<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 March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period from to
--------------- -------------
Commission file number 0-26140
@TRACK COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-0352879
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1155 Kas Drive, Suite 100, Richardson, Texas 75081
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 301-2000
--------------
Not Applicable
- --------------------------------------------------------------------------------
(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.
<TABLE>
<CAPTION>
Number of Shares Outstanding as of
Title of each class May 2, 2000
- ---------------------------- ----------------------------------
<S> <C>
Common Stock, $.01 par value 25,319,931
</TABLE>
<PAGE> 2
@TRACK 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 March 31, 2000
and December 31, 1999 1
Consolidated Statements of Operations for the
three months ended March 31, 2000 and 1999 2
Consolidated Statements of Cash Flows for the three
months ended March 31, 2000 and 1999 3
Consolidated Statement of Changes in Stockholders' Equity
(Deficit) for the three months ended March 31, 2000 4
Notes to Consolidated Financial Statements 5-6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
Item 3 Quantitative and Qualitative Disclosures About
Market Risk 8
PART II. OTHER INFORMATION
Item 1 Legal Proceedings 9
Item 2 Changes in Securities 9
Item 3 Defaults Upon Senior Securities 9
Item 4 Submission of Matters to a Vote of Security Holders 9
Item 5 Other Information 9
Item 6 Exhibits and Reports on Form 8-K 9
Signatures 10
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
@TRACK COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
2000 1999
--------- ------------
<S> <C> <C>
Current assets:
Cash and short-term investments $ 18,906 $ 17,768
Accounts receivable, net 10,878 13,341
Inventories 9,917 9,292
Pledged securities - current portion 6,362 12,705
Other current assets 3,192 2,588
--------- ---------
Total current assets 49,255 55,694
Network, equipment and software, net 14,754 15,703
Other assets, net 2,568 2,676
--------- ---------
Total assets $ 66,577 $ 74,073
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 2,727 $ 2,431
Telecommunications costs payable 4,814 4,462
Accrued interest payable 541 3,784
Other current liabilities 8,904 9,357
--------- ---------
Total current liabilities 16,986 20,034
Senior notes payable 92,189 92,090
--------- ---------
Total liabilities 109,175 112,124
--------- ---------
Commitments and contingencies
Stockholders' equity (deficit):
Preferred Stock -- --
Common Stock 256 255
Additional paid-in capital 149,987 149,742
Accumulated deficit (192,294) (187,501)
Treasury stock (547) (547)
--------- ---------
Total stockholders' equity (deficit) (42,598) (38,051)
--------- ---------
Total liabilities and stockholders' equity (deficit) $ 66,577 $ 74,073
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 4
@TRACK COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------
2000 1999
-------- --------
<S> <C> <C>
Revenues:
Product $ 1,870 $ 4,340
Service 12,233 12,741
-------- --------
Total revenues 14,103 17,081
-------- --------
Cost of revenues:
Product 1,341 3,144
Service (Note 5) 7,104 3,277
-------- --------
Total cost of revenues 8,445 6,421
-------- --------
Gross profit 5,658 10,660
-------- --------
Expenses:
General and administrative 2,594 3,389
Customer service 1,725 1,818
Sales and marketing 1,097 914
Engineering 581 647
Network services center 352 419
Depreciation and amortization 1,429 1,624
-------- --------
7,778 8,811
-------- --------
Operating income (loss) (2,120) 1,849
Interest income 527 918
Interest expense (3,342) (3,342)
Other income (Note 5) 142 965
-------- --------
Income (loss) before income taxes (4,793) 390
Income tax provision -- --
-------- --------
Net income (loss) $ (4,793) $ 390
======== ========
Per share:
Basic and diluted income (loss) $ (0.19) $ 0.02
======== ========
Weighted average number of shares outstanding
Basic 25,189 24,993
======== ========
Diluted 25,189 25,444
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 5
@TRACK COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (4,793) $ 390
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization 1,429 1,624
Amortization of discount on notes payable 99 98
Provision for bad debts 223 828
(Increase) decrease in accounts receivable 2,240 (768)
(Increase) in inventory (625) (1,615)
Increase (decrease) in accounts payable 296 (8,554)
Increase (decrease) in accrued expenses and other current liabilities (3,344) 9,175
Other (610) (8,426)
-------- --------
Net cash used in operating activities (5,085) (7,248)
-------- --------
Cash flows from investing activities:
Additions to network and equipment (174) (1,831)
Additions to capitalized software (192) (177)
Decrease in pledged securities 6,343 6,066
Decrease in short-term investments 9,561 2,457
-------- --------
Net cash provided by investing activities 15,538 6,515
-------- --------
Cash flows from financing activities:
Proceeds from exercise of stock options 246 82
-------- --------
Net cash provided by financing activities 246 82
-------- --------
Increase (decrease) in cash and cash equivalents 10,699 (651)
Cash and cash equivalents, beginning of period 5,167 16,461
-------- --------
Cash and cash equivalents, end of period 15,866 15,810
Short-term investments 3,040 7,251
-------- --------
Cash and short-term investments $ 18,906 $ 23,061
======== ========
Supplemental cash flow information:
Interest paid $ 6,487 $ 6,487
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
@TRACK COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
(in thousands, except share information)
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
------------------------ ----------------------- Paid-in
Shares Amount Shares Amount Capital
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Stockholders' equity (deficit) at December 31, 1999 1,000 $ -- 25,432,210 $ 255 $ 149,742
Exercise of stock options 199,518 1 245
Net loss
---------- ---------- ---------- ---------- ----------
Stockholders' equity (deficit) at March 31, 2000 1,000 $ -- 25,631,728 $ 256 $ 149,987
========== ========== ========== ========== ==========
<CAPTION>
Treasury Stock
----------------------- Accumulated
Shares Amount Deficit Total
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Stockholders' equity (deficit) at December 31, 1999 311,997 $ (547) $ (187,501) $ (38,051)
Exercise of stock options 246
Net loss (4,793) (4,793)
---------- ---------- ----------- ----------
Stockholders' equity (deficit) at March 31, 2000 311,997 $ (547) $ (192,294) $ (42,598)
========== ========== =========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 7
@TRACK 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. The initial application for the Company's wireless enhanced
services has been developed for, and is marketed and sold to, companies
that operate in the long-haul trucking market. The Company provides
long-haul trucking companies with a comprehensive package of mobile
communications and management information services, thereby enabling
its trucking customers to effectively monitor the operations and
improve the performance of their fleets. The initial product
application was customized and has been sold to and installed in the
service vehicle fleets of the member companies of SBC Communications,
Inc. During the fourth quarter of 1999, the Company entered the mobile
asset tracking market with the introduction of its trailer-tracking
product, Trackware. Trackware is currently being tested by prospective
customers. There were no significant revenues from Trackware during the
three months ended March 31, 2000.
2. BASIS OF PRESENTATION
Effective April 10, 2000, HighwayMaster Communications, Inc.
changed its corporate name to @Track Communications, Inc. The
consolidated financial statements include those of @Track
Communications, Inc. and its wholly owned subsidiary, HighwayMaster of
Canada, LLC.
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 financial statements for the
year ended December 31, 1999. 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 months ended March 31,
1999 and 2000 is computed using the weighted average number of shares
outstanding during the respective periods. Diluted earnings per share
for the three months ended March 31, 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 months ended March 31, 2000.
4. INVENTORIES
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- ----------
<S> <C> <C>
Complete systems $5,809,000 $6,576,000
Component parts 2,635,000 2,302,000
Equipment shipped not yet accepted 1,473,000 414,000
---------- ----------
$9,917,000 $9,292,000
========== ==========
</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 on May 3, 1999.
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.
Also, during the three months ended March 31, 1999, the
Company recorded the benefit from the settlement of the litigation with
AT&T Corp. The proceeds of this settlement, net of related expenses,
are reflected as "other income" in the accompanying Consolidated
Statements of Operations.
6. RECLASSIFICATION
The Company provides post sale support and maintenance on the
installed base of mobile units. Historically, revenues and cost of
revenues related to support and maintenance activities have been
reported as a component of "product revenues" and "cost of product
revenues," respectively. The level of this activity has increased
significantly as a result of the Company's contract with the member
companies of SBC Communications, Inc. (the "Service Vehicle Contract"),
at a net cost to the Company. The Company believes the net cost of this
activity directly relates to the realization of the recurring stream of
"service revenue." Accordingly, beginning in the first quarter of 2000,
the Company has classified the revenues and cost of revenues related to
support and maintenance activities with "service revenues" and "cost of
service revenues," respectively. The effect of this reclassification is
to reduce gross service margin to 41.9%, as compared to 48.8% based on
the former classification. This reclassification did not effect the
first quarter of 1999 since activity related to the Service Vehicle
Contract at that time related to either installation or post sale
support and maintenance provided under warranty. Other post sale
support and maintenance activity during the first quarter of 1999 was
insignificant.
6
<PAGE> 9
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000, Compared to Three Months Ended March
31, 1999
Total revenues decreased 17.4% from $17.1 million in 1999 to $14.1
million in 2000. Product revenues decreased 56.9% from $4.3 million in 1999 to
$1.9 million in 2000, primarily due to a 73.2% decrease in mobile units
revenued. Product revenues during the three months ended March 31, 2000, did not
include any significant sales to either new or existing long-haul trucking
customers. In addition, minimal product revenues were recorded from the Service
Vehicle Contract. The Company expects product revenues to increase significantly
during the remainder of 2000 as a result of installations under the Service
Vehicle Contract. Service revenues decreased 4.0% from $12.7 million in 1999 to
$12.2 million in 2000, due primarily to lower average monthly revenue per mobile
unit. While the average installed base of mobile units was essentially unchanged
from 1999 to 2000, the average monthly revenue per mobile unit decreased 5.1% to
$78.58 in 2000 from $82.77 in 1999, due to reduced personal calling revenue and
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. As more fully described in Note 6 to the
accompanying consolidated financial statements, service revenues in 2000 include
post sale support and maintenance revenues, which increased average monthly
revenue per mobile unit by $3.91. The installed base of mobile units decreased
from 52,263 at March 31, 1999 to 49,514 at March 31, 2000. This decrease is
primarily because of the loss of three customers, with an aggregate installed
based of approximately 6,600 units, subsequent to March 31, 1999. The
deinstallations at two of these customers were due to the inability of these
customers to pay amounts owed to the Company. A third customer returned
approximately 2,900 units that had been installed on a provisional basis in
connection with a development contract that was terminated pursuant to a
settlement agreement.
Service gross profit margin was 41.9% in 2000 compared to 74.3% in
1999. As more fully described in Note 5 to the accompanying consolidated
financial statements, during 1999 the Company recorded $3.6 million of credits
due from cellular carriers related to prior years. Excluding the effect of these
credits, the 1999 service gross profit margin would have been 46.2%. As more
fully described in Note 6 to the accompanying consolidated financial statements,
cost of service revenues in 2000 include the costs of providing post sale
support and maintenance. Excluding these costs, 2000 service gross profit margin
would have been 48.8%.
Operating expenses decreased 11.7% to $7.8 million in 2000 from $8.8
million in 1999. The principal components of this reduction were bad debt
expense, payroll related costs and depreciation and amortization. Bad debt
expense decreased as a result of the combined effect of reduced sales and
adjustments to the bad debt reserve to reflect the current assessment of
collectibility of certain accounts. Of the reduction in payroll related costs,
the most significant component was contract labor related to a variety of
projects. The decrease in depreciation and amortization is primarily the result
of asset retirements during 1999.
Interest income was $0.5 million in 2000 compared to $0.9 million in
1999, reflecting the lower average outstanding balances during 2000 in cash and
short-term investments.
Other income in 1999 reflects the proceeds from the settlement of the
litigation with AT&T Corp., net of related costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and short-term investments balances at March 31,
2000 were $18.9 million compared to $17.8 million at December 31, 1999. Based on
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 12 months. However, the Company's future
cash flow from operations and operating requirements may vary depending on a
number of factors, 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.
7
<PAGE> 10
The Company has incurred significant operating losses since inception
and has a stockholders' deficit of approximately $42.6 million at March 31,
2000. The Company must significantly increase its product sales and service
revenue while decreasing its operating expenses to achieve profitability. The
Company's ability to achieve profitable operations will be affected by the
expenses, difficulties and delays frequently encountered in the development and
marketing of telecommunication products and services, the competitive
environment in which the Company operates, the Company's dependence upon certain
key customers and other risks and uncertainties. Although the Company believes
it will be able to successfully mitigate these risks, there is no assurance that
the Company ever will be able to achieve profitability.
Beginning March 15, 2001, the Company will be required to fund the
interest payment on its 13 3/4% Senior Notes from cash generated from operations
or obtain an alternative means of repayment. Prior to March 15, 2001, interest
payments on the Senior Notes are provided for through a portfolio of U. S.
Government securities held in escrow. If the Company is unable to service the
Senior Notes through cash generated from operations, the Company would be
required to obtain additional financial resources to fund such interest payments
or seek to restructure the terms of the Senior Notes. Although the Company
believes that it will be able to fund such interest payments, there is no
assurance that the Company's future operations will generate sufficient
positive cash flow for this purpose or that the Company would be able to obtain
additional financial resources or restructure the terms of the Senior Notes on
terms acceptable to the Company.
The Company's ability to generate positive cash flow from operations is
dependent upon the continued retention of certain key customers. The loss of any
such customers would significantly reduce the Company's ability to generate
sufficient cash flow to fund the interest payments on the Senior Notes beginning
March 15, 2001.
The future success of the Company is dependent upon its ability to
profitably develop and market its products and services in the highly
competitive and rapidly changing telecommunications industry and the support of
its creditors, stockholders and customers.
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 to reduce
or eliminate its operating losses; or (ii) restructure the terms of the Senior
Notes; or (iii) 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 either restructure the Senior Notes
or obtain additional debt or equity financing on satisfactory terms, if at all.
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.
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" and "---Liquidity and Capital Resources," 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 continue to maintain or increase
gross service margins and revenues, reduce operating costs or achieve sustained
operational profitability. 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, 1999 (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.
8
<PAGE> 11
@TRACK COMMUNICATIONS, INC. AND SUBSIDIARY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -- None
Item 2. Changes in Securities -- None.
Item 3. Defaults Upon Senior Securities -- None.
Item 4. Submission of Matters to a Vote of Security Holders -- None
Item 5. Other Information --
Effective March 3, 2000, the Company formed a new subsidiary,
HighwayMaster of Canada, L.L.C., a Delaware limited liability company, to
conduct operations in Canada. The Company will serve as the sole managing member
of HighwayMaster of Canada, L.L.C.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See the Index to Exhibits.
(b) Reports on Form 8-K - None
9
<PAGE> 12
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.
@TRACK COMMUNICATIONS, INC.
Date: May 11, 2000
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)
10
<PAGE> 13
INDEX TO 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)
</TABLE>
<PAGE> 14
<TABLE>
<S> <C>
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)
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)
</TABLE>
<PAGE> 15
<TABLE>
<S> <C>
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)
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)
10.50 - Stock Option Agreement dated September 3, 1999, by and between
the Company and J. Raymond Bilbao.(21)
10.51 - Stock Option Agreement dated September 3, 1999, by and between
the Company and Todd Felker.(21)
10.52 - Stock Option Agreement dated September 3, 1999, by and between
the Company and C. Marshall Lamm.(21)
10.53 - Stock Option Agreement dated September 3, 1999, by and between
the Company and William H. McCausland.(21)
10.54 - Stock Option Agreement dated September 3, 1999, by and between
the Company and Pierre H. Parent.(21)
10.55 - Stock Option Agreement dated September 3, 1999, by and between
the Company and W. Michael Smith.(21)
10.56 - Stock Option Agreement dated September 3, 1999, by and between
the Company and Robert W. LaMere.(21)
10.57 - Stock Option Agreement dated September 3, 1999 by and between
the Company and Stephen P. Tacke.(21)
10.58 - Employment Agreement, dated March 15, 2000, by and between the
Company and W. Michael Smith.(22)
10.59 - Employment Agreement, dated March 10, 2000, by and between the
Company and J. Raymond Bilbao.(22)
10.60 - Employment Agreement, dated March 13, 2000, by and between the
Company and Todd A. Felker.(22)
10.61 - Employment Agreement, dated March 13, 2000, by and between the
Company and Marshall Lamm.(22)
10.62 - Employment Agreement, dated March 13, 2000, by and between the
Company and Pierre Parent.(22)
10.63 - Limited Liability Company Agreement of HighwayMaster of
Canada, LLC executed March 3, 2000.(22)
</TABLE>
<PAGE> 16
<TABLE>
<S> <C>
10.64 - Investor Relations Services Agreement, dated March 31, 2000,
by and between the Company and N.D. Hamilton Associates, Inc.
(22)
11 - Statement re Computation of Per Share Earnings.(22)
27 - Financial Data Schedule.(22)
</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 ended September 30, 1998.
(16) Filed in connection with the Company's Form 10-K 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 in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended June 30, 1999.
(20) Certain confidential portions deleted pursuant to letter granting
application for confidential treatment issued October 10, 1999 in
connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended June 30, 1999.
(21) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended September 30, 1999.
(22) Filed herewith.
<PAGE> 1
EXHIBIT 10.58
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of the 15th day
of March 2000, but effective as of January 1, 2000, is entered into in
Richardson, Texas by and between HighwayMaster Communications, Inc., a Delaware
corporation, with its principal place of business located at 1155 Kas Drive,
Suite 100, Richardson, Texas, 75081 ("Employer"), and W. Michael Smith, an
individual residing at 3236 Langley Drive, Plano, Texas 75025 ("Employee").
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, Employer and Employee, intending to be legally bound, hereby agree as
follows:
1. Employment Relationship. Employer hereby employs Employee, and Employee
hereby accepts such employment, upon the terms and conditions set forth
in this Agreement. Such employment relationship shall continue for the
stated term of this Agreement, as described in Paragraph 8 hereof,
unless earlier terminated pursuant to Paragraph 5 hereof.
2. Position and Responsibilities of Employee. Employee shall be employed
as Chief Financial Officer with job responsibilities related thereto,
and such job responsibilities may be expanded at the sole discretion of
Employer. Employee shall report to the President and shall devote such
time, skill and attention to the business of Employer as shall be
required for the efficient management thereof, and shall manage and
supervise such business, and shall devote his full time best efforts to
the faithful performance of his duties on behalf of Employer. Employee
shall also perform such other duties, and may have job responsibilities
and titles modified from time to time as may be requested by the
President or by resolution of the Board of Directors of Employer,
provided such duties and job titles are generally consistent with the
level of responsibility currently held by Employee. Employee shall not
engage in additional gainful employment of any kind or undertake any
role or position, whether or not for compensation, with any competitor
of Employer during the term of this Agreement without advance written
consent from Employer.
3. Compensation. For all services rendered by Employee pursuant to this
Agreement, Employer shall pay to Employee, and Employee shall accept as
full compensation hereunder the following:
a. Salary. Employee shall receive a salary of $13,500.00 per
month payable by Employer in bi-monthly amounts in Richardson,
Texas. Employee's salary shall be subject to all appropriate
federal and state withholding taxes and shall be payable in
accordance with the normal payroll procedures of Employer.
b. Benefits and Perquisites. Employee shall be entitled to
participate in the employee benefit plans provided by Employer
for all employees generally, and for executive employees of
Employer. Employer shall be entitled to change such plans from
time to time, and the parties acknowledge that at the initial
date of this
1
<PAGE> 2
Agreement the fringe benefits provided to Employee include a
corporate 401(k) plan, health, dental, life, short and
long-term disability insurance for the Employee, and
reimbursement of certain expenses in accordance with the
policies and procedures of Employer.
c. Discretionary Bonuses. Employer shall establish an incentive
bonus plan for Employee based on various targets and
performance criteria to be established by the President and
Board of Directors in consultation with the Employee. The
evaluation of the performance of the Employee as measured by
the applicable targets and the awarding of applicable bonuses,
if any, shall be at the sole discretion of the President. The
maximum annual bonus which may be awarded to Employee shall be
in the amount of thirty percent (30%) of Employee's annual
base salary at each fiscal year end of Employer during the
term of this Agreement, pro-rated for partial years. The
annual discretionary bonus may be awarded in whole, in part,
or withheld in its entirety based on the level of incentive
bonus plan performance criteria achieved by Employee, in the
sole judgement of the President and Board of Directors. If
Employee terminates this Agreement prior to the expiration of
the initial one (1) year term or if Employer terminates this
Agreement for cause as per Paragraph 5(b), the Employee will
not be paid any Discretionary Bonus, in whole or in part. If
Employer terminates this Agreement as per Paragraph 5 (c)
hereof prior to the expiration of the initial one (1) year
term, Employee shall be entitled to receive his Discretionary
Bonus on a prorated basis in such amount as determined by the
President in her sole discretion.
d. Stock Options. Employee previously executed Stock Option
Agreement(s) by which Employee has been granted the right to
purchase shares of common stock of Employer at a stated
exercise price as per the terms and conditions of the
HighwayMaster Communications, Inc.(f/k/a HM Holding
Corporation) 1994 Stock Option Plan (the "Plan")(such previous
option grants hereinafter referred to as "Previous Stock
Option Grants"). As per the Plan and the Stock Option
Agreements, Employee's options vest in five (5) installments
with 20% vesting immediately upon the grant date and 20%
vesting on each of the next four yearly anniversaries of grant
date. Notwithstanding the terms of the Plan and the Stock
Option Agreements previously executed by Employee and
Employer, upon the occurrence of a Change in Control as
defined in Paragraph 7 of this Agreement, all stock options
issued pursuant to the Previous Stock Option Grants shall
accelerate and be deemed vested on the day prior to the Change
in Control of Employer.
4. Protective Covenants. Employee recognizes that his employment by
Employer is one of the highest trust and confidence because (i)
Employee will become fully familiar with all aspects of Employer's
business during the period of his employment with Employer, (ii)
certain information of which Employee will gain knowledge during his
employment by Employer is proprietary and confidential information and
is of special and peculiar value to Employer, and (iii) if any such
proprietary and confidential information were imparted to or became
known by any person, including Employee, engaging in a business in
2
<PAGE> 3
competition with that of Employer, hardship, loss and irreparable
injury and damage could result to Employer, the measurement of which
would be difficult if not impossible to ascertain. Employee further
acknowledges that Employer has developed unique skills, concepts, sales
presentations, marketing programs, marketing strategy, business
practices, methods of operation, pricing information, production cost
information, trademarks, licenses, technical information, proprietary
information, computer software programs, tapes and discs concerning its
operations systems, customer lists, customer leads, documents
identifying past, present and future customers, customer profile and
preference data, hiring and training methods, investment policies,
financial and other confidential and proprietary information concerning
its operations and expansion plans ("Trade Secrets"). Therefore,
Employee agrees that it is necessary for Employer to protect its
business and that of its affiliates from such damage, and Employee
further agrees that the following covenants constitute a reasonable and
appropriate means, consistent with the best interest of both Employee
and Employer, to protect Employer or its affiliates against damage due
to loss or disclosure of proprietary information or Trade Secrets and
shall apply to and be binding upon Employee as provided herein:
a. Trade Secrets. Employee recognizes that his position with
Employer is one of the highest trust and confidence by reason
of Employee's access to and contact with certain Trade Secrets
of Employer. Employee agrees and covenants that, except as may
be required by Employer in connection with this Agreement, or
with the prior written consent of Employer, Employee shall
not, either during the term of this Agreement or thereafter,
directly or indirectly, use for Employee's own benefit or for
the benefit of another, or disclose, disseminate, or
distribute to another, except as directed by Employer or as
required for the performance of Employee's duties on behalf of
the Employer, any Trade Secret (whether or not acquired,
learned, obtained, or developed by Employee alone or in
conjunction with others) of Employer or of others with whom
Employer has a business relationship. All Trade Secrets, and
all memoranda, notes, records, drawings, documents, or other
writings whatsoever made, compiled, acquired, or received by
Employee during the term of this Agreement, arising out of, in
connection with, or related to any activity or business of
Employer, including, but not limited to, the customers,
suppliers, or others with whom Employer has a business
relationship, the arrangements of Employer with such parties,
and the pricing and expansion policies and strategy of
Employer, are, and shall continue to be, the sole and
exclusive property of Employer and shall, together with all
copies thereof, any and all documents constituting or relating
to Employer's proprietary information and Trade Secrets, and
all advertising literature, be returned and delivered to
Employer by Employee immediately, without demand, upon the
termination of this Agreement, or at any time upon Employer's
demand.
Employee acknowledges that Employer would not provide
Employee access to Employer's Trade Secrets and proprietary
and confidential information but for Employee's covenants in
this Paragraph 4.
3
<PAGE> 4
Employee represents and warrants that he is not bound
by any agreement with any prior employer or other party that
will be breached by execution and performance of this
Agreement, or which would otherwise prevent him from
performing his duties with Employer as set forth in this
Agreement. Employee represents and warrants that he has not
retained any copies of proprietary and confidential
information of any prior employer, and he will not use or rely
on any confidential and proprietary information of any prior
employer in carrying out his duties for Employer.
b. Covenant Not to Compete. In consideration of the numerous
mutual promises contained in the Agreement between Employer
and the Employee, including, without limitation, those
involving access to Trade Secrets and confidential information
and training, and in order to protect Employer's Trade Secrets
and the confidential information and to reduce the likelihood
of irreparable damage which would occur in the event such
information is provided to or used by a competitor of
Employer, Employee agrees that during his or her employment
and for an additional period of eighteen (18) months
immediately following the voluntary or involuntary termination
of his or her employment (the "Non-Competition Term"),
Employee will not, without the prior written consent of
Employer (which consent may be withheld in its sole
discretion), enter the employ of any person or entity, either
directly or indirectly either as principal, agent,
representative, shareholder (except owning publicly traded
stock for investment purposes only in which Employee owns less
than 5%) consultant, officer, business partner, associate,
employee or otherwise, with a place of business in the United
States of America and/or Canada, which sells or offers to sell
services and/or products which compete directly with the
services and/or products offered or to be offered for sale by
Employer.
If, during any period within the Noncompetition Term, Employee
is not in compliance with the terms of this Paragraph 4,
Employer shall be entitled to, among other remedies,
compliance by Employee with the terms of this Paragraph 4 for
an additional period equal to the period of such
noncompliance. For purposes of this Agreement, the term
"Noncompetition Term" shall also include this additional
period. Employee hereby acknowledges that the geographic
boundaries, scope of prohibited activities and the time
duration of the provisions of this Section 4 are reasonable
and are no broader than are necessary to protect the
legitimate business interests of the Employer.
The Employer and Employee agree and stipulate that the
agreements and covenants not to compete contained in Paragraph
4 hereof are fair and reasonable in light of all of the facts
and circumstances of the relationship between Employee and
Employer; however, Employee and Employer are aware that in
certain circumstances courts have refused to enforce certain
agreements not to compete. Therefore, in furtherance of, and
not in derogation of the provisions of Paragraph 4, Employer
and Employee agree that in the event a court should decline to
enforce the provisions of Paragraph 4, that Paragraph 4 shall
be deemed to be modified or reformed to restrict Employee's
competition with Employer or its
4
<PAGE> 5
affiliates to the maximum extent, as to time, geography and
business scope, which the court shall find enforceable;
provided, however, in no event shall the provisions of
Paragraph 4 be deemed to be more restrictive to Employee than
those contained herein.
c. Non-Solicitation Employee agrees that during his employment,
and for a period of twenty four (24) months following the
termination of his employment (for whatever reason), that
neither he nor any individual, partner(s), limited
partnership, corporation or other entity or business with
which he is in any way affiliated, including, without
limitation, any partner, limited partner, director, officer,
shareholder, employee, or agent of any such entity or
business, will (i) request, induce or attempt to influence,
directly or indirectly, any employee of Employer to terminate
their employment with Employer or (ii) employ any person who
as of the date of this Agreement was, or after such date is or
was, an employee of Employer. Employee further agrees that
during the period beginning with the commencement of
Employee's employment with Employer and ending twenty four
(24) months after the termination of Employee's employment
with Employer (for whatever reason), he shall not, directly or
indirectly, as an employee, agent, consultant, stockholder,
director, partner or in any other individual or representative
capacity of Employer or of any other person, entity or
business, solicit or encourage any present or future customer,
supplier, contractor, partner or investor of the Employer to
terminate or otherwise alter his, her or its relationship with
Employer.
d. Work Product. For purposes of this Paragraph 4, "Work Product"
shall mean all intellectual property rights, including all
trade secrets, U.S. and international copyrights, patentable
inventions, discoveries and other intellectual property rights
in any programming, design, documentation, technology, or
other work product that is created in connection with
Employee's work. In addition, all rights in any preexisting
programming, design, documentation, technology, or other Work
Product provided to Employer during Employee's employment
shall automatically become part of the Work Product hereunder,
whether or not it arises specifically out of my "Work." For
purposes of this Agreement, "Work" shall mean (1) any direct
assignments and required performance by or for the Employer,
and (2) any other productive output that relates to the
business of the Employer and is produced during the course of
Employee's employment or engagement by Employer. For this
purpose, Work may be considered present even after normal
working hours, away from Employer's premises, on an
unsupervised basis, alone or with others. Unless otherwise
provided in a subsequent writing signed by the President of
the Employer, this Agreement shall apply to all Work Product
created in connection with all Work conducted before or after
the date of this Agreement.
Employer shall own all rights in the Work Product. To this
end, all Work Product shall be considered work made for hire
for Employer. If any of the Work Product may not, by operation
of law or agreement, be considered Work made by
5
<PAGE> 6
Employee for hire for the Employer (or if ownership of all
rights therein do not otherwise vest exclusively in the
Employer immediately), Employee agrees to assign, and upon
creation thereof does hereby automatically assign, with
further consideration, the ownership thereof to the Employer.
Employee hereby irrevocably relinquishes for the benefit of
Employer and its assigns any moral rights in the Work Product
recognized by applicable law. Employer shall have the right to
obtain and hold, in whatever name or capacity it selects,
copyrights, registrations, and any other protection available
in the Work Product.
Employee agrees to perform upon the request of Employer,
during or after Employee's Work or employment, such further
acts as may be necessary or desirable to transfer, perfect,
and defend the Employer's ownership of the Work Product,
including by (1) executing, acknowledging, and delivering any
requested affidavits and documents of assignment and
conveyance, (2) obtaining and/or aiding in the enforcement of
copyrights, trade secrets, and (if applicable) patents with
respect to the Work Product in any countries, and (3)
providing testimony in connection with any proceeding
affecting the rights of the Employer in any Work Product.
