,
Carrier shall present GTE with an amendment for consideration as set forth in
Section 1.10, and GTE agrees to use good faith efforts to respond within sixty
(60) days from the date it receives the proposed amendment. Nothing herein
commits GTE to expanding or modifying the terms and conditions of this Addenda.
1.12 Nature of the Relationship. The Parties acknowledge and agree that
nothing in this Agreement shall be construed or implied to create a relationship
of partners, agency, joint venture, or employer and employee. Neither Party
hereto shall, in any way, have the authority to bind the other party in any
manner whatsoever.
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1.13 Primary Point of Contact. The Parties will each identify a primary
point of contact (the "Contact") for administration of this Agreement.
1.14 Applicable Law. The validity, construction and performance of this
Agreement shall be governed and interpreted in accordance with the laws of the
State of New York.
1.15 Effects of Headings. Headings to articles and paragraphs of this
Agreement are to facilitate reference only, do not form a part of this
Agreement, and shall not in any way affect the interpretation hereof.
1.16 Assignment. Neither this Agreement nor the rights nor obligations
hereunder shall be assigned or delegated, in whole or in part, by Carrier to any
other person, firm or corporation without the prior written consent thereto by
GTE. GTE will provide Carrier written notice of any assignment of this Agreement
by GTE or any divestiture of any Territories . To the extent GTE divests one or
more of its Territories, GTE shall provide Carrier with notice of such
divestiture, but there is no further guarantee of Roaming in a divested
Territory.
1.17 Notices. Except as otherwise provided in this Agreement, all
notices required or permitted to be given hereunder shall be made by registered
or certified mail, return receipt requested, or by an overnight mail service
having a record of receipt and addressed as follows:
If to GTE: GTE Wireless Incorporated
245 Perimeter Center Parkway
Atlanta, Georgia 30346
Attn. Director, Carrier Alliances
With a copy to: GTE Legal Department
245 Perimeter Center Parkway
Atlanta, Georgia 30346
Attn. General Counsel
Fax: (770) 391-8250
If to Carrier:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
Either party hereto may change its address by providing notice of such
address change to the other party in the manner set forth above. Notices given
as herein provided shall be considered to have been received five (5) days after
mailing thereof, or when actually received, whichever occurs first.
1.18 Severability. Any provision of this Agreement which is prohibited,
unenforceable or is declared or found to be illegal, unenforceable or void, in
any
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jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
1.19 Waiver. The failure of either Party to enforce, in any one or more
instances, performance of any of the terms, covenants or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right or
claim granted or arising hereunder or of the future performance of any such
term, covenant, or condition, and such failure shall in no way affect the
validity of this Agreement or the rights and obligations of the Parties hereto.
The Parties acknowledge that a waiver of any term or provision hereof may only
be given by a written instrument executed by each party hereto.
1.20 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument notwithstanding that all
Parties are not signatories to each counterpart.
1.21 Third Parties. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person other than the Parties
hereto and their successors or permitted assigns, any rights, benefits or
remedies of any kind or character whatsoever under or by reason of this
Agreement.
1.22 Entire Agreement. This Agreement, together with all Exhibits
attached hereto and expressly made a part of this Agreement, shall constitute
the entire agreement between the Parties hereto provided and shall supersede all
prior proposals, negotiations, understandings and agreements, whether oral or
written.
1.23 NO WARRANTY. GTE AND ITS AFFILIATES MAKE NO WARRANTIES, EITHER
EXPRESSED OR IMPLIED, CONCERNING THE FACILITIES OR THE SERVICE, INCLUDING,
WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
USE OR PURPOSE. THIS SECTION SHALL APPLY TO RESELLER OR ANY OF RESELLER'S END
USERS. Carrier expressly acknowledges that GTE shall have no liability for any
failure, defects, malfunctions or errors in the Facilities or for the provision
of service hereunder.
1.24 NO FACILITIES LIABILITY. Under no circumstances will GTE have any
liability to CARRIER or any End User for any causes of action, losses or damages
arising out of (i) mistakes, omissions, interruptions, errors, or defects in
furnishing THE SERVICE, (ii) failures or defects in Facilities, or (iii) GTE's
failure to maintain proper standards or maintenance and operation of the
Facilities or to exercise reasonable supervision with respect to the operations
of the Facilities.
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1.25 CAPACITY LIMITATION. The parties recognize that unusual
concentrations of usage may occur in certain locations. GTE shall incur no
liability for its inability to provide adequate service hereunder if such
liability is due to a lack of network capacity which results from the aforesaid
usage concentration, and nothing herein shall require GTE to expend any capital
to insure capacity for service.
SECTION 2
REPRESENTATIONS REGARDING HIGHWAYMASTER SYSTEM AND USAGE
OF ROAMING HEREUNDER
2.1 General. GTE is entering into the above Addendum based on the
representations and warranties made by Carrier in this Section 2. To the extent
any of the representations and warranties below are or become inaccurate,
misleading or untrue (a "Change"), Carrier shall notify GTE in writing (the
"Notification") of such changes. Upon the earlier of the date the Change
occurred or the date of the Notification, GTE may, in its sole discretion
terminate this Addendum with Carrier. Carrier shall have the right upon ten (10)
days prior notice to verify and obtain proof that each representation and
warranty is true and accurate. Carrier acknowledges and agrees that GTE has
provided the Roaming Rate in reliance on the representations and warranties made
hereunder.
The HighwayMaster System shall utilize the Numbers of Carrier that are
not dialable from the Public Switched Telephone Network. At this time, the
Numbers can only be successfully called through the Roamer Access port of the
serving carrier in a wireless market or by the industry standard IS~41 (ANSI-41)
automatic call delivery mechanism if utilized and consented to by GTE
HighwayMaster numbers. The Numbers for a HighwayMaster System will be loaded in
the "valid foreign group" of all carriers participating in providing roaming
under this addendum.
2.2 Description of Service. HighwayMaster has a mobile communications
system utilizing wireless technology and a patented smart phone and other
technology to provide communications and tracking service for the Trucking
Industry (the "HighwayMaster System") and any other applications approved by
Carriers as set forth herein or Section 1.12. The smart phone is a wireless
phone connected to a proprietary software processor placed in each HighwayMaster
System. The smart phone may use a voice recognition technology as a safety
feature and interfaces with a front end processor or PC based system which
resides at a control dispatch or response center ("Dispatch") operated by or for
the HighwayMaster Customer. As each HighwayMaster System, that is located
primarily in a vehicle, travels throughout North America, the HighwayMaster
System generates transmissions that show location, and other necessary
information (the "Tracking Information") to the Dispatch. The Tracking
Information and any call validation is provided to HighwayMaster through a third
party agreement. Through such agreement, a special signal is automatically
transmitted to HighwayMaster's network services center ("NSC") each time a
HighwayMaster System enters into a different SID. All calls, whether inbound or
outbound, are processed by the NSC. A national wireless network created by the
execution of similar Roaming addenda such as this Addendum provides the network
over which the "Tracking Information" will be transmitted.
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2.3 Roaming Requirement. Carrier represents and warrants that the
Roaming usage for each of its Customers and every HighwayMaster System will be
frequent multi state/multi market travel, wherein during two (2) consecutive
months of each quarter in a calendar year, seventy percent (70%) of the Roaming
usage, including *19 validation, occurs in multiple SIDs (the "Minimum Roaming
Requirement"). Carrier shall monitor compliance with this provision.
2.4 Restrictive Dialing. HighwayMaster represents and warrants that
each and every HighwayMaster System will be restricted in the following manner
("Restrictive Dialing"):
(i) calls can only be made to these [TEXT HAS BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SEC.]such additional toll free numbers as shall be
supplied in writing by Carrier and are then consented to in writing by GTE; and
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SEC.]
2.5 Use of Roaming. The Roaming and the Roaming Rate provided hereunder
shall only be used with all or a substantial portion of the HighwayMaster System
in the Trucking Industry, and such HighwayMaster System will have the
Restrictive Call Delivery and will meet the Minimum Roaming Requirement unless
otherwise agreed to in writing by GTE and Carrier or as expressly set forth
herein. AGREED TO BY:
<TABLE>
<S> <C>
GTE WIRELESS INCORPORATED CARRIER
By: By:
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Title: Title:
--------------------------------------- -----------------------------------------------
Date: Date:
--------------------------------------- -----------------------------------------------
By:
---------------------------------------
Title:
---------------------------------------
Date:
---------------------------------------
</TABLE>
Transition Agreement GTE PROPRIETARY AND CONFIDENTIAL
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APPENDIX I
- --------------------------------------------------------------------------------
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
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<PAGE> 1
FLEET-ON-TRACK(SM)
SERVICES AGREEMENT
BY AND BETWEEN
GTE TELECOMMUNICATION SERVICES INCORPORATED
and
HIGHWAYMASTER CORPORATION
GTE TSI Proprietary and Confidential Information
Fleet-On-Track is a service and service mark of GTE TSI
<PAGE> 2
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement"), dated as of April 29, 1999,
is entered into by and between GTE Telecommunication Services Incorporated, a
Delaware corporation ("Provider"), and HighwayMaster Corporation, a Delaware
corporation ("HighwayMaster" or "Customer"). (Provider and Customer collectively
the "Parties.")