Employee warrants that Employee's Work for Employer does not
and will not in any way conflict with any remaining
obligations Employee may have with any prior employer or
contractor. Employee also agrees to develop all Work Product
in a manner that avoids even the appearance of infringement of
any third party's intellectual property rights.
e. Survival of Covenants. Each covenant of Employee set forth in
this Paragraph 4 shall survive the termination of this
Agreement and shall be construed as an agreement independent
of any other provision of this Agreement, and the existence of
any claim or cause of action of Employee against Employer
whether predicated on this Agreement or otherwise shall not
constitute a defense to the enforcement by Employer of said
covenant. No modification or waiver of any covenant contained
in Paragraph 4 shall be valid unless such waiver or
modification is in writing and signed by the President of the
Employer.
f. Remedies. In the event of breach or threatened breach by
Employee of any provision of this Paragraph 4, Employer shall
be entitled to relief by temporary restraining order,
temporary injunction, or permanent injunction or otherwise, in
addition to other legal and equitable relief to which it may
be entitled, including any and all monetary damages which
Employer may incur as a result of said breach, violation or
threatened breach or violation. Employer may pursue any remedy
available to it concurrently or consecutively in any order as
to any breach, violation, or threatened breach or violation,
and the pursuit of one of such remedies at any time will not
be deemed an election of remedies or waiver of the right to
pursue any other of such remedies as to such breach,
violation, or threatened breach or violation, or as to any
other breach, violation, or threatened breach or violation.
6
<PAGE> 7
Employee hereby acknowledges that Employee's
agreement to be bound by the protective covenants set forth in
this Paragraph 4 was a material inducement for Employer
entering into this Agreement, agreeing to pay Employee the
compensation and benefits set forth herein, and providing
Employee access to Employer's Trade Secrets and other
confidential information.
5. Termination. The employment relationship between Employee and Employer
created hereunder shall terminate before the expiration of the stated
term of this Agreement upon the occurrence of any one of the following
events:
a. Death or Permanent Disability. The employment relationship
shall be terminated effective on the death or permanent
disability of the Employee.
b. Termination for Cause. The following events, which for
purposes of this Agreement shall constitute "cause" for
termination:
i. Any act of fraud, misappropriation or embezzlement by
Employee with respect to any aspect of Employer's
business;
ii. The breach by Employee of any provision of Paragraphs
1, 2 or 4 (including but not limited to a refusal to
follow lawful directives of the President or Board of
Directors of Employer which are not inconsistent with
the provisions of this Agreement) of this Agreement;
iii. The conviction of Employee by a court of competent
jurisdiction of a felony or of a crime involving
moral turpitude;
iv. The intentional and material breach by the Employee
of any non-disclosure or
non-competition/non-solicitation provision of any
agreement to which the Employee and Employer or any
of its subsidiaries are parties; or
v. The intentional and continual failure by the Employee
to perform in all material respects his duties and
responsibilities (other than as a result of death or
disability) and the failure of the Employee to cure
the same in all material respects within thirty (30)
days after written notice thereof from Employer;
vi. The illegal use of drugs by Employee during the term
of this Agreement that, in the determination of the
President of Employer, substantially interferes with
Employee's performance of his duties hereunder;
vii. acceptance of employment with any other employer
except upon written permission of the President of
the Employer.
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<PAGE> 8
c. Termination by Employer with Notice. Employer may terminate
this Agreement without cause at any time upon thirty (30) days
written notice to Employee, during which period Employee shall
not be required to perform any services for Employer other
than to assist Employer in training his successor and
generally preparing for an orderly transition; PROVIDED,
HOWEVER, that Employee shall be entitled to compensation upon
such termination as provided in Paragraph 6(a), (b), (c) and
(d) below.
6. Compensation Upon Termination. Upon the termination of Employee's
employment under this Agreement before the expiration of the stated
term hereof for any reason, Employee shall be entitled to:
a. the salary earned by him before the effective date of
termination as provided in Paragraph 3(a) hereof (including
salary payable during any applicable notice period), prorated
on the basis of the number of full days of service rendered by
Employee during the salary payment period to the effective
date of termination;
b. any accrued, but unpaid, vacation benefits; and
c. any previously authorized but unreimbursed business expenses.
If Employee's employment hereunder terminates because of the
death or permanent disability of Employee, all amounts that may be due
to him under this Paragraph 6 shall be paid to him or his
administrators, personal representatives, heirs and legatees, as may be
appropriate.
d. Additional Compensation Upon Termination Without Cause. If
Employee's employment hereunder terminates without cause
pursuant to Paragraph 5(c) above, Employer shall pay to
Employee in addition to the amounts set forth in Subparagraphs
6(a), 6(b) and 6(c) above:
i. salary payments for the duration of the initial term
of this Agreement, or any Renewal Term, as set forth
in Paragraph 8 below when and as such salary payments
would have come due had the Employee's employment not
been terminated;
The provisions of Paragraphs 4, 5 and 6 hereof shall survive
the termination of the employment relationship hereunder and this
Agreement to the extent necessary or reasonably appropriate to effect
the intent of the parties hereto as expressed in such provisions.
8
<PAGE> 9
7. Compensation Upon Change in Control.
a. For purposes of the Agreement, "Change of Control" means the
occurrence of any of the following events:
i. any "person" or "group" as such terms are used under
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), other
than Employer, any trustee or any other fiduciary
holding securities under an employee benefit plan of
Employer, or any corporation owned, directly or
indirectly, by the stockholders of Employer in
substantially the same proportions as their ownership
of Common Stock of Employer, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), of securities of Employer
representing thirty-five percent (35%) or more of the
combined voting power of Employer's voting securities
then-outstanding;
ii. during any period of two consecutive years,
individuals who at the beginning of such period
constituted the Board of Directors of Employer cease
for any reason to constitute a majority thereof
(unless the election, or nomination for election by
Employer's stockholders, of such director was
approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
directors at the beginning of such period or whose
election or nomination for election was previously so
approved);
iii. Employer completes a merger or consolidation of
Employer with another corporation, other than (A) a
merger or consolidation which would result in the
voting securities of Employer outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity) more than
eighty percent (80%) of the combined voting power of
the voting securities of Employer or such surviving
entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation
affected to implement a recapitalization of Employer
(or similar transaction) in which no "person" (as
herein above defined) acquires more than thirty
percent (30%) of the combined voting power of
Employer's then-outstanding voting securities; or
iv. the stockholders of Employer approve a plan of
complete liquidation of Employer or any agreement for
the sale or disposition by Employer of all or
substantially all of Employer's assets.
9
<PAGE> 10
b. For purposes of this Agreement, "Good Reason" means the
occurrence of any of the following events:
i. the reduction of the Employee's job title, position
or responsibilities without the Employee's prior
written consent;
ii. the change of the location where the Employee is
based to a location which is more than fifty (50)
miles from his present location without the
Employee's prior written consent; or
iii. the reduction of the Employee's annual salary and
bonus by more than ten percent (10%) from the sum of
the higher rate of the Employee's actual annual
salary and bonus in effect within two years
immediately preceding the Change of Control.
Employee shall give Employer fifteen (15) business days notice
of an intent terminate this Agreement for "Good Reason" as
defined in this Paragraph 7, and provide the Employer with ten
(10) business days after receipt of such notice from Employee
to remedy the alleged violation of subparagraphs 7(b)(i)(ii),
or (iii).
c. BENEFITS UPON CHANGE IN CONTROL
i. Severance Benefits. If the Employee's employment with
Employer is terminated (i) by Employer (or by the
acquiring or successor business entity following a
Change of Control) other than for Cause or death, or
(ii) by the Employee for Good Reason, in either event
within a period beginning one hundred and eighty
(180) days before, and ending two (2) years after,
the date of a Change of Control (the "Change
Period"), the Employee shall receive a severance
benefit in an amount equal to the sum of:
(1) the Employee's highest annual cash base
salary in effect within two (2) years
immediately preceding the Change of Control;
plus
(2) the average of the Employee's annual bonuses
paid for the two (2) calendar years
immediately preceding the Change of Control.
In addition, for eighteen months following the date
of termination of the Employee's employment in
circumstances in which a severance payment is due
hereunder, Employer shall provide the Employee health
and other welfare benefits that are not less
favorable to the Employee than those to which he was
entitled immediately prior to the Change in Control.
Provided however, Employer shall have no obligation
to provide Employee with any compensation under this
Paragraph 7 if Employee is in breach or violation of
any of the covenants contained in Paragraph 4.
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ii. Form of Payment. The amount of the severance benefit
provided in Paragraph 7(c)(i) hereof shall be paid to
Employee in two (2) equal installments, the first
installment payable as soon as practicable after the
occurrence of the event giving rise to the payment of
the severance benefit by Employer hereunder, but in
no event more than thirty (30) days thereafter, and
the second installment payable one (1) year following
the occurrence of such event, provided, however, that
the severance benefit payable by Employer pursuant to
Paragraph 7(c)(i) hereof will be reduced by any other
cash payments made to the Employee under a written
employment agreement between the Employee and
Employer for periods after the date on which the
Employee's employment was terminated. Provided
however, Employer shall have no obligation to provide
Employee with any compensation under this Paragraph 7
if Employee is in breach or violation of any of the
covenants contained in Paragraph 4.
iii. Gross-Up Payments. Anything in this Agreement to the
contrary notwithstanding, in the event that a
severance payment is made under this Agreement and it
shall be determined (as hereafter provided) that any
payment (other than the Gross-Up Payments provided
for herein) or distribution by Employer or any of its
affiliates to or for the benefit of the Employee,
whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement
or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, or
the lapse or termination of any restriction on, or
the vesting or exercisability of any of the foregoing
(a "Payment"), excluding, however, any stock option
or right in respect of restricted stock, would be
subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the
"Code") (or any successor provision thereto), by
reason of being considered "contingent on a change in
ownership or control" of Employer, within the meaning
of Section 280G of the Code (or any successor
provision thereto) or to any similar tax imposed by
state or local law, or any interest or penalties with
respect to such tax (such tax or taxes, together with
any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then
the Employee shall be entitled to receive an
additional payment or payments (collectively, a
"Gross-Up Payment"); provided, however, that no
Gross-Up Payment shall be made with respect to the
Excise Tax, if any, imposed upon (i) any stock
option, including without limitation any incentive
stock option, as defined by Section 422 of the Code
("ISO") granted prior to the execution of this
Agreement or (ii) any stock appreciation or similar
right, whether or not limited, granted in tandem with
an ISO described in clause (i). The Gross-Up Payment
shall be in an amount such that, after payment by the
Employee of all taxes (including any interest or
penalties imposed with respect to such taxes),
including an Excise Tax imposed upon the Gross-Up
Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon
the Payment. The procedural
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provisions relating to Gross-Up Payments set forth in
Annex A hereto are hereby incorporated herein by this
reference.
d. Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Paragraph 7 of this
Agreement by seeking other employment or otherwise. However,
the amount of any payment or benefit provided for in this
Paragraph 7 shall be reduced by any compensation earned by the
Employee as a result of employment by another employer and as
provided in Paragraph 7(c)(ii) hereof.
8. Term. This Agreement shall be binding and enforceable against Employer
and Employee immediately upon its execution by both such parties. The
stated term of this Agreement and the employment relationship created
hereunder shall begin on January 1, 2000 (with employee to be bound by
confidentiality and other provisions set forth in Paragraph 4 herein to
the extent confidential information is provided to Employee prior to
such date), and shall remain in effect for one (1) year thereafter,
unless sooner terminated in accordance with Paragraph 5 hereof. This
Agreement shall be deemed to be renewed for a month-to-month term after
its initial term ("Renewal Term") unless the parties execute an express
written renewal agreement which specifies a different term.
a. Notwithstanding any provision of this Agreement to the
contrary, the parties' respective rights and obligations under
Paragraph 7 shall survive any termination or expiration of
this Agreement or the termination of the Employee's employment
following a Change of Control for any reason whatsoever.
9. Remedies. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover
damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in its favor. Notwithstanding
Paragraph 10 below, the parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions
of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
10. Arbitration. Except as Provided in Paragraph 9 above, any controversy
or claim arising out of or relating to this Agreement or relating to
Employee's rights, compensation and responsibilities as an employee
shall be determined by arbitration in Dallas County, Texas in
accordance with the rules of the American Arbitration Association then
in effect. The arbitration shall be submitted to a single arbitrator
selected in accordance with the American Arbitration Association's
procedures then in effect for the selection of employment arbitrators.
This Paragraph 10 shall survive termination of this Agreement for any
reason.
11. Assignment. This Agreement is personal to Employee and may not be
assigned in any way by Employee without the prior written consent of
Employer. This Agreement shall not be assignable or delegable by
Employer, other than to an affiliate of Employer;
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provided, however, that in the event of the merger or consolidation of
Employer the obligations of Employer hereunder shall be binding upon
the surviving or resulting entity of such merger of consolidation. The
rights and obligations under this Agreement shall inure to the benefit
of and shall be binding upon the heirs, legatees, administrators and
personal representatives of Employee and upon the successors,
representatives and assigns of Employer.
12. Severability and Reformation. The parties hereto intend all provisions
of this Agreement to be enforced to the fullest extent permitted by
law. If, however, any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future law, such
provision shall be fully severable, and this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable
provision were never a part hereof, and the remaining provisions shall
remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance.
13. Notices. All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, mailed by certified mail (return
receipt requested) or sent by overnight delivery service, cable,
telegram, facsimile transmission or telex to the parties at the
following addresses or at such other addresses as shall be specified by
the parties by like notice:
If to Employer: J. Raymond Bilbao
General Counsel & Secretary
1155 Kas Drive, Suite 100
Richardson, Texas 75081
If to Employee: W. Michael Smith
3236 Langley Drive
Plano, Texas 75025
Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth calendar day after
posting, in the case of notice so given by overnight delivery service,
on the date of actual delivery and, in the case of notice so given by
cable, telegram, facsimile transmission, telex or personal delivery, on
the date of actual transmission or, as the case may be, personal
delivery.
14. Further Actions. Whether or not specifically required under the terms
of this Agreement, each party hereto shall execute and deliver such
documents and take such further actions as shall be necessary in order
for such party to perform all of his or its obligations specified
herein or reasonably implied from the terms hereof.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAWS (RULES) OR CHOICE OF LAWS (RULES) THEREOF.
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16. Entire Agreement and Amendment. This Agreement contains the entire
understanding and agreement between the parties, and supersedes any
other agreement between Employee and Employer, whether oral or in
writing, with respect to the subject matter hereof. This Agreement may
not be altered, amended, or rescinded, nor may any of its provisions be
waived, except by an instrument in writing signed by both parties
hereto or, in the case of an asserted waiver, by the party against whom
the waiver is sought to be enforced. Any modification of this Agreement
may only be signed on behalf of Employer by the President of Employer.
17. Counterparts. This Agreement may be executed in counterparts, with the
same effect as if both parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together
and shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EMPLOYER:
HIGHWAYMASTER COMMUNICATIONS, INC.
By: /s/ JANA AHLFINGER BELL
------------------------
JANA AHLFINGER BELL,
President and Chief Executive Officer
EMPLOYEE:
/s/ W. MICHAEL SMITH 03/15/2000
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ANNEX A
GROSS-UP PAYMENT PROCEDURAL PROVISIONS
(a) Subject to the provision of Paragraph (e) hereof, all
determinations required to be made under Paragraph 7(c)(iii) of the Agreement,
including whether an Excise Tax is payable by the Employee and the amount of
such Excise Tax and whether a Gross-Up Payment is required to be paid by
Employer to the Employee and the amount of such Gross-Up Payment, if any, shall
be made by a Top 5 accounting firm (the "Accounting Firm") selected by the
Employee in his sole discretion. The Employee shall direct the Accounting Firm
to submit its determination and detailed supporting calculations to both
Employer and the Employee within thirty (30) calendar days after the Termination
Date, if applicable, and any such other time or times as may be requested by
Employer or the Employee. If the Accounting Firm determines that any Excise Tax
is payable by the Employee, Employer shall pay the required Gross-Up Payment to
the Employee within fifteen (15) business days after receipt of such
determination and calculations with respect to any Payment to the Employee. If
the Accounting Firm determines that no Excise Tax is payable by the Employee, it
shall, at the same time as it makes such determination, furnish Employer and the
Employee an opinion that the Employee has substantial authority not to report
any Excise Tax on his federal, state or local income or other tax return. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which shall
not have been made by Employer should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that Employer exhausts or fails to pursue its remedies pursuant to Paragraph (e)
hereof and the Employee thereafter is required to make a payment of any Excise
Tax, the Employee shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both Employer and the Employee as promptly as
possible. Any such Underpayment shall be promptly paid by Employer to, or for
the benefit of, the Employee within fifteen (15) business days after receipt of
such determination and calculations.
(b) Employer and the Employee shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of Employer or the Employee, as the case may be, reasonably requested
by the Accounting Firm, and otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the determinations and
calculations contemplated by Paragraph (a) hereof. Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment shall be binding upon
Employer and the Employee.
(c) The federal, state and local income or other tax returns
filed by the Employee shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Employee. The Employee shall make proper payment of the amount of any Excise
Payment, and at the request of Employer, provide to Employer true and correct
copies (with any amendments) of his federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonable requested by
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Employer, evidencing such payment. If prior to the filing of the Employee's
federal income tax return, or corresponding state or local tax return, if
relevant, the Accounting Firm determines that the amount of the Gross-Up Payment
should be reduced, the Employee shall within fifteen (15) business days pay to
Employer the amount of such deduction.
(d) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Paragraph (a) hereof shall be borne by Employer. If such fees and expenses are
initially paid by the Employee, Employer shall reimburse the Employee the full
amount of such fees and expenses within fifteen (15) business days after receipt
from the Employee of a statement therefor and reasonable evidence of his payment
thereof.
(e) The Employee shall notify Employer in writing of any claim
by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by Employer of a Gross-Up Payment. Such
notification shall be given as promptly as practicable but no later than ten
(10) business days after the Employee actually receives notice of such claim and
the Employee shall further apprise Employer of the nature of such claim and the
date on which such claim is requested to be paid ( in each case, to the extent
known by the Employee). The Employee shall not pay such claim prior to the
earlier of (i) the expiration of the thirty (30) calendar-day period following
the date on which he gives such notice to Employer and (ii) the date that any
payment of amount with respect to such claim is due. If Employer notifies the
Employee in writing prior to the expiration of such period that it desires to
contest such claim, the Employee shall:
(i) provide Employer with any written records or documents in
his possession relating to such claim reasonably requested by Employer;
(ii) take such action in connection with contesting such claim
as Employer shall reasonable request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by Employer;
(iii) cooperate with Employer in good faith in order
effectively to contest such claim, and
(iv) permit Employer to participate in any proceedings
relating to such claim;
provided, however, that Employer shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnity and hold harmless the Employee, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Paragraph (e), Employer shall control all proceedings taken in connection with
the contest of any claim contemplated by this Paragraph (e) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Employee may participate therein at his own
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cost and expense) and may, at its option, either direct the Employee to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a count of initial jurisdiction and in one or more
appellate courts, as Employer shall determine; provided, however, that if
Employer directs the Employee to pay the tax claimed and sue for a refund,
Employer shall advance the amount of such payment to the Employee on an
interest-free basis and shall indemnify and hold the Employee harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Employee with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, Employer's control of any such contested claim
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Employee shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(f) If, after the receipt by the Employee of an amount
advanced by Employer pursuant to Paragraph (e) hereof, the Employee receives any
refund with respect to such claim, the Employee shall (subject to Employer's
complying with the requirements of Paragraph (e) hereof) promptly pay to
Employer the amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by Employer pursuant to Paragraph (e) hereof, a
determination is made that the Employee shall not be entitled to any refund with
respect to such claim and Employer does not notify the Employee in writing of
its intent to contest such denial or refund prior to the expiration of thirty
(30) calendar days after such determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount of any such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid by Employer to the Employee pursuant to this Paragraph 7(c)(iii) of the
Agreement.
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<PAGE> 1
EXHIBIT 10.59
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of the 10th day
of March 2000, but effective as of January 1, 2000, is entered into in
Richardson, Texas by and between HighwayMaster Communications, Inc., a Delaware
corporation, with its principal place of business located at 1155 Kas Drive,
Suite 100, Richardson, Texas, 75081 ("Employer"), and J. Raymond Bilbao, an
individual residing at 3549 Edwards Drive, Plano, Texas, 75025 ("Employee").
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, Employer and Employee, intending to be legally bound, hereby agree as
follows:
1. Employment Relationship. Employer hereby employs Employee, and Employee
hereby accepts such employment, upon the terms and conditions set forth
in this Agreement. Such employment relationship shall continue for the
stated term of this Agreement, as described in Paragraph 8 hereof,
unless earlier terminated pursuant to Paragraph 5 hereof.
2. Position and Responsibilities of Employee. Employee shall be employed
as General Counsel and Secretary with job responsibilities related
thereto, and such job responsibilities may be expanded at the sole
discretion of Employer. Employee shall report to the President and
shall devote such time, skill and attention to the business of Employer
as shall be required for the efficient management thereof, and shall
manage and supervise such business, and shall devote his full time best
efforts to the faithful performance of his duties on behalf of
Employer. Employee shall also perform such other duties, and may have
job responsibilities and titles modified from time to time as may be
requested by the President or by resolution of the Board of Directors
of Employer, provided such duties and job titles are generally
consistent with the level of responsibility currently held by Employee.
Employee shall not engage in additional gainful employment of any kind
or undertake any role or position, whether or not for compensation,
with any competitor of Employer during the term of this Agreement
without advance written consent from Employer.
3. Compensation. For all services rendered by Employee pursuant to this
Agreement, Employer shall pay to Employee, and Employee shall accept as
full compensation hereunder the following:
a. Salary. Employee shall receive a salary of $10,833.33 per
month payable by Employer in bi-monthly amounts in Richardson,
Texas. Employee's salary shall be subject to all appropriate
federal and state withholding taxes and shall be payable in
accordance with the normal payroll procedures of Employer.
b. Benefits and Perquisites. Employee shall be entitled to
participate in the employee benefit plans provided by Employer
for all employees generally, and for executive employees of
Employer. Employer shall be entitled to change such plans from
time to time, and the parties acknowledge that at the initial
date of this
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Agreement the fringe benefits provided to Employee include a
corporate 401(k) plan, health, dental, life, short and
long-term disability insurance for the Employee, and
reimbursement of certain expenses in accordance with the
policies and procedures of Employer.
c. Discretionary Bonuses. Employer shall establish an incentive
bonus plan for Employee based on various targets and
performance criteria to be established by the President and
Board of Directors in consultation with the Employee. The
evaluation of the performance of the Employee as measured by
the applicable targets and the awarding of applicable bonuses,
if any, shall be at the sole discretion of the President. The
maximum annual bonus which may be awarded to Employee shall be
in the amount of thirty percent (30%) of Employee's annual
base salary at each fiscal year end of Employer during the
term of this Agreement, pro-rated for partial years. The
annual discretionary bonus may be awarded in whole, in part,
or withheld in its entirety based on the level of incentive
bonus plan performance criteria achieved by Employee, in the
sole judgement of the President and Board of Directors. If
Employee terminates this Agreement prior to the expiration of
the initial one (1) year term or if Employer terminates this
Agreement for cause as per Paragraph 5(b), the Employee will
not be paid any Discretionary Bonus, in whole or in part. If
Employer terminates this Agreement as per Paragraph 5 (c)
hereof prior to the expiration of the initial one (1) year
term, Employee shall be entitled to receive his Discretionary
Bonus on a prorated basis in such amount as determined by the
President in her sole discretion.
d. Stock Options. Employee previously executed Stock Option
Agreement(s) by which Employee has been granted the right to
purchase shares of common stock of Employer at a stated
exercise price as per the terms and conditions of the
HighwayMaster Communications, Inc.(f/k/a HM Holding
Corporation) 1994 Stock Option Plan (the "Plan")(such previous
option grants hereinafter referred to as "Previous Stock
Option Grants"). As per the Plan and the Stock Option
Agreements, Employee's options vest in five (5) installments
with 20% vesting immediately upon the grant date and 20%
vesting on each of the next four yearly anniversaries of grant
date. Notwithstanding the terms of the Plan and the Stock
Option Agreements previously executed by Employee and
Employer, upon the occurrence of a Change in Control as
defined in Paragraph 7 of this Agreement, all stock options
issued pursuant to the Previous Stock Option Grants shall
accelerate and be deemed vested on the day prior to the Change
in Control of Employer.
4. Protective Covenants. Employee recognizes that his employment by
Employer is one of the highest trust and confidence because (i)
Employee will become fully familiar with all aspects of Employer's
business during the period of his employment with Employer, (ii)
certain information of which Employee will gain knowledge during his
employment by Employer is proprietary and confidential information and
is of special and peculiar value to Employer, and (iii) if any such
proprietary and confidential information were imparted to or became
known by any person, including Employee, engaging in a business in
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<PAGE> 3
competition with that of Employer, hardship, loss and irreparable
injury and damage could result to Employer, the measurement of which
would be difficult if not impossible to ascertain. Employee further
acknowledges that Employer has developed unique skills, concepts, sales
presentations, marketing programs, marketing strategy, business
practices, methods of operation, pricing information, production cost
information, trademarks, licenses, technical information, proprietary
information, computer software programs, tapes and discs concerning its
operations systems, customer lists, customer leads, documents
identifying past, present and future customers, customer profile and
preference data, hiring and training methods, investment policies,
financial and other confidential and proprietary information concerning
its operations and expansion plans ("Trade Secrets"). Therefore,
Employee agrees that it is necessary for Employer to protect its
business and that of its affiliates from such damage, and Employee
further agrees that the following covenants constitute a reasonable and
appropriate means, consistent with the best interest of both Employee
and Employer, to protect Employer or its affiliates against damage due
to loss or disclosure of proprietary information or Trade Secrets and
shall apply to and be binding upon Employee as provided herein:
a. Trade Secrets. Employee recognizes that his position with
Employer is one of the highest trust and confidence by reason
of Employee's access to and contact with certain Trade Secrets
of Employer. Employee agrees and covenants that, except as may
be required by Employer in connection with this Agreement, or
with the prior written consent of Employer, Employee shall
not, either during the term of this Agreement or thereafter,
directly or indirectly, use for Employee's own benefit or for
the benefit of another, or disclose, disseminate, or
distribute to another, except as directed by Employer or as
required for the performance of Employee's duties on behalf of
the Employer, any Trade Secret (whether or not acquired,
learned, obtained, or developed by Employee alone or in
conjunction with others) of Employer or of others with whom
Employer has a business relationship. All Trade Secrets, and
all memoranda, notes, records, drawings, documents, or other
writings whatsoever made, compiled, acquired, or received by
Employee during the term of this Agreement, arising out of, in
connection with, or related to any activity or business of
Employer, including, but not limited to, the customers,
suppliers, or others with whom Employer has a business
relationship, the arrangements of Employer with such parties,
and the pricing and expansion policies and strategy of
Employer, are, and shall continue to be, the sole and
exclusive property of Employer and shall, together with all
copies thereof, any and all documents constituting or relating
to Employer's proprietary information and Trade Secrets, and
all advertising literature, be returned and delivered to
Employer by Employee immediately, without demand, upon the
termination of this Agreement, or at any time upon Employer's
demand.
Employee acknowledges that Employer would not provide
Employee access to Employer's Trade Secrets and proprietary
and confidential information but for Employee's covenants in
this Paragraph 4.
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Employee represents and warrants that he is not bound
by any agreement with any prior employer or other party that
will be breached by execution and performance of this
Agreement, or which would otherwise prevent him from
performing his duties with Employer as set forth in this
Agreement. Employee represents and warrants that he has not
retained any copies of proprietary and confidential
information of any prior employer, and he will not use or rely
on any confidential and proprietary information of any prior
employer in carrying out his duties for Employer.
b. Covenant Not to Compete. In consideration of the numerous
mutual promises contained in the Agreement between Employer
and the Employee, including, without limitation, those
involving access to Trade Secrets and confidential information
and training, and in order to protect Employer's Trade Secrets
and the confidential information and to reduce the likelihood
of irreparable damage which would occur in the event such
information is provided to or used by a competitor of
Employer, Employee agrees that during his or her employment
and for an additional period of eighteen (18) months
immediately following the voluntary or involuntary termination
of his or her employment (the "Non-Competition Term"),
Employee will not, without the prior written consent of
Employer (which consent may be withheld in its sole
discretion), enter the employ of any person or entity, either
directly or indirectly either as principal, agent,
representative, shareholder (except owning publicly traded
stock for investment purposes only in which Employee owns less
than 5%) consultant, officer, business partner, associate,
employee or otherwise, with a place of business in the United
States of America and/or Canada, which sells or offers to sell
services and/or products which compete directly with the
services and/or products offered or to be offered for sale by
Employer.
If, during any period within the Noncompetition Term, Employee
is not in compliance with the terms of this Paragraph 4,
Employer shall be entitled to, among other remedies,
compliance by Employee with the terms of this Paragraph 4 for
an additional period equal to the period of such
noncompliance. For purposes of this Agreement, the term
"Noncompetition Term" shall also include this additional
period. Employee hereby acknowledges that the geographic
boundaries, scope of prohibited activities and the time
duration of the provisions of this Section 4 are reasonable
and are no broader than are necessary to protect the
legitimate business interests of the Employer.
The Employer and Employee agree and stipulate that the
agreements and covenants not to compete contained in Paragraph
4 hereof are fair and reasonable in light of all of the facts
and circumstances of the relationship between Employee and
Employer; however, Employee and Employer are aware that in
certain circumstances courts have refused to enforce certain
agreements not to compete. Therefore, in furtherance of, and
not in derogation of the provisions of Paragraph 4, Employer
and Employee agree that in the event a court should decline to
enforce the provisions of Paragraph 4, that Paragraph 4 shall
be deemed to be modified or reformed to restrict Employee's
competition with Employer or its
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<PAGE> 5
affiliates to the maximum extent, as to time, geography and
business scope, which the court shall find enforceable;
provided, however, in no event shall the provisions of
Paragraph 4 be deemed to be more restrictive to Employee than
those contained herein.
c. Non-Solicitation Employee agrees that during his employment,
and for a period of twenty four (24) months following the
termination of his employment (for whatever reason), that
neither he nor any individual, partner(s), limited
partnership, corporation or other entity or business with
which he is in any way affiliated, including, without
limitation, any partner, limited partner, director, officer,
shareholder, employee, or agent of any such entity or
business, will (i) request, induce or attempt to influence,
directly or indirectly, any employee of Employer to terminate
their employment with Employer or (ii) employ any person who
as of the date of this Agreement was, or after such date is or
was, an employee of Employer. Employee further agrees that
during the period beginning with the commencement of
Employee's employment with Employer and ending twenty four
(24) months after the termination of Employee's employment
with Employer (for whatever reason), he shall not, directly or
indirectly, as an employee, agent, consultant, stockholder,
director, partner or in any other individual or representative
capacity of Employer or of any other person, entity or
business, solicit or encourage any present or future customer,
supplier, contractor, partner or investor of the Employer to
terminate or otherwise alter his, her or its relationship with
Employer.
d. Work Product. For purposes of this Paragraph 4, "Work Product"
shall mean all intellectual property rights, including all
trade secrets, U.S. and international copyrights, patentable
inventions, discoveries and other intellectual property rights
in any programming, design, documentation, technology, or
other work product that is created in connection with
Employee's work. In addition, all rights in any preexisting
programming, design, documentation, technology, or other Work
Product provided to Employer during Employee's employment
shall automatically become part of the Work Product hereunder,
whether or not it arises specifically out of my "Work." For
purposes of this Agreement, "Work" shall mean (1) any direct
assignments and required performance by or for the Employer,
and (2) any other productive output that relates to the
business of the Employer and is produced during the course of
Employee's employment or engagement by Employer. For this
purpose, Work may be considered present even after normal
working hours, away from Employer's premises, on an
unsupervised basis, alone or with others. Unless otherwise
provided in a subsequent writing signed by the President of
the Employer, this Agreement shall apply to all Work Product
created in connection with all Work conducted before or after
the date of this Agreement.