WITNESSETH:
WHEREAS, the Parties wish to enter into this Agreement whereby the
Provider will supply certain software and services for the Customer's use in
connection with Customer's business;
NOW, THEREFORE, in consideration of the premises, the terms and
conditions set forth herein, the mutual benefits to be gained by the performance
thereof and other good, valuable, mutual and binding consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. DEFINITIONS. Unless the context otherwise requires, the terms defined
in this Section 1 shall have the meanings herein specified for all purposes of
this Agreement, applicable to both the singular and plural forms of any of the
terms herein defined:
1.1 "Affiliate" shall mean a Person, association, partnership,
corporation or joint-stock company or trust that, now or in the future, directly
or indirectly, through one or more intermediaries, controls, is controlled by or
is under common control with, another Person or entity. Control shall be defined
as (i) ownership of a majority of the voting power of all classes of voting
stock or (ii) ownership of a majority of the beneficial interests in income and
capital of an entity other than a corporation.
1.2 "Carrier" shall mean an entity licensed by the Federal
Communications Commission ("FCC") to provide cellular service, broadband
personal communications services ("PCS"), or specialized mobile radio ("SMR")
service through the use of the entity's own licensed facilities. For the
purposes of this Agreement, Host Carrier and serve carriers are Carriers as
defined herein.
1.3 "CGSA" shall mean a cellular geographic service area of a Carrier
which is defined by the Federal Communications Commission as either a
metropolitan service area ("MSA") or a rural service area ("RSA").
1.4 "Client" shall mean a Person that receives services from the
HighwayMaster System who is a customer of Customer.
1.5 "Customer Information" shall mean any and all information, in any
tangible or electronic form, which bears a legend "HighwayMaster Confidential
GTE TSI Proprietary and Confidential Information 1
Fleet-On-Track is a service and service mark of GTE TSI
<PAGE> 3
Information - Subject to Use and Disclosure Restrictions Pursuant to Contract"
and which has been provided to the Designated GTE Recipient; provided, however,
the foregoing shall not include that portion of any information made available
by Customer without restrictions on use or disclosure or that portion of any
information which is readily discernable by the performance of this Agreement.
All information, even if in writing or other tangible form, but which does not
bear the legend described above, shall not be considered "Customer Information."
In addition, this definition is subject to the limitations of Section 7.1(b)
below.
1.5a "Designated GTE Recipient" shall mean the General Counsel of
Provider, or any other individual designated by GTE in writing, pursuant to
Section 11.5 of this Agreement, to be the recipient of Customer Information.
1.5b "Designated HighwayMaster Recipient" shall mean the General
Counsel of Customer, or any other individual designated by HighwayMaster in
writing, pursuant to Section 11.5 of this Agreement, to be the recipient of
Provider Information.
1.6 "HighwayMaster System" shall mean the system module ("System
Module"), display module ("Display Module"), HighwayMaster software provided to
its Clients, the Network Services Center(s) ("NSC"), interface between
HighwayMaster and the NSC, interface between the NSC and System Module.
1.7 "Host Carrier" shall mean the Carrier that has entered into an
agreement with Customer to sponsor the administration of the HighwayMaster
service through items such as the administration of the NPA/NXXs, the BID and
the wireless service agreements, and possibly other services associated with the
HighwayMaster wireless coverage areas.
1.8 "Host System" shall mean the Provider's system including without
limitation all equipment, processors, software and other technology created,
designed, used or owned by Provider to provide the Services to the Customer.
1.9 "Interface" shall mean the routines and protocols, regardless of
the media on which contained, that enable the passing of information (either
one-way or bi-directional) between the different systems, or between a
particular system and an input/output device, in a usable form.
1.10 "Material Default" means any Material Breach which has not been
cured within thirty (30) days after notice of such breach is given to the
breaching Party by the non-breaching Party.
1.11 "Material Breach" means, with respect to either Party to this
Agreement, any material breach of any obligation, representation, warranty, or
covenant of such Party contained in this Agreement which has caused or will
cause the other Party to this Agreement to incur substantial monetary damages.
GTE TSI Proprietary and Confidential Information 2
Fleet-On-Track is a service and service mark of GTE TSI
<PAGE> 4
1.12 "Provider Information" shall mean any and all information, in any
tangible or electronic form, which bears a legend "GTE Confidential Information
- - Subject to Use and Disclosure Restrictions Pursuant to Contract" and which has
been provided to the Designated HighwayMaster Recipient; provided, however, the
foregoing shall not include that portion of any information made available by
Provider without restrictions on use or disclosure or that portion of any
information which is readily discernable by the performance of this Agreement.
All information, even if in writing or other tangible form, but which does not
bear the legend described above, shall not be considered "Provider Information."
In addition, this definition is subject to the limitations of Section 7.2(b)
below.
1.13 "Provider Interfaces" shall mean the Interfaces specifically
designed and created by Provider and used by Provider and/or Customer in
connection with the Services provided under this Agreement, including the
Interface(s) between the Host System and the System Modules used by Clients as
described in the Technical Specifications, and the Interface(s) between the Host
System and the NSC System, each as modified and updated from time to time.
1.14 "Services" shall mean the services to be provided to Customer for
use with the HighwayMaster System by Provider as described or identified in
Exhibits A and B attached hereto and incorporated herein by this reference.
1.15 "Software" shall mean the software, both source and object code,
supporting documentation, all modifications and derivatives and other protected
technology created or designed by or for Provider, or owned by Provider that is
used in the provision of the Services under this Agreement, including but not
limited to the Provider Interfaces.
1.16 "Term" shall have the meaning set forth in Section 9.1 of this
Agreement.
1.17 "Person" shall mean any individual, corporation, partnership,
firm, joint venture, association, joint stock company, trust, estate,
unincorporated organization, governmental or regulatory body or other entity.
2. PROVIDER OBLIGATIONS. In addition to the other covenants, terms and
conditions set forth in this Agreement, Provider agrees to perform the
obligations set forth in this Section 2.
2.1 Obligation to Provide Services. Provider agrees to provide to
Customer the Services within the United States of America, Mexico and Canada. To
the extent Provider or Customer believe any revision/alteration is needed,
Provider or Customer shall notify the other Party immediately of the proposed
revision/alteration and Customer and Provider will use their best efforts to
approve a revision/alteration that permits the Services to be provided in
accordance with this Agreement. Notwithstanding the above, neither Party shall
be required to alter or revise its business operations or systems in a manner
that would be detrimental to its other business operations, customers or Clients
or
GTE TSI Proprietary and Confidential Information 3
Fleet-On-Track is a service and service mark of GTE TSI
<PAGE> 5
which would require substantial capital expenditures. [TEXT HAS BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SEC.]
2.2 Billing and Payment for Status Coding Transactions. Customer
intends to enter into agreements ("Carrier Status Coding Agreements") with
Carrier(s) that will provide for compensation to Carrier(s) for each status
coding transaction that occurs on a Carrier's cellular system. Provider's
obligations set forth in this Section are subject to Customer entering into the
Carrier Status Coding Agreements and notifying Provider in writing that such
agreements have been executed. To the extent Provider is able to interface with
a Carrier's cellular system, Provider shall be in possession of and shall be
able to generate data on the number of status coding transactions that occur on
each Carrier's cellular system during the monthly cellular/roaming cycle. As
part of the Services, Provider agrees that it will create two copies of two
reports for each Carrier showing the number of transactions on such Carrier's
cellular system for each MSCID. Provider shall also provide Customer with a
magnetic billing tape containing the two reports. Customer will be solely
responsible for translating the information on the tape and paying the
Carrier(s) in accordance with such information.
2 [TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SEC.]
3. PROVIDER REPRESENTATIONS.
3.1 Other Material Agreements. The execution, delivery and performance
of this Agreement does not conflict with or result in a material breach of any
provision of any material agreement to which Provider is a party.
3.2 Valid Execution. This Agreement has been duly executed and
delivered by an authorized representative of Provider and constitutes a valid
and legally binding obligation of Provider, enforceable against it in accordance
with its terms.
4. CUSTOMER OBLIGATIONS. In addition to the other covenants, terms and
conditions set forth in this Agreement, Customer agrees to perform the
obligations set forth in this Section 4.