Employer shall own all rights in the Work Product. To this
end, all Work Product shall be considered work made for hire
for Employer. If any of the Work Product may not, by operation
of law or agreement, be considered Work made by
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<PAGE> 6
Employee for hire for the Employer (or if ownership of all
rights therein do not otherwise vest exclusively in the
Employer immediately), Employee agrees to assign, and upon
creation thereof does hereby automatically assign, with
further consideration, the ownership thereof to the Employer.
Employee hereby irrevocably relinquishes for the benefit of
Employer and its assigns any moral rights in the Work Product
recognized by applicable law. Employer shall have the right to
obtain and hold, in whatever name or capacity it selects,
copyrights, registrations, and any other protection available
in the Work Product.
Employee agrees to perform upon the request of Employer,
during or after Employee's Work or employment, such further
acts as may be necessary or desirable to transfer, perfect,
and defend the Employer's ownership of the Work Product,
including by (1) executing, acknowledging, and delivering any
requested affidavits and documents of assignment and
conveyance, (2) obtaining and/or aiding in the enforcement of
copyrights, trade secrets, and (if applicable) patents with
respect to the Work Product in any countries, and (3)
providing testimony in connection with any proceeding
affecting the rights of the Employer in any Work Product.
Employee warrants that Employee's Work for Employer does not
and will not in any way conflict with any remaining
obligations Employee may have with any prior employer or
contractor. Employee also agrees to develop all Work Product
in a manner that avoids even the appearance of infringement of
any third party's intellectual property rights.
e. Survival of Covenants. Each covenant of Employee set forth in
this Paragraph 4 shall survive the termination of this
Agreement and shall be construed as an agreement independent
of any other provision of this Agreement, and the existence of
any claim or cause of action of Employee against Employer
whether predicated on this Agreement or otherwise shall not
constitute a defense to the enforcement by Employer of said
covenant. No modification or waiver of any covenant contained
in Paragraph 4 shall be valid unless such waiver or
modification is in writing and signed by the President of the
Employer.
f. Remedies. In the event of breach or threatened breach by
Employee of any provision of this Paragraph 4, Employer shall
be entitled to relief by temporary restraining order,
temporary injunction, or permanent injunction or otherwise, in
addition to other legal and equitable relief to which it may
be entitled, including any and all monetary damages which
Employer may incur as a result of said breach, violation or
threatened breach or violation. Employer may pursue any remedy
available to it concurrently or consecutively in any order as
to any breach, violation, or threatened breach or violation,
and the pursuit of one of such remedies at any time will not
be deemed an election of remedies or waiver of the right to
pursue any other of such remedies as to such breach,
violation, or threatened breach or violation, or as to any
other breach, violation, or threatened breach or violation.
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<PAGE> 7
Employee hereby acknowledges that Employee's
agreement to be bound by the protective covenants set forth in
this Paragraph 4 was a material inducement for Employer
entering into this Agreement, agreeing to pay Employee the
compensation and benefits set forth herein, and providing
Employee access to Employer's Trade Secrets and other
confidential information.
5. Termination. The employment relationship between Employee and Employer
created hereunder shall terminate before the expiration of the stated
term of this Agreement upon the occurrence of any one of the following
events:
a. Death or Permanent Disability. The employment relationship
shall be terminated effective on the death or permanent
disability of the Employee.
b. Termination for Cause. The following events, which for
purposes of this Agreement shall constitute "cause" for
termination:
i. Any act of fraud, misappropriation or embezzlement by
Employee with respect to any aspect of Employer's
business;
ii. The breach by Employee of any provision of Paragraphs
1, 2 or 4 (including but not limited to a refusal to
follow lawful directives of the President or Board of
Directors of Employer which are not inconsistent with
the provisions of this Agreement) of this Agreement;
iii. The conviction of Employee by a court of competent
jurisdiction of a felony or of a crime involving
moral turpitude;
iv. The intentional and material breach by the Employee
of any non-disclosure or
non-competition/non-solicitation provision of any
agreement to which the Employee and Employer or any
of its subsidiaries are parties; or
v. The intentional and continual failure by the Employee
to perform in all material respects his duties and
responsibilities (other than as a result of death or
disability) and the failure of the Employee to cure
the same in all material respects within thirty (30)
days after written notice thereof from Employer;
vi. The illegal use of drugs by Employee during the term
of this Agreement that, in the determination of the
President of Employer, substantially interferes with
Employee's performance of his duties hereunder;
vii. acceptance of employment with any other employer
except upon written permission of the President of
the Employer.
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<PAGE> 8
c. Termination by Employer with Notice. Employer may terminate
this Agreement without cause at any time upon thirty (30) days
written notice to Employee, during which period Employee shall
not be required to perform any services for Employer other
than to assist Employer in training his successor and
generally preparing for an orderly transition; PROVIDED,
HOWEVER, that Employee shall be entitled to compensation upon
such termination as provided in Paragraph 6(a), (b), (c) and
(d) below.
6. Compensation Upon Termination. Upon the termination of Employee's
employment under this Agreement before the expiration of the stated
term hereof for any reason, Employee shall be entitled to:
a. the salary earned by him before the effective date of
termination as provided in Paragraph 3(a) hereof (including
salary payable during any applicable notice period), prorated
on the basis of the number of full days of service rendered by
Employee during the salary payment period to the effective
date of termination;
b. any accrued, but unpaid, vacation benefits; and
c. any previously authorized but unreimbursed business expenses.
If Employee's employment hereunder terminates because of the
death or permanent disability of Employee, all amounts that may be due
to him under this Paragraph 6 shall be paid to him or his
administrators, personal representatives, heirs and legatees, as may be
appropriate.
d. Additional Compensation Upon Termination Without Cause. If
Employee's employment hereunder terminates without cause
pursuant to Paragraph 5(c) above, Employer shall pay to
Employee in addition to the amounts set forth in Subparagraphs
6(a), 6(b) and 6(c) above:
i. salary payments for the duration of the initial term
of this Agreement, or any Renewal Term, as set forth
in Paragraph 8 below when and as such salary payments
would have come due had the Employee's employment not
been terminated;
The provisions of Paragraphs 4, 5 and 6 hereof shall survive
the termination of the employment relationship hereunder and this
Agreement to the extent necessary or reasonably appropriate to effect
the intent of the parties hereto as expressed in such provisions.
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<PAGE> 9
7. Compensation Upon Change in Control.
a. For purposes of the Agreement, "Change of Control" means the
occurrence of any of the following events:
i. any "person" or "group" as such terms are used under
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), other
than Employer, any trustee or any other fiduciary
holding securities under an employee benefit plan of
Employer, or any corporation owned, directly or
indirectly, by the stockholders of Employer in
substantially the same proportions as their ownership
of Common Stock of Employer, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), of securities of Employer
representing thirty-five percent (35%) or more of the
combined voting power of Employer's voting securities
then-outstanding;
ii. during any period of two consecutive years,
individuals who at the beginning of such period
constituted the Board of Directors of Employer cease
for any reason to constitute a majority thereof
(unless the election, or nomination for election by
Employer's stockholders, of such director was
approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
directors at the beginning of such period or whose
election or nomination for election was previously so
approved);
iii. Employer completes a merger or consolidation of
Employer with another corporation, other than (A) a
merger or consolidation which would result in the
voting securities of Employer outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity) more than
eighty percent (80%) of the combined voting power of
the voting securities of Employer or such surviving
entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation
affected to implement a recapitalization of Employer
(or similar transaction) in which no "person" (as
herein above defined) acquires more than thirty
percent (30%) of the combined voting power of
Employer's then-outstanding voting securities; or
iv. the stockholders of Employer approve a plan of
complete liquidation of Employer or any agreement for
the sale or disposition by Employer of all or
substantially all of Employer's assets.
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<PAGE> 10
b. For purposes of this Agreement, "Good Reason" means the
occurrence of any of the following events:
i. the reduction of the Employee's job title, position
or responsibilities without the Employee's prior
written consent;
ii. the change of the location where the Employee is
based to a location which is more than fifty (50)
miles from his present location without the
Employee's prior written consent; or
iii. the reduction of the Employee's annual salary and
bonus by more than ten percent (10%) from the sum of
the higher rate of the Employee's actual annual
salary and bonus in effect within two years
immediately preceding the Change of Control.
Employee shall give Employer fifteen (15) business days notice
of an intent terminate this Agreement for "Good Reason" as
defined in this Paragraph 7, and provide the Employer with ten
(10) business days after receipt of such notice from Employee
to remedy the alleged violation of subparagraphs 7(b)(i)(ii),
or (iii).
c. BENEFITS UPON CHANGE IN CONTROL
i. Severance Benefits. If the Employee's employment with
Employer is terminated (i) by Employer (or by the
acquiring or successor business entity following a
Change of Control) other than for Cause or death, or
(ii) by the Employee for Good Reason, in either event
within a period beginning one hundred and eighty
(180) days before, and ending two (2) years after,
the date of a Change of Control (the "Change
Period"), the Employee shall receive a severance
benefit in an amount equal to the sum of:
(1) the Employee's highest annual cash base
salary in effect within two (2) years
immediately preceding the Change of Control;
plus
(2) the average of the Employee's annual bonuses
paid for the two (2) calendar years
immediately preceding the Change of Control.
In addition, for eighteen months following the date
of termination of the Employee's employment in
circumstances in which a severance payment is due
hereunder, Employer shall provide the Employee health
and other welfare benefits that are not less
favorable to the Employee than those to which he was
entitled immediately prior to the Change in Control.
Provided however, Employer shall have no obligation
to provide Employee with any compensation under this
Paragraph 7 if Employee is in breach or violation of
any of the covenants contained in Paragraph 4.
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ii. Form of Payment. The amount of the severance benefit
provided in Paragraph 7(c)(i) hereof shall be paid to
Employee in two (2) equal installments, the first
installment payable as soon as practicable after the
occurrence of the event giving rise to the payment of
the severance benefit by Employer hereunder, but in
no event more than thirty (30) days thereafter, and
the second installment payable one (1) year following
the occurrence of such event, provided, however, that
the severance benefit payable by Employer pursuant to
Paragraph 7(c)(i) hereof will be reduced by any other
cash payments made to the Employee under a written
employment agreement between the Employee and
Employer for periods after the date on which the
Employee's employment was terminated. Provided
however, Employer shall have no obligation to provide
Employee with any compensation under this Paragraph 7
if Employee is in breach or violation of any of the
covenants contained in Paragraph 4.
iii. Gross-Up Payments. Anything in this Agreement to the
contrary notwithstanding, in the event that a
severance payment is made under this Agreement and it
shall be determined (as hereafter provided) that any
payment (other than the Gross-Up Payments provided
for herein) or distribution by Employer or any of its
affiliates to or for the benefit of the Employee,
whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement
or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, or
the lapse or termination of any restriction on, or
the vesting or exercisability of any of the foregoing
(a "Payment"), excluding, however, any stock option
or right in respect of restricted stock, would be
subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the
"Code") (or any successor provision thereto), by
reason of being considered "contingent on a change in
ownership or control" of Employer, within the meaning
of Section 280G of the Code (or any successor
provision thereto) or to any similar tax imposed by
state or local law, or any interest or penalties with
respect to such tax (such tax or taxes, together with
any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then
the Employee shall be entitled to receive an
additional payment or payments (collectively, a
"Gross-Up Payment"); provided, however, that no
Gross-Up Payment shall be made with respect to the
Excise Tax, if any, imposed upon (i) any stock
option, including without limitation any incentive
stock option, as defined by Section 422 of the Code
("ISO") granted prior to the execution of this
Agreement or (ii) any stock appreciation or similar
right, whether or not limited, granted in tandem with
an ISO described in clause (i). The Gross-Up Payment
shall be in an amount such that, after payment by the
Employee of all taxes (including any interest or
penalties imposed with respect to such taxes),
including an Excise Tax imposed upon the Gross-Up
Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon
the Payment. The procedural
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provisions relating to Gross-Up Payments set forth in
Annex A hereto are hereby incorporated herein by this
reference.
d. Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Paragraph 7 of this
Agreement by seeking other employment or otherwise. However,
the amount of any payment or benefit provided for in this
Paragraph 7 shall be reduced by any compensation earned by the
Employee as a result of employment by another employer and as
provided in Paragraph 7(c)(ii) hereof.
8. Term. This Agreement shall be binding and enforceable against Employer
and Employee immediately upon its execution by both such parties. The
stated term of this Agreement and the employment relationship created
hereunder shall begin on January 1, 2000 (with employee to be bound by
confidentiality and other provisions set forth in Paragraph 4 herein to
the extent confidential information is provided to Employee prior to
such date), and shall remain in effect for one (1) year thereafter,
unless sooner terminated in accordance with Paragraph 5 hereof. This
Agreement shall be deemed to be renewed for a month-to-month term after
its initial term ("Renewal Term") unless the parties execute an express
written renewal agreement which specifies a different term.
a. Notwithstanding any provision of this Agreement to the
contrary, the parties' respective rights and obligations under
Paragraph 7 shall survive any termination or expiration of
this Agreement or the termination of the Employee's employment
following a Change of Control for any reason whatsoever.
9. Remedies. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover
damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in its favor. Notwithstanding
Paragraph 10 below, the parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions
of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
10. Arbitration. Except as Provided in Paragraph 9 above, any controversy
or claim arising out of or relating to this Agreement or relating to
Employee's rights, compensation and responsibilities as an employee
shall be determined by arbitration in Dallas County, Texas in
accordance with the rules of the American Arbitration Association then
in effect. The arbitration shall be submitted to a single arbitrator
selected in accordance with the American Arbitration Association's
procedures then in effect for the selection of employment arbitrators.
This Paragraph 10 shall survive termination of this Agreement for any
reason.
11. Assignment. This Agreement is personal to Employee and may not be
assigned in any way by Employee without the prior written consent of
Employer. This Agreement shall not be assignable or delegable by
Employer, other than to an affiliate of Employer;
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provided, however, that in the event of the merger or consolidation of
Employer the obligations of Employer hereunder shall be binding upon
the surviving or resulting entity of such merger of consolidation. The
rights and obligations under this Agreement shall inure to the benefit
of and shall be binding upon the heirs, legatees, administrators and
personal representatives of Employee and upon the successors,
representatives and assigns of Employer.
12. Severability and Reformation. The parties hereto intend all provisions
of this Agreement to be enforced to the fullest extent permitted by
law. If, however, any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future law, such
provision shall be fully severable, and this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable
provision were never a part hereof, and the remaining provisions shall
remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance.
13. Notices. All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, mailed by certified mail (return
receipt requested) or sent by overnight delivery service, cable,
telegram, facsimile transmission or telex to the parties at the
following addresses or at such other addresses as shall be specified by
the parties by like notice:
If to Employer: Jana A. Bell
President & Chief Executive Officer
1155 Kas Drive, Suite 100
Richardson, Texas 75081
If to Employee: J. Raymond Bilbao
3549 Edwards Drive
Plano, Texas 75025
Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth calendar day after
posting, in the case of notice so given by overnight delivery service,
on the date of actual delivery and, in the case of notice so given by
cable, telegram, facsimile transmission, telex or personal delivery, on
the date of actual transmission or, as the case may be, personal
delivery.
14. Further Actions. Whether or not specifically required under the terms
of this Agreement, each party hereto shall execute and deliver such
documents and take such further actions as shall be necessary in order
for such party to perform all of his or its obligations specified
herein or reasonably implied from the terms hereof.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAWS (RULES) OR CHOICE OF LAWS (RULES) THEREOF.
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16. Entire Agreement and Amendment. This Agreement contains the entire
understanding and agreement between the parties, and supersedes any
other agreement between Employee and Employer, whether oral or in
writing, with respect to the subject matter hereof. This Agreement may
not be altered, amended, or rescinded, nor may any of its provisions be
waived, except by an instrument in writing signed by both parties
hereto or, in the case of an asserted waiver, by the party against whom
the waiver is sought to be enforced. Any modification of this Agreement
may only be signed on behalf of Employer by the President of Employer.
17. Counterparts. This Agreement may be executed in counterparts, with the
same effect as if both parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together
and shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EMPLOYER:
HIGHWAYMASTER COMMUNICATIONS, INC.
By: /S/ JANA AHLFINGER BELL
------------------------
JANA AHLFINGER BELL,
President and Chief Executive Officer
EMPLOYEE:
/S/ J. RAYMOND BILBAO
- ----------------------
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ANNEX A
GROSS-UP PAYMENT PROCEDURAL PROVISIONS
(a) Subject to the provision of Paragraph (e) hereof, all
determinations required to be made under Paragraph 7(c)(iii) of the Agreement,
including whether an Excise Tax is payable by the Employee and the amount of
such Excise Tax and whether a Gross-Up Payment is required to be paid by
Employer to the Employee and the amount of such Gross-Up Payment, if any, shall
be made by a Top 5 accounting firm (the "Accounting Firm") selected by the
Employee in his sole discretion. The Employee shall direct the Accounting Firm
to submit its determination and detailed supporting calculations to both
Employer and the Employee within thirty (30) calendar days after the Termination
Date, if applicable, and any such other time or times as may be requested by
Employer or the Employee. If the Accounting Firm determines that any Excise Tax
is payable by the Employee, Employer shall pay the required Gross-Up Payment to
the Employee within fifteen (15) business days after receipt of such
determination and calculations with respect to any Payment to the Employee. If
the Accounting Firm determines that no Excise Tax is payable by the Employee, it
shall, at the same time as it makes such determination, furnish Employer and the
Employee an opinion that the Employee has substantial authority not to report
any Excise Tax on his federal, state or local income or other tax return. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which shall
not have been made by Employer should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that Employer exhausts or fails to pursue its remedies pursuant to Paragraph (e)
hereof and the Employee thereafter is required to make a payment of any Excise
Tax, the Employee shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both Employer and the Employee as promptly as
possible. Any such Underpayment shall be promptly paid by Employer to, or for
the benefit of, the Employee within fifteen (15) business days after receipt of
such determination and calculations.
(b) Employer and the Employee shall each provide the Accounting Firm
access to and copies of any books, records and documents in the possession of
Employer or the Employee, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by Paragraph (a) hereof. Any determination by the Accounting Firm
as to the amount of the Gross-Up Payment shall be binding upon Employer and the
Employee.
(c) The federal, state and local income or other tax returns filed by
the Employee shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Employee. The Employee shall make proper payment of the amount of any Excise
Payment, and at the request of Employer, provide to Employer true and correct
copies (with any amendments) of his federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonable requested by
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Employer, evidencing such payment. If prior to the filing of the Employee's
federal income tax return, or corresponding state or local tax return, if
relevant, the Accounting Firm determines that the amount of the Gross-Up Payment
should be reduced, the Employee shall within fifteen (15) business days pay to
Employer the amount of such deduction.
(d) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by Paragraph
(a) hereof shall be borne by Employer. If such fees and expenses are initially
paid by the Employee, Employer shall reimburse the Employee the full amount of
such fees and expenses within fifteen (15) business days after receipt from the
Employee of a statement therefor and reasonable evidence of his payment thereof.
(e) The Employee shall notify Employer in writing of any claim by the
Internal Revenue Service or any other taxing authority that, if successful,
would require the payment by Employer of a Gross-Up Payment. Such notification
shall be given as promptly as practicable but no later than ten (10) business
days after the Employee actually receives notice of such claim and the Employee
shall further apprise Employer of the nature of such claim and the date on which
such claim is requested to be paid ( in each case, to the extent known by the
Employee). The Employee shall not pay such claim prior to the earlier of (i) the
expiration of the thirty (30) calendar-day period following the date on which he
gives such notice to Employer and (ii) the date that any payment of amount with
respect to such claim is due. If Employer notifies the Employee in writing prior
to the expiration of such period that it desires to contest such claim, the
Employee shall:
(i) provide Employer with any written records or documents in
his possession relating to such claim reasonably requested by Employer;
(ii) take such action in connection with contesting such claim
as Employer shall reasonable request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by Employer;
(iii) cooperate with Employer in good faith in order
effectively to contest such claim, and
(iv) permit Employer to participate in any proceedings
relating to such claim;
provided, however, that Employer shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnity and hold harmless the Employee, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Paragraph (e), Employer shall control all proceedings taken in connection with
the contest of any claim contemplated by this Paragraph (e) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Employee may participate therein at his own
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<PAGE> 17
cost and expense) and may, at its option, either direct the Employee to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a count of initial jurisdiction and in one or more
appellate courts, as Employer shall determine; provided, however, that if
Employer directs the Employee to pay the tax claimed and sue for a refund,
Employer shall advance the amount of such payment to the Employee on an
interest-free basis and shall indemnify and hold the Employee harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Employee with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, Employer's control of any such contested claim
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Employee shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(f) If, after the receipt by the Employee of an amount advanced by
Employer pursuant to Paragraph (e) hereof, the Employee receives any refund with
respect to such claim, the Employee shall (subject to Employer's complying with
the requirements of Paragraph (e) hereof) promptly pay to Employer the amount of
such refund (together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by the Employee of an amount advanced
by Employer pursuant to Paragraph (e) hereof, a determination is made that the
Employee shall not be entitled to any refund with respect to such claim and
Employer does not notify the Employee in writing of its intent to contest such
denial or refund prior to the expiration of thirty (30) calendar days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of any such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid by Employer to the
Employee pursuant to this Paragraph 7(c)(iii) of the Agreement.
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EXHIBIT 10.60
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of the 13th day
of March 2000, but effective as of January 1, 2000, is entered into in
Richardson, Texas by and between HighwayMaster Communications, Inc., a Delaware
corporation, with its principal place of business located at 1155 Kas Drive,
Suite 100, Richardson, Texas, 75081 ("Employer"), and Todd A. Felker, an
individual residing at 6316 Walling Avenue, Plano, Texas 75093 ("Employee").
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, Employer and Employee, intending to be legally bound, hereby agree as
follows:
1. Employment Relationship. Employer hereby employs Employee, and Employee
hereby accepts such employment, upon the terms and conditions set forth
in this Agreement. Such employment relationship shall continue for the
stated term of this Agreement, as described in Paragraph 8 hereof,
unless earlier terminated pursuant to Paragraph 5 hereof.
2. Position and Responsibilities of Employee. Employee shall be employed
as Senior Vice President-Sales, Marketing & Account Management with job
responsibilities related thereto, and such job responsibilities may be
expanded at the sole discretion of Employer. Employee shall report to
the President and shall devote such time, skill and attention to the
business of Employer as shall be required for the efficient management
thereof, and shall manage and supervise such business, and shall devote
his full time best efforts to the faithful performance of his duties on
behalf of Employer. Employee shall also perform such other duties, and
may have job responsibilities and titles modified from time to time as
may be requested by the President or by resolution of the Board of
Directors of Employer, provided such duties and job titles are
generally consistent with the level of responsibility currently held by
Employee. Employee shall not engage in additional gainful employment of
any kind or undertake any role or position, whether or not for
compensation, with any competitor of Employer during the term of this
Agreement without advance written consent from Employer.
3. Compensation. For all services rendered by Employee pursuant to this
Agreement, Employer shall pay to Employee, and Employee shall accept as
full compensation hereunder the following:
a. Salary. Employee shall receive a salary of $13,750.00 per
month payable by Employer in bi-monthly amounts in Richardson,
Texas. Employee's salary shall be subject to all appropriate
federal and state withholding taxes and shall be payable in
accordance with the normal payroll procedures of Employer.
b. Benefits and Perquisites. Employee shall be entitled to
participate in the employee benefit plans provided by Employer
for all employees generally, and for executive employees of
Employer. Employer shall be entitled to change such plans from
time to time, and the parties acknowledge that at the initial
date of this
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Agreement the fringe benefits provided to Employee include a
corporate 401(k) plan, health, dental, life, short and
long-term disability insurance for the Employee, and
reimbursement of certain expenses in accordance with the
policies and procedures of Employer.
c. Discretionary Bonuses. Employer shall establish an incentive
bonus plan for Employee based on various targets and
performance criteria to be established by the President and
Board of Directors in consultation with the Employee. The
evaluation of the performance of the Employee as measured by
the applicable targets and the awarding of applicable bonuses,
if any, shall be at the sole discretion of the President. The
maximum annual bonus which may be awarded to Employee shall be
in the amount of thirty percent (30%) of Employee's annual
base salary at each fiscal year end of Employer during the
term of this Agreement, pro-rated for partial years. The
annual discretionary bonus may be awarded in whole, in part,
or withheld in its entirety based on the level of incentive
bonus plan performance criteria achieved by Employee, in the
sole judgement of the President and Board of Directors. If
Employee terminates this Agreement prior to the expiration of
the initial one (1) year term or if Employer terminates this
Agreement for cause as per Paragraph 5(b), the Employee will
not be paid any Discretionary Bonus, in whole or in part. If
Employer terminates this Agreement as per Paragraph 5 (c)
hereof prior to the expiration of the initial one (1) year
term, Employee shall be entitled to receive his Discretionary
Bonus on a prorated basis in such amount as determined by the
President in her sole discretion.
d. Stock Options. Employee previously executed Stock Option
Agreement(s) by which Employee has been granted the right to
purchase shares of common stock of Employer at a stated
exercise price as per the terms and conditions of the
HighwayMaster Communications, Inc.(f/k/a HM Holding
Corporation) 1994 Stock Option Plan (the "Plan")(such previous
option grants hereinafter referred to as "Previous Stock
Option Grants"). As per the Plan and the Stock Option
Agreements, Employee's options vest in five (5) installments
with 20% vesting immediately upon the grant date and 20%
vesting on each of the next four yearly anniversaries of grant
date. Notwithstanding the terms of the Plan and the Stock
Option Agreements previously executed by Employee and
Employer, upon the occurrence of a Change in Control as
defined in Paragraph 7 of this Agreement, all stock options
issued pursuant to the Previous Stock Option Grants shall
accelerate and be deemed vested on the day prior to the Change
in Control of Employer.
4. Protective Covenants. Employee recognizes that his employment by
Employer is one of the highest trust and confidence because (i)
Employee will become fully familiar with all aspects of Employer's
business during the period of his employment with Employer, (ii)
certain information of which Employee will gain knowledge during his
employment by Employer is proprietary and confidential information and
is of special and peculiar value to Employer, and (iii) if any such
proprietary and confidential information were imparted to or became
known by any person, including Employee, engaging in a business in
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competition with that of Employer, hardship, loss and irreparable
injury and damage could result to Employer, the measurement of which
would be difficult if not impossible to ascertain. Employee further
acknowledges that Employer has developed unique skills, concepts, sales
presentations, marketing programs, marketing strategy, business
practices, methods of operation, pricing information, production cost
information, trademarks, licenses, technical information, proprietary
information, computer software programs, tapes and discs concerning its
operations systems, customer lists, customer leads, documents
identifying past, present and future customers, customer profile and
preference data, hiring and training methods, investment policies,
financial and other confidential and proprietary information concerning
its operations and expansion plans ("Trade Secrets"). Therefore,
Employee agrees that it is necessary for Employer to protect its
business and that of its affiliates from such damage, and Employee
further agrees that the following covenants constitute a reasonable and
appropriate means, consistent with the best interest of both Employee
and Employer, to protect Employer or its affiliates against damage due
to loss or disclosure of proprietary information or Trade Secrets and
shall apply to and be binding upon Employee as provided herein:
a. Trade Secrets. Employee recognizes that his position with
Employer is one of the highest trust and confidence by reason
of Employee's access to and contact with certain Trade Secrets
of Employer. Employee agrees and covenants that, except as may
be required by Employer in connection with this Agreement, or
with the prior written consent of Employer, Employee shall
not, either during the term of this Agreement or thereafter,
directly or indirectly, use for Employee's own benefit or for
the benefit of another, or disclose, disseminate, or
distribute to another, except as directed by Employer or as
required for the performance of Employee's duties on behalf of
the Employer, any Trade Secret (whether or not acquired,
learned, obtained, or developed by Employee alone or in
conjunction with others) of Employer or of others with whom
Employer has a business relationship. All Trade Secrets, and
all memoranda, notes, records, drawings, documents, or other
writings whatsoever made, compiled, acquired, or received by
Employee during the term of this Agreement, arising out of, in
connection with, or related to any activity or business of
Employer, including, but not limited to, the customers,
suppliers, or others with whom Employer has a business
relationship, the arrangements of Employer with such parties,
and the pricing and expansion policies and strategy of
Employer, are, and shall continue to be, the sole and
exclusive property of Employer and shall, together with all
copies thereof, any and all documents constituting or relating
to Employer's proprietary information and Trade Secrets, and
all advertising literature, be returned and delivered to
Employer by Employee immediately, without demand, upon the
termination of this Agreement, or at any time upon Employer's
demand.
Employee acknowledges that Employer would not provide
Employee access to Employer's Trade Secrets and proprietary
and confidential information but for Employee's covenants in
this Paragraph 4.
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Employee represents and warrants that he is not bound
by any agreement with any prior employer or other party that
will be breached by execution and performance of this
Agreement, or which would otherwise prevent him from
performing his duties with Employer as set forth in this
Agreement. Employee represents and warrants that he has not
retained any copies of proprietary and confidential
information of any prior employer, and he will not use or rely
on any confidential and proprietary information of any prior
employer in carrying out his duties for Employer.
b. Covenant Not to Compete. In consideration of the numerous
mutual promises contained in the Agreement between Employer
and the Employee, including, without limitation, those
involving access to Trade Secrets and confidential information
and training, and in order to protect Employer's Trade Secrets
and the confidential information and to reduce the likelihood
of irreparable damage which would occur in the event such
information is provided to or used by a competitor of
Employer, Employee agrees that during his or her employment
and for an additional period of eighteen (18) months
immediately following the voluntary or involuntary termination
of his or her employment (the "Non-Competition Term"),
Employee will not, without the prior written consent of
Employer (which consent may be withheld in its sole
discretion), enter the employ of any person or entity, either
directly or indirectly either as principal, agent,
representative, shareholder (except owning publicly traded
stock for investment purposes only in which Employee owns less
than 5%) consultant, officer, business partner, associate,
employee or otherwise, with a place of business in the United
States of America and/or Canada, which sells or offers to sell
services and/or products which compete directly with the
services and/or products offered or to be offered for sale by
Employer.
If, during any period within the Noncompetition Term, Employee
is not in compliance with the terms of this Paragraph 4,
Employer shall be entitled to, among other remedies,
compliance by Employee with the terms of this Paragraph 4 for
an additional period equal to the period of such
noncompliance. For purposes of this Agreement, the term
"Noncompetition Term" shall also include this additional
period. Employee hereby acknowledges that the geographic
boundaries, scope of prohibited activities and the time
duration of the provisions of this Section 4 are reasonable
and are no broader than are necessary to protect the
legitimate business interests of the Employer.
The Employer and Employee agree and stipulate that the
agreements and covenants not to compete contained in Paragraph
4 hereof are fair and reasonable in light of all of the facts
and circumstances of the relationship between Employee and
Employer; however, Employee and Employer are aware that in
certain circumstances courts have refused to enforce certain
agreements not to compete. Therefore, in furtherance of, and
not in derogation of the provisions of Paragraph 4, Employer
and Employee agree that in the event a court should decline to
enforce the provisions of Paragraph 4, that Paragraph 4 shall
be deemed to be modified or reformed to restrict Employee's
competition with Employer or its
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<PAGE> 5
affiliates to the maximum extent, as to time, geography and
business scope, which the court shall find enforceable;
provided, however, in no event shall the provisions of
Paragraph 4 be deemed to be more restrictive to Employee than
those contained herein.
c. Non-Solicitation Employee agrees that during his employment,
and for a period of twenty four (24) months following the
termination of his employment (for whatever reason), that
neither he nor any individual, partner(s), limited
partnership, corporation or other entity or business with
which he is in any way affiliated, including, without
limitation, any partner, limited partner, director, officer,
shareholder, employee, or agent of any such entity or
business, will (i) request, induce or attempt to influence,
directly or indirectly, any employee of Employer to terminate
their employment with Employer or (ii) employ any person who
as of the date of this Agreement was, or after such date is or
was, an employee of Employer. Employee further agrees that
during the period beginning with the commencement of
Employee's employment with Employer and ending twenty four
(24) months after the termination of Employee's employment
with Employer (for whatever reason), he shall not, directly or
indirectly, as an employee, agent, consultant, stockholder,
director, partner or in any other individual or representative
capacity of Employer or of any other person, entity or
business, solicit or encourage any present or future customer,
supplier, contractor, partner or investor of the Employer to
terminate or otherwise alter his, her or its relationship with
Employer.
d. Work Product. For purposes of this Paragraph 4, "Work Product"
shall mean all intellectual property rights, including all
trade secrets, U.S. and international copyrights, patentable
inventions, discoveries and other intellectual property rights
in any programming, design, documentation, technology, or
other work product that is created in connection with
Employee's work. In addition, all rights in any preexisting
programming, design, documentation, technology, or other Work
Product provided to Employer during Employee's employment
shall automatically become part of the Work Product hereunder,
whether or not it arises specifically out of my "Work." For
purposes of this Agreement, "Work" shall mean (1) any direct
assignments and required performance by or for the Employer,
and (2) any other productive output that relates to the
business of the Employer and is produced during the course of
Employee's employment or engagement by Employer. For this
purpose, Work may be considered present even after normal
working hours, away from Employer's premises, on an
unsupervised basis, alone or with others. Unless otherwise
provided in a subsequent writing signed by the President of
the Employer, this Agreement shall apply to all Work Product
created in connection with all Work conducted before or after
the date of this Agreement.
Employer shall own all rights in the Work Product. To this
end, all Work Product shall be considered work made for hire
for Employer. If any of the Work Product may not, by operation
of law or agreement, be considered Work made by
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<PAGE> 6
Employee for hire for the Employer (or if ownership of all
rights therein do not otherwise vest exclusively in the
Employer immediately), Employee agrees to assign, and upon
creation thereof does hereby automatically assign, with
further consideration, the ownership thereof to the Employer.
Employee hereby irrevocably relinquishes for the benefit of
Employer and its assigns any moral rights in the Work Product
recognized by applicable law. Employer shall have the right to
obtain and hold, in whatever name or capacity it selects,
copyrights, registrations, and any other protection available
in the Work Product.
Employee agrees to perform upon the request of Employer,
during or after Employee's Work or employment, such further
acts as may be necessary or desirable to transfer, perfect,
and defend the Employer's ownership of the Work Product,
including by (1) executing, acknowledging, and delivering any
requested affidavits and documents of assignment and
conveyance, (2) obtaining and/or aiding in the enforcement of
copyrights, trade secrets, and (if applicable) patents with
respect to the Work Product in any countries, and (3)
providing testimony in connection with any proceeding
affecting the rights of the Employer in any Work Product.
Employee warrants that Employee's Work for Employer does not
and will not in any way conflict with any remaining
obligations Employee may have with any prior employer or
contractor. Employee also agrees to develop all Work Product
in a manner that avoids even the appearance of infringement of
any third party's intellectual property rights.
e. Survival of Covenants. Each covenant of Employee set forth in
this Paragraph 4 shall survive the termination of this
Agreement and shall be construed as an agreement independent
of any other provision of this Agreement, and the existence of
any claim or cause of action of Employee against Employer
whether predicated on this Agreement or otherwise shall not
constitute a defense to the enforcement by Employer of said
covenant. No modification or waiver of any covenant contained
in Paragraph 4 shall be valid unless such waiver or
modification is in writing and signed by the President of the
Employer.
f. Remedies. In the event of breach or threatened breach by
Employee of any provision of this Paragraph 4, Employer shall
be entitled to relief by temporary restraining order,
temporary injunction, or permanent injunction or otherwise, in
addition to other legal and equitable relief to which it may
be entitled, including any and all monetary damages which
Employer may incur as a result of said breach, violation or
threatened breach or violation. Employer may pursue any remedy
available to it concurrently or consecutively in any order as
to any breach, violation, or threatened breach or violation,
and the pursuit of one of such remedies at any time will not
be deemed an election of remedies or waiver of the right to
pursue any other of such remedies as to such breach,
violation, or threatened breach or violation, or as to any
other breach, violation, or threatened breach or violation.
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Employee hereby acknowledges that Employee's
agreement to be bound by the protective covenants set forth in
this Paragraph 4 was a material inducement for Employer
entering into this Agreement, agreeing to pay Employee the
compensation and benefits set forth herein, and providing
Employee access to Employer's Trade Secrets and other
confidential information.
5. Termination. The employment relationship between Employee and Employer
created hereunder shall terminate before the expiration of the stated
term of this Agreement upon the occurrence of any one of the following
events:
a. Death or Permanent Disability. The employment relationship
shall be terminated effective on the death or permanent
disability of the Employee.
b. Termination for Cause. The following events, which for
purposes of this Agreement shall constitute "cause" for
termination:
i. Any act of fraud, misappropriation or embezzlement by
Employee with respect to any aspect of Employer's
business;
ii. The breach by Employee of any provision of Paragraphs
1, 2 or 4 (including but not limited to a refusal to
follow lawful directives of the President or Board of
Directors of Employer which are not inconsistent with
the provisions of this Agreement) of this Agreement;
iii. The conviction of Employee by a court of competent
jurisdiction of a felony or of a crime involving
moral turpitude;
iv. The intentional and material breach by the Employee
of any non-disclosure or
non-competition/non-solicitation provision of any
agreement to which the Employee and Employer or any
of its subsidiaries are parties; or
v. The intentional and continual failure by the Employee
to perform in all material respects his duties and
responsibilities (other than as a result of death or
disability) and the failure of the Employee to cure
the same in all material respects within thirty (30)
days after written notice thereof from Employer;
vi. The illegal use of drugs by Employee during the term
of this Agreement that, in the determination of the
President of Employer, substantially interferes with
Employee's performance of his duties hereunder;
vii. acceptance of employment with any other employer
except upon written permission of the President of
the Employer.
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c. Termination by Employer with Notice. Employer may terminate
this Agreement without cause at any time upon thirty (30) days
written notice to Employee, during which period Employee shall
not be required to perform any services for Employer other
than to assist Employer in training his successor and
generally preparing for an orderly transition; PROVIDED,
HOWEVER, that Employee shall be entitled to compensation upon
such termination as provided in Paragraph 6(a), (b), (c) and
(d) below.
6. Compensation Upon Termination. Upon the termination of Employee's
employment under this Agreement before the expiration of the stated
term hereof for any reason, Employee shall be entitled to:
a. the salary earned by him before the effective date of
termination as provided in Paragraph 3(a) hereof (including
salary payable during any applicable notice period), prorated
on the basis of the number of full days of service rendered by
Employee during the salary payment period to the effective
date of termination;
b. any accrued, but unpaid, vacation benefits; and
c. any previously authorized but unreimbursed business expenses.
If Employee's employment hereunder terminates because of the
death or permanent disability of Employee, all amounts that may be due
to him under this Paragraph 6 shall be paid to him or his
administrators, personal representatives, heirs and legatees, as may be
appropriate.
d. Additional Compensation Upon Termination Without Cause. If
Employee's employment hereunder terminates without cause
pursuant to Paragraph 5(c) above, Employer shall pay to
Employee in addition to the amounts set forth in Subparagraphs
6(a), 6(b) and 6(c) above:
i. salary payments for the duration of the initial term
of this Agreement, or any Renewal Term, as set forth
in Paragraph 8 below when and as such salary payments
would have come due had the Employee's employment not
been terminated;
The provisions of Paragraphs 4, 5 and 6 hereof shall survive
the termination of the employment relationship hereunder and this
Agreement to the extent necessary or reasonably appropriate to effect
the intent of the parties hereto as expressed in such provisions.
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7. Compensation Upon Change in Control.
a. For purposes of the Agreement, "Change of Control" means the
occurrence of any of the following events:
i. any "person" or "group" as such terms are used under
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), other
than Employer, any trustee or any other fiduciary
holding securities under an employee benefit plan of
Employer, or any corporation owned, directly or
indirectly, by the stockholders of Employer in
substantially the same proportions as their ownership
of Common Stock of Employer, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), of securities of Employer
representing thirty-five percent (35%) or more of the
combined voting power of Employer's voting securities
then-outstanding;
ii. during any period of two consecutive years,
individuals who at the beginning of such period
constituted the Board of Directors of Employer cease
for any reason to constitute a majority thereof
(unless the election, or nomination for election by
Employer's stockholders, of such director was
approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
directors at the beginning of such period or whose
election or nomination for election was previously so
approved);
iii. Employer completes a merger or consolidation of
Employer with another corporation, other than (A) a
merger or consolidation which would result in the
voting securities of Employer outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity) more than
eighty percent (80%) of the combined voting power of
the voting securities of Employer or such surviving
entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation
affected to implement a recapitalization of Employer
(or similar transaction) in which no "person" (as
herein above defined) acquires more than thirty
percent (30%) of the combined voting power of
Employer's then-outstanding voting securities; or
iv. the stockholders of Employer approve a plan of
complete liquidation of Employer or any agreement for
the sale or disposition by Employer of all or
substantially all of Employer's assets.
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b. For purposes of this Agreement, "Good Reason" means the
occurrence of any of the following events:
i. the reduction of the Employee's job title, position
or responsibilities without the Employee's prior
written consent;
ii. the change of the location where the Employee is
based to a location which is more than fifty (50)
miles from his present location without the
Employee's prior written consent; or
iii. the reduction of the Employee's annual salary and
bonus by more than ten percent (10%) from the sum of
the higher rate of the Employee's actual annual
salary and bonus in effect within two years
immediately preceding the Change of Control.
Employee shall give Employer fifteen (15) business days notice
of an intent terminate this Agreement for "Good Reason" as
defined in this Paragraph 7, and provide the Employer with ten
(10) business days after receipt of such notice from Employee
to remedy the alleged violation of subparagraphs 7(b)(i)(ii),
or (iii).
c. BENEFITS UPON CHANGE IN CONTROL
i. Severance Benefits. If the Employee's employment with
Employer is terminated (i) by Employer (or by the
acquiring or successor business entity following a
Change of Control) other than for Cause or death, or
(ii) by the Employee for Good Reason, in either event
within a period beginning one hundred and eighty
(180) days before, and ending two (2) years after,
the date of a Change of Control (the "Change
Period"), the Employee shall receive a severance
benefit in an amount equal to the sum of:
(1) the Employee's highest annual cash base
salary in effect within two (2) years
immediately preceding the Change of Control;
plus
(2) the average of the Employee's annual bonuses
paid for the two (2) calendar years
immediately preceding the Change of Control.
In addition, for eighteen months following the date
of termination of the Employee's employment in
circumstances in which a severance payment is due
hereunder, Employer shall provide the Employee health
and other welfare benefits that are not less
favorable to the Employee than those to which he was
entitled immediately prior to the Change in Control.
Provided however, Employer shall have no obligation
to provide Employee with any compensation under this
Paragraph 7 if Employee is in breach or violation of
any of the covenants contained in Paragraph 4.
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ii. Form of Payment. The amount of the severance benefit
provided in Paragraph 7(c)(i) hereof shall be paid to
Employee in two (2) equal installments, the first
installment payable as soon as practicable after the
occurrence of the event giving rise to the payment of
the severance benefit by Employer hereunder, but in
no event more than thirty (30) days thereafter, and
the second installment payable one (1) year following
the occurrence of such event, provided, however, that
the severance benefit payable by Employer pursuant to
Paragraph 7(c)(i) hereof will be reduced by any other
cash payments made to the Employee under a written
employment agreement between the Employee and
Employer for periods after the date on which the
Employee's employment was terminated. Provided
however, Employer shall have no obligation to provide
Employee with any compensation under this Paragraph 7
if Employee is in breach or violation of any of the
covenants contained in Paragraph 4.
iii. Gross-Up Payments. Anything in this Agreement to the
contrary notwithstanding, in the event that a
severance payment is made under this Agreement and it
shall be determined (as hereafter provided) that any
payment (other than the Gross-Up Payments provided
for herein) or distribution by Employer or any of its
affiliates to or for the benefit of the Employee,
whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement
or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, or
the lapse or termination of any restriction on, or
the vesting or exercisability of any of the foregoing
(a "Payment"), excluding, however, any stock option
or right in respect of restricted stock, would be
subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the
"Code") (or any successor provision thereto), by
reason of being considered "contingent on a change in
ownership or control" of Employer, within the meaning
of Section 280G of the Code (or any successor
provision thereto) or to any similar tax imposed by
state or local law, or any interest or penalties with
respect to such tax (such tax or taxes, together with
any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then
the Employee shall be entitled to receive an
additional payment or payments (collectively, a
"Gross-Up Payment"); provided, however, that no
Gross-Up Payment shall be made with respect to the
Excise Tax, if any, imposed upon (i) any stock
option, including without limitation any incentive
stock option, as defined by Section 422 of the Code
("ISO") granted prior to the execution of this
Agreement or (ii) any stock appreciation or similar
right, whether or not limited, granted in tandem with
an ISO described in clause (i). The Gross-Up Payment
shall be in an amount such that, after payment by the
Employee of all taxes (including any interest or
penalties imposed with respect to such taxes),
including an Excise Tax imposed upon the Gross-Up
Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon
the Payment. The procedural
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provisions relating to Gross-Up Payments set forth in
Annex A hereto are hereby incorporated herein by this
reference.
d. Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Paragraph 7 of this
Agreement by seeking other employment or otherwise. However,
the amount of any payment or benefit provided for in this
Paragraph 7 shall be reduced by any compensation earned by the
Employee as a result of employment by another employer and as
provided in Paragraph 7(c)(ii) hereof.
8. Term. This Agreement shall be binding and enforceable against Employer
and Employee immediately upon its execution by both such parties. The
stated term of this Agreement and the employment relationship created
hereunder shall begin on January 1, 2000 (with employee to be bound by
confidentiality and other provisions set forth in Paragraph 4 herein to
the extent confidential information is provided to Employee prior to
such date), and shall remain in effect for one (1) year thereafter,
unless sooner terminated in accordance with Paragraph 5 hereof. This
Agreement shall be deemed to be renewed for a month-to-month term after
its initial term ("Renewal Term") unless the parties execute an express
written renewal agreement which specifies a different term.
a. Notwithstanding any provision of this Agreement to the
contrary, the parties' respective rights and obligations under
Paragraph 7 shall survive any termination or expiration of
this Agreement or the termination of the Employee's employment
following a Change of Control for any reason whatsoever.
9. Remedies. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover
damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in its favor. Notwithstanding
Paragraph 10 below, the parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions
of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
10. Arbitration. Except as Provided in Paragraph 9 above, any controversy
or claim arising out of or relating to this Agreement or relating to
Employee's rights, compensation and responsibilities as an employee
shall be determined by arbitration in Dallas County, Texas in
accordance with the rules of the American Arbitration Association then
in effect. The arbitration shall be submitted to a single arbitrator
selected in accordance with the American Arbitration Association's
procedures then in effect for the selection of employment arbitrators.
This Paragraph 10 shall survive termination of this Agreement for any
reason.
11. Assignment. This Agreement is personal to Employee and may not be
assigned in any way by Employee without the prior written consent of
Employer. This Agreement shall not be assignable or delegable by
Employer, other than to an affiliate of Employer;
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provided, however, that in the event of the merger or consolidation of
Employer the obligations of Employer hereunder shall be binding upon
the surviving or resulting entity of such merger of consolidation. The
rights and obligations under this Agreement shall inure to the benefit
of and shall be binding upon the heirs, legatees, administrators and
personal representatives of Employee and upon the successors,
representatives and assigns of Employer.
12. Severability and Reformation. The parties hereto intend all provisions
of this Agreement to be enforced to the fullest extent permitted by
law. If, however, any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future law, such
provision shall be fully severable, and this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable
provision were never a part hereof, and the remaining provisions shall
remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance.
13. Notices. All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, mailed by certified mail (return
receipt requested) or sent by overnight delivery service, cable,
telegram, facsimile transmission or telex to the parties at the
following addresses or at such other addresses as shall be specified by
the parties by like notice:
If to Employer: J. Raymond Bilbao
General Counsel & Secretary
1155 Kas Drive, Suite 100
Richardson, Texas 75081
If to Employee: Todd A. Felker
6316 Walling Avenue
Plano, Texas 75093
Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth calendar day after
posting, in the case of notice so given by overnight delivery service,
on the date of actual delivery and, in the case of notice so given by
cable, telegram, facsimile transmission, telex or personal delivery, on
the date of actual transmission or, as the case may be, personal
delivery.
14. Further Actions. Whether or not specifically required under the terms
of this Agreement, each party hereto shall execute and deliver such
documents and take such further actions as shall be necessary in order
for such party to perform all of his or its obligations specified
herein or reasonably implied from the terms hereof.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAWS (RULES) OR CHOICE OF LAWS (RULES) THEREOF.
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16. Entire Agreement and Amendment. This Agreement contains the entire
understanding and agreement between the parties, and supersedes any
other agreement between Employee and Employer, whether oral or in
writing, with respect to the subject matter hereof. This Agreement may
not be altered, amended, or rescinded, nor may any of its provisions be
waived, except by an instrument in writing signed by both parties
hereto or, in the case of an asserted waiver, by the party against whom
the waiver is sought to be enforced. Any modification of this Agreement
may only be signed on behalf of Employer by the President of Employer.
17. Counterparts. This Agreement may be executed in counterparts, with the
same effect as if both parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together
and shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EMPLOYER:
HIGHWAYMASTER COMMUNICATIONS, INC.
By: /S/ JANA AHLFINGER BELL
------------------------
JANA AHLFINGER BELL,
President and Chief Executive Officer
EMPLOYEE:
/S/ TODD FELKER
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ANNEX A
GROSS-UP PAYMENT PROCEDURAL PROVISIONS
(a) Subject to the provision of Paragraph (e) hereof, all
determinations required to be made under Paragraph 7(c)(iii) of the Agreement,
including whether an Excise Tax is payable by the Employee and the amount of
such Excise Tax and whether a Gross-Up Payment is required to be paid by
Employer to the Employee and the amount of such Gross-Up Payment, if any, shall
be made by a Top 5 accounting firm (the "Accounting Firm") selected by the
Employee in his sole discretion. The Employee shall direct the Accounting Firm
to submit its determination and detailed supporting calculations to both
Employer and the Employee within thirty (30) calendar days after the Termination
Date, if applicable, and any such other time or times as may be requested by
Employer or the Employee. If the Accounting Firm determines that any Excise Tax
is payable by the Employee, Employer shall pay the required Gross-Up Payment to
the Employee within fifteen (15) business days after receipt of such
determination and calculations with respect to any Payment to the Employee. If
the Accounting Firm determines that no Excise Tax is payable by the Employee, it
shall, at the same time as it makes such determination, furnish Employer and the
Employee an opinion that the Employee has substantial authority not to report
any Excise Tax on his federal, state or local income or other tax return. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which shall
not have been made by Employer should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that Employer exhausts or fails to pursue its remedies pursuant to Paragraph (e)
hereof and the Employee thereafter is required to make a payment of any Excise
Tax, the Employee shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both Employer and the Employee as promptly as
possible. Any such Underpayment shall be promptly paid by Employer to, or for
the benefit of, the Employee within fifteen (15) business days after receipt of
such determination and calculations.
(b) Employer and the Employee shall each provide the Accounting Firm
access to and copies of any books, records and documents in the possession of
Employer or the Employee, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by Paragraph (a) hereof. Any determination by the Accounting Firm
as to the amount of the Gross-Up Payment shall be binding upon Employer and the
Employee.
(c) The federal, state and local income or other tax returns filed by
the Employee shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Employee. The Employee shall make proper payment of the amount of any Excise
Payment, and at the request of Employer, provide to Employer true and correct
copies (with any amendments) of his federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonable requested by
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Employer, evidencing such payment. If prior to the filing of the Employee's
federal income tax return, or corresponding state or local tax return, if
relevant, the Accounting Firm determines that the amount of the Gross-Up Payment
should be reduced, the Employee shall within fifteen (15) business days pay to
Employer the amount of such deduction.
(d) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by Paragraph
(a) hereof shall be borne by Employer. If such fees and expenses are initially
paid by the Employee, Employer shall reimburse the Employee the full amount of
such fees and expenses within fifteen (15) business days after receipt from the
Employee of a statement therefor and reasonable evidence of his payment thereof.
(e) The Employee shall notify Employer in writing of any claim by the
Internal Revenue Service or any other taxing authority that, if successful,
would require the payment by Employer of a Gross-Up Payment. Such notification
shall be given as promptly as practicable but no later than ten (10) business
days after the Employee actually receives notice of such claim and the Employee
shall further apprise Employer of the nature of such claim and the date on which
such claim is requested to be paid ( in each case, to the extent known by the
Employee). The Employee shall not pay such claim prior to the earlier of (i) the
expiration of the thirty (30) calendar-day period following the date on which he
gives such notice to Employer and (ii) the date that any payment of amount with
respect to such claim is due. If Employer notifies the Employee in writing prior
to the expiration of such period that it desires to contest such claim, the
Employee shall:
(i) provide Employer with any written records or documents in
his possession relating to such claim reasonably requested by Employer;
(ii) take such action in connection with contesting such claim
as Employer shall reasonable request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by Employer;
(iii) cooperate with Employer in good faith in order
effectively to contest such claim, and
(iv) permit Employer to participate in any proceedings
relating to such claim;
provided, however, that Employer shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnity and hold harmless the Employee, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Paragraph (e), Employer shall control all proceedings taken in connection with
the contest of any claim contemplated by this Paragraph (e) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Employee may participate therein at his own
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<PAGE> 17
cost and expense) and may, at its option, either direct the Employee to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a count of initial jurisdiction and in one or more
appellate courts, as Employer shall determine; provided, however, that if
Employer directs the Employee to pay the tax claimed and sue for a refund,
Employer shall advance the amount of such payment to the Employee on an
interest-free basis and shall indemnify and hold the Employee harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Employee with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, Employer's control of any such contested claim
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Employee shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(f) If, after the receipt by the Employee of an amount advanced by
Employer pursuant to Paragraph (e) hereof, the Employee receives any refund with
respect to such claim, the Employee shall (subject to Employer's complying with
the requirements of Paragraph (e) hereof) promptly pay to Employer the amount of
such refund (together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by the Employee of an amount advanced
by Employer pursuant to Paragraph (e) hereof, a determination is made that the
Employee shall not be entitled to any refund with respect to such claim and
Employer does not notify the Employee in writing of its intent to contest such
denial or refund prior to the expiration of thirty (30) calendar days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of any such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid by Employer to the
Employee pursuant to this Paragraph 7(c)(iii) of the Agreement.
- -------------------
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EXHIBIT 10.61
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of the 13th day
of March 2000, but effective as of January 1, 2000, is entered into in
Richardson, Texas by and between HighwayMaster Communications, Inc., a Delaware
corporation, with its principal place of business located at 1155 Kas Drive,
Suite 100, Richardson, Texas, 75081 ("Employer"), and Marshall Lamm, an
individual residing at 4201 Hampshire Street, Plano, Texas 75093 ("Employee").
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, Employer and Employee, intending to be legally bound, hereby agree as
follows:
1. Employment Relationship. Employer hereby employs Employee, and Employee
hereby accepts such employment, upon the terms and conditions set forth
in this Agreement. Such employment relationship shall continue for the
stated term of this Agreement, as described in Paragraph 8 hereof,
unless earlier terminated pursuant to Paragraph 5 hereof.
2. Position and Responsibilities of Employee. Employee shall be employed
as Senior Vice President-Operations with job responsibilities related
thereto, and such job responsibilities may be expanded at the sole
discretion of Employer. Employee shall report to the President and
shall devote such time, skill and attention to the business of Employer
as shall be required for the efficient management thereof, and shall
manage and supervise such business, and shall devote his full time best
efforts to the faithful performance of his duties on behalf of
Employer. Employee shall also perform such other duties, and may have
job responsibilities and titles modified from time to time as may be
requested by the President or by resolution of the Board of Directors
of Employer, provided such duties and job titles are generally
consistent with the level of responsibility currently held by Employee.
Employee shall not engage in additional gainful employment of any kind
or undertake any role or position, whether or not for compensation,
with any competitor of Employer during the term of this Agreement
without advance written consent from Employer.
3. Compensation. For all services rendered by Employee pursuant to this
Agreement, Employer shall pay to Employee, and Employee shall accept as
full compensation hereunder the following:
a. Salary. Employee shall receive a salary of $12,083.33 per
month payable by Employer in bi-monthly amounts in Richardson,
Texas. Employee's salary shall be subject to all appropriate
federal and state withholding taxes and shall be payable in
accordance with the normal payroll procedures of Employer.
b. Benefits and Perquisites. Employee shall be entitled to
participate in the employee benefit plans provided by Employer
for all employees generally, and for executive employees of
Employer. Employer shall be entitled to change such plans from
time to time, and the parties acknowledge that at the initial
date of this
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Agreement the fringe benefits provided to Employee include a
corporate 401(k) plan, health, dental, life, short and
long-term disability insurance for the Employee, and
reimbursement of certain expenses in accordance with the
policies and procedures of Employer.
c. Discretionary Bonuses. Employer shall establish an incentive
bonus plan for Employee based on various targets and
performance criteria to be established by the President and
Board of Directors in consultation with the Employee. The
evaluation of the performance of the Employee as measured by
the applicable targets and the awarding of applicable bonuses,
if any, shall be at the sole discretion of the President. The
maximum annual bonus which may be awarded to Employee shall be
in the amount of thirty percent (30%) of Employee's annual
base salary at each fiscal year end of Employer during the
term of this Agreement, pro-rated for partial years. The
annual discretionary bonus may be awarded in whole, in part,
or withheld in its entirety based on the level of incentive
bonus plan performance criteria achieved by Employee, in the
sole judgement of the President and Board of Directors. If
Employee terminates this Agreement prior to the expiration of
the initial one (1) year term or if Employer terminates this
Agreement for cause as per Paragraph 5(b), the Employee will
not be paid any Discretionary Bonus, in whole or in part. If
Employer terminates this Agreement as per Paragraph 5 (c)
hereof prior to the expiration of the initial one (1) year
term, Employee shall be entitled to receive his Discretionary
Bonus on a prorated basis in such amount as determined by the
President in her sole discretion.
d. Stock Options. Employee previously executed Stock Option
Agreement(s) by which Employee has been granted the right to
purchase shares of common stock of Employer at a stated
exercise price as per the terms and conditions of the
HighwayMaster Communications, Inc.(f/k/a HM Holding
Corporation) 1994 Stock Option Plan (the "Plan")(such previous
option grants hereinafter referred to as "Previous Stock
Option Grants"). As per the Plan and the Stock Option
Agreements, Employee's options vest in five (5) installments
with 20% vesting immediately upon the grant date and 20%
vesting on each of the next four yearly anniversaries of grant
date. Notwithstanding the terms of the Plan and the Stock
Option Agreements previously executed by Employee and
Employer, upon the occurrence of a Change in Control as
defined in Paragraph 7 of this Agreement, all stock options
issued pursuant to the Previous Stock Option Grants shall
accelerate and be deemed vested on the day prior to the Change
in Control of Employer.
4. Protective Covenants. Employee recognizes that his employment by
Employer is one of the highest trust and confidence because (i)
Employee will become fully familiar with all aspects of Employer's
business during the period of his employment with Employer, (ii)
certain information of which Employee will gain knowledge during his
employment by Employer is proprietary and confidential information and
is of special and peculiar value to Employer, and (iii) if any such
proprietary and confidential information were imparted to or became
known by any person, including Employee, engaging in a business in
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<PAGE> 3
competition with that of Employer, hardship, loss and irreparable
injury and damage could result to Employer, the measurement of which
would be difficult if not impossible to ascertain. Employee further
acknowledges that Employer has developed unique skills, concepts, sales
presentations, marketing programs, marketing strategy, business
practices, methods of operation, pricing information, production cost
information, trademarks, licenses, technical information, proprietary
information, computer software programs, tapes and discs concerning its
operations systems, customer lists, customer leads, documents
identifying past, present and future customers, customer profile and
preference data, hiring and training methods, investment policies,
financial and other confidential and proprietary information concerning
its operations and expansion plans ("Trade Secrets"). Therefore,
Employee agrees that it is necessary for Employer to protect its
business and that of its affiliates from such damage, and Employee
further agrees that the following covenants constitute a reasonable and
appropriate means, consistent with the best interest of both Employee
and Employer, to protect Employer or its affiliates against damage due
to loss or disclosure of proprietary information or Trade Secrets and
shall apply to and be binding upon Employee as provided herein:
a. Trade Secrets. Employee recognizes that his position with
Employer is one of the highest trust and confidence by reason
of Employee's access to and contact with certain Trade Secrets
of Employer. Employee agrees and covenants that, except as may
be required by Employer in connection with this Agreement, or
with the prior written consent of Employer, Employee shall
not, either during the term of this Agreement or thereafter,
directly or indirectly, use for Employee's own benefit or for
the benefit of another, or disclose, disseminate, or
distribute to another, except as directed by Employer or as
required for the performance of Employee's duties on behalf of
the Employer, any Trade Secret (whether or not acquired,
learned, obtained, or developed by Employee alone or in
conjunction with others) of Employer or of others with whom
Employer has a business relationship. All Trade Secrets, and
all memoranda, notes, records, drawings, documents, or other
writings whatsoever made, compiled, acquired, or received by
Employee during the term of this Agreement, arising out of, in
connection with, or related to any activity or business of
Employer, including, but not limited to, the customers,
suppliers, or others with whom Employer has a business
relationship, the arrangements of Employer with such parties,
and the pricing and expansion policies and strategy of
Employer, are, and shall continue to be, the sole and
exclusive property of Employer and shall, together with all
copies thereof, any and all documents constituting or relating
to Employer's proprietary information and Trade Secrets, and
all advertising literature, be returned and delivered to
Employer by Employee immediately, without demand, upon the
termination of this Agreement, or at any time upon Employer's
demand.
Employee acknowledges that Employer would not provide
Employee access to Employer's Trade Secrets and proprietary
and confidential information but for Employee's covenants in
this Paragraph 4.