4.1 Customer's Use of Services. Customer agrees to use the Services
only in connection with the use, sale, distribution or operation of the
HighwayMaster System or a substantial portion thereof. Customer may resell the
Services separately from the HighwayMaster System in the future only upon
obtaining advance written consent from Provider, which consent may be withheld
in the sole discretion of Provider. To the extent Provider grants such consent,
the Parties must negotiate mutually acceptable terms upon which the Services
could be resold.
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4.2 Customer's Duties.
(a) Customer is responsible for taking all actions necessary
to reach agreement with Carrier(s) to provide the interface with
Provider's Host System so that Provider is able to provide the Services
in a Carrier's market. Customer acknowledges and agrees that it is
solely responsible for such relationships with Carrier(s) and that
Provider is not responsible for any inability to provide Services due
to an action or omission by Carrier or Customer that causes the
Services to be inoperable. Provider agrees to use reasonable efforts to
assist Customer to locate and identify problems in its interfaces with
Carrier(s); provided, however, that Provider may charge Customer
additional amounts for such assistance.
(b) Customer agrees to maintain and operate the HighwayMaster
System or any related equipment, software, hardware or other technology
used in connection therewith in such a manner so that Customer will
provide, send and receive any information, data or messages in the
specified message format that complies with Provider's then current
specifications therefor and enables Provider to provide the Services.
(c) Customer will be solely responsible for any translations
of the status code messages, as more fully described in Section 4 of
Exhibit A, received by its Clients.
(d) Customer will notify Provider of any Carrier or CGSA that
is properly added to or deleted from the HighwayMaster System and
Provider will have five (5) business days from the date of such
notification to make the addition or deletion to its Host System.
(e) Customer agrees that it will not modify or alter the
HighwayMaster System or any related equipment, software, hardware or
other technology used in connection therewith in a way which would not
be in compliance with Provider's then current specifications applicable
to Services or prevent or substantially hinder the provision of the
Services to Customer.
(f) As more fully set forth in Section 1 of Exhibit C,
Customer will use its best efforts to identify and correct any of the
mobile unit's System Modules or Display Modules that are generating
excessive and/or inaccurate transactions. Further, Customer will give
Provider thirty (30) days prior written notice of any modifications,
alterations or revisions to the HighwayMaster System or its business
operations that could significantly increase the number of transactions
to be processed by Provider.
5. CUSTOMER REPRESENTATIONS.
5.1 Other Material Agreements. The execution, delivery and performance
of this Agreement does not conflict with or result in a material breach of any
provision of any material agreement to which Customer is a party.
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5.2 Valid Execution. This Agreement has been duly executed and
delivered by an authorized representative of Customer and constitutes a valid
and legally binding obligation of Customer, enforceable against it in accordance
with its terms.
6. OWNERSHIP OF INTELLECTUAL PROPERTY.
6.1 No License of Intellectual Property.
(a) Nothing herein shall be construed to grant Customer any
license, express or implied, under any patents, copyrights, or
trademarks of Provider or any of its Affiliates or any improvements,
modifications or improvements thereto, except as may be necessary for
Customer's performance of its obligations under this Agreement and its
Client's use of Services provided pursuant to this Agreement, and then
only for the term of this Agreement, and to the extent provided in
Section 10.7. Provider agrees, however, to indemnify and hold harmless
Customer from any and all claims, losses, damages, causes of action,
costs (including reasonable attorneys fees) or expenses incurred by
Customer as a result of any claim or action brought by a third party
arising out of or resulting from the use of any Software or hardware
provided by Provider to Customer or used by Provider in connection with
the Services provided pursuant to this Agreement. This indemnity shall
not extend to: any use of such Software or hardware other than when
used in connection with the Services under this Agreement;
modifications to such Software or hardware made by or for the Customer;
combinations of such Software and/or hardware with other software,
hardware or functionality not provided by Provider; or compliance with
Customer provided specifications. The foregoing indemnity shall not
extend to any technical assistance given by Provider in the course of
performing this Agreement because this Agreement does not encompass or
contemplate such technical assistance.
(b) Nothing herein shall be construed to grant Provider any
license, express or implied, under any patents, copyrights, or
trademarks of Customer or any of its Affiliates or any improvements,
modifications or improvements thereto, except as may be necessary for
Provider's performance of its obligations under this Agreement, and
then only for the term of this Agreement. Customer agrees, however, to
indemnify and hold harmless Provider from any and all claims, losses,
damages, causes of action, costs (including reasonable attorneys fees)
or expenses incurred by Provider as a result of any claim or action
brought by a third party arising out of or resulting from the use of
any software or hardware provided by Customer to Provider or used by
Customer or Clients in connection with this Agreement. This indemnity
shall not extend to: any use of such software or hardware other than
when used in connection with the Services under this Agreement;
modifications to such software or hardware made by or for Provider;
combinations of such software and/or hardware with other software,
hardware or functionality not provided by Customer or Clients; or
compliance with Provider provided specifications. The foregoing
indemnity further shall not extend to any
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technical assistance given by Customer or Clients in the course of
performing this Agreement because this Agreement does not encompass or
contemplate such technical assistance.
6.2 No Transfer of Ownership. Nothing in this Agreement shall be
construed as transferring ownership of any property, tangible or intangible,
including without limitation intellectual property. Subject to the license
rights set forth in Sections 6.1(a) and 6.1(b), nothing in this Agreement shall
be construed as transferring license rights in any property, tangible or
intangible, including without limitation intellectual property. The Parties have
entered into a separate agreement contemporaneously herewith that addresses
ownership of intellectual property.
6.3 [TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
7. SAFEGUARDING OF INFORMATION.
7.1 Customer Information.
(a) Use of Customer Information. Except and to the extent set
forth in this Agreement, nothing herein shall constitute a grant of
license to Provider of Customer Information. Provider may only use the
Customer Information to the extent set forth herein or as required to
perform its obligations under this Agreement, unless Provider obtains
prior written consent from Customer to use the Customer Information for
another purpose. Provider may not disclose the Customer Information to
any third party (other than to any Affiliate provided that they have a
reasonable need for such disclosure and other than to contractors
performing services for Provider and potential successors in interest,
provided such contractors and potential successors in interest enter
into written agreements with Provider restricting further use and
disclosure of Customer Information) without the prior written consent
of Customer. If Provider receives or is served with any order,
subpoena, demand or other request from any governmental agency, court
or other legal forum to produce Customer Information ("Request for
Production"), Provider will provide Customer with prompt notice of such
Request for Production so that Customer, at its expense, may seek a
protective order or such other remedy to prevent production of the
Customer Information. If Provider is ultimately compelled, by a court
or other legal forum, which has authority, to comply with the Request
for Production, Provider will not be in violation of this Section. Upon
termination or expiration of this Agreement or, with respect to any
Customer Information, on such earlier date that Provider in its
opinion, shall no longer require the Customer Information to provide
the Services hereunder, Provider will, at Customer's request, either
erase the Customer Information from any files maintained by Provider or
return the Customer Information to Customer. Provider agrees to protect
and safeguard the confidentiality of the Customer Information to the
same degree and extent as Provider protects and safeguards its own
confidential information.
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<PAGE> 9
(b) Exclusions to Obligations Relating to Customer
Information. Notwithstanding Section 7.1(a) above, Customer Information
shall not include, and this Agreement shall impose no obligation on
Provider to protect, not disclose or not use that portion of any
Customer Information that:
(1) Prior to its disclosure by Customer, is lawfully
and rightfully known by or available to Provider or its
Affiliates (from other than Customer or its Affiliates),
without restriction on use or disclosure;
(2) Through no breach of this Agreement or fault on
the part of the Provider, is or hereafter becomes part of the
public domain (i.e., without restriction on use or
disclosure);
(3) Is developed by or for the Provider independently
from and without access to Customer Information;
(4) Is lawfully received by the Provider from a third
party without restriction on use or disclosure and without
breach of this Agreement or any other agreement, or breach of
any fiduciary obligation or obligation of confidentiality; or
(5) Is approved in writing by Customer for disclosure
to third parties or for other uses.
7.2 Provider Information.
(a) Use of Provider Information. Except and to the extent set
forth in this Agreement, nothing herein shall constitute a grant of
license to Customer of Provider Information. Customer may only use the
Provider Information to the extent set forth herein or as required to
perform its obligations under this Agreement, unless Customer obtains
prior written consent from Provider to use the Provider Information for
another purpose. Customer may not disclose the Provider Information to
any third party (other than to any Affiliate provided that they have a
reasonable need for such disclosure and other than to contractors
performing services for Customer and potential successors in interest,
provided such contractors and potential successors in interest enter
into written agreements with Customer restricting further use and
disclosure of Provider Information) without the prior written consent
of Provider. If Customer receives or is served with any order,
subpoena, demand or other request from any governmental agency, court
or other legal forum to produce Provider Information ("Request for
Production"), Customer will provide Provider with prompt notice of such
"Request for Production" so that Provider, at its expense, may seek a
protective order or such other remedy to prevent production of the
Provider Information. If Customer is ultimately compelled, by a court
or other legal forum, which has authority, to comply with the Request
for Production, Customer will not be in violation of this Section. Upon
termination or expiration of this Agreement or, with respect to any
Provider Information, on such earlier date that Customer in its
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opinion, shall no longer require the Provider Information to perform
its obligations under this Agreement, Customer will, at Provider's
request, either erase the Provider Information from any files
maintained by Customer or return the Provider Information to Provider.
Customer agrees to protect and safeguard the confidentiality of the
Provider Information to the same degree and extent as Customer protects
and safeguards its own confidential information.
(b) Exclusions to Obligations Relating to Provider
Information. Notwithstanding Section 7.2(a) above, Provider Information
shall not include, and this Agreement shall impose no obligation on
Customer to protect, not disclose or not use that portion of any
Provider Information that:
(1) Prior to its disclosure by Provider, is lawfully
and rightfully known by or available to Customer or its
Affiliates (from other than Provider or its Affiliates),
without restriction on use or disclosure;
(2) Through no breach of this Agreement or fault on
the part of the Customer, is or hereafter becomes part of the
public domain (i.e., without restriction on use or
disclosure);
(3) Is developed by or for the Customer independently
from and without access to Provider Information;
(4) Is lawfully received by the Customer from a third
party without restriction on use or disclosure and without
breach of this Agreement or any other agreement, or breach of
any fiduciary obligation or obligation of confidentiality; or
(5) Is approved in writing by Provider for disclosure
to third parties or for other uses.
Except for exception (5), the foregoing exceptions shall not apply to
Software.
7.3 EXCEPTIONS. The Parties acknowledge and agree that the above
Confidentiality provisions do not limit either Party from disclosing this
Agreement to Host Carrier on a "need to know basis" to permit performance
hereunder. The parties further acknowledge that the Provider Information and the
Customer Information may be disclosed by the receiving party to (i) the
receiving party's attorneys, accountants, and financial advisors, and (ii) a
prospective purchaser or merger partner, provided such recipients agree in
writing not to further use or disclose the information consistent with the
provisions of this Agreement.
8. COMPENSATION.
8.1 Process for Compensation. Customer will compensate Provider for the
Services in accordance with the terms, rates and charges set forth in Exhibit C
attached hereto. Provider will prepare and send to Customer monthly statements
of the amounts
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<PAGE> 11
owed by Customer to Provider. Customer will pay Provider within net thirty (30)
days following receipt of such statement ("Due Date"). Receipt shall be deemed
to have occurred three (3) days after such statement has been deposited in the
U.S. Mail. If Customer fails to pay Provider by the Due Date, any and all
outstanding amounts due Provider shall accrue interest at the rate of one and a
half percent (1.5 %) per month or the maximum amount of interest allowed by law,
whichever is less.
8.2 Disputes Regarding Compensation. To the extent Customer has a
legitimate dispute regarding amounts owed to Provider (the "Disputed Amount"),
Customer agrees that it shall continue to pay Provider all amounts that are
undisputed and seventy five percent (75%) of the Disputed Amount by the Due
Date. Customer shall simultaneously with payment of any portion of a Disputed
Amount notify Provider of the dispute and then shall rely upon the Dispute
Resolution Provisions in Sections 11.19 and 11.20 of this Agreement. Customer
must notify Provider in writing of any dispute on or with a statement within one
hundred twenty (120) days after Customer has received such statement. To the
extent Customer does not prevail on a Disputed Amount, Provider shall be
entitled to interest as set forth in Section 8.1 on the unpaid Disputed Amount
from the date such Disputed Amount was originally due and payable.
9. TERM OF AGREEMENT; RENEWAL OPTION.
9.1 Term. The initial term of this Agreement shall be for a period of
three calendar years commencing on the date of execution of this Agreement by
both Parties and ending on the third anniversary of such date (the "Initial
Term"), unless terminated earlier as provided herein.
9.2 Renewal Term. Unless earlier terminated in accordance with any of
the provisions of Section 10, upon expiration of the Initial Term, this
Agreement shall automatically renew upon the same terms and conditions for up to
ten (10) consecutive one (1) year renewal terms (a "Renewal Term"), provided,
however, that
(a) Provider will have the right to revise the terms of
compensation set forth in Exhibit C of this Agreement for each one year Renewal
Term. Customer and Provider acknowledge and agree that Provider shall have the
right to revise the compensation to receive all of Provider's costs, overhead,
administrative fees and a reasonable profit margin to be determined by Provider;
(b) Provider shall not have terminated this Agreement in
accordance with its rights set forth in Section 10 of this Agreement or any
other rights of termination hereunder; and
With respect to the revision of compensation in Section 9.2(a),
Provider will give Customer an amendment (the "Compensation Amendment") to this
Agreement ready for execution setting forth the compensation revisions at least
ninety (90) days prior to the effective date of such revision. The effective
date of any Compensation Amendment shall be established by Provider, but in no
event shall it be prior to the expiration of the
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Term of this Agreement or any then applicable Renewal Term. If Customer does not
execute the Compensation Amendment by the expiration of the Term or Renewal
Term, the Services shall automatically be placed on month-to-month status until
such time as the Compensation Amendment is executed by Customer. Compensation
for any month-to-month Services shall be the amounts and rates which are in
effect as of the date of expiration of the Term or the applicable Renewal Term
plus a ten percent (10%) special handling fee. To the extent Customer fails to
execute the Compensation Amendment or the Parties have not entered into a new
agreement for the Services and the Services have been provided on a
month-to-month basis for twelve (12) months, Provider shall have the option to
terminate the Services upon sixty (60) days advance written notice to Customer
and Customer shall have no right to renew, extend or otherwise continue this
Agreement.
10. TERMINATION; NONRENEWAL.
10.1 Termination for Cause. In the event of a Material Default by
either Party under this Agreement, the nondefaulting Party may terminate this
Agreement by giving notice of such termination to the other Party to this
Agreement, which notice of termination shall specify a date no earlier than
sixty (60) days after the date such notice is given for such termination. To the
extent the defaulting Party cures the Material Default within the thirty (30)
day cure period provided for in the Definition of Material Default, this
Agreement cannot be terminated unless a subsequent notice of Material Default is
provided hereunder.
10.2 Termination for Nonpayment. In the event that Customer fails to
pay Provider any amounts owed for the Services by the Due Date and Customer
fails to fully cure such payment default within ninety (90) days after notice by
Provider of such payment default, then Provider may terminate this Agreement by
giving notice of such termination to Customer, which notice of termination shall
specify a date no earlier than the date such notice is given for such
termination.
10.3 Termination for Insolvency. If Customer makes an assignment for
the benefit of creditors or files a voluntary petition under Title 11 of the
United States Code or under any similar state insolvency laws or if Agent shall
have an involuntary petition for bankruptcy filed against it under Title 11 of
the United States Code and such involuntary petition is not dismissed within
thirty (30) days; or a trustee or receiver is appointed to administer Agent's
business or assets, Provider shall have the right to terminate this Agreement
effective upon notification of such termination to Customer.
10.4 Nonrenewal for Discontinued Service. To the extent Provider or any
of its successors or assigns ceases to offer or provide the Services or any
portion thereof, Provider shall not be required to renew this Agreement after
the Term or applicable Renewal Term as to all or that portion of the Services
which Provider no longer offers or provides, and Customer shall have no rights
of renewal. In the event of nonrenewal under this Section, Provider shall
continue to provide the Services to Customer for a period of ninety (90) days
plus a reasonable transition period of not more than an additional ninety (90)
days.
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<PAGE> 13
10.5 Termination For Discontinued Business. To the extent Provider
ceases to operate all or substantially all of its business operations, Provider
shall not be obligated to provide the Services under this Agreement.
10.6 Termination for Convenience/Nonrenewal. At any time after the
first year of the Initial Term, either Party may provide the other Party with a
written six months' notice of its intent to terminate the Agreement for
convenience; immediately following the end of this six (6) months notice period,
there will be an additional period of twelve (12) months in which the Parties
will transition Customer from Provider's Services. This eighteen month time
period shall be known as the "Transition Period". During the Transition Period,
Customer will be responsible for writing requirements and developing an
alternative to Provider's Services. Provider will cooperate in good faith with
Customer during the Transition Period including providing reasonable support for
testing, and at Provider's discretion, providing input for requirements.