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Employee represents and warrants that he is not bound
by any agreement with any prior employer or other party that
will be breached by execution and performance of this
Agreement, or which would otherwise prevent him from
performing his duties with Employer as set forth in this
Agreement. Employee represents and warrants that he has not
retained any copies of proprietary and confidential
information of any prior employer, and he will not use or rely
on any confidential and proprietary information of any prior
employer in carrying out his duties for Employer.
b. Covenant Not to Compete. In consideration of the numerous
mutual promises contained in the Agreement between Employer
and the Employee, including, without limitation, those
involving access to Trade Secrets and confidential information
and training, and in order to protect Employer's Trade Secrets
and the confidential information and to reduce the likelihood
of irreparable damage which would occur in the event such
information is provided to or used by a competitor of
Employer, Employee agrees that during his or her employment
and for an additional period of eighteen (18) months
immediately following the voluntary or involuntary termination
of his or her employment (the "Non-Competition Term"),
Employee will not, without the prior written consent of
Employer (which consent may be withheld in its sole
discretion), enter the employ of any person or entity, either
directly or indirectly either as principal, agent,
representative, shareholder (except owning publicly traded
stock for investment purposes only in which Employee owns less
than 5%) consultant, officer, business partner, associate,
employee or otherwise, with a place of business in the United
States of America and/or Canada, which sells or offers to sell
services and/or products which compete directly with the
services and/or products offered or to be offered for sale by
Employer.
If, during any period within the Noncompetition Term, Employee
is not in compliance with the terms of this Paragraph 4,
Employer shall be entitled to, among other remedies,
compliance by Employee with the terms of this Paragraph 4 for
an additional period equal to the period of such
noncompliance. For purposes of this Agreement, the term
"Noncompetition Term" shall also include this additional
period. Employee hereby acknowledges that the geographic
boundaries, scope of prohibited activities and the time
duration of the provisions of this Section 4 are reasonable
and are no broader than are necessary to protect the
legitimate business interests of the Employer.
The Employer and Employee agree and stipulate that the
agreements and covenants not to compete contained in Paragraph
4 hereof are fair and reasonable in light of all of the facts
and circumstances of the relationship between Employee and
Employer; however, Employee and Employer are aware that in
certain circumstances courts have refused to enforce certain
agreements not to compete. Therefore, in furtherance of, and
not in derogation of the provisions of Paragraph 4, Employer
and Employee agree that in the event a court should decline to
enforce the provisions of Paragraph 4, that Paragraph 4 shall
be deemed to be modified or reformed to restrict Employee's
competition with Employer or its
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affiliates to the maximum extent, as to time, geography and
business scope, which the court shall find enforceable;
provided, however, in no event shall the provisions of
Paragraph 4 be deemed to be more restrictive to Employee than
those contained herein.
c. Non-Solicitation Employee agrees that during his employment,
and for a period of twenty four (24) months following the
termination of his employment (for whatever reason), that
neither he nor any individual, partner(s), limited
partnership, corporation or other entity or business with
which he is in any way affiliated, including, without
limitation, any partner, limited partner, director, officer,
shareholder, employee, or agent of any such entity or
business, will (i) request, induce or attempt to influence,
directly or indirectly, any employee of Employer to terminate
their employment with Employer or (ii) employ any person who
as of the date of this Agreement was, or after such date is or
was, an employee of Employer. Employee further agrees that
during the period beginning with the commencement of
Employee's employment with Employer and ending twenty four
(24) months after the termination of Employee's employment
with Employer (for whatever reason), he shall not, directly or
indirectly, as an employee, agent, consultant, stockholder,
director, partner or in any other individual or representative
capacity of Employer or of any other person, entity or
business, solicit or encourage any present or future customer,
supplier, contractor, partner or investor of the Employer to
terminate or otherwise alter his, her or its relationship with
Employer.
d. Work Product. For purposes of this Paragraph 4, "Work Product"
shall mean all intellectual property rights, including all
trade secrets, U.S. and international copyrights, patentable
inventions, discoveries and other intellectual property rights
in any programming, design, documentation, technology, or
other work product that is created in connection with
Employee's work. In addition, all rights in any preexisting
programming, design, documentation, technology, or other Work
Product provided to Employer during Employee's employment
shall automatically become part of the Work Product hereunder,
whether or not it arises specifically out of my "Work." For
purposes of this Agreement, "Work" shall mean (1) any direct
assignments and required performance by or for the Employer,
and (2) any other productive output that relates to the
business of the Employer and is produced during the course of
Employee's employment or engagement by Employer. For this
purpose, Work may be considered present even after normal
working hours, away from Employer's premises, on an
unsupervised basis, alone or with others. Unless otherwise
provided in a subsequent writing signed by the President of
the Employer, this Agreement shall apply to all Work Product
created in connection with all Work conducted before or after
the date of this Agreement.
Employer shall own all rights in the Work Product. To this
end, all Work Product shall be considered work made for hire
for Employer. If any of the Work Product may not, by operation
of law or agreement, be considered Work made by
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Employee for hire for the Employer (or if ownership of all
rights therein do not otherwise vest exclusively in the
Employer immediately), Employee agrees to assign, and upon
creation thereof does hereby automatically assign, with
further consideration, the ownership thereof to the Employer.
Employee hereby irrevocably relinquishes for the benefit of
Employer and its assigns any moral rights in the Work Product
recognized by applicable law. Employer shall have the right to
obtain and hold, in whatever name or capacity it selects,
copyrights, registrations, and any other protection available
in the Work Product.
Employee agrees to perform upon the request of Employer,
during or after Employee's Work or employment, such further
acts as may be necessary or desirable to transfer, perfect,
and defend the Employer's ownership of the Work Product,
including by (1) executing, acknowledging, and delivering any
requested affidavits and documents of assignment and
conveyance, (2) obtaining and/or aiding in the enforcement of
copyrights, trade secrets, and (if applicable) patents with
respect to the Work Product in any countries, and (3)
providing testimony in connection with any proceeding
affecting the rights of the Employer in any Work Product.
Employee warrants that Employee's Work for Employer does not
and will not in any way conflict with any remaining
obligations Employee may have with any prior employer or
contractor. Employee also agrees to develop all Work Product
in a manner that avoids even the appearance of infringement of
any third party's intellectual property rights.
e. Survival of Covenants. Each covenant of Employee set forth in
this Paragraph 4 shall survive the termination of this
Agreement and shall be construed as an agreement independent
of any other provision of this Agreement, and the existence of
any claim or cause of action of Employee against Employer
whether predicated on this Agreement or otherwise shall not
constitute a defense to the enforcement by Employer of said
covenant. No modification or waiver of any covenant contained
in Paragraph 4 shall be valid unless such waiver or
modification is in writing and signed by the President of the
Employer.
f. Remedies. In the event of breach or threatened breach by
Employee of any provision of this Paragraph 4, Employer shall
be entitled to relief by temporary restraining order,
temporary injunction, or permanent injunction or otherwise, in
addition to other legal and equitable relief to which it may
be entitled, including any and all monetary damages which
Employer may incur as a result of said breach, violation or
threatened breach or violation. Employer may pursue any remedy
available to it concurrently or consecutively in any order as
to any breach, violation, or threatened breach or violation,
and the pursuit of one of such remedies at any time will not
be deemed an election of remedies or waiver of the right to
pursue any other of such remedies as to such breach,
violation, or threatened breach or violation, or as to any
other breach, violation, or threatened breach or violation.
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Employee hereby acknowledges that Employee's
agreement to be bound by the protective covenants set forth in
this Paragraph 4 was a material inducement for Employer
entering into this Agreement, agreeing to pay Employee the
compensation and benefits set forth herein, and providing
Employee access to Employer's Trade Secrets and other
confidential information.
5. Termination. The employment relationship between Employee and Employer
created hereunder shall terminate before the expiration of the stated
term of this Agreement upon the occurrence of any one of the following
events:
a. Death or Permanent Disability. The employment relationship
shall be terminated effective on the death or permanent
disability of the Employee.
b. Termination for Cause. The following events, which for
purposes of this Agreement shall constitute "cause" for
termination:
i. Any act of fraud, misappropriation or embezzlement by
Employee with respect to any aspect of Employer's
business;
ii. The breach by Employee of any provision of Paragraphs
1, 2 or 4 (including but not limited to a refusal to
follow lawful directives of the President or Board of
Directors of Employer which are not inconsistent with
the provisions of this Agreement) of this Agreement;
iii. The conviction of Employee by a court of competent
jurisdiction of a felony or of a crime involving
moral turpitude;
iv. The intentional and material breach by the Employee
of any non-disclosure or
non-competition/non-solicitation provision of any
agreement to which the Employee and Employer or any
of its subsidiaries are parties; or
v. The intentional and continual failure by the Employee
to perform in all material respects his duties and
responsibilities (other than as a result of death or
disability) and the failure of the Employee to cure
the same in all material respects within thirty (30)
days after written notice thereof from Employer;
vi. The illegal use of drugs by Employee during the term
of this Agreement that, in the determination of the
President of Employer, substantially interferes with
Employee's performance of his duties hereunder;
vii. acceptance of employment with any other employer
except upon written permission of the President of
the Employer.
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<PAGE> 8
c. Termination by Employer with Notice. Employer may terminate
this Agreement without cause at any time upon thirty (30) days
written notice to Employee, during which period Employee shall
not be required to perform any services for Employer other
than to assist Employer in training his successor and
generally preparing for an orderly transition; PROVIDED,
HOWEVER, that Employee shall be entitled to compensation upon
such termination as provided in Paragraph 6(a), (b), (c) and
(d) below.
6. Compensation Upon Termination. Upon the termination of Employee's
employment under this Agreement before the expiration of the stated
term hereof for any reason, Employee shall be entitled to:
a. the salary earned by him before the effective date of
termination as provided in Paragraph 3(a) hereof (including
salary payable during any applicable notice period), prorated
on the basis of the number of full days of service rendered by
Employee during the salary payment period to the effective
date of termination;
b. any accrued, but unpaid, vacation benefits; and
c. any previously authorized but unreimbursed business expenses.
If Employee's employment hereunder terminates because of the
death or permanent disability of Employee, all amounts that may be due
to him under this Paragraph 6 shall be paid to him or his
administrators, personal representatives, heirs and legatees, as may be
appropriate.
d. Additional Compensation Upon Termination Without Cause. If
Employee's employment hereunder terminates without cause
pursuant to Paragraph 5(c) above, Employer shall pay to
Employee in addition to the amounts set forth in Subparagraphs
6(a), 6(b) and 6(c) above:
i. salary payments for the duration of the initial term
of this Agreement, or any Renewal Term, as set forth
in Paragraph 8 below when and as such salary payments
would have come due had the Employee's employment not
been terminated;
The provisions of Paragraphs 4, 5 and 6 hereof shall survive
the termination of the employment relationship hereunder and this
Agreement to the extent necessary or reasonably appropriate to effect
the intent of the parties hereto as expressed in such provisions.
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<PAGE> 9
7. Compensation Upon Change in Control.
a. For purposes of the Agreement, "Change of Control" means the
occurrence of any of the following events:
i. any "person" or "group" as such terms are used under
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), other
than Employer, any trustee or any other fiduciary
holding securities under an employee benefit plan of
Employer, or any corporation owned, directly or
indirectly, by the stockholders of Employer in
substantially the same proportions as their ownership
of Common Stock of Employer, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), of securities of Employer
representing thirty-five percent (35%) or more of the
combined voting power of Employer's voting securities
then-outstanding;
ii. during any period of two consecutive years,
individuals who at the beginning of such period
constituted the Board of Directors of Employer cease
for any reason to constitute a majority thereof
(unless the election, or nomination for election by
Employer's stockholders, of such director was
approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
directors at the beginning of such period or whose
election or nomination for election was previously so
approved);
iii. Employer completes a merger or consolidation of
Employer with another corporation, other than (A) a
merger or consolidation which would result in the
voting securities of Employer outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity) more than
eighty percent (80%) of the combined voting power of
the voting securities of Employer or such surviving
entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation
affected to implement a recapitalization of Employer
(or similar transaction) in which no "person" (as
herein above defined) acquires more than thirty
percent (30%) of the combined voting power of
Employer's then-outstanding voting securities; or
iv. the stockholders of Employer approve a plan of
complete liquidation of Employer or any agreement for
the sale or disposition by Employer of all or
substantially all of Employer's assets.
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<PAGE> 10
b. For purposes of this Agreement, "Good Reason" means the
occurrence of any of the following events:
i. the reduction of the Employee's job title, position
or responsibilities without the Employee's prior
written consent;
ii. the change of the location where the Employee is
based to a location which is more than fifty (50)
miles from his present location without the
Employee's prior written consent; or
iii. the reduction of the Employee's annual salary and
bonus by more than ten percent (10%) from the sum of
the higher rate of the Employee's actual annual
salary and bonus in effect within two years
immediately preceding the Change of Control.
Employee shall give Employer fifteen (15) business days notice
of an intent terminate this Agreement for "Good Reason" as
defined in this Paragraph 7, and provide the Employer with ten
(10) business days after receipt of such notice from Employee
to remedy the alleged violation of subparagraphs 7(b)(i)(ii),
or (iii).
c. BENEFITS UPON CHANGE IN CONTROL
i. Severance Benefits. If the Employee's employment with
Employer is terminated (i) by Employer (or by the
acquiring or successor business entity following a
Change of Control) other than for Cause or death, or
(ii) by the Employee for Good Reason, in either event
within a period beginning one hundred and eighty
(180) days before, and ending two (2) years after,
the date of a Change of Control (the "Change
Period"), the Employee shall receive a severance
benefit in an amount equal to the sum of:
(1) the Employee's highest annual cash base
salary in effect within two (2) years
immediately preceding the Change of Control;
plus
(2) the average of the Employee's annual bonuses
paid for the two (2) calendar years
immediately preceding the Change of Control.
In addition, for eighteen months following the date
of termination of the Employee's employment in
circumstances in which a severance payment is due
hereunder, Employer shall provide the Employee health
and other welfare benefits that are not less
favorable to the Employee than those to which he was
entitled immediately prior to the Change in Control.
Provided however, Employer shall have no obligation
to provide Employee with any compensation under this
Paragraph 7 if Employee is in breach or violation of
any of the covenants contained in Paragraph 4.
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ii. Form of Payment. The amount of the severance benefit
provided in Paragraph 7(c)(i) hereof shall be paid to
Employee in two (2) equal installments, the first
installment payable as soon as practicable after the
occurrence of the event giving rise to the payment of
the severance benefit by Employer hereunder, but in
no event more than thirty (30) days thereafter, and
the second installment payable one (1) year following
the occurrence of such event, provided, however, that
the severance benefit payable by Employer pursuant to
Paragraph 7(c)(i) hereof will be reduced by any other
cash payments made to the Employee under a written
employment agreement between the Employee and
Employer for periods after the date on which the
Employee's employment was terminated. Provided
however, Employer shall have no obligation to provide
Employee with any compensation under this Paragraph 7
if Employee is in breach or violation of any of the
covenants contained in Paragraph 4.
iii. Gross-Up Payments. Anything in this Agreement to the
contrary notwithstanding, in the event that a
severance payment is made under this Agreement and it
shall be determined (as hereafter provided) that any
payment (other than the Gross-Up Payments provided
for herein) or distribution by Employer or any of its
affiliates to or for the benefit of the Employee,
whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement
or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, or
the lapse or termination of any restriction on, or
the vesting or exercisability of any of the foregoing
(a "Payment"), excluding, however, any stock option
or right in respect of restricted stock, would be
subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the
"Code") (or any successor provision thereto), by
reason of being considered "contingent on a change in
ownership or control" of Employer, within the meaning
of Section 280G of the Code (or any successor
provision thereto) or to any similar tax imposed by
state or local law, or any interest or penalties with
respect to such tax (such tax or taxes, together with
any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then
the Employee shall be entitled to receive an
additional payment or payments (collectively, a
"Gross-Up Payment"); provided, however, that no
Gross-Up Payment shall be made with respect to the
Excise Tax, if any, imposed upon (i) any stock
option, including without limitation any incentive
stock option, as defined by Section 422 of the Code
("ISO") granted prior to the execution of this
Agreement or (ii) any stock appreciation or similar
right, whether or not limited, granted in tandem with
an ISO described in clause (i). The Gross-Up Payment
shall be in an amount such that, after payment by the
Employee of all taxes (including any interest or
penalties imposed with respect to such taxes),
including an Excise Tax imposed upon the Gross-Up
Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon
the Payment. The procedural
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<PAGE> 12
provisions relating to Gross-Up Payments set forth in
Annex A hereto are hereby incorporated herein by this
reference.
d. Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Paragraph 7 of this
Agreement by seeking other employment or otherwise. However,
the amount of any payment or benefit provided for in this
Paragraph 7 shall be reduced by any compensation earned by the
Employee as a result of employment by another employer and as
provided in Paragraph 7(c)(ii) hereof.
8. Term. This Agreement shall be binding and enforceable against Employer
and Employee immediately upon its execution by both such parties. The
stated term of this Agreement and the employment relationship created
hereunder shall begin on January 1, 2000 (with employee to be bound by
confidentiality and other provisions set forth in Paragraph 4 herein to
the extent confidential information is provided to Employee prior to
such date), and shall remain in effect for one (1) year thereafter,
unless sooner terminated in accordance with Paragraph 5 hereof. This
Agreement shall be deemed to be renewed for a month-to-month term after
its initial term ("Renewal Term") unless the parties execute an express
written renewal agreement which specifies a different term.
a. Notwithstanding any provision of this Agreement to the
contrary, the parties' respective rights and obligations under
Paragraph 7 shall survive any termination or expiration of
this Agreement or the termination of the Employee's employment
following a Change of Control for any reason whatsoever.
9. Remedies. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover
damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in its favor. Notwithstanding
Paragraph 10 below, the parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions
of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
10. Arbitration. Except as Provided in Paragraph 9 above, any controversy
or claim arising out of or relating to this Agreement or relating to
Employee's rights, compensation and responsibilities as an employee
shall be determined by arbitration in Dallas County, Texas in
accordance with the rules of the American Arbitration Association then
in effect. The arbitration shall be submitted to a single arbitrator
selected in accordance with the American Arbitration Association's
procedures then in effect for the selection of employment arbitrators.
This Paragraph 10 shall survive termination of this Agreement for any
reason.
11. Assignment. This Agreement is personal to Employee and may not be
assigned in any way by Employee without the prior written consent of
Employer. This Agreement shall not be assignable or delegable by
Employer, other than to an affiliate of Employer;
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<PAGE> 13
provided, however, that in the event of the merger or consolidation of
Employer the obligations of Employer hereunder shall be binding upon
the surviving or resulting entity of such merger of consolidation. The
rights and obligations under this Agreement shall inure to the benefit
of and shall be binding upon the heirs, legatees, administrators and
personal representatives of Employee and upon the successors,
representatives and assigns of Employer.
12. Severability and Reformation. The parties hereto intend all provisions
of this Agreement to be enforced to the fullest extent permitted by
law. If, however, any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future law, such
provision shall be fully severable, and this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable
provision were never a part hereof, and the remaining provisions shall
remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance.
13. Notices. All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, mailed by certified mail (return
receipt requested) or sent by overnight delivery service, cable,
telegram, facsimile transmission or telex to the parties at the
following addresses or at such other addresses as shall be specified by
the parties by like notice:
If to Employer: J. Raymond Bilbao
General Counsel & Secretary
1155 Kas Drive, Suite 100
Richardson, Texas 75081
If to Employee: Marshall Lamm
4201 Hampshire Street
Plano, Texas 75093
Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth calendar day after
posting, in the case of notice so given by overnight delivery service,
on the date of actual delivery and, in the case of notice so given by
cable, telegram, facsimile transmission, telex or personal delivery, on
the date of actual transmission or, as the case may be, personal
delivery.
14. Further Actions. Whether or not specifically required under the terms
of this Agreement, each party hereto shall execute and deliver such
documents and take such further actions as shall be necessary in order
for such party to perform all of his or its obligations specified
herein or reasonably implied from the terms hereof.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAWS (RULES) OR CHOICE OF LAWS (RULES) THEREOF.
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<PAGE> 14
16. Entire Agreement and Amendment. This Agreement contains the entire
understanding and agreement between the parties, and supersedes any
other agreement between Employee and Employer, whether oral or in
writing, with respect to the subject matter hereof. This Agreement may
not be altered, amended, or rescinded, nor may any of its provisions be
waived, except by an instrument in writing signed by both parties
hereto or, in the case of an asserted waiver, by the party against whom
the waiver is sought to be enforced. Any modification of this Agreement
may only be signed on behalf of Employer by the President of Employer.
17. Counterparts. This Agreement may be executed in counterparts, with the
same effect as if both parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together
and shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EMPLOYER:
HIGHWAYMASTER COMMUNICATIONS, INC.
By: /s/ JANA AHLFINGER BELL
------------------------------
JANA AHLFINGER BELL,
President and Chief Executive Officer
EMPLOYEE:
/s/ MARSHALL LAMM
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<PAGE> 15
ANNEX A
GROSS-UP PAYMENT PROCEDURAL PROVISIONS
(a) Subject to the provision of Paragraph (e) hereof, all
determinations required to be made under Paragraph 7(c)(iii) of the Agreement,
including whether an Excise Tax is payable by the Employee and the amount of
such Excise Tax and whether a Gross-Up Payment is required to be paid by
Employer to the Employee and the amount of such Gross-Up Payment, if any, shall
be made by a Top 5 accounting firm (the "Accounting Firm") selected by the
Employee in his sole discretion. The Employee shall direct the Accounting Firm
to submit its determination and detailed supporting calculations to both
Employer and the Employee within thirty (30) calendar days after the Termination
Date, if applicable, and any such other time or times as may be requested by
Employer or the Employee. If the Accounting Firm determines that any Excise Tax
is payable by the Employee, Employer shall pay the required Gross-Up Payment to
the Employee within fifteen (15) business days after receipt of such
determination and calculations with respect to any Payment to the Employee. If
the Accounting Firm determines that no Excise Tax is payable by the Employee, it
shall, at the same time as it makes such determination, furnish Employer and the
Employee an opinion that the Employee has substantial authority not to report
any Excise Tax on his federal, state or local income or other tax return. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which shall
not have been made by Employer should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that Employer exhausts or fails to pursue its remedies pursuant to Paragraph (e)
hereof and the Employee thereafter is required to make a payment of any Excise
Tax, the Employee shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both Employer and the Employee as promptly as
possible. Any such Underpayment shall be promptly paid by Employer to, or for
the benefit of, the Employee within fifteen (15) business days after receipt of
such determination and calculations.
(b) Employer and the Employee shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of Employer or the Employee, as the case may be, reasonably requested
by the Accounting Firm, and otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the determinations and
calculations contemplated by Paragraph (a) hereof. Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment shall be binding upon
Employer and the Employee.
(c) The federal, state and local income or other tax returns
filed by the Employee shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Employee. The Employee shall make proper payment of the amount of any Excise
Payment, and at the request of Employer, provide to Employer true and correct
copies (with any amendments) of his federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonable requested by
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<PAGE> 16
Employer, evidencing such payment. If prior to the filing of the Employee's
federal income tax return, or corresponding state or local tax return, if
relevant, the Accounting Firm determines that the amount of the Gross-Up Payment
should be reduced, the Employee shall within fifteen (15) business days pay to
Employer the amount of such deduction.
(d) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Paragraph (a) hereof shall be borne by Employer. If such fees and expenses are
initially paid by the Employee, Employer shall reimburse the Employee the full
amount of such fees and expenses within fifteen (15) business days after receipt
from the Employee of a statement therefor and reasonable evidence of his payment
thereof.
(e) The Employee shall notify Employer in writing of any claim
by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by Employer of a Gross-Up Payment. Such
notification shall be given as promptly as practicable but no later than ten
(10) business days after the Employee actually receives notice of such claim and
the Employee shall further apprise Employer of the nature of such claim and the
date on which such claim is requested to be paid ( in each case, to the extent
known by the Employee). The Employee shall not pay such claim prior to the
earlier of (i) the expiration of the thirty (30) calendar-day period following
the date on which he gives such notice to Employer and (ii) the date that any
payment of amount with respect to such claim is due. If Employer notifies the
Employee in writing prior to the expiration of such period that it desires to
contest such claim, the Employee shall:
(i) provide Employer with any written records or documents in
his possession relating to such claim reasonably requested by Employer;
(ii) take such action in connection with contesting such claim
as Employer shall reasonable request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by Employer;
(iii) cooperate with Employer in good faith in order
effectively to contest such claim, and
(iv) permit Employer to participate in any proceedings
relating to such claim;
provided, however, that Employer shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnity and hold harmless the Employee, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Paragraph (e), Employer shall control all proceedings taken in connection with
the contest of any claim contemplated by this Paragraph (e) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Employee may participate therein at his own
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<PAGE> 17
cost and expense) and may, at its option, either direct the Employee to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a count of initial jurisdiction and in one or more
appellate courts, as Employer shall determine; provided, however, that if
Employer directs the Employee to pay the tax claimed and sue for a refund,
Employer shall advance the amount of such payment to the Employee on an
interest-free basis and shall indemnify and hold the Employee harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Employee with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, Employer's control of any such contested claim
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Employee shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(f) If, after the receipt by the Employee of an amount
advanced by Employer pursuant to Paragraph (e) hereof, the Employee receives any
refund with respect to such claim, the Employee shall (subject to Employer's
complying with the requirements of Paragraph (e) hereof) promptly pay to
Employer the amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by Employer pursuant to Paragraph (e) hereof, a
determination is made that the Employee shall not be entitled to any refund with
respect to such claim and Employer does not notify the Employee in writing of
its intent to contest such denial or refund prior to the expiration of thirty
(30) calendar days after such determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount of any such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid by Employer to the Employee pursuant to this Paragraph 7(c)(iii) of the
Agreement.
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EXHIBIT 10.62
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of the 14th day
of March 2000, but effective as of January 1, 2000, is entered into in
Richardson, Texas by and between HighwayMaster Communications, Inc., a Delaware
corporation, with its principal place of business located at 1155 Kas Drive,
Suite 100, Richardson, Texas, 75081 ("Employer"), and Pierre Parent, an
individual residing at 310 Wood Duck Lane, McKinney, Texas 75070 ("Employee").
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, Employer and Employee, intending to be legally bound, hereby agree as
follows:
1. Employment Relationship. Employer hereby employs Employee, and Employee
hereby accepts such employment, upon the terms and conditions set forth
in this Agreement. Such employment relationship shall continue for the
stated term of this Agreement, as described in Paragraph 8 hereof,
unless earlier terminated pursuant to Paragraph 5 hereof.
2. Position and Responsibilities of Employee. Employee shall be employed
as Chief Technical Officer with job responsibilities related thereto,
and such job responsibilities may be expanded at the sole discretion of
Employer. Employee shall report to the President and shall devote such
time, skill and attention to the business of Employer as shall be
required for the efficient management thereof, and shall manage and
supervise such business, and shall devote his full time best efforts to
the faithful performance of his duties on behalf of Employer. Employee
shall also perform such other duties, and may have job responsibilities
and titles modified from time to time as may be requested by the
President or by resolution of the Board of Directors of Employer,
provided such duties and job titles are generally consistent with the
level of responsibility currently held by Employee. Employee shall not
engage in additional gainful employment of any kind or undertake any
role or position, whether or not for compensation, with any competitor
of Employer during the term of this Agreement without advance written
consent from Employer.
3. Compensation. For all services rendered by Employee pursuant to this
Agreement, Employer shall pay to Employee, and Employee shall accept as
full compensation hereunder the following:
a. Salary. Employee shall receive a salary of $13,125.00 per
month payable by Employer in bi-monthly amounts in Richardson,
Texas. Employee's salary shall be subject to all appropriate
federal and state withholding taxes and shall be payable in
accordance with the normal payroll procedures of Employer.
b. Benefits and Perquisites. Employee shall be entitled to
participate in the employee benefit plans provided by Employer
for all employees generally, and for executive employees of
Employer. Employer shall be entitled to change such plans from
time to time, and the parties acknowledge that at the initial
date of this
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<PAGE> 2
Agreement the fringe benefits provided to Employee include a
corporate 401(k) plan, health, dental, life, short and
long-term disability insurance for the Employee, and
reimbursement of certain expenses in accordance with the
policies and procedures of Employer.
c. Discretionary Bonuses. Employer shall establish an incentive
bonus plan for Employee based on various targets and
performance criteria to be established by the President and
Board of Directors in consultation with the Employee. The
evaluation of the performance of the Employee as measured by
the applicable targets and the awarding of applicable bonuses,
if any, shall be at the sole discretion of the President. The
maximum annual bonus which may be awarded to Employee shall be
in the amount of thirty percent (30%) of Employee's annual
base salary at each fiscal year end of Employer during the
term of this Agreement, pro-rated for partial years. The
annual discretionary bonus may be awarded in whole, in part,
or withheld in its entirety based on the level of incentive
bonus plan performance criteria achieved by Employee, in the
sole judgement of the President and Board of Directors. If
Employee terminates this Agreement prior to the expiration of
the initial one (1) year term or if Employer terminates this
Agreement for cause as per Paragraph 5(b), the Employee will
not be paid any Discretionary Bonus, in whole or in part. If
Employer terminates this Agreement as per Paragraph 5 (c)
hereof prior to the expiration of the initial one (1) year
term, Employee shall be entitled to receive his Discretionary
Bonus on a prorated basis in such amount as determined by the
President in her sole discretion.
d. Stock Options. Employee previously executed Stock Option
Agreement(s) by which Employee has been granted the right to
purchase shares of common stock of Employer at a stated
exercise price as per the terms and conditions of the
HighwayMaster Communications, Inc.(f/k/a HM Holding
Corporation) 1994 Stock Option Plan (the "Plan")(such previous
option grants hereinafter referred to as "Previous Stock
Option Grants"). As per the Plan and the Stock Option
Agreements, Employee's options vest in five (5) installments
with 20% vesting immediately upon the grant date and 20%
vesting on each of the next four yearly anniversaries of grant
date. Notwithstanding the terms of the Plan and the Stock
Option Agreements previously executed by Employee and
Employer, upon the occurrence of a Change in Control as
defined in Paragraph 7 of this Agreement, all stock options
issued pursuant to the Previous Stock Option Grants shall
accelerate and be deemed vested on the day prior to the Change
in Control of Employer.