Provider will continue to provide Services under the terms of this Agreement
during the Transition Period. Changes to functionality will not be implemented
except as mutually agreed upon in writing by the Parties. Customer is obligated
to pay Provider for the Services provided during the Transition Period. If
Customer substantially transitions off of Provider's Services at any time during
the Transition Period (that is, moves vehicles to another HLR/VLR), Provider
will invoice and Customer will pay the average monthly amount of the last twelve
(12) months invoices for the remainder of the Transition Period. However, if
Customer transitions by moving markets (MSCID's) to another HLR/VLR as a part of
a transition plan, then the following adjustments will be made:
(a) If Customer terminates the Agreement in
accordance with this paragraph 10.6, then Customer will pay
the full amounts agreed to per the Agreement throughout the
transition period, except that during the last three (3)
months of the Transition Period, Customer will pay based on a
proportionate schedule. [TEXT HAS BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS
BEEN FILED SEPARATELY WITH THE SEC.]
(b) If Provider terminates the Agreement in accordance with
this paragraph 10.6, then Customer will pay the full amounts
agreed to per the Agreement throughout the Transition Period,
except that at the point during the Transition Period that
Customer begins to transition transactions away from Provider,
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH
THE SEC.] In no case will Provider be required to provide
services more than four (4) months after a proportionate
reduction in charges takes effect.
10.7 License to use Provider Interfaces. Upon the termination or
expiration of this Agreement, Customer shall have a perpetual, non-exclusive and
royalty-free right and license to use the most recent version of the Provider
Interfaces existing at the termination or expiration of the Agreement, solely in
connection with the operation of the
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HighwayMaster System or a substantial portion thereof, including the right to
distribute the Provider Interfaces to third parties who are engaged to provide
services similar to the Services furnished by Provider or the services provided
to Customer by the NSC. Customer agrees that Provider shall retain its ownership
rights and interests in the Provider Interfaces, including any modifications,
adaptations, translations and derivative works based thereon (whether created by
Provider, Customer or any third party), and that Customer is merely granted a
license to use the Provider Interfaces as set forth herein. Customer's right to
distribute the Provider Interfaces (including portions thereof) to any third
party is subject to the requirement that each third party recipient shall agree
in writing to maintain the confidential nature of the Provider Interfaces and
limit its use of the Provider Interfaces to be solely in connection with the
HighwayMaster System or a substantial portion thereof. PROVIDER DOES NOT MAKE
AND NEITHER CUSTOMER NOR ANY THIRD PARTY RECEIVES ANY REPRESENTATION OR WARRANTY
WITH RESPECT TO THE OWNERSHIP, FUNCTIONALITY OR PERFORMANCE OF THE PROVIDER
INTERFACES, IT BEING EXPRESSLY AGREED THAT THE PROVIDER INTERFACES ARE PROVIDED
`AS IS' WITHOUT WARRANTY OF ANY KIND, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT. Customer
shall inform any third party that is provided the Provider Interfaces of the
above disclaimer of warranty and shall include such disclaimer in any agreement
with such third party. Provider shall cause one copy of the Provider Interfaces
to be delivered to Customer within thirty (30) days following the termination or
expiration of this Agreement under circumstances that entitle Customer to the
license of the Provider Interfaces set forth above; provided, however, that
Customer shall reimburse Provider for all costs and expenses (including
reasonable charges for overhead) incurred in connection with the delivery of the
Provider Interfaces. Nothing in this Section 10.7 shall require Provider to
license or deliver any other Provider Information or Software, including the
manner in which the Provider Interface operates in connection with the Host
System.
11. MISCELLANEOUS PROVISIONS.
11.1 Force Majeure. Each Party hereto shall be excused from performance
hereunder for any period and to the extent that it is prevented from performing
any action pursuant hereto, in whole or in part, as a result of delays beyond
its control caused by the other Party or by an act of God or the public enemy,
fire, floods, epidemics, quarantine restrictions, civil disturbance, court
order, labor dispute, third party nonperformance (except to the extent such
third party nonperformance is wrongfully caused by a Party to this Agreement),
or other cause beyond its control, including without limitation failures or
fluctuations in electrical power, heat, light or air conditioning. Additionally,
Provider shall not be liable to Customer or Clients if changes, alterations or
modifications in the HighwayMaster System, Customer's facilities, operations,
network equipment, or procedures made in the ordinary course of business render
the Services obsolete or unusable.
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11.2 Severability. Any provision of this Agreement which is prohibited,
unenforceable or is declared or found to be illegal, unenforceable or void, in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.
11.3 Nondisclosure/Media Releases. All media releases, public
announcements and public disclosures by any Party hereto relating to this
Agreement or its subject matter, including without limitation promotional or
marketing material, but not including any announcement intended solely for
internal distribution or any disclosure required by legal, accounting or
regulatory requirements beyond the reasonable control of such Party, shall be
coordinated with and approved by the other Party hereto prior to the release
thereof, which approval shall not be unreasonably withheld or delayed. The terms
of this Agreement are confidential except that either Party may disclose the
terms of this Agreement to any of its, or its Affiliates, employees, consultants
or professionals on a "need to know basis" to permit performance hereunder.
Neither Party shall announce or disclose to any third party, the terms and
conditions contained herein or any discussions relating thereto, without the
prior written consent of the other Party, except as required by law, in which
case the Party required to make disclosure shall give the other Party prompt
notice of any such requirement so that the other Party can take any actions it
deems appropriate to protect the information from disclosure. Notwithstanding
the above, Customer shall be permitted to disclose this Agreement to the
Securities and Exchange Commission ("SEC") and file it therewith, as required in
connection with a 10Q, 10K, 8K or other SEC required reporting document and
Provider shall be permitted to disclose this Agreement to potential successors
in interest of Provider, provided such potential successors in interest agree in
writing not to further disclose such information. Customer shall provide the SEC
with a clean and redacted copy of the Agreement to indicate to the SEC which
Sections should be redacted and unavailable for public review. A copy of the
Agreement with the proposed redactions will be provided to Provider twenty (20)
business days prior to filing the Agreement with the SEC, and Provider shall
have such twenty (20) business days to request additional or different
redactions. In the event no such comments are provided to Customer by Provider
in such time period, Customer shall be authorized to file this Agreement with
the SEC in the form given to Provider for review. To the extent the SEC or
Customer determines that any requested redactions are not allowed by the SEC,
Customer must notify Provider of the specific changes required by the SEC prior
to filing this Agreement with the SEC.
11.4 Injunctive Relief. Each Party acknowledges that any Material
Default of its obligations under this Agreement may cause irreparable harm to
the other Party for which remedies at law will be inadequate and that, in the
event of any such Material Default, the nonbreaching Party shall be entitled to
equitable relief (including without limitation injunctive relief and specific
performance).
11.5 Notices. Any notice required by this Agreement must be given by
depositing a copy of such notice (i) in the United States mail, postage prepaid,
certified
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<PAGE> 16
return receipt requested or (ii) in overnight delivery or (ii) via facsimile.
Any such notice will be deemed to be received upon the earlier of verification
of delivery or the fifth (5th) day after depositing a copy of such notice in the
mail or overnight delivery, except that notices received by facsimile shall only
be deemed effective upon actual receipt by the individual with the title set
forth below as confirmed solely by such individual. Any such notice will be
given at the following addresses or to such later addresses of which the sending
Party has received actual or constructive notice:
If to Customer: HighwayMaster Corporation
1155 Kas Drive
Richardson, Texas 75081
Attention: President
Cc: General Counsel
FAX No.: 972-301-2263
If to Provider: GTE Telecommunication Services Incorporated
201 N. Franklin Street
P.O. Box 2924
Tampa, Florida 33601-2924
Attention: President
Cc: Vice President & General Counsel
FAX No.: 813 273-3430
11.6 Legal Representation. Customer acknowledges that Provider has
offered no legal advice or counsel to Customer nor made any representations to
Customer regarding Customer's exemption from the jurisdiction of federal, state,
or local govern-mental agencies with potential jurisdiction over the Parties
herein and the Services to be rendered hereunder and Provider has not offered
Customer any legal advice or counsel regarding the subject matter of this
Agreement. Provider acknowledges that Customer has offered no legal advice or
counsel to Provider nor made any representations to Provider regarding
Provider's exemption from the jurisdiction of federal, state, or local
governmental agencies with potential jurisdiction over the Parties herein and
the Services and obligations to be rendered hereunder and Customer has not
offered Provider any legal advice or counsel regarding the subject matter of
this Agreement.
11.7 Interpretation. Headings used in this Agreement are for
convenience only and will not be deemed to be operative text. Terms of gender
will be deemed inter-changeable, as will singular and plural terms, in each case
unless the context otherwise requires.
11.8 Execution. This Agreement shall be deemed to be executed at such
time as all Parties hereto have signed a counterpart hereof and each Party
hereto has received from each of the other Parties hereto an originally-signed
counterpart or a facsimile transmission or other replication of an
originally-signed counterpart.
GTE TSI Proprietary and Confidential Information 15
Fleet-On-Track is a service and service mark of GTE TSI
<PAGE> 17
11.9 Waiver. The failure of either Party to enforce, in any one or more
instances, performance of any of the terms, covenants or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right or
claim granted or arising hereunder or of the future performance of any such
term, covenant, or condition, and such failure shall in no way affect the
validity of this Agreement or the rights and obligations of the Parties hereto.
The Parties acknowledge that a waiver of any term or provision hereof may only
be given by a written instrument executed by each Party intended to be benefited
by the same.
11.10 WARRANTY DISCLAIMER. PROVIDER'S AND CUSTOMER'S OBLIGATIONS
HEREUNDER ARE IN LIEU OF ALL WARRANTIES, EXPRESS OR IMPLIED. PROVIDER MAKES NO
WARRANTIES, EXPRESS OR IMPLIED REGARDING THE GOODS, SERVICES OR EQUIPMENT TO BE
PROVIDED HEREIN, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
11.11 NO LIABILITY FOR INDIRECT DAMAGES. PROVIDER SHALL NOT BE LIABLE
TO CUSTOMER, CLIENTS OR ANY THIRD PARTY, AND CUSTOMER SHALL NOT BE LIABLE TO
PROVIDER, OR ANY THIRD PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, RELIANCE,
OR SPECIAL DAMAGES, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOST PROFITS,
REGARDLESS OF THE FORM OF ACTION WHETHER IN CONTRACT, INDEMNITY, WARRANTY,
STRICT LIABILITY OR TORT ARISING FROM OR RELATED TO THE PERFORMANCE OF THE
DUTIES OR OBLIGATIONS OF PROVIDER OR CUSTOMER IN ACCORDANCE WITH THE TERMS SET
FORTH HEREIN OR THE RENDERING OF SERVICES HEREUNDER.
11.12 LIMITATION OF LIABILITY. THE LIABILITY OF EITHER PARTY FOR ANY
CLAIM ASSERTED BY THE OTHER PARTY OR ANY THIRD PARTY ARISING OUT OF THIS
AGREEMENT SHALL BE LIMITED TO AN AMOUNT EQUAL TO THE TOTAL AMOUNTS PAID BY
CUSTOMER TO PROVIDER IN THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING THE
EVENT GIVING RISE TO THE CLAIM.
11.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument notwithstanding that all
Parties are not signatories to each counterpart.
11.14 Assignability and Binding Effect. This Agreement shall inure to
the benefit of and be binding upon the Parties hereto and their respective
successors and permitted assigns. Customer may not assign this Agreement without
the prior written consent of Provider, such prior written consent will not be
unreasonably withheld if the proposed assignment is to an Affiliate of Customer.
GTE TSI Proprietary and Confidential Information 16
Fleet-On-Track is a service and service mark of GTE TSI
<PAGE> 18
11.15 Amendments. This Agreement may not be modified, amended or
supplemented except by an agreement in writing signed by all of the Parties
hereto. Provider shall not accept nor act upon any instructions, directions,
and/or modifications concerning Provider's performance hereunder which would
affect the terms, conditions, and/or pricing of this Agreement unless authorized
by Customer's representative.
11.16 Expenses, Taxes, Etc. Each of the Parties hereto shall pay all
fees and expenses incurred by it in connection with the preparation and
negotiation of this Agreement. There shall be added to any charges incurred and
payable by Customer under this Agreement, an amount equal to any tariff, duty,
or levy tax including but not limited to sales, ad valorem and use tax or any
tax in lieu thereof imposed by any local, state, or federal government or
governmental agency with respect to the Services or with respect to this
Agreement, but in no event will taxes be paid by Customer which are based on the
income or net worth of Provider.
11.17 Third Parties. Except as expressly provided herein, nothing
herein expressed or implied is intended or shall be construed to confer upon or
give to any Person other than the Parties hereto and their successors or
permitted assigns, any rights, benefits or remedies of any kind or character
whatsoever under or by reason of this Agreement.
11.18 Attorneys' Fees. Except as herein expressly provided, in any
arbitration, suit, action or proceeding brought by one Party against the other
Party under this Agreement, or where any provision hereof is validly asserted as
a defense, the prevailing Party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy, subject to the
limitation of liabilities set forth herein.
11.19 Dispute Resolution Procedures. Except as provided in Section
11.19(d) below, for all disputes relating to this Agreement, prior to
instituting litigation, in any forum, including, but not limited to, state,
federal, or regulatory proceedings, each Party agrees to the following
procedures:
(a) In the event a Party has a dispute with the other Party
relating to this Agreement, the aggrieved Party shall give the other
Party detailed written notice of any acts, occurrences and/or omissions
giving rise to the dispute. The aggrieved Party, in its sole
discretion, may include copies of documents which it believes support
its claim(s).
(b) Within fifteen (15) days after receipt of notice, the
Party receiving the notice shall tender to the other Party a written
response, including an offer of settlement, if it so desires. Any offer
of settlement not accepted or rejected within fifteen (15) days shall
be deemed rejected.
(c) In the event the Parties are unable to settle their
dispute after following the procedures set forth in this Section 11.19,
and fifteen (15) days following the receipt of the response made
pursuant to (b) above (or the lapse of
GTE TSI Proprietary and Confidential Information 17
Fleet-On-Track is a service and service mark of GTE TSI
<PAGE> 19
the fifteen (15) day period specified therein in the event no response
is made), the Parties shall submit their dispute to mediation.
Compliance with the procedures on dispute resolution and mediation
shall be a condition precedent to initiating any judicial,
quasi-judicial and/or regulatory or legal proceeding. Any lawsuit filed
prior to the exhaustion of the mediation procedures provided for in
this Agreement shall be dismissed, notwithstanding any later exhaustion
of mediation and the subsequent filing of any lawsuit by the other
Party. A Party seeking and obtaining dismissal of a lawsuit pursuant to
this provision shall recover all of its costs and attorneys' fees
incurred in obtaining such dismissal.
(d) Notwithstanding Section 11.19 (a) - (c) above, if either
Party seeks to obtain a temporary restraining order or preliminary
injunction to prevent the imminent disclosure of Customer Information
or Provider Information, as the case may be, or if Customer seeks to
obtain an temporary restraining order or preliminary injunction to
prevent the unjustified suspension of Services by Provider, the dispute
resolution provisions of this Section 11.19 will not apply. However, if
the Party seeking the temporary restraining order or preliminary
injunction is unsuccessful, such Party shall be required to pay all
costs and expenses (including reasonable attorney's fees) of the other
Party within thirty (30) days of the denial of the requested relief. To
the extent either Party seeks any relief not provided for by this
Section 11.19(d), the dispute resolution provisions of Section 11.19
(a) - (c) shall control.
11.20 Rules for Mediation.
(a) Consent to Mediator. Both Parties shall share equally the
cost of mediation. The Mediator shall act as an advocate for resolution
and shall use his or her best efforts to assist the Parties in reaching
a mutually agreeable settlement. The Parties agree to select the
Mediator within three (3) business days following the procedure set
forth in 11.19 above. In the event the Parties are unable to agree on a
Mediator, the matter shall be referred to the American Arbitration
Association for the appointment of a Mediator pursuant to its
Commercial Mediation Rules.
(b) Conditions Precedent to Service as a Mediator. The
Mediator shall not serve as a mediator in any dispute in which he or
she has a financial or personal interest in the result of mediation.
Prior to accepting an appointment, the Mediator shall disclose any
circumstance likely to create presumption of bias or prevent prompt
meeting with the Parties. In the event the Parties disagree as to
whether the Mediator shall serve, the Mediator shall not serve.
(c) Authority of Mediator. The Mediator shall not have the
authority to decide any issue for the Parties, but will attempt to
facilitate voluntary resolution of the dispute by the Parties. The
Mediator is authorized to conduct joint and separate meetings with the
Parties and to offer suggestions to assist the
GTE TSI Proprietary and Confidential Information 18
Fleet-On-Track is a service and service mark of GTE TSI
<PAGE> 20
Parties achieve settlement. If necessary, the Mediator may also obtain
expert advice concerning technical aspects of the dispute, provided the
Parties agree and assume the expenses of obtaining the advice.
Arrangements for obtaining such advice shall be made by the Mediator or
the Parties, as the Mediator shall determine.
(d) Date, Time and Place of Mediation. The Mediator shall fix
the date and the time of each mediation session.