4. Protective Covenants. Employee recognizes that his employment by
Employer is one of the highest trust and confidence because (i)
Employee will become fully familiar with all aspects of Employer's
business during the period of his employment with Employer, (ii)
certain information of which Employee will gain knowledge during his
employment by Employer is proprietary and confidential information and
is of special and peculiar value to Employer, and (iii) if any such
proprietary and confidential information were imparted to or became
known by any person, including Employee, engaging in a business in
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<PAGE> 3
competition with that of Employer, hardship, loss and irreparable
injury and damage could result to Employer, the measurement of which
would be difficult if not impossible to ascertain. Employee further
acknowledges that Employer has developed unique skills, concepts, sales
presentations, marketing programs, marketing strategy, business
practices, methods of operation, pricing information, production cost
information, trademarks, licenses, technical information, proprietary
information, computer software programs, tapes and discs concerning its
operations systems, customer lists, customer leads, documents
identifying past, present and future customers, customer profile and
preference data, hiring and training methods, investment policies,
financial and other confidential and proprietary information concerning
its operations and expansion plans ("Trade Secrets"). Therefore,
Employee agrees that it is necessary for Employer to protect its
business and that of its affiliates from such damage, and Employee
further agrees that the following covenants constitute a reasonable and
appropriate means, consistent with the best interest of both Employee
and Employer, to protect Employer or its affiliates against damage due
to loss or disclosure of proprietary information or Trade Secrets and
shall apply to and be binding upon Employee as provided herein:
a. Trade Secrets. Employee recognizes that his position with
Employer is one of the highest trust and confidence by reason
of Employee's access to and contact with certain Trade Secrets
of Employer. Employee agrees and covenants that, except as may
be required by Employer in connection with this Agreement, or
with the prior written consent of Employer, Employee shall
not, either during the term of this Agreement or thereafter,
directly or indirectly, use for Employee's own benefit or for
the benefit of another, or disclose, disseminate, or
distribute to another, except as directed by Employer or as
required for the performance of Employee's duties on behalf of
the Employer, any Trade Secret (whether or not acquired,
learned, obtained, or developed by Employee alone or in
conjunction with others) of Employer or of others with whom
Employer has a business relationship. All Trade Secrets, and
all memoranda, notes, records, drawings, documents, or other
writings whatsoever made, compiled, acquired, or received by
Employee during the term of this Agreement, arising out of, in
connection with, or related to any activity or business of
Employer, including, but not limited to, the customers,
suppliers, or others with whom Employer has a business
relationship, the arrangements of Employer with such parties,
and the pricing and expansion policies and strategy of
Employer, are, and shall continue to be, the sole and
exclusive property of Employer and shall, together with all
copies thereof, any and all documents constituting or relating
to Employer's proprietary information and Trade Secrets, and
all advertising literature, be returned and delivered to
Employer by Employee immediately, without demand, upon the
termination of this Agreement, or at any time upon Employer's
demand.
Employee acknowledges that Employer would not provide
Employee access to Employer's Trade Secrets and proprietary
and confidential information but for Employee's covenants in
this Paragraph 4.
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<PAGE> 4
Employee represents and warrants that he is not bound
by any agreement with any prior employer or other party that
will be breached by execution and performance of this
Agreement, or which would otherwise prevent him from
performing his duties with Employer as set forth in this
Agreement. Employee represents and warrants that he has not
retained any copies of proprietary and confidential
information of any prior employer, and he will not use or rely
on any confidential and proprietary information of any prior
employer in carrying out his duties for Employer.
b. Covenant Not to Compete. In consideration of the numerous
mutual promises contained in the Agreement between Employer
and the Employee, including, without limitation, those
involving access to Trade Secrets and confidential information
and training, and in order to protect Employer's Trade Secrets
and the confidential information and to reduce the likelihood
of irreparable damage which would occur in the event such
information is provided to or used by a competitor of
Employer, Employee agrees that during his or her employment
and for an additional period of eighteen (18) months
immediately following the voluntary or involuntary termination
of his or her employment (the "Non-Competition Term"),
Employee will not, without the prior written consent of
Employer (which consent may be withheld in its sole
discretion), enter the employ of any person or entity, either
directly or indirectly either as principal, agent,
representative, shareholder (except owning publicly traded
stock for investment purposes only in which Employee owns less
than 5%) consultant, officer, business partner, associate,
employee or otherwise, with a place of business in the United
States of America and/or Canada, which sells or offers to sell
services and/or products which compete directly with the
services and/or products offered or to be offered for sale by
Employer.
If, during any period within the Noncompetition Term, Employee
is not in compliance with the terms of this Paragraph 4,
Employer shall be entitled to, among other remedies,
compliance by Employee with the terms of this Paragraph 4 for
an additional period equal to the period of such
noncompliance. For purposes of this Agreement, the term
"Noncompetition Term" shall also include this additional
period. Employee hereby acknowledges that the geographic
boundaries, scope of prohibited activities and the time
duration of the provisions of this Section 4 are reasonable
and are no broader than are necessary to protect the
legitimate business interests of the Employer.
The Employer and Employee agree and stipulate that the
agreements and covenants not to compete contained in Paragraph
4 hereof are fair and reasonable in light of all of the facts
and circumstances of the relationship between Employee and
Employer; however, Employee and Employer are aware that in
certain circumstances courts have refused to enforce certain
agreements not to compete. Therefore, in furtherance of, and
not in derogation of the provisions of Paragraph 4, Employer
and Employee agree that in the event a court should decline to
enforce the provisions of Paragraph 4, that Paragraph 4 shall
be deemed to be modified or reformed to restrict Employee's
competition with Employer or its
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<PAGE> 5
affiliates to the maximum extent, as to time, geography and
business scope, which the court shall find enforceable;
provided, however, in no event shall the provisions of
Paragraph 4 be deemed to be more restrictive to Employee than
those contained herein.
c. Non-Solicitation Employee agrees that during his employment,
and for a period of twenty four (24) months following the
termination of his employment (for whatever reason), that
neither he nor any individual, partner(s), limited
partnership, corporation or other entity or business with
which he is in any way affiliated, including, without
limitation, any partner, limited partner, director, officer,
shareholder, employee, or agent of any such entity or
business, will (i) request, induce or attempt to influence,
directly or indirectly, any employee of Employer to terminate
their employment with Employer or (ii) employ any person who
as of the date of this Agreement was, or after such date is or
was, an employee of Employer. Employee further agrees that
during the period beginning with the commencement of
Employee's employment with Employer and ending twenty four
(24) months after the termination of Employee's employment
with Employer (for whatever reason), he shall not, directly or
indirectly, as an employee, agent, consultant, stockholder,
director, partner or in any other individual or representative
capacity of Employer or of any other person, entity or
business, solicit or encourage any present or future customer,
supplier, contractor, partner or investor of the Employer to
terminate or otherwise alter his, her or its relationship with
Employer.
d. Work Product. For purposes of this Paragraph 4, "Work Product"
shall mean all intellectual property rights, including all
trade secrets, U.S. and international copyrights, patentable
inventions, discoveries and other intellectual property rights
in any programming, design, documentation, technology, or
other work product that is created in connection with
Employee's work. In addition, all rights in any preexisting
programming, design, documentation, technology, or other Work
Product provided to Employer during Employee's employment
shall automatically become part of the Work Product hereunder,
whether or not it arises specifically out of my "Work." For
purposes of this Agreement, "Work" shall mean (1) any direct
assignments and required performance by or for the Employer,
and (2) any other productive output that relates to the
business of the Employer and is produced during the course of
Employee's employment or engagement by Employer. For this
purpose, Work may be considered present even after normal
working hours, away from Employer's premises, on an
unsupervised basis, alone or with others. Unless otherwise
provided in a subsequent writing signed by the President of
the Employer, this Agreement shall apply to all Work Product
created in connection with all Work conducted before or after
the date of this Agreement.
Employer shall own all rights in the Work Product. To this
end, all Work Product shall be considered work made for hire
for Employer. If any of the Work Product may not, by operation
of law or agreement, be considered Work made by
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<PAGE> 6
Employee for hire for the Employer (or if ownership of all
rights therein do not otherwise vest exclusively in the
Employer immediately), Employee agrees to assign, and upon
creation thereof does hereby automatically assign, with
further consideration, the ownership thereof to the Employer.
Employee hereby irrevocably relinquishes for the benefit of
Employer and its assigns any moral rights in the Work Product
recognized by applicable law. Employer shall have the right to
obtain and hold, in whatever name or capacity it selects,
copyrights, registrations, and any other protection available
in the Work Product.
Employee agrees to perform upon the request of Employer,
during or after Employee's Work or employment, such further
acts as may be necessary or desirable to transfer, perfect,
and defend the Employer's ownership of the Work Product,
including by (1) executing, acknowledging, and delivering any
requested affidavits and documents of assignment and
conveyance, (2) obtaining and/or aiding in the enforcement of
copyrights, trade secrets, and (if applicable) patents with
respect to the Work Product in any countries, and (3)
providing testimony in connection with any proceeding
affecting the rights of the Employer in any Work Product.
Employee warrants that Employee's Work for Employer does not
and will not in any way conflict with any remaining
obligations Employee may have with any prior employer or
contractor. Employee also agrees to develop all Work Product
in a manner that avoids even the appearance of infringement of
any third party's intellectual property rights.
e. Survival of Covenants. Each covenant of Employee set forth in
this Paragraph 4 shall survive the termination of this
Agreement and shall be construed as an agreement independent
of any other provision of this Agreement, and the existence of
any claim or cause of action of Employee against Employer
whether predicated on this Agreement or otherwise shall not
constitute a defense to the enforcement by Employer of said
covenant. No modification or waiver of any covenant contained
in Paragraph 4 shall be valid unless such waiver or
modification is in writing and signed by the President of the
Employer.
f. Remedies. In the event of breach or threatened breach by
Employee of any provision of this Paragraph 4, Employer shall
be entitled to relief by temporary restraining order,
temporary injunction, or permanent injunction or otherwise, in
addition to other legal and equitable relief to which it may
be entitled, including any and all monetary damages which
Employer may incur as a result of said breach, violation or
threatened breach or violation. Employer may pursue any remedy
available to it concurrently or consecutively in any order as
to any breach, violation, or threatened breach or violation,
and the pursuit of one of such remedies at any time will not
be deemed an election of remedies or waiver of the right to
pursue any other of such remedies as to such breach,
violation, or threatened breach or violation, or as to any
other breach, violation, or threatened breach or violation.
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Employee hereby acknowledges that Employee's
agreement to be bound by the protective covenants set forth in
this Paragraph 4 was a material inducement for Employer
entering into this Agreement, agreeing to pay Employee the
compensation and benefits set forth herein, and providing
Employee access to Employer's Trade Secrets and other
confidential information.
5. Termination. The employment relationship between Employee and Employer
created hereunder shall terminate before the expiration of the stated
term of this Agreement upon the occurrence of any one of the following
events:
a. Death or Permanent Disability. The employment relationship
shall be terminated effective on the death or permanent
disability of the Employee.
b. Termination for Cause. The following events, which for
purposes of this Agreement shall constitute "cause" for
termination:
i. Any act of fraud, misappropriation or embezzlement by
Employee with respect to any aspect of Employer's
business;
ii. The breach by Employee of any provision of Paragraphs
1, 2 or 4 (including but not limited to a refusal to
follow lawful directives of the President or Board of
Directors of Employer which are not inconsistent with
the provisions of this Agreement) of this Agreement;
iii. The conviction of Employee by a court of competent
jurisdiction of a felony or of a crime involving
moral turpitude;
iv. The intentional and material breach by the Employee
of any non-disclosure or non-competition/
non-solicitation provision of any agreement to which
the Employee and Employer or any of its subsidiaries
are parties; or
v. The intentional and continual failure by the Employee
to perform in all material respects his duties and
responsibilities (other than as a result of death or
disability) and the failure of the Employee to cure
the same in all material respects within thirty (30)
days after written notice thereof from Employer;
vi. The illegal use of drugs by Employee during the term
of this Agreement that, in the determination of the
President of Employer, substantially interferes with
Employee's performance of his duties hereunder;
vii. acceptance of employment with any other employer
except upon written permission of the President of
the Employer.
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<PAGE> 8
c. Termination by Employer with Notice. Employer may terminate
this Agreement without cause at any time upon thirty (30) days
written notice to Employee, during which period Employee shall
not be required to perform any services for Employer other
than to assist Employer in training his successor and
generally preparing for an orderly transition; PROVIDED,
HOWEVER, that Employee shall be entitled to compensation upon
such termination as provided in Paragraph 6(a), (b), (c) and
(d) below.
6. Compensation Upon Termination. Upon the termination of Employee's
employment under this Agreement before the expiration of the stated
term hereof for any reason, Employee shall be entitled to:
a. the salary earned by him before the effective date of
termination as provided in Paragraph 3(a) hereof (including
salary payable during any applicable notice period), prorated
on the basis of the number of full days of service rendered by
Employee during the salary payment period to the effective
date of termination;
b. any accrued, but unpaid, vacation benefits; and
c. any previously authorized but unreimbursed business expenses.
If Employee's employment hereunder terminates because of the
death or permanent disability of Employee, all amounts that may be due
to him under this Paragraph 6 shall be paid to him or his
administrators, personal representatives, heirs and legatees, as may be
appropriate.
d. Additional Compensation Upon Termination Without Cause. If
Employee's employment hereunder terminates without cause
pursuant to Paragraph 5(c) above, Employer shall pay to
Employee in addition to the amounts set forth in Subparagraphs
6(a), 6(b) and 6(c) above:
i. salary payments for the duration of the initial term
of this Agreement, or any Renewal Term, as set forth
in Paragraph 8 below when and as such salary payments
would have come due had the Employee's employment not
been terminated;
The provisions of Paragraphs 4, 5 and 6 hereof shall survive
the termination of the employment relationship hereunder and this
Agreement to the extent necessary or reasonably appropriate to effect
the intent of the parties hereto as expressed in such provisions.
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7. Compensation Upon Change in Control.
a. For purposes of the Agreement, "Change of Control" means the
occurrence of any of the following events:
i. any "person" or "group" as such terms are used under
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), other
than Employer, any trustee or any other fiduciary
holding securities under an employee benefit plan of
Employer, or any corporation owned, directly or
indirectly, by the stockholders of Employer in
substantially the same proportions as their ownership
of Common Stock of Employer, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), of securities of Employer
representing thirty-five percent (35%) or more of the
combined voting power of Employer's voting securities
then-outstanding;
ii. during any period of two consecutive years,
individuals who at the beginning of such period
constituted the Board of Directors of Employer cease
for any reason to constitute a majority thereof
(unless the election, or nomination for election by
Employer's stockholders, of such director was
approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
directors at the beginning of such period or whose
election or nomination for election was previously so
approved);
iii. Employer completes a merger or consolidation of
Employer with another corporation, other than (A) a
merger or consolidation which would result in the
voting securities of Employer outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity) more than
eighty percent (80%) of the combined voting power of
the voting securities of Employer or such surviving
entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation
affected to implement a recapitalization of Employer
(or similar transaction) in which no "person" (as
herein above defined) acquires more than thirty
percent (30%) of the combined voting power of
Employer's then-outstanding voting securities; or
iv. the stockholders of Employer approve a plan of
complete liquidation of Employer or any agreement for
the sale or disposition by Employer of all or
substantially all of Employer's assets.
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b. For purposes of this Agreement, "Good Reason" means the
occurrence of any of the following events:
i. the reduction of the Employee's job title, position
or responsibilities without the Employee's prior
written consent;
ii. the change of the location where the Employee is
based to a location which is more than fifty (50)
miles from his present location without the
Employee's prior written consent; or
iii. the reduction of the Employee's annual salary and
bonus by more than ten percent (10%) from the sum of
the higher rate of the Employee's actual annual
salary and bonus in effect within two years
immediately preceding the Change of Control.
Employee shall give Employer fifteen (15) business days notice
of an intent terminate this Agreement for "Good Reason" as
defined in this Paragraph 7, and provide the Employer with ten
(10) business days after receipt of such notice from Employee
to remedy the alleged violation of subparagraphs 7(b)(i)(ii),
or (iii).
c. BENEFITS UPON CHANGE IN CONTROL
i. Severance Benefits. If the Employee's employment with
Employer is terminated (i) by Employer (or by the
acquiring or successor business entity following a
Change of Control) other than for Cause or death, or
(ii) by the Employee for Good Reason, in either event
within a period beginning one hundred and eighty
(180) days before, and ending two (2) years after,
the date of a Change of Control (the "Change
Period"), the Employee shall receive a severance
benefit in an amount equal to the sum of:
(1) the Employee's highest annual cash base
salary in effect within two (2) years
immediately preceding the Change of Control;
plus
(2) the average of the Employee's annual bonuses
paid for the two (2) calendar years
immediately preceding the Change of Control.
In addition, for eighteen months following the date
of termination of the Employee's employment in
circumstances in which a severance payment is due
hereunder, Employer shall provide the Employee health
and other welfare benefits that are not less
favorable to the Employee than those to which he was
entitled immediately prior to the Change in Control.
Provided however, Employer shall have no obligation
to provide Employee with any compensation under this
Paragraph 7 if Employee is in breach or violation of
any of the covenants contained in Paragraph 4.
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ii. Form of Payment. The amount of the severance benefit
provided in Paragraph 7(c)(i) hereof shall be paid to
Employee in two (2) equal installments, the first
installment payable as soon as practicable after the
occurrence of the event giving rise to the payment of
the severance benefit by Employer hereunder, but in
no event more than thirty (30) days thereafter, and
the second installment payable one (1) year following
the occurrence of such event, provided, however, that
the severance benefit payable by Employer pursuant to
Paragraph 7(c)(i) hereof will be reduced by any other
cash payments made to the Employee under a written
employment agreement between the Employee and
Employer for periods after the date on which the
Employee's employment was terminated. Provided
however, Employer shall have no obligation to provide
Employee with any compensation under this Paragraph 7
if Employee is in breach or violation of any of the
covenants contained in Paragraph 4.
iii. Gross-Up Payments. Anything in this Agreement to the
contrary notwithstanding, in the event that a
severance payment is made under this Agreement and it
shall be determined (as hereafter provided) that any
payment (other than the Gross-Up Payments provided
for herein) or distribution by Employer or any of its
affiliates to or for the benefit of the Employee,
whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement
or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, or
the lapse or termination of any restriction on, or
the vesting or exercisability of any of the foregoing
(a "Payment"), excluding, however, any stock option
or right in respect of restricted stock, would be
subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the
"Code") (or any successor provision thereto), by
reason of being considered "contingent on a change in
ownership or control" of Employer, within the meaning
of Section 280G of the Code (or any successor
provision thereto) or to any similar tax imposed by
state or local law, or any interest or penalties with
respect to such tax (such tax or taxes, together with
any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then
the Employee shall be entitled to receive an
additional payment or payments (collectively, a
"Gross-Up Payment"); provided, however, that no
Gross-Up Payment shall be made with respect to the
Excise Tax, if any, imposed upon (i) any stock
option, including without limitation any incentive
stock option, as defined by Section 422 of the Code
("ISO") granted prior to the execution of this
Agreement or (ii) any stock appreciation or similar
right, whether or not limited, granted in tandem with
an ISO described in clause (i). The Gross-Up Payment
shall be in an amount such that, after payment by the
Employee of all taxes (including any interest or
penalties imposed with respect to such taxes),
including an Excise Tax imposed upon the Gross-Up
Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon
the Payment. The procedural
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provisions relating to Gross-Up Payments set forth in
Annex A hereto are hereby incorporated herein by this
reference.
d. Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Paragraph 7 of this
Agreement by seeking other employment or otherwise. However,
the amount of any payment or benefit provided for in this
Paragraph 7 shall be reduced by any compensation earned by the
Employee as a result of employment by another employer and as
provided in Paragraph 7(c)(ii) hereof.
8. Term. This Agreement shall be binding and enforceable against Employer
and Employee immediately upon its execution by both such parties. The
stated term of this Agreement and the employment relationship created
hereunder shall begin on January 1, 2000 (with employee to be bound by
confidentiality and other provisions set forth in Paragraph 4 herein to
the extent confidential information is provided to Employee prior to
such date), and shall remain in effect for one (1) year thereafter,
unless sooner terminated in accordance with Paragraph 5 hereof. This
Agreement shall be deemed to be renewed for a month-to-month term after
its initial term ("Renewal Term") unless the parties execute an express
written renewal agreement which specifies a different term.
a. Notwithstanding any provision of this Agreement to the
contrary, the parties' respective rights and obligations under
Paragraph 7 shall survive any termination or expiration of
this Agreement or the termination of the Employee's employment
following a Change of Control for any reason whatsoever.
9. Remedies. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover
damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in its favor. Notwithstanding
Paragraph 10 below, the parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions
of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
10. Arbitration. Except as Provided in Paragraph 9 above, any controversy
or claim arising out of or relating to this Agreement or relating to
Employee's rights, compensation and responsibilities as an employee
shall be determined by arbitration in Dallas County, Texas in
accordance with the rules of the American Arbitration Association then
in effect. The arbitration shall be submitted to a single arbitrator
selected in accordance with the American Arbitration Association's
procedures then in effect for the selection of employment arbitrators.
This Paragraph 10 shall survive termination of this Agreement for any
reason.
11. Assignment. This Agreement is personal to Employee and may not be
assigned in any way by Employee without the prior written consent of
Employer. This Agreement shall not be assignable or delegable by
Employer, other than to an affiliate of Employer;
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provided, however, that in the event of the merger or consolidation of
Employer the obligations of Employer hereunder shall be binding upon
the surviving or resulting entity of such merger of consolidation. The
rights and obligations under this Agreement shall inure to the benefit
of and shall be binding upon the heirs, legatees, administrators and
personal representatives of Employee and upon the successors,
representatives and assigns of Employer.
12. Severability and Reformation. The parties hereto intend all provisions
of this Agreement to be enforced to the fullest extent permitted by
law. If, however, any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future law, such
provision shall be fully severable, and this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable
provision were never a part hereof, and the remaining provisions shall
remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance.
13. Notices. All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, mailed by certified mail (return
receipt requested) or sent by overnight delivery service, cable,
telegram, facsimile transmission or telex to the parties at the
following addresses or at such other addresses as shall be specified by
the parties by like notice:
If to Employer: J. Raymond Bilbao
General Counsel & Secretary
1155 Kas Drive, Suite 100
Richardson, Texas 75081
If to Employee: Pierre Parent
310 Wood Duck Lane
McKinney, Texas 75070
Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth calendar day after
posting, in the case of notice so given by overnight delivery service,
on the date of actual delivery and, in the case of notice so given by
cable, telegram, facsimile transmission, telex or personal delivery, on
the date of actual transmission or, as the case may be, personal
delivery.
14. Further Actions. Whether or not specifically required under the terms
of this Agreement, each party hereto shall execute and deliver such
documents and take such further actions as shall be necessary in order
for such party to perform all of his or its obligations specified
herein or reasonably implied from the terms hereof.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAWS (RULES) OR CHOICE OF LAWS (RULES) THEREOF.
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16. Entire Agreement and Amendment. This Agreement contains the entire
understanding and agreement between the parties, and supersedes any
other agreement between Employee and Employer, whether oral or in
writing, with respect to the subject matter hereof. This Agreement may
not be altered, amended, or rescinded, nor may any of its provisions be
waived, except by an instrument in writing signed by both parties
hereto or, in the case of an asserted waiver, by the party against whom
the waiver is sought to be enforced. Any modification of this Agreement
may only be signed on behalf of Employer by the President of Employer.
17. Counterparts. This Agreement may be executed in counterparts, with the
same effect as if both parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together
and shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EMPLOYER:
HIGHWAYMASTER COMMUNICATIONS, INC.
By: /S/ JANA AHLFINGER BELL
------------------------
JANA AHLFINGER BELL,
President and Chief Executive Officer
EMPLOYEE:
/S/ PIERRE PARENT 03/14/2000
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ANNEX A
GROSS-UP PAYMENT PROCEDURAL PROVISIONS
(a) Subject to the provision of Paragraph (e) hereof, all
determinations required to be made under Paragraph 7(c)(iii) of the Agreement,
including whether an Excise Tax is payable by the Employee and the amount of
such Excise Tax and whether a Gross-Up Payment is required to be paid by
Employer to the Employee and the amount of such Gross-Up Payment, if any, shall
be made by a Top 5 accounting firm (the "Accounting Firm") selected by the
Employee in his sole discretion. The Employee shall direct the Accounting Firm
to submit its determination and detailed supporting calculations to both
Employer and the Employee within thirty (30) calendar days after the Termination
Date, if applicable, and any such other time or times as may be requested by
Employer or the Employee. If the Accounting Firm determines that any Excise Tax
is payable by the Employee, Employer shall pay the required Gross-Up Payment to
the Employee within fifteen (15) business days after receipt of such
determination and calculations with respect to any Payment to the Employee. If
the Accounting Firm determines that no Excise Tax is payable by the Employee, it
shall, at the same time as it makes such determination, furnish Employer and the
Employee an opinion that the Employee has substantial authority not to report
any Excise Tax on his federal, state or local income or other tax return. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which shall
not have been made by Employer should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that Employer exhausts or fails to pursue its remedies pursuant to Paragraph (e)
hereof and the Employee thereafter is required to make a payment of any Excise
Tax, the Employee shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both Employer and the Employee as promptly as
possible. Any such Underpayment shall be promptly paid by Employer to, or for
the benefit of, the Employee within fifteen (15) business days after receipt of
such determination and calculations.
(b) Employer and the Employee shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of Employer or the Employee, as the case may be, reasonably requested
by the Accounting Firm, and otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the determinations and
calculations contemplated by Paragraph (a) hereof. Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment shall be binding upon
Employer and the Employee.
(c) The federal, state and local income or other tax returns
filed by the Employee shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Employee. The Employee shall make proper payment of the amount of any Excise
Payment, and at the request of Employer, provide to Employer true and correct
copies (with any amendments) of his federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonable requested by
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<PAGE> 16
Employer, evidencing such payment. If prior to the filing of the Employee's
federal income tax return, or corresponding state or local tax return, if
relevant, the Accounting Firm determines that the amount of the Gross-Up Payment
should be reduced, the Employee shall within fifteen (15) business days pay to
Employer the amount of such deduction.
(d) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Paragraph (a) hereof shall be borne by Employer. If such fees and expenses are
initially paid by the Employee, Employer shall reimburse the Employee the full
amount of such fees and expenses within fifteen (15) business days after receipt
from the Employee of a statement therefor and reasonable evidence of his payment
thereof.
(e) The Employee shall notify Employer in writing of any claim
by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by Employer of a Gross-Up Payment. Such
notification shall be given as promptly as practicable but no later than ten
(10) business days after the Employee actually receives notice of such claim and
the Employee shall further apprise Employer of the nature of such claim and the
date on which such claim is requested to be paid ( in each case, to the extent
known by the Employee). The Employee shall not pay such claim prior to the
earlier of (i) the expiration of the thirty (30) calendar-day period following
the date on which he gives such notice to Employer and (ii) the date that any
payment of amount with respect to such claim is due. If Employer notifies the
Employee in writing prior to the expiration of such period that it desires to
contest such claim, the Employee shall:
(i) provide Employer with any written records or documents in
his possession relating to such claim reasonably requested by Employer;
(ii) take such action in connection with contesting such claim
as Employer shall reasonable request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by Employer;
(iii) cooperate with Employer in good faith in order
effectively to contest such claim, and
(iv) permit Employer to participate in any proceedings
relating to such claim;
provided, however, that Employer shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnity and hold harmless the Employee, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Paragraph (e), Employer shall control all proceedings taken in connection with
the contest of any claim contemplated by this Paragraph (e) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Employee may participate therein at his own
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<PAGE> 17
cost and expense) and may, at its option, either direct the Employee to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a count of initial jurisdiction and in one or more
appellate courts, as Employer shall determine; provided, however, that if
Employer directs the Employee to pay the tax claimed and sue for a refund,
Employer shall advance the amount of such payment to the Employee on an
interest-free basis and shall indemnify and hold the Employee harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Employee with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, Employer's control of any such contested claim
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Employee shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(f) If, after the receipt by the Employee of an amount
advanced by Employer pursuant to Paragraph (e) hereof, the Employee receives any
refund with respect to such claim, the Employee shall (subject to Employer's
complying with the requirements of Paragraph (e) hereof) promptly pay to
Employer the amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by Employer pursuant to Paragraph (e) hereof, a
determination is made that the Employee shall not be entitled to any refund with
respect to such claim and Employer does not notify the Employee in writing of
its intent to contest such denial or refund prior to the expiration of thirty
(30) calendar days after such determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount of any such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid by Employer to the Employee pursuant to this Paragraph 7(c)(iii) of the
Agreement.
- --------------------
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EXHIBIT 10.63
LIMITED LIABILITY COMPANY AGREEMENT OF
HIGHWAYMASTER OF CANADA, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
THESE MEMBERSHIP INTERESTS HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR
PURSUANT TO THE PROVISIONS OF ANY STATE SECURITIES ACT
CERTAIN RESTRICTIONS ON TRANSFERS OF INTERESTS
ARE SET FORTH HEREIN
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I Definitions............................................................................................1
ARTICLE II Organization..........................................................................................5
Section 2.1. Formation.....................................................................5
Section 2.2. Name, Place of Business and Office............................................5
Section 2.3. Classification of the Company.................................................6
Section 2.4. Registered Office and Registered Agent........................................6
Section 2.5. Purposes and Character of Business; Powers....................................6
Section 2.6. Term..........................................................................6
ARTICLE III Company Capital......................................................................................6
Section 3.1. Initial Capital Contributions of the Members..................................6
Section 3.2. Additional Capital Contributions of the Members...............................7
Section 3.3. Company Capital...............................................................7
Section 3.4. Liability of Members..........................................................7
Section 3.5. Loans by Members or Affiliates................................................8
Section 3.6. Capital Accounts..............................................................8
Section 3.7. Sharing Ratios................................................................9
ARTICLE IV Manager...............................................................................................9
Section 4.1. Election......................................................................9
Section 4.2. Vacancies....................................................................10
Section 4.3. Powers of Manager............................................................10
Section 4.4. Transactions with Related Parties............................................10
Section 4.5. Indemnification of the Manager...............................................10
ARTICLE V Allocations and Distributions.........................................................................11
Section 5.1. Distributions................................................................11
Section 5.2. Allocations of Profits and Losses............................................11
Section 5.3. Compliance with Code.........................................................14
Section 5.4. Allocations upon Transfer of Membership Interest.............................14
ARTICLE VI Meetings of Members..................................................................................15
Section 6.1. Place of Meetings............................................................15
Section 6.2. Notice of Meetings of Members................................................15
Section 6.3. Quorum.......................................................................15
Section 6.4. Voting on Matters............................................................16
Section 6.5. List of Members Entitled to Vote.............................................16
Section 6.6. Actions With or Without a Meeting and Telephone Meetings.....................16
ARTICLE VII Transferability of Member's Interest................................................................16
Section 7.1. Restrictions on Transfer of Interest of a Member.............................16
Section 7.2. Assignees....................................................................17
Section 7.3. Substituted Members..........................................................18
ARTICLE VIII Books and Records; Accounting; Reporting; Tax Elections; Etc.......................................18
Section 8.1. Books and Records............................................................18
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Section 8.2. Accounting Basis for Tax Reporting Purposes; Fiscal Year.....................19
Section 8.3. Reports......................................................................19
Section 8.4. Tax Matters Partner..........................................................19
ARTICLE IX Dissolution, Liquidation and Termination of the Membership...........................................19
Section 9.1. Events Causing Dissolution...................................................19
Section 9.2. Liquidation; Sale of Substantially all of the Assets.........................20
Section 9.3. Distributions in Kind........................................................20
ARTICLE X Miscellaneous Provisions..............................................................................21
Section 10.1. Address for Notices..........................................................21
Section 10.2. Additional Documents and Acts................................................21
Section 10.3. Assumed Name.................................................................21
Section 10.4. Qualification in Foreign Jurisdictions.......................................21
Section 10.5. Application of Delaware Law..................................................21
Section 10.6. No Action for Partition......................................................22
Section 10.7. Headings and Sections........................................................22
Section 10.8. Amendment of Certificate of Formation and Agreement..........................22
Section 10.9. Numbers and Gender...........................................................22
Section 10.10. Binding Effect...............................................................22
Section 10.11. Counterparts.................................................................22
Section 10.12. Approvals....................................................................22
SCHEDULE 1 Names, Addresses, Initial Capital Contributions, and Sharing Ratios of the Members
</TABLE>
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LIMITED LIABILITY COMPANY AGREEMENT
OF HIGHWAYMASTER OF CANADA, LLC
This Limited Liability Company Agreement of HighwayMaster of Canada,
LLC, is hereby duly adopted, approved, ratified, and confirmed as the Limited
Liability Company Agreement of HighwayMaster of Canada, LLC, a Delaware limited
liability company, effective as of the 3rd day of March, 2000, by the party
signing this Agreement as the initial Manager and Member of the Company.