(e) Identification of Matters in Dispute. At least ten (10)
days prior to the first scheduled mediation session, each Party shall
provide the Mediator with a brief memorandum setting forth its position
with regard to the issues that need to be resolved. At the discretion
of the Mediator, such memoranda may be mutually exchanged by the
Parties. At the first session, the Parties will be expected to produce
all information reasonably required for the Mediator to understand the
issues presented. The Mediator may require any Party to supplement such
information.
(f) Privacy. Mediation sessions are private. The Parties and
their representatives may attend mediation sessions. Other persons may
attend only with the permission of the Parties and with the consent of
the Mediator.
(g) Confidentiality. Confidential information disclosed to a
Mediator by the Parties or by witnesses in the course of the mediation
shall not be divulged by the Mediator. All records, reports or other
documents received by a Mediator while serving in that capacity shall
be confidential. The Mediator shall not be compelled to divulge such
records or to testify in regard to the mediation in any adversary
proceeding or judicial forum.
The Parties shall maintain the confidentiality of the
mediation and shall not rely on or introduce as evidence in any
arbitral, judicial or other proceeding:
(i) views expressed or suggestions made by another Party
with respect to a possible settlement of the dispute;
(ii) admissions made by another Party in the course of the
mediation proceedings;
(iii) proposals made or views expressed by the Mediator; or
(iv) the fact that another Party had or had not indicated
willingness to accept a proposal for settlement made
by the Mediator.
(h) No Stenographic Record. There shall be no stenographic
record of the mediation process.
GTE TSI Proprietary and Confidential Information 19
Fleet-On-Track is a service and service mark of GTE TSI
<PAGE> 21
(i) Termination of Mediation. The mediation shall be
terminated:
(i) by the execution of a settlement agreement by the
Parties;
(ii) by a written declaration of the Mediator to the
effect that further efforts at mediation are no
longer worthwhile; or
(iii) by a written declaration of a Party or Parties to the
effect that the mediation proceedings are terminated,
but then only after a good faith participation in
mediation consisting of at least eight hours of
mediation. Written certification by the mediator that
a Party has not participated in good faith in the
mediation shall prevent termination of the mediation
proceedings.
Any mediation awards resulting from the invocation of this paragraph
shall be governed by the provisions set forth in Sections 11.11 and
11.12.
(j) Duration. Either Party may require that mediation be
completed within forty five (45) days from the submission of the first
notice set forth in 11.19(a) above. In the event substantial potential
damages continue to accrue pending mediation, the mediator shall have
the authority to amend all of the procedures and time periods as may be
reasonable to expedite the procedure.
11.21 Independent Contractor. Provider is providing the Services as an
independent contractor. This Agreement shall not be construed to create a joint
venture, partnership, employment relationship, franchise or any other legal
relationship between the Parties other than that of independent contractor.
Neither Party shall share or be responsible for the debts and liabilities of the
other Party, or have the authority to bind the other Party in any manner.
11.22 Entire Agreement. This Agreement, together with Exhibits A, B, C,
D, and E attached hereto and expressly made a part of this Agreement, shall
constitute the entire agreement between the Parties hereto with respect to the
Services and shall supersede all prior proposals, negotiations, understandings
and agreements, whether oral or written, including but not limited to the
Services Agreement entered into by Customer and Provider dated March 14, 1995.
The Parties agree that this Agreement supersedes and replaces in its entirety a
document purporting to be an agreement between Customer and Provider entitled
"Fleet-on-Track Services Agreement" and bearing signatures dated December 16,
1998 and January 5, 1998 [sic], such document now being null, void, and of no
effect.
GTE TSI Proprietary and Confidential Information 20
Fleet-On-Track is a service and service mark of GTE TSI
<PAGE> 22
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the date first above written.
PROVIDER: CUSTOMER:
GTE Telecommunication HighwayMaster Corporation
Services Incorporated
By: (x) Terry Lewis By: (x) Jana Bell
-------------------------- -----------------------------
Printed name: Terry Lewis Printed name: Jana Bell
Title: President Title: President & CEO
Date: May 2, 1999 Date: April 29, 1999
------------------------ ---------------------------
GTE TSI Proprietary and Confidential Information 21
Fleet-On-Track is a service and service mark of GTE TSI
<PAGE> 23
EXHIBIT A
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE
OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
GTE TSI Proprietary and Confidential Information
Fleet-On-Track is a service and service mark of GTE TSI
A-1
<PAGE> 24
EXHIBIT B
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE
OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
GTE TSI Proprietary and Confidential Information
Fleet-On-Track is a service and service mark of GTE TSI
B-1
<PAGE> 25
OBSERVED HOLIDAYS
New Year's Day
Memorial Day
Independence Day
Labor Day
Thanksgiving Day
Day after Thanksgiving
Christmas Day
GTE TSI Proprietary and Confidential Information
Fleet-On-Track is a service and service mark of GTE TSI
B-2
<PAGE> 26
EXHIBIT C
SERVICES CHARGE CALCULATION
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE
OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
GTE TSI Proprietary and Confidential Information
Fleet-On-Track is a service and service mark of GTE TSI
C-1
<PAGE> 27
EXHIBIT D
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE
OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
GTE TSI Proprietary and Confidential Information
Fleet-On-Track is a service and service mark of GTE TSI.
D-1
<PAGE> 28
EXHIBIT E
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE
OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
GTE TSI Proprietary and Confidential Information
Fleet-On-Track is a service and service mark of GTE TSI
E-1
<PAGE> 1
CONFIDENTIAL
MEMORANDUM OF UNDERSTANDING
This MEMORANDUM OF UNDERSTANDING is entered into on this 16th day of April, 1999
by and between HighwayMaster Corporation ("HMC"), with its principal place of
business located at 1155 Kas Drive, Richardson, Texas 75081 and Criticom
International Corporation ("CIC"), with its principal place of business located
at 1301 East 79th Street, Minneapolis, Minnesota 55425.
WHEREAS, HMC desires to engage CIC and CIC desires to provide certain alarm
monitoring services as more specifically set forth below herein;
NOW THEREFORE, premises considered the parties agree as follows:
1. General. The parties agree that the terms and conditions contained herein
are binding upon the parties. However, the parties agree to execute a
formal agreement which will at a minimum contain these terms and conditions
by April 27, 1999.
2. Definitions:
"Monitoring Service" shall mean receiving and responding appropriately to
panic alarm signals as set forth in the HighwayMaster Corporation
Specification for Series 5005S Panic Alarm Monitoring attached hereto as
Exhibit C.
"Subscriber" shall mean a HighwayMaster customer(s) at the company level.
Does not refer to individual users of HMC Unit.
"User" shall mean an individual employee of Subscriber who uses Series
5005S mobile unit.
"Unit" shall mean an individual HighwayMaster Series 5005S mobile unit.
3. Exclusivity
CIC shall be the exclusive provider of Monitoring Services for Units. HMC
shall have the right to contract with an alternative alarm monitoring
vendor to provide Monitoring Services as a redundant backup, but only
during the period of time that CIC is unable to provide offsite redundant
Monitoring Services of similar service functionality to CIC's primary
monitoring center. HMC and CIC will mutually agree upon CIC's redundant
site specifications and the proportionate share of the costs to be borne by
HMC for the redundant site.
4. CIC Responsibilities
4.1.1. CIC shall use its best efforts to have a system tested and
operational by May 11, 1999, to begin providing Monitoring
Services for Users. HMC understands that the availability of
Monitoring Services may be adversely affected by the
completion by third party vendors of certain programming and
other events
CONFIDENTIAL REVISED 12:10 P.M. APRIL 16, 1999
PAGE 1
<PAGE> 2
beyond the reasonable control of CIC. HMC and CIC shall use
their best efforts to encourage the third party vendors to
complete the programming within the necessary time frames to
ensure the delivery of the Monitoring Services by May 11,
1999. [TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SEC.]
4.2. CIC shall coordinate the development and integration of an automation
package to serve the Subscribers. See the "Dispatch Automation
System" section for more information.
4.3. HMC and CIC agree that CIC's sole obligation with respect to any
Subscriber shall be to monitor signals received from Units and to
respond thereto. CIC shall, upon receipt of signal from a Unit, make
every reasonable effort to transmit notification to the Public Safety
Answering Point ("PSAP") and/or to the person or persons whose names
and telephone numbers are provided by HMC, which are updated as
needed, unless CIC has reason to believe that the alarm may be false.
4.3.1. [TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SEC.]
4.4. CIC recognizes that the Units are designed, in part, for improvement
in the safety for Users, and as such, shall provide sufficient
personnel to perform the Monitoring Services twenty four (24) hours
for each and every day of the year. CIC will provide sufficient
personnel to mitigate delays with regard to alarms or other emergency
requests by Users generated via Units.
4.5. CIC shall provide all necessary personnel, hardware, computers,
telephone systems to perform the Monitoring Services except as
provided by HMC as listed in EXHIBIT B: HMC PROVIDED EQUIPMENT AND
SOFTWARE.
4.6. CIC shall maintain an Underwriter's Laboratories approved listing for
commercial fire for a monitoring center, although HMC understands
that Underwriter's Laboratories does not provide listing services for
mobile security central stations. If Underwriter's Laboratories
listing for mobile security becomes available, and HMC requires it,
then CIC shall obtain it at that time.
CONFIDENTIAL REVISED 12:10 P.M. APRIL 16, 1999
PAGE 2
<PAGE> 3
4.7. CIC shall provide HMC with daily electronic access to User's alarm
history, statistical information and database as defined in the
Specification for Series 5005S Panic Alarm Monitoring provided to CIC
in March 1999.
4.8. CIC shall coordinate the implementation and design of the Monitoring
Services with HMC.
4.9. [TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SEC.]
4.10. [TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SEC.]
4.11. The contract shall include a service level agreement indicating key
performance indicators that will be met by both parties. Such
indicators shall be mutually agreed upon. Additional indemnification
language will be necessary to limit liability of both parties.
4.12. CIC represents that it is licensed at the state level to provide
Monitoring Services where applicable in the 48 contiguous states of
the United States of America except for the states of Utah and
Virginia. CIC will make every reasonable attempt to ensure PSAP(s) do
not deny response based on the absence of appropriate licenses and/or
certifications.
5. HMC's Responsibilities
5.1. HMC agrees to make payments to CIC as set forth herein.
5.2. HMC shall use its best efforts to require new Subscribers, other than
SBC Communications, Inc. and its member companies ("SBC"), to provide
indemnification to CIC.
5.3. HMC will provide all software and hardware under a Software
("Software") License Contract necessary for the correct and continued
operation of the Units as provided for in EXHIBIT B: HMC PROVIDED
EQUIPMENT AND SOFTWARE.
5.4. Both Parties will jointly create the procedures for an orderly
transfer of new Users for activation.
5.5. [TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SEC.]
CONFIDENTIAL REVISED 12:10 P.M. APRIL 16, 1999
PAGE 3
<PAGE> 4
5.6. HMC shall promptly notify CIC of any complaint or question regarding
the Monitoring Services.
5.7. Unit Design and Installation
5.7.1. HMC agrees that CIC shall have no responsibility for the
sale, design, installation, maintenance or repair of
equipment located as part of the Units of the Users.
5.7.2. HMC agrees to install and maintain Units using high quality
equipment, techniques, and practices. HMC agrees to make
every reasonable effort to correct and control Unit or User
deficiencies causing false signals. If any Unit sends an
unreasonable number of false signals which materially
impairs CIC's ability to provide the Monitoring Services,
CIC may temporarily suspend the provision of Monitoring
Services to the malfunctioning Unit.
5.8. HMC shall be solely responsible for all risks and expenses incurred
in connection with its actions in the sale or use of Units or
Monitoring Services or any other acts of HMC.
5.9. Governmental Requirements
5.9.1. HMC agrees to pay any and all sales, use or business taxes
or impositions by Municipal, State, Federal and/or other
authorities in connection with the Monitoring Services to be
provided by CIC except for sales, use or business taxes
assessed on the net income or gross revenues of CIC. If CIC
is required to obtain additional licenses, HMC and CIC will
reach agreement on reimbursement to CIC for said additional
required licenses.
5.9.2. HMC and/or HMC with CIC's assistance, shall provide and
mail, at HMC's own expense, all announcements or notices
required to be mailed to Users as required by any regulatory
agency.
5.9.3. In the event a fine, penalty or fee is assessed against CIC
by any governmental or municipal agency as a result of any
signal originating from Units, HMC agrees to forthwith
reimburse CIC for same as long as the fine, penalty or fee
is not assessed on CIC because of CIC's wilfull misconduct
and/or gross negligence.
CONFIDENTIAL REVISED 12:10 P.M. APRIL 16, 1999
PAGE 4
<PAGE> 5
6. Dispatch Automation System
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
7. Payment
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
7.4. Payment by HMC shall be received by CIC within Thirty (30) days from
the date of invoice from CIC.
7.5. Under no circumstances will HMC's inability to collect from the
Subscriber delay payment to CIC.
8. Term
8.1. The term of the formal agreement shall commence at the time that a
minimum of 12,000 Units are activated and monitored by CIC and shall
continue thereafter for three (3) years. If SBC terminates its
agreement with HMC or fails to activate at least 12,000 units for
Monitoring Service, HMC shall have the right to terminate the 12,000
Unit minimum requirement upon ninety (90) days written notice without
liability but the formal agreement shall continue in effect for three
years from the date of the execution of the formal agreement.
8.2. The formal agreement shall automatically renew for successive two
year terms unless 120 days written notice of intent not to renew is
provided by either party. Both parties agree to cooperate in the
event of termination and if necessary grant an extension if more time
is required for a smooth transition of Monitoring Services.
9. HMC and CIC represent and warrant that their respective equipment and
services are Year 2000 compliant.
10. The understandings set forth in this Memorandum of Understanding are
binding upon each of the undersigned individuals, their heirs, successors
and assigns.
11. The terms and conditions of this Memorandum of Understanding are strictly
confidential and shall not be disclosed to any third parties without the
prior written consent of the other party but the parties may disclose only
the existence of this Memorandum of Understanding and the formal agreement
without revealing any of the terms contained therein.
CONFIDENTIAL REVISED 12:10 P.M. APRIL 16, 1999
PAGE 5
<PAGE> 6
CRITICOM INTERNATIONAL CORP. HIGHWAYMASTER CORPORATION
By: (x) Raymond J. Menard By: (x) W. Michael Smith
---------------------------------- ---------------------------------
Name: Raymond J. Menard Name: W. Michael Smith
-------------------------------- -------------------------------
Title: VP Development Title: Chief Financial Officer
------------------------------- ------------------------------
Date: 4/19/99 Date: 4/16/99
-------------------------------- ------------------------------
CONFIDENTIAL REVISED 12:10 P.M. APRIL 16, 1999
PAGE 6
<PAGE> 7
EXHIBIT A: PRICE LIST
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE
OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
CONFIDENTIAL REVISED 12:10 P.M. APRIL 16, 1999
PAGE 7
<PAGE> 8
EXHIBIT B: HMC PROVIDED EQUIPMENT AND SOFTWARE
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE
OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
CONFIDENTIAL REVISED 12:10 P.M. APRIL 16, 1999
PAGE 8
<PAGE> 9
EXHIBIT C
[TEXT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE
OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.]
CONFIDENTIAL REVISED 12:10 P.M. APRIL 16, 1999
PAGE 9
<PAGE> 1
EXHIBIT 11
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
1999 1998 1999 1998
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net income (loss) applicable to common stockholders:
Net income (loss) $ 188,000 $(14,067,000) $ 578,000 $(25,656,000)
============ ============ =========== ============
Weighted average number of shares outstanding:
Weighted average number of shares outstanding, net of treasury
shares - Basic EPS 24,981,054 24,898,986 24,955,638 24,898,986
Additional weighted average shares for assumed exercise of stock
options, net of shares assumed to be repurchased with exercise
proceeds 326,842 -- 384,271 --
------------ ------------ ----------- ------------
Weighted average number of shares outstanding, net of treasury
shares - Diluted EPS 25,307,896 24,898,986 25,339,909 24,898,986
============ ============ =========== ============
Net income (loss) per common share applicable to common stockholders:
Basic EPS $ 0.01 $ (0.56) $ 0.02 $ (1.03)
============ ============ =========== ============
Diluted EPS $ 0.01 $ (0.56) $ 0.02 $ (1.03)
============ ============ =========== ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 18,221
<SECURITIES> 4,155
<RECEIVABLES> 27,196
<ALLOWANCES> 7,325
<INVENTORY> 9,248
<CURRENT-ASSETS> 67,979
<PP&E> 33,384
<DEPRECIATION> 13,265
<TOTAL-ASSETS> 97,312
<CURRENT-LIABILITIES> 31,528
<BONDS> 91,893
0
0
<COMMON> 254
<OTHER-SE> (26,363)
<TOTAL-LIABILITY-AND-EQUITY> 97,312
<SALES> 23,787
<TOTAL-REVENUES> 50,279
<CGS> 17,761
<TOTAL-COSTS> 27,674
<OTHER-EXPENSES> 18,407
<LOSS-PROVISION> 1,394
<INTEREST-EXPENSE> 1,415
<INCOME-PRETAX> 578
<INCOME-TAX> 0
<INCOME-CONTINUING> 578
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 578
<EPS-BASIC> .02
<EPS-DILUTED> .02
</TABLE>