The Certificate of Formation of the Company, dated March 3, 2000, was
filed in the office of the Secretary of State of Delaware on March 3, 2000.
ARTICLE I
DEFINITIONS
The definitions used in this Agreement shall, unless the context
otherwise requires, have the meanings specified in this Article.
1. "ACT" means the Delaware Limited Liability Company Act, as amended
from time to time.
2. "ADDITIONAL CAPITAL CONTRIBUTION" means any amount contributed or
deemed to be contributed to the capital of the Company by the Members pursuant
to Section 3.2.
3. "ADJUSTED CAPITAL ACCOUNT" means, with respect to any Member, such
Member's Capital Account as of the end of any relevant date after giving effect
to the following adjustments:
(a) Credit to such Capital Account any amounts which such
Member is deemed to be obligated to restore pursuant to Treasury Regulations
Section 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of "Adjusted Capital Account" is intended to
comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d)
and 1.704-2, and shall be interpreted consistently therewith.
4. "ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any
Member, the deficit balance, if any, in that Member's Adjusted Capital Account.
<PAGE> 5
5. "AFFILIATE" means any Person that directly, or indirectly through
one or more intermediaries, controls, is controlled by or is under common
control with the Person to whom reference is made. The term "control" as used
herein (including the terms "controlling," "controlled by," and "under common
control with") means the possession, direct or indirect, of the power (a) to
vote fifty percent (50%) or more of the outstanding voting securities of or
voting interest in a Person, or (b) otherwise to direct the management policies
of such Person by contract or otherwise.
6. "AGREEMENT" means this Limited Liability Company Agreement, as
amended from time to time.
7. "AVAILABLE FUNDS" means Company cash on hand, as of the date of
computation, including (without limitation) cash derived from any one or more
of the following sources: (a) the Capital Contributions of the Members made
pursuant to the terms of this Agreement, (b) the proceeds of any sale or other
disposition of all or any portion of the assets, including, but not limited to,
any insurance proceeds, and (c) all Company operating income.
8. "BANKRUPT MEMBER" means any Member who is insolvent, who has filed
a voluntary petition in bankruptcy or against whom a third party has filed an
involuntary petition in bankruptcy and the same is not dismissed within thirty
(30) days.
9. "BOOK VALUE" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except (a) the initial Book Value of any
asset contributed by a Member to the Company shall be the fair market value of
such asset, as determined by the Manager; (b) the Book Value of all Company
assets shall be adjusted in the event of a revaluation as provided in Section
3.6(d); (c) the Book Value of any Company asset distributed to any Member shall
be the fair market value of such asset on the date of distribution as
determined by the Manager; and (d) such Book Value shall be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Profits and Losses.
10. "CAPITAL ACCOUNT" means with respect to any Member, the account
maintained for such Member in a manner which the Manager determines is in
accordance with Treasury Regulations Section 1.704-1(b)(2)(iv).
11. "CAPITAL CONTRIBUTIONS" means the total of all capital
contributions of the Members pursuant to Sections 3.1 and 3.2, including, but
not limited to, the Initial Capital Contributions and the Additional Capital
Contributions.
12. "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
13. "COMPANY" means HighwayMaster of Canada, LLC, a Delaware limited
liability company.
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14. "DEPRECIATION" means, for each Fiscal Year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that
if the Book Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period (as a result
of property contributions or adjustments to such values), Depreciation shall be
adjusted as necessary so as to be an amount which bears the same ratio to such
beginning Book Value as the federal income tax depreciation, amortization, or
other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization, or other cost recovery deduction for such year or
other period is zero, Depreciation for such year or other period shall be
determined with reference to such beginning Book Value using any reasonable
method selected by the Manager.
15. "DISTRIBUTABLE CASH FLOW" means any Available Funds not required
to meet current or anticipated obligations of the Company, as determined by the
Manager. In determining what cash is available for distribution, the Manager
may retain such amounts as the Manager in its sole discretion determine will be
required to pay the Company's debts, obligations and expenses, and to
accomplish the Company's goals and operating results, whether then accrued or
anticipated to accrue in the future.
16. "FISCAL YEAR" means the fiscal year of the Company as established
in Section 8.2.
17. "INITIAL CAPITAL CONTRIBUTION" means, as to any Member, any amount
contributed to the capital of the Company by a Member pursuant to Section 3.1.
18. "MAJORITY" means, with respect to any referenced group of Members,
a combination of such Members who, in the aggregate, own more than fifty
percent (50%) of the Sharing Ratios owned by all of the Members included in
such referenced group, and, with respect to any other referenced group of
persons, more than fifty percent (50%) of the total number of such persons.
19. "MANAGER" means any person or persons that are elected to act as
managers of the Company as provided herein. "MANAGERS" means all such persons
collectively in their capacity as Managers of the Company.
20. "MEMBER" means the parties listed as Members on Schedule 1 of this
Agreement or any successor or successors to all or part of any such Member's
Membership Interest, or any party admitted as an additional member to the
Company in accordance with this Agreement and the Act, each in the capacity as
a Member of the Company. "MEMBERS" mean all such persons collectively in their
capacity as Members of the Company.
21. "MEMBER NONRECOURSE DEBT" means any nonrecourse debt (as defined
in Treasury Regulations Section 1.704-2(b)(4)) of the Company for which any
Member bears the
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<PAGE> 7
economic risk of loss, in accordance with Treasury Regulations Sections
1.704-2(b)(4) and 1.752-2.
22. "MEMBER NONRECOURSE DEBT MINIMUM GAIN" means, for each Member, the
amount of Minimum Gain for the Fiscal year or other period attributable to such
Member's "partner nonrecourse debt," determined in accordance with Treasury
Regulations Section 1.704-2(i)(2).
23. "MEMBER NONRECOURSE DEDUCTIONS" means any Losses or other losses
or deductions of the Company that must be allocated to a Member who bears the
economic risk of loss for the "partner nonrecourse liability" to which the
Losses or other losses or other deductions relate, determined in accordance
with Treasury Regulations Section 1.704-2(i)(1).
24. "MEMBERSHIP INTEREST" means all of the rights and obligations of a
Member in respect of such Member's ownership interest in the Company, including
but not limited to the right to receive distributions and any obligation to
make Capital Contributions under this Agreement.
25. "MINIMUM GAIN" means, with respect to all nonrecourse liabilities
of the Company, the minimum amount of gain that would be realized by the
Company if the Company disposed of the Company property subject to such
liability in full satisfaction thereof computed in accordance with Treasury
Regulations Section 1.704-2(d).
26. "MINIMUM GAIN SHARE" means, for each Member, such Member's share
of Minimum Gain for the Fiscal Year (after taking into account any decrease in
Minimum Gain for such year), such share to be determined under Treasury
Regulations Section 1.704-2(g).
27. "NONRECOURSE DEDUCTIONS" means, for each Fiscal Year or other
period, an amount of Company deductions that are characterized as "nonrecourse
deductions" under Treasury Regulations Section 1.704-2(c).
28. "PERSON" OR "PERSON" means an individual, a corporation, a sole
proprietorship, a partnership, a limited liability company, an association, a
trust, a joint venture, or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
29. "PROFITS" and "LOSSES" means, for each Fiscal Year or other
period, an amount equal to the Company's taxable income or loss for such year
or period, determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss, or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or
loss), with the following adjustments:
(a) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss;
4
<PAGE> 8
(b) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
account in computing Profits or Losses pursuant to this definition, shall be
subtracted from such taxable income or loss;
(c) Gain or loss resulting from any disposition of Company
property with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Book Value of the property
disposed of, notwithstanding that the adjusted tax basis of such property
differs from such Book Value;
(d) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year or
other period, computed in accordance with the definition of "Depreciation"
herein; and
(e) Notwithstanding any other provision of this definition,
any items which are specifically allocated pursuant to Section 5.2(c) shall not
be taken into account in computing Profits or Losses.
30. "SHARING RATIO" means, with respect to any Member, the percentage
assigned to such Member in accordance with Section 3.7, as such percentage may
change from time to time.
31. "TREASURY REGULATIONS" means the Income Tax Regulations
promulgated under the Code, as such regulations may be amended from time to
time (including corresponding provisions of succeeding regulations).
ARTICLE II
ORGANIZATION
SECTION 2.1. FORMATION
The Company was formed upon the filing of the Certificate of Formation
of the Company on March 3, 2000, pursuant to the
Act.
SECTION 2.2. NAME, PLACE OF BUSINESS AND OFFICE
The name of the Company is HighwayMaster of Canada, LLC, although such
business may be conducted under any other name to the extent permitted by local
law. The Company shall maintain its principal office at the following address:
1155 Kas Drive, Suite 100, Richardson, Texas, 75081. The Manager may at any
time change the location of the Company's
5
<PAGE> 9
office and may establish additional offices, if it deems it advisable. The
Manager shall promptly give the Members written notice of any change in
location of the principal office of the Company.
SECTION 2.3. CLASSIFICATION OF THE COMPANY
Notwithstanding anything to the contrary contained herein, the Members
intend that the Company shall be classified as a corporation for federal tax
purposes and shall be subject to all federal tax laws governing corporations.
The Members intend that the Company not be a corporation for any purposes other
than federal tax purposes, and this Agreement may not be construed to suggest
otherwise.
SECTION 2.4. REGISTERED OFFICE AND REGISTERED AGENT
The Company's initial registered office shall be 1209 Orange Street,
Wilmington, Delaware 19801, and the name of its initial registered agent at
such address is The Corporation Trust Corporation.
SECTION 2.5. PURPOSES AND CHARACTER OF BUSINESS; POWERS
The purposes and character of the business of the Company are to
transact any or all lawful business for which limited liability companies may
be organized under the Act. The Company shall have any and all powers which are
necessary or desirable to carry out the purposes and business of the Company.
SECTION 2.6. TERM
The term of existence of the Company shall be perpetual, unless the
Company is earlier dissolved in accordance with either the provisions of this
Agreement or the Act.
ARTICLE III
COMPANY CAPITAL
SECTION 3.1. INITIAL CAPITAL CONTRIBUTIONS OF THE MEMBERS
(a) Upon the execution of this Agreement, the Members shall
contribute cash and/or property to the Company in the amount set forth as the
Initial Capital Contribution of such Member on Schedule 1 attached hereto and
hereby made a part hereof. Such cash shall be the Initial Capital Contribution
of each such Member and each such Member agrees to make its Initial Capital
Contribution.
(b) Upon making the initial Capital Contribution, the Members
shall receive its Membership Interest and its initial Sharing Ratio, as set
forth on Schedule 1.
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SECTION 3.2. ADDITIONAL CAPITAL CONTRIBUTIONS OF THE MEMBERS
(a) A Member may make an optional Additional Capital
Contribution to the Company at any time at the request of and upon receiving
the consent of the Manager. No Member shall be required to make any Additional
Capital Contribution unless such Member consents thereto.
(b) If any Member makes a payment directly to a creditor or
another Member in satisfaction of any indebtedness of the Company pursuant to
any indemnity, guaranty or contribution obligation of such Member which has
been approved by the Manager in respect of Company indebtedness, or if any
collateral interest granted by such Member to such creditor or other Member
which has been approved by the Manager to secure any such indebtedness is
foreclosed and the proceeds of such foreclosure are applied to reduce or
satisfy such indebtedness and any foreclosure-related expenses, such Member
shall be deemed to have made a permitted Additional Capital Contribution equal
to such amount, shall receive a credit to its Capital Account in the amount
thereof.
SECTION 3.3. COMPANY CAPITAL
(a) Except as may be otherwise specifically provided in this
Agreement, no Member shall be paid interest on any Capital Contribution to the
Company.
(b) No Member shall have the right to withdraw all or any
part of its Capital Contribution or to receive any return on any portion of its
Capital Contribution, except as may be otherwise specifically provided in this
Agreement.
(c) Under circumstances involving a return of any Capital
Contribution, no Member shall have the right to receive property other than
cash.
SECTION 3.4. LIABILITY OF MEMBERS
(a) No Member shall be liable for the debts, liabilities,
contracts or any other obligation of the Company, except to the extent
expressly provided herein or in the Act. No Member shall be liable for the
debts or liabilities of any other Member.
(b) No Member shall be required to contribute to the capital
of, or loan, the Company any funds other than as expressly required in this
Agreement.
(c) The Manager shall not be liable for the return of all or
any portion of the Capital Contributions of any Member.
(d) Except as otherwise expressly provided herein, no Member
shall have any priority over any other Member as to the return of its
contributions to capital or as to compensation by way of income.
7
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SECTION 3.5. LOANS BY MEMBERS OR AFFILIATES
Any Member or Affiliate may (but shall not be obligated to) at any
time, upon obtaining the consent of the Manager, loan money or guarantee a loan
to the Company to finance Company operations, to finance or refinance any
assets of the Company, to pay the debts and obligations of the Company, or for
any other Company purpose. If any Member or its Affiliate lends funds or
guarantees a loan of funds to the Company, such Member or Affiliate shall be
entitled to receive interest on such loan, or a fee for guaranteeing any such
loan, at an interest rate or fee to be agreed upon by such Member or Affiliate
and the Manager.
SECTION 3.6. CAPITAL ACCOUNTS
(a) A Capital Account shall be established and maintained for
each Member.
(b) A Member's Capital Account shall be credited with (i) the
amount of cash and the initial Book Value of any property contributed by such
Member to the Company as a Capital Contribution pursuant to Sections 3.1 or
3.2, (ii) such Member's allocable share of Profits, income and gain and (iii)
the amount of any Company liabilities that are expressly assumed by such Member
or that are secured by any Company property distributed to such Member.
(c) A Member's Capital Account shall be debited with (i) the
amount of cash and the Book Value of any Company property distributed to such
Member pursuant to any provision of this Agreement, (ii) such Member's
allocable share of Losses, deductions and other losses and (iii) the amount of
any liabilities of such Member that are expressly assumed by the Company or
that are secured by any property contributed by such Member to the Company.
(d) Upon the occurrence of certain events described in
Treasury Regulations Sections 1.704-1(b)(2)(iv)(f), 1.704-1(b)(4) and 1.704-2,
the Manager may elect to increase or decrease the Capital Accounts of the
Members to reflect a revaluation of Company property on the Company's books.
(e) The Capital Account of each Member shall be determined
after giving effect to all transactions which have been effected prior to the
time when such determination is made giving rise to the allocation of Profits
and Losses and to all contributions and distributions theretofore made. Any
person who acquires a Membership Interest directly from a Member, or whose
Sharing Ratio shall be increased by means of a transfer to it of all or part of
the interest of another Member, shall have a Capital Account which includes all
or part of the Capital Account balance of the Membership Interest so acquired
or transferred.
(f) In the event that any Member makes a loan to the Company,
such loan shall not be considered a contribution to the capital of the Company
and shall not increase the
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Capital Account of the lending Member. Repayment of such loans shall not be
deemed withdrawals from the capital of the Company.
(g) Any fees, salary or similar compensation payable to a
Member pursuant to this Agreement shall be deemed a guaranteed payment for
federal income tax purposes and not a distribution to such Member for such
purposes. Such payments to a Member shall not reduce the Capital Account of
such Member, except to the extent of its distributive share of any Company
Losses or other downward capital adjustment resulting from such payment.
(h) From time to time the Manager may make such modifications
to the manner in which the Capital Accounts are computed to comply with
Treasury Regulations Sections 1.704-1(b) and 1.704-2 provided that such
modification is not likely to have a material effect on the amounts
distributable to any Member pursuant to this Agreement.
(i) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to
comply with Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be
interpreted and applied in a manner consistent with such Treasury Regulations.
(j) No Member with a deficit balance in its Capital Account
shall have any obligation to the Company or any other Member to restore such
deficit balance. In addition, no venturer or partner in any Member shall have
any liability to the Company or any other Member for any deficit balance in
such venturer's or partner's capital account in the Member in which it is a
venturer or partner. Furthermore, a deficit Capital Account balance of a Member
(or a deficit capital account of a partner or venturer in a Member) shall not
be deemed to be a Company asset or Company property.
SECTION 3.7. SHARING RATIOS
The initial Sharing Ratio of each Member is set forth opposite its
respective name on Schedule 1, attached hereto and hereby made a part of this
Agreement.
ARTICLE IV
MANAGER
SECTION 4.1. ELECTION
The Manager of the Company shall be HighwayMaster Communications, Inc.
and HighwayMaster Communications, Inc. shall remain as Manager of the Company
until the earlier of (1) HighwayMaster Communications, Inc.'s resignation as
Manager or (2) the dissolution of the Company in accordance with this
Agreement.
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SECTION 4.2. VACANCIES
Any vacancy occurring in the office of the Manager may be filled by
the affirmative vote of all of the Members.
SECTION 4.3. POWERS OF MANAGER
To the fullest extent permitted by applicable law, the Manager shall
have full, exclusive and complete discretion to manage and control the affairs
of the Company, shall make all decisions affecting the Company business, shall
have full authority to take any action contemplated hereby and shall have full
power to exercise any and all rights generally inferred or conferred by law in
connection therewith.
SECTION 4.4. TRANSACTIONS WITH RELATED PARTIES
The Manager may agree, contract, or arrange with the Manager, any
Member or any Affiliates of any Manager or Member in the name and on behalf of
the Company, for the performance of services for the Company, and the payment
of compensation therefor, in carrying out the business of the Company as if
such Manager, Member or Affiliate were an independent contractor, provided that
the compensation for such services shall be (a) at rates comparable to the
charges made to the third parties for rendering comparable services in the
geographical area where the services are performed and (b) paid only for actual
services rendered to the Company.
SECTION 4.5. INDEMNIFICATION OF THE MANAGER
(a) To the fullest extent allowed by the Act and other
applicable law, the Company shall indemnify, defend against and save harmless
the Manager from, any expenses (including reasonable attorneys' fees and court
costs), liabilities, claims, causes of action, losses or damages incurred by
reason of any act or omission performed or omitted by the Manager in good faith
on behalf of the Company or the Members and in a manner reasonably believed by
such Manager to be within the scope of the authority granted to it by this
Agreement, REGARDLESS OF WHETHER SUCH ACT OR OMISSION CONSTITUTED THE SOLE,
PARTIAL OR CONCURRENT NEGLIGENCE (WHETHER ACTIVE OR PASSIVE) OF SUCH MANAGER.
(b) The satisfaction of any indemnification under this
Section shall be from and limited to Company assets, including insurance
proceeds, if any, and no Member shall have any personal liability on account
thereof.
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ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
SECTION 5.1. DISTRIBUTIONS
(a) First, to the Members, at such times as the Manager shall
determine, in respect of each Member's accrued and unpaid Additional Capital
Contributions, in the proportion that such Member's accrued and unpaid
Additional Capital Contributions bears to the sum of all Members' accrued and
unpaid Additional Capital Contributions; and
(b) Then the balance to the Members, pro rata, at such times
as the Manager shall determine, in accordance with such Members' respective
Sharing Ratios, determined as of the date of distribution.
SECTION 5.2. ALLOCATIONS OF PROFITS AND LOSSES
(a) TREATMENT AS A CORPORATION. Notwithstanding anything
contained in Article 5, for federal tax purposes, the Company is classified as
a corporation which recognizes Profits and Losses at the Company level instead
of allocating such Profits and Losses to the Members. Except as provided in the
preceding sentence, for all purposes and in the event the Company is classified
as a partnership for federal tax purposes, the Profits and Losses are subject
to the allocation provisions as provided in Sections 5.2(b) through 5.2(h)
below.
(b) PROFITS. Except as provided in Sections 5.2(a), 5.2(d)
and 5.2(e), Profits for any Fiscal Year will be allocated in the following
order:
(1) First, to each Member until the cumulative
Profits allocated to such Member under this Section 5.2(b)(1) equals the
cumulative Losses allocated to such Member under Section 5.2(c)(2) for all
prior periods; and
(2) The balance, if any, to the Members in
proportion to their respective Sharing Ratios.
(c) LOSSES. Except as provided in Section 5.2(d) and 5.2(e),
Losses for any Fiscal Year will be allocated in the following order:
(1) First, to each Member until the cumulative
Losses allocated to such Member under this Section 5.2(c)(1) equals the
cumulative Profits allocated to such Member under Section 5.2(b)(2) for all
prior periods; and
(2) The balance, if any, to the Members in
proportion to their respective Sharing Ratios.
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(d) SPECIAL ALLOCATIONS. Except as otherwise provided in
Section 5.2(a), the following special allocations will be made in the following
order and priority:
(1) MEMBER MINIMUM GAIN CHARGEBACK. Notwithstanding
any other provision of this Section (other than Section 5.2(a), which shall be
controlling over this Section 5.2(d)(1)), if there is a net decrease in Company
Minimum Gain during any taxable year or other period for which allocations are
made, the Members will be specially allocated items of Company income and gain
for that period (and, if necessary, subsequent periods). The amount allocated
to each Member under this Section 5.2(d)(1) shall be an amount equal to such
Member's share of the net decrease in Company Minimum Gain during such year or
other period determined in accordance with Treasury Regulations Section
1.704-2(g)(2). This Section 5.2(d)(1) is intended to comply with the
"partnership minimum gain chargeback" requirements of the Treasury Regulations
and the exceptions thereto and will be interpreted consistently therewith.
(2) MEMBER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK.
Notwithstanding any other provision of this Section (other than Section 5.2(a),
which shall be controlling over this Section 5.2(d)(2) and Section 5.2(d)(1),
which shall be applied first), if there is a net decrease in Member Nonrecourse
Debt Minimum Gain during any taxable year or other period for which allocations
are made, any Member with a share of such Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrecourse Debt (determined under Treasury
Regulations Section 1.704-(2)(i)(5)) as of the beginning of the year shall be
specially allocated items of Company income and gain for that period (and, if
necessary, subsequent periods) in proportion to the portion of such Member's
share of the net decrease in the Member Nonrecourse Debt Minimum Gain with
respect to such Member Nonrecourse Debt that is allocable to the disposition of
Company property subject to such Member Nonrecourse Debt. The items to be so
allocated shall be determined in accordance with Regulations Section
1.704-2(g). This Section is intended to comply with the "partner nonrecourse
debt minimum gain chargeback" requirements of the Treasury Regulations and the
exceptions thereto and shall be interpreted consistently therewith.
(3) QUALIFIED INCOME OFFSET. A Member who
unexpectedly receives any adjustment, allocation or distribution described in
Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) will be
specially allocated items of Company income and gain in an amount and manner
sufficient to eliminate, to the extent required by the Treasury Regulations,
the Adjusted Capital Account Deficit of the Member as quickly as possible.
(4) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions
for any taxable year or other period for which allocations are made will be
allocated among the Members in proportion to their respective Sharing Ratios in
the Company.
(5) MEMBER NONRECOURSE DEDUCTIONS. Notwithstanding
anything to the contrary in this Agreement (other than Section 5.2(a), which
shall be controlling over this Section 5.2(d)(5)), any Member Nonrecourse
Deductions for any taxable year or other period for which allocations are made
will be allocated to the Member who bears the economic risk of
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loss with respect to the Member Nonrecourse Debt to which the Member
Nonrecourse Deductions are attributable in accordance with Treasury Regulations
Section 1.704-2(i).
(6) CODE SECTION 754 ADJUSTMENTS. To the extent an
adjustment to the adjusted tax basis of any Company asset under Code Sections
734(b) or 743(b) is required to be taken into account in determining Capital
Accounts under Treasury Regulations Section 1.704-1(b)(2)(iv)(m), the amount of
the adjustment to the Capital Accounts will be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the adjustment
decreases the basis), and the gain or loss will be specially allocated to the
Members in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted under Treasury Regulations Section
1.704-1(b)(2)(iv)(m).
(7) DEPRECIATION RECAPTURE. In the event there is
any recapture of Depreciation or investment tax credit, the allocation of gain
or income attributable to such recapture shall be shared by the Members in the
same proportion as the deduction for such Depreciation or investment tax credit
was shared.
(8) INTEREST IN COMPANY. Notwithstanding any other
provision of this Agreement (other than Section 5.2(a), which shall be
controlling over this Section 5.2(d)(8)), no allocation of Profit or Loss or
item of Profit or Loss will be made to a Member if the allocation would not
have "economic effect" under Treasury Regulations Section 1.704-1(b)(2)(ii) or
otherwise would not be in accordance with the Member's interest in the Company
within the meaning of Treasury Regulations Section 1.704-1(b)(3) or
1.704-1(b)(4)(iv). The Manager will have the authority to reallocate any item
in accordance with this Section 5.2(d)(8).
(e) CURATIVE ALLOCATIONS. The allocations set forth in
Sections 5.2(d)(1) through (8) (the "Regulatory Allocations") are intended to
comply with certain requirements of Treasury Regulations Section 1.704-1(b) and
1.704-2. The Regulatory Allocations may not be consistent with the manner in
which the Members intend to divide Company distributions. Accordingly, the
Manager is authorized to further allocate Profits, Losses, and other items
among the Members so as to prevent the Regulatory Allocations from distorting
the manner in which Company distributions would be divided among the Members
under Sections 5.1 and 9.2 but for application of the Regulatory Allocations.
In general, the reallocation will be accomplished by specially allocating other
Profits, Losses and items of income, gain, loss and deduction, to the extent
they exist, among the Members so that the net amount of the Regulatory
Allocations and the special allocations to each Member is zero. The Manager
will have discretion to accomplish this result in any reasonable manner that is
consistent with Code Section 704 and the related Treasury Regulations.
(f) TAX ALLOCATIONS--CODE SECTION 704(C). In accordance with
Code Section 704(c) and the related Treasury Regulations, income, gain, loss
and deduction with respect to any property contributed to the capital of the
Company, solely for tax purposes, will be allocated among the Members so as to
take account of any variation between the adjusted basis to the Company of the
property for federal income tax purposes and the initial Book Value. If
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the Book Value of any Company asset is adjusted, subsequent allocations of
income, gain, loss and deduction with respect to that asset will take account
of any variation between the adjusted basis of the asset for federal income tax
purposes and its Book Value in the same manner as under Code Section 704(c) and
the related Treasury Regulations. Any elections or other decisions relating to
allocations under this Section 5.2(f) will be made in any manner that the
Manager determines reasonably reflects the purpose and intention of this
Agreement. Allocations under this Section are solely for purposes of federal,
state and local taxes and will not affect, or in any way be taken into account
in computing, any Member's Capital Account or share of Profits, Losses or other
items or distributions under any provision of this Agreement.
(g) OTHER ALLOCATION RULES. The following rules will apply to
the calculation and allocation of Profits, Losses and other items:
(1) Except as otherwise provided in the Agreement,
all Profits, Losses and other items allocated to the Members will be allocated
among them in proportion to their Sharing Ratios.
(2) For purposes of determining the Profits, Losses
or any other item allocable to any period, Profits, Losses and other items will
be determined on a daily, monthly or other basis, as determined by the Manager
using any permissible method under Code Section 706 and the related Treasury
Regulations.
(3) Except as otherwise provided in this Agreement,
all items of Company income, gain, loss, deduction, credit and other
allocations not provided for in this Agreement will be divided among the
Members in the same proportions as they share Profits and Losses.
(h) MEMBER ACKNOWLEDGMENT. The Members agree to be bound by
the provisions of this Section in reporting their shares of Company income and
loss for income tax purposes.
SECTION 5.3. COMPLIANCE WITH CODE
The foregoing provisions of this Article relating to the allocation of
Profits, Losses and other items for federal income tax purposes are intended to
comply with Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be
interpreted and applied in a manner consistent with such Treasury Regulations.
Notwithstanding anything to the contrary, nothing in this Article shall apply
if it lacks "economic effect."
SECTION 5.4. ALLOCATIONS UPON TRANSFER OF MEMBERSHIP INTEREST
Profits or Losses attributable to any Membership Interest which has
been transferred during any Company Fiscal Year shall be allocated between the
transferor and the transferee as follows:
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(a) For the days in such Fiscal Year prior to and including
the date of the transfer, to the transferor.
(b) For the days in such Fiscal Year subsequent to the date
of the transfer, to the transferee.
ARTICLE VI
MEETINGS OF MEMBERS
SECTION 6.1. PLACE OF MEETINGS
All meetings of the Members shall be held at the principal office of
the Company or at such other place within or without the State of Delaware as
may be determined by the Manager and set forth in the respective notice or
waivers of notice of such meeting. There shall be no annual meeting and a
meeting of the Members shall only take place at such time and in such manner as
the Manager determines.
SECTION 6.2. NOTICE OF MEETINGS OF MEMBERS
Written or printed notice stating the place, day and hour of the
meeting and the purpose or purposes for which the meeting is called, shall be
delivered not less than ten (10) nor more than sixty (60) days before the date
of the meeting, either personally or by mail, by or at the direction of the
Manager or person calling the meeting, to each Member of record entitled to
vote at such meeting. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail addressed to the Member at his address
as it appears on the transfer records of the Company, with postage prepaid.
SECTION 6.3. QUORUM
A Majority of the Members shall constitute a quorum at all meetings of
the Members, except as otherwise provided by law or the Certificate of
Formation. Once a quorum is present at the meeting of the Members, the
subsequent withdrawal from the meeting of any Member prior to adjournment or
the refusal of any Member to vote shall not affect the presence of a quorum at
the meeting. If, however, such quorum shall not be present at any meeting of
the Members, the Members entitled to vote at such meeting shall have the power
to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the holders of the requisite amount of
Membership Interests shall be present or represented. At any meeting of the
Members at which a quorum is present, the vote of the holders of a Majority of
all the Sharing Ratios owned by the Members present or represented at such
meeting shall be the act of the Members, unless the vote of a greater number is
required by law, the Certificate of Formation or this Agreement.
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SECTION 6.4. VOTING ON MATTERS
For purposes of voting on matters other than a matter for which the
affirmative vote of the holders of a specified portion of the Membership
Interests entitled to vote is required by the Act, the Certificate of Formation
or this Agreement, at any meeting of the Members at which a quorum is present,
the act of the Members shall be the affirmative vote of the holders of a
Majority of the Sharing Ratios owned by the Members present or represented at
such meeting.
SECTION 6.5. LIST OF MEMBERS ENTITLED TO VOTE
The Manager shall make, at least five (5) days before each meeting of
Members, a complete list of the Members entitled to vote at such meeting, or
any adjournment of such meeting, arranged in alphabetical order, with the
address of and the Sharing Ratio held by each, which list, for a period of five
(5) days prior to such meeting, shall be kept on file at the registered office
of the Company and shall be subject to inspection by any Member at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to inspection of any
Member during the whole time of the meeting. However, failure to comply with
the requirements of this Section shall not affect the validity of any action
taken at such meeting.
SECTION 6.6. ACTIONS WITH OR WITHOUT A MEETING AND TELEPHONE MEETINGS
Notwithstanding any provision contained in this Agreement, all actions
of the Members provided for herein shall be taken either at a meeting and
evidenced by written minutes thereof executed by an authorized Member or by
written consent without a meeting. Any meeting of the Members may be held by
means of a telephone conference in which all Members can hear each other. Any
action which may be taken by the Members without a meeting shall be effective
only if the written consent (or consents) sets forth the action so taken, and
is signed by the Members owning Sharing Ratios constituting not less than the
minimum number of Sharing Ratios that would be necessary to take such action if
all of the Members entitled to vote on the action were present and voted
thereon.
ARTICLE VII
TRANSFERABILITY OF MEMBER'S INTEREST
SECTION 7.1. RESTRICTIONS ON TRANSFER OF INTEREST OF A MEMBER
(a) Unless the Manager consents, no Member shall withdraw or
retire from the Company, substitute any person in its stead or sell, exchange,
transfer, give, assign, pledge, hypothecate, mortgage or dispose of all or any
portion of its Membership Interest. Any such prohibited sale, exchange,
transfer, gift, assignment, pledge, hypothecation, mortgage or disposition
shall be void and shall result in an automatic dissolution of the Company
subject to
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the provisions of Section 9.1; provided, however, that a Member may transfer
his, her, or its Membership Interest to an Affiliate of such Member.
(b) Notwithstanding anything to the contrary contained
herein, unless all of the Members shall consent, no Member may sell, transfer
or assign all or any portion of its Membership Interest if such sale, transfer
or assignment would violate any federal securities laws or any applicable state
securities laws (including suitability standards).
SECTION 7.2. ASSIGNEES
(a) The Company shall not recognize for any purpose any
purported sale, assignment or transfer of all or any fraction of the interest
of a Member unless the provisions of this Article have been satisfied, all
costs of such assignment have been paid by the assigning Member, such sale,
assignment or transfer is exempt from registration under the Securities Act of
1933, as amended, the Delaware Securities Act, as amended, and any other
applicable state of federal securities act, and there is delivered to the
Manager, upon request of the Manager, an opinion of counsel acceptable to the
Manager with respect thereto, and there is filed with the Company a written and
dated notification of such sale, assignment or transfer, in form satisfactory
to the Manager, executed and acknowledged by both the seller, assignor or
transferor and the purchaser, assignee or transferee and such notification (1)
contains the acceptance by the purchaser, assignee or transferee of and
agreement to be bound by all the terms and provisions of this Agreement and (2)
represents that such sale, assignment or transfer was made in accordance with
all applicable securities laws and regulations (including suitability
standards). Any sale, assignment or transfer shall be recognized by the Company
as effective on the date of such notification if the date of such notification
is within fifteen (15) days of the date on which such notification is filed
with the Company, and otherwise shall be recognized as effective on the date
such notification is filed with the Company.
(b) Any Member who assigns all its interest in the Company
shall cease to be a Member, except that, unless and until a substituted Member
has been admitted into the Company, such assigning Member shall retain the
statutory rights of the assignor of a Member's interest under the Act;
provided, however, that such assigning Member shall have no right to vote on,
consent to or approve any matter or decision (it being intended that the
Sharing Ratio of such assigning Member shall be ignored in determining whether
the requisite vote, consent or approval of the Members has been obtained).
(c) A person who is the assignee of all or any fraction of
the interest of a Member, but does not become a substituted Member, and desires
to make a further assignment of such interest, shall be subject to all the
provisions of this Article to the same extent and in the same manner as any
Member desiring to make an assignment of its interest.
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SECTION 7.3. SUBSTITUTED MEMBERS
(a) No Member shall have the right to substitute in its place
a purchaser, assignee, transferee, donee, heir, legatee, or other recipient of
all or any portion of the Membership Interest of such Member. Any such
purchaser, assignee, transferee, donee, legatee, distributee or other recipient
of an interest shall be admitted to the Company as a substituted Member only
with the consent of Members owning a Majority of the Sharing Ratios owned by
all of such other Members, which consent may be granted or withheld by any
Member in its sole discretion.
(b) No person shall become a substituted Member until such
person has satisfied the requirements of this Article; provided, however, that
for the purpose of allocating Profits, Losses and other items and distributing
cash available for distribution, a person shall be treated as having become,
and as appearing in the records of the Company as, a Member, as the case may
be, on such date as the sale, assignment or transfer to such person was
recognized by the Company pursuant to Section 7.2.
(c) Any purchaser, assignee, transferee, donee, heir, legatee
or other recipient of all or any portion of a Membership Interest who is not
admitted to the Company as a substituted Member (1) shall be entitled only to
allocations and distributions with respect to such Membership Interest in
accordance with this Agreement, (2) shall not have any right to vote on,
consent to or approve any matter or decision (it being intended that the
Sharing Ratio of such person shall be ignored for purposes of determining
whether the requisite vote, consent or approval of the Members has been
obtained), (3) shall not have any other rights of a Member under the Act or
this Agreement, except as expressly provided in this Section 7.3(c), but (4)
shall be subject to all of the duties and obligations of a Member under this
Agreement, the Certificate of Formation of the Company and applicable law,
including but not limited to, the provisions of Article 7 to the same extent
and in the same manner as any Member.
ARTICLE VIII
BOOKS AND RECORDS; ACCOUNTING; REPORTING; TAX ELECTIONS; ETC.
SECTION 8.1. BOOKS AND RECORDS
The books and records of the Company shall be maintained by the
Manager at the principal office of the Company and shall be available for
examination at such office by any Member or its duly authorized representatives
during regular business hours. Any Member, at its own expense, may cause an
audit of the books and records of the Company during regular business hours and
shall furnish a written report thereof to the other Members.
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SECTION 8.2. ACCOUNTING BASIS FOR TAX REPORTING PURPOSES; FISCAL YEAR
The books and records of the Company shall be kept on such method of
reporting for tax and financial reporting purposes as the Manager shall select.
The Fiscal Year of the Company shall be the calendar year.
SECTION 8.3. REPORTS
Within ninety (90) days after the end of each Fiscal Year, the Manager
shall cause the Company to send to each Member a copy of each federal and, if
applicable, state income tax return of the Company for the Fiscal Year that
ended, together with such other tax information as shall be reasonably
necessary for the preparation by each Member of its federal and state income
tax returns.
SECTION 8.4. TAX MATTERS PARTNER
In the event the Company is treated as a partnership for federal tax
purposes, HighwayMaster Communications, Inc. shall act as the "tax matters
partner" pursuant to Section 6231(a)(7) of the Code.
ARTICLE IX
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE MEMBERSHIP
SECTION 9.1. EVENTS CAUSING DISSOLUTION
(a) The Company shall be dissolved upon the first of the
following to occur:
(1) upon the unanimous written agreement of all of
the Members;
(2) upon the election of the Manager;
(3) the entry of a judgment, order or decree of a
court of competent jurisdiction adjudicating the Company to be a bankrupt, and
the expiration without appeal of the period, if any, allowed by applicable law
in which to appeal therefrom; or
(4) the entry of a decree of judicial dissolution
under the Act.
(b) The events set forth in Section 9.1(a) constitute the
only means by which a dissolution of the Company shall occur.
(c) Upon dissolution of the Company, the business and affairs
of the Company shall terminate, and the assets of the Company shall be
liquidated under this Article 9.
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(d) Dissolution of the Company shall be effective as of the
day on which the event occurs giving rise to the dissolution, but the Company
shall not terminate until there has been a winding up of the Company's business
and affairs, and the assets of the Company have been distributed as provided in
Section 9.2.
SECTION 9.2. LIQUIDATION; SALE OF SUBSTANTIALLY ALL OF THE ASSETS
(a) Subject to the restrictions and limitations contained in
this Agreement, upon dissolution of the Company, the Manager may cause any part
or all of the Company assets to be sold in such manner as the Manager shall
determine in an effort to obtain the best prices for such assets (provided,
however, that the Manager may distribute Company assets in kind to the Members
to the extent practicable). During the liquidation period, the Manager shall
have the right to continue to operate and otherwise to deal with Company
property to the same extent the Manager has such right prior to dissolution of
the Company. In the event that the sole remaining Manager has dissolved,
withdrawn or becomes bankrupt or legally incapacitated, the Members may, within
thirty (30) days after any such occurrence, appoint a person to perform the
functions of the Manager in liquidating the assets of the Company and winding
up its affairs.
(b) In settling accounts after dissolution, the assets of the
Company shall be paid or distributed in the following order:
(1) first, to third party creditors, in the order of
priority as provided by law;
(2) then, to the Members and their respective
Affiliates for any fees or other compensation or any unreimbursed costs and
expenses owing to the Members or their respective Affiliates, and then to the
repayment of any loans with interest, made by any Member to the Company;
(3) then, an amount equal to the then remaining
positive balances in the Capital Accounts of the Members shall be distributed
to the Members in proportion to the amount of such balances; and
(4) then, any remainder shall be distributed to the
Members, pro rata, in accordance with their respective Sharing Ratios.
Notwithstanding the foregoing, no distributions shall be made pursuant
to this Section 9.2 before giving effect to the allocations of Profits, Losses
and other items, pursuant to Section 5.2.
SECTION 9.3. DISTRIBUTIONS IN KIND
If any assets of the Company are distributed in kind pursuant to this
Agreement, such assets shall be distributed to the Members entitled thereto as
tenants-in-common in the same proportions as the Members would have been
entitled to cash distributions if such property had been sold for cash at its
fair market value and the net proceeds thereof distributed to the Members. In
the event that distributions in kind are made to the Members upon dissolution
and liquidation of the Company, the Capital Account balances of such Members
shall be adjusted to reflect the Members' allocable share of gain or loss which
would have resulted if the distributed property had
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been sold at its fair market value (as determined in accordance with the method
for determining Book Value).
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. ADDRESS FOR NOTICES
All notices, demands, consents and reports provided for in this
Agreement shall be in writing and shall be given to the parties at the
addresses set forth herein or at such other addresses as the Members may
hereafter specify in writing. Such notices may be delivered by hand, or by
telex, telegram, facsimile or telecopy, or may be mailed, postage prepaid, by
certified or registered mail, by a deposit in a depository for the receipt of
mail regularly maintained by the United States Postal Service. All notices
which are hand delivered or given by telex, telegram, facsimile or telecopy
shall be deemed given on the date of delivery. Except as otherwise provided
herein, all notices which are mailed in the manner provided above shall be
deemed given three (3) days after being mailed.
SECTION 10.2. ADDITIONAL DOCUMENTS AND ACTS
In connection with this Agreement, as well as all transactions
contemplated by this Agreement, the Members agree to execute such additional
documents and papers, and to perform and do such additional acts as may be
necessary and proper to effectuate and carry out all of the provisions of this
Agreement.
SECTION 10.3. ASSUMED NAME
The Manager shall execute and file all assumed name certificates
required by applicable law.
SECTION 10.4. QUALIFICATION IN FOREIGN JURISDICTIONS
The Manager shall take such steps as are necessary or desirable to
allow the Company to conduct business in any jurisdiction where the Company
desires to conduct business.
SECTION 10.5. APPLICATION OF DELAWARE LAW
This Agreement and the application or interpretation hereof, shall be
governed exclusively by the laws of the State of Delaware, and specifically the
Act.
21
<PAGE> 25
SECTION 10.6. NO ACTION FOR PARTITION
No Member shall have any right to maintain any action for partition
with respect to the property of the Company.
SECTION 10.7. HEADINGS AND SECTIONS
The headings in this Agreement are inserted for convenience only and
are in no way intended to describe, interpret, define, or limit the scope,
extent or intent of this Agreement or any provision hereof. Unless the context
requires otherwise, all references in this Agreement to Sections or Articles
shall be deemed to mean and refer to Sections or Articles of this Agreement.
SECTION 10.8. AMENDMENT OF CERTIFICATE OF FORMATION AND AGREEMENT
Except as otherwise expressly set forth in this Agreement, the
Certificate of Formation of the Company and this Agreement may be amended,
supplemented or restated at any time by the Manager as it determines in its
sole discretion.
SECTION 10.9. NUMBERS AND GENDER
Where the context so indicates, the masculine shall include feminine
and neuter, and the neuter shall include the masculine and feminine, and the
singular shall include the plural.
SECTION 10.10. BINDING EFFECT
Except as herein otherwise provided to the contrary, this Agreement
shall be binding upon and inure to the benefit of the Members, their
distributees, heirs, legal representatives, executors, administrators,
successors and assigns.
SECTION 10.11. COUNTERPARTS
This Agreement may be executed in multiple counterparts, each of which
shall be deemed to be an original and shall be binding upon the Member who
executed the same, but all of such counterparts shall constitute the same
Agreement.
SECTION 10.12. APPROVALS
Except where otherwise indicated, all approvals, consents and other
similar rights of the Members or Manager, or of any portion of the Members or
Manager, pursuant to this Agreement may be exercised by such Members or
Manager, and such approvals and consents may be granted or denied by such
Members or Manager, in their sole and absolute discretion.
22
<PAGE> 26
IN WITNESS WHEREOF, the undersigned, being the sole Member and Manager
of the Company named in the Certificate of Formation of the Company has caused
this Agreement to be duly adopted by the Company effective as of the day first
above written.
MANAGER: MEMBER:
HIGHWAYMASTER HIGHWAYMASTER
COMMUNICATIONS, INC., a COMMUNICATIONS, INC., a
Delaware corporation Delaware corporation
By: /S/ JANA BELL By: /S/ JANA BELL
--------------------------- --------------------------------
Name: JANA BELL Name: JANA BELL
------------------------ ------------------------------
Its: PRESIDENT & CEO Its: PRESIDENT & CEO
------------------------- -------------------------------
<PAGE> 27
SCHEDULE 1
Name, Address, Initial Capital Contribution and Sharing Ratio of the Member
<TABLE>
<CAPTION>
Name and Address: Initial Capital Contribution Sharing Ratio
- ---------------- ---------------------------- -------------
<S> <C> <C>
HighwayMaster Communications, Inc. $1,000.00 100%
1155 Kas Drive, Suite 100
Richardson, Texas 75081
</TABLE>
<PAGE> 1
EXHIBIT 10.64
INVESTOR RELATIONS SERVICES AGREEMENT
This INVESTOR RELATIONS SERVICES AGREEMENT (this "Agreement"), made and
entered into this 31st day of March, 2000, by and between HighwayMaster
Communications, Inc., a Delaware Corporation, having a principal place of
business at 1155 Kas Drive, Suite 100, Richardson, Texas, 75081
("HighwayMaster"), and N.D. Hamilton Associates, Inc., a Florida Corporation,
having a principal place of business at 115 S.E. Spanish Trail, Boca Raton,
Florida 33432 ("Hamilton").
ARTICLE 1
INVESTOR RELATIONS SERVICES
1.1 Investor Relations Services Provided. Hamilton agrees to provide
investor relations consultation services to HighwayMaster during the
Contract Term (as defined in Section 2.1 below). These professional
services will be directed toward assisting HighwayMaster in the
accomplishment of certain corporate investor relations objectives
including, but not limited to, the following:
1.0.1 Increasing the investment community's awareness of
HighwayMaster by conducting an active investor relations
program designed to gain recognition from the investment
community of HighwayMaster's long-term investment potential.
1.1.1 Assisting HighwayMaster in obtaining at least one (1)
national, sell side analyst from a quality, recognized
brokerage to follow HighwayMaster and provide quarterly
updates to the public.
1.1.2 Assisting HighwayMaster in obtaining at least one (1)
regional, sell side analyst of high recognition and quality,
to follow HighwayMaster and provide quarterly updates to the
public.
1.1.3 Assisting HighwayMaster in obtaining two (2) nationally
recognized analysts to each prepare a research report on
HighwayMaster.
1.1.4 Assisting HighwayMaster with the distribution of investor
packages to investors and analysts during the Contract Term.
ARTICLE 2
CONTRACT TERM
1.2 Term. Hamilton shall provide the services described in Article 1 above
for a period commencing on the date of execution of this Agreement and
terminating six (6) months thereafter (the "Contract Term").
INVESTOR RELATIONS SERVICES AGREEMENT - PAGE 1
<PAGE> 2
ARTICLE 3
SERVICE FEES & BILLING
1.3 Fees & Billing. HighwayMaster shall provide the following compensation
to Hamilton for the services rendered under this Agreement:
3.0.1 FIXED MONTHLY FEE. HighwayMaster shall compensate Hamilton at
the rate of $3,500.00 per month for each month during the
Contract Term payable on the first day of each month.
1.3.1 Stock Options. HighwayMaster shall grant to Hamilton the
following option to purchase shares of common stock of
HighwayMaster at an exercise price of $5.63 per share upon the
occurrence of the following events:
1.3.1.1 5,000 stock options upon the execution of this
Agreement.
1.3.1.2 3,000 stock options if, as a result of Hamilton's
efforts, one (1) national, sell side analyst from a
quality, recognized brokerage firm begins to follow
HighwayMaster and provides ongoing quarterly updates
to the public regarding HighwayMaster; provided,
however, that such coverage must commence during the
Contract Term.
1.3.1.3 3,000 stock options if, as a result of Hamilton's
efforts, one (1) regional, sell side analyst of high
recognition and quality, begins to follow
HighwayMaster and provides quarterly updates to the
public regarding HighwayMaster; provided, however,
that such coverage must commence during the Contract
Term.
1.3.1.4 3,000 stock options if, as a result of Hamilton's
efforts, two (2) nationally recognized analysts each
prepare a research report on HighwayMaster prior to
the end of the Contract Term.
1.3.1.5 3,000 stock options on the six month anniversary of
this Agreement, if during the Contract Term, Hamilton
has used his best efforts to distribute investor
packages to investors and analysts.
1.3.2 Vesting and Exercise of Vested Options. Any stock options
earned by Hamilton during the Contract Term shall vest on the
one (1) year anniversary of the execution of this Agreement.
In order to exercise any vested options, Hamilton must deliver
written notice to HighwayMaster indicating the number of
vested options which Hamilton desires to exercise and a
cashier's check in the amount of the exercise price.
INVESTOR RELATIONS SERVICES AGREEMENT - PAGE 2
<PAGE> 3
1.3.3 Taxes. HighwayMaster shall issue to Hamilton a Form 1099-Misc.
following the end of each calendar year in which Hamilton
exercises any portion of the options. Hamilton shall be
responsible for the payment of all taxes incurred as a result
of the exercise of the stock options and the sale of common
stock issued as a result thereof.
1.3.4 Registration of Stock Issued Upon Exercise of
Stock Options.
1.3.4.1 HighwayMaster shall file a registration statement
on the appropriate form under the Securities Act,
within ninety (90) days from the date of vesting
of Hamilton's options covering the registration of
the resale of the shares of common stock for which
options are earned by Hamilton under Section 3.1.2
(the "Registrable Shares"). In connection with
such registration statement, HighwayMaster shall:
1.3.4.1.1 Use its reasonable best efforts to cause such
registration statement to become effective and
keep such registration statement effective until
the earlier of (x) one hundred twenty (120) days
from the date of effectiveness or (y) Hamilton's
disposition of all of the Registrable Shares;
1.3.4.1.2 Use its reasonable best efforts to prepare and
file with the Securities and Exchange Commission
(the "SEC") such amendments and supplements to
such registration statement as may be necessary to
comply with the applicable provisions of the
Securities Act of 1933, as amended (the
"Securities Act");
1.3.4.1.3 Use its reasonable best efforts to register and
qualify the Registrable Shares covered by such
registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be
reasonably requested by Hamilton, and to keep such
registration or qualification effective during the
period such registration statement is to be kept
effective, provided, however, that HighwayMaster
shall not be required to become subject to
taxation, qualify to do business or file a general
consent to service of process in any such
jurisdictions;
1.3.4.1.4 Use its reasonable best efforts to maintain the
authorization for quotation of the securities
covered by such registration statement on the
NASDAQ SmallCap Market; and
1.3.4.1.5 Notify Hamilton, at any time when Hamilton must
suspend offers or sales of the Registrable Shares
under the registration statement, either because
the prospectus included in such registration
statement is required to be amended for any
reason, such as an
INVESTOR RELATIONS SERVICES AGREEMENT - PAGE 3
<PAGE> 4
amendment under the Securities Act to provide current
information, or because the prospectus includes an
untrue statement of a material fact or omits to state
a material fact required to be stated therein or
necessary to make the statements therein not
misleading in the light of the circumstances then
existing. HighwayMaster shall use its reasonable best
efforts to enable Hamilton to promptly recommence
offers and sales under the registration statement.
Notwithstanding the foregoing and anything to the
contrary set forth in this Section 3.1.5, Hamilton
acknowledges that there may occasionally be times
when HighwayMaster must suspend the use of the
prospectus included in such registration statement
until such time as an amendment to the registration
statement has been filed by HighwayMaster and
declared effective by the SEC, or until such time as
HighwayMaster has filed an appropriate report with
the SEC pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"). Hamilton hereby
covenants that he will not offer or sell any shares
of the Registrable Shares pursuant to such prospectus
during the period commencing when HighwayMaster
notifies Hamilton of the suspension of the use of
such prospectus and the reason therefor, and ending
when HighwayMaster notifies Hamilton in writing that
it may thereafter effect offers and sales pursuant to
such prospectus.
3.0.1.1 It is a condition precedent to the obligations of
HighwayMaster to take any action pursuant to this
Section 3.1.5 hereof with respect to the Registrable
Shares, that Hamilton shall furnish to HighwayMaster
such information regarding itself, the Registrable
Shares held thereby and the intended method of
disposition of such securities as shall be required
to effect the registration of such Registrable Shares
and as may be required from time to time to keep such
registration current.
1.3.4.2 Except as otherwise provided herein, all expenses
incurred by or on behalf of HighwayMaster in
connection with registrations, filings or
qualifications pursuant to this Section 3.1.5,
including without limitation all registration, filing
and qualification fees, the fees and expenses
incurred in connection with the listing of the
Registrable Shares to be registered on each security
exchange on which shares of HighwayMaster's common
stock are then listed, printer's and accounting fees,
and fees and disbursements of counsel for
HighwayMaster, shall be borne by HighwayMaster. In no
event shall HighwayMaster be obligated to bear
underwriting, brokerage or related fees, discounts or
commissions or the fees or expenses of counsel or
advisors to Hamilton.
INVESTOR RELATIONS SERVICES AGREEMENT - PAGE 4
<PAGE> 5
1.3.4.3 Each of HighwayMaster and Hamilton shall agree to
such other reasonable and customary arrangements,
undertakings and indemnifications with respect to the
registration of the Registrable Shares to be received
by Hamilton pursuant to the Agreement as may be
requested by any of them, but shall not be obligated
to enter into any underwriting arrangements.
1.3.4.4 HighwayMaster covenants that it will at all times use
its reasonable best efforts to timely file any
reports required to be filed by it under the
Securities Act and the 1934 Act and that it will take
such other actions as may be reasonably necessary to
enable Hamilton to sell the shares of common stock
without registration under applicable exemptions
provided for under the Securities Act including,
without limitation, Rule 144.
1.3.4.5 Unless and until the registration statement is
effective, any stock certificates issued to Hamilton
as a result of the exercise of the stock options
shall bear the following restrictive legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR SECURITIES LAWS OF ANY STATE, AND
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY
BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREUNDER."
1.4 Expenses. Hamilton shall be responsible for paying any and all expenses
incurred by Hamilton in performing the services hereunder.
HighwayMaster shall have no liability for any expenses incurred by
Hamilton in performing the services hereunder.
INVESTOR RELATIONS SERVICES AGREEMENT - PAGE 5
<PAGE> 6
ARTICLE 4
MISCELLANEOUS
1.5 Indemnification to Hamilton. HighwayMaster shall indemnify and hold
harmless Hamilton, its officers, agents, and representatives (each an
"Indemnified Hamilton Party") from and against any and all losses,
claims, damages or liabilities which either such Indemnified Hamilton
Party may incur, including any amount paid in settlement of any claim,
action or proceeding commenced or threatened, and any and all expenses
reasonably incurred (including reasonable and necessary attorney's
fees) in connection with any such claim, action or proceeding insofar
as such loss, claim, damages, liabilities, actions, proceedings or
expenses (collectively "Hamilton Losses") resulted from false and/or
incorrect information, false representations, false and/or incorrect
reports or other false and/or incorrect data furnished by HighwayMaster
or its authorized representatives to Hamilton in writing for use in
connection with the services to be provided by Hamilton pursuant to the
terms of this Agreement, except that no Indemnified Hamilton Party
shall be so indemnified to the extent that any Hamilton Losses arise
out of such Indemnified Hamilton Party's negligence or willful
misconduct or bad faith in connection with the performance of such
Indemnified Hamilton Party's services hereunder and except that
HighwayMaster shall not be liable in any event for any amount paid in
settlement of any claim or any litigation, threatened or commenced,
whatsoever if such settlement is effected without the written consent
of HighwayMaster (which consent shall not be reasonably withheld).
Hamilton shall give prompt written notice to HighwayMaster of any claim
or action commenced or threatened against each Indemnified Hamilton
Party in respect of which indemnity may be sought thereunder. If it so
elects within a reasonable time after receipt of such notice,
HighwayMaster may assume the defense of such claim or action. If
HighwayMaster assumes the defense of such claim or action,
HighwayMaster will not be liable for any fees and expenses of counsel
for an Indemnified Hamilton Party incurred thereafter in connection
with such claim or action. Any separate counsel representing an
Indemnified Hamilton Party shall cooperate with HighwayMaster and its
counsel in the defense of such claim or action. The failure of Hamilton
to promptly notify HighwayMaster of its receipt of commencement of any
claims or action in respect of which indemnity may be sought will
relieve HighwayMaster from any liability HighwayMaster may have to the
extent that such delay in notification prejudices HighwayMaster's
defense of such claim or action.
1.6 Indemnification to HighwayMaster. Hamilton shall indemnify and hold
harmless HighwayMaster, its parents, subsidiaries, affiliates,
officers, agents, and representatives (each an "Indemnified
HighwayMaster Party") from and against any and all losses, claims,
damages or liabilities which either such Indemnified HighwayMaster
Party may incur, including any amount paid in settlement of any claim,
action or proceeding commenced or threatened, and any and all expenses
reasonably incurred (including reasonable and necessary attorney's
fees) in connection with any such claim, action or proceeding insofar
as such loss, claim, damages, liabilities, actions, proceedings or
expenses (collectively "HighwayMaster Losses") resulted from the acts
and/or omissions of Hamilton or its authorized representatives in
performing the services to be provided by Hamilton pursuant to the
terms of this Agreement, except that no Indemnified HighwayMaster Party
shall be so indemnified to the extent that any HighwayMaster Losses
arise out of such Indemnified HighwayMaster Party's negligence, willful
misconduct, or provision of false or incorrect information to
INVESTOR RELATIONS SERVICES AGREEMENT - PAGE 6
<PAGE> 7
Hamilton and except that Hamilton shall not be liable in any event for
any amount paid in settlement of any claim or any litigation,
threatened or commenced, whatsoever if such settlement is effected
without the written consent of the Hamilton (which consent shall not be
reasonably withheld). HighwayMaster shall give prompt written notice to
Hamilton of any claim or action commenced or threatened against each
Indemnified HighwayMaster Party in respect of which indemnity may be
sought thereunder. If it so elects within a reasonable time after
receipt of such notice, Hamilton may assume the defense of such claim
or action. If Hamilton assumes the defense of such claim or action,
Hamilton will not be liable for any fees and expenses of counsel for an
Indemnified HighwayMaster Party incurred thereafter in connection with
such claim or action. Any separate counsel representing an Indemnified
HighwayMaster Party shall cooperate with Hamilton and its counsel in
the defense of such claim or action. The failure of HighwayMaster to
promptly notify Hamilton of its receipt of commencement of any claims
or action in respect of which indemnity may be sought will relieve
Hamilton from any liability Hamilton may have to the extent that such
delay in notification prejudices Hamilton's defense of such claim or
action.
1.7 Confidentiality. "HighwayMaster Confidential Information" shall mean,
for purposes of this Section 4.3, the technical and business
information which is proprietary and confidential to HighwayMaster, and
such other information marked "Confidential" and disclosed to Hamilton
by HighwayMaster pursuant to this Agreement. Hamilton shall hold all
HighwayMaster Confidential Information in confidence and shall not
disclose the same to third parties without the prior written permission
of HighwayMaster, and shall not use HighwayMaster Confidential
Information other than for the benefit of HighwayMaster during the
Contract Term and for such period following the termination of this
Agreement as HighwayMaster Confidential Information remains a trade
secret of HighwayMaster.
1.8 Relationship of the Parties. It is the intention of the parties that
Hamilton be an independent contractor and not an employee, agent, joint
venturer, or partner of HighwayMaster. Nothing in this Agreement shall
be interpreted or construed as creating or establishing the
relationship of employer and employee between HighwayMaster and either
Hamilton or any employee or agent of Hamilton. Nothing in this
Agreement shall be construed to give either party the power to direct
or control the daily activities of the other party, or to constitute
the parties as principal and agent, employer and employee, franchisor
and franchisee, partners, joint venturers, co-owners, or otherwise as
participants in a joint undertaking. HighwayMaster and Hamilton
understand and agree that, except as specifically provided in this
Agreement, HighwayMaster does not grant Hamilton the power or authority
to make or give any agreement, statement, representation, warranty, or
other commitment on behalf of HighwayMaster, or to enter into any
contract or otherwise incur any liability or obligation, express or
implied, on behalf of HighwayMaster, or to transfer, release, or waive
any right, title, or interest of HighwayMaster.
1.9 No False Representations. Hamilton shall (1) conduct business in a
manner that reflects favorably at all times on HighwayMaster's products
and services and the reputation of HighwayMaster; (2) avoid deceptive,
misleading, or unethical practices that are or might be
INVESTOR RELATIONS SERVICES AGREEMENT - PAGE 7
<PAGE> 8
detrimental to HighwayMaster, its products and services including any
disparagement of HighwayMaster, its products and services; (3) make no
false or misleading representations with regard to HighwayMaster, its
products and services; and (4) refrain from publishing or employing any
misleading or deceptive advertising material regarding HighwayMaster,
its products and services.
1.10 Nonexclusive. Hamilton shall retain the right to perform services for
others during the terms of this Agreement; provided, that
HighwayMaster's ownership and confidentiality of work product is not
jeopardized in any way. HighwayMaster shall retain the right to cause
similar services to be performed by its own personnel and/or other
contractors during the Contract Term.
1.11 Compliance With Law. Hamilton shall comply with all applicable federal,
state, and local laws and regulations in performing its duties
hereunder including, but not limited to, the Securities Act (and any
rules and regulations promulgated thereunder), the 1934 Act (and any
rules and regulations promulgated thereunder), and the NASDAQ Stock
Exchange Rules and Regulations.
1.12 Method of Performing Services. Hamilton, in conjunction with its
personnel, will determine the method, details, and means of performing
the services to be performed for HighwayMaster pursuant to the terms of
this Agreement. HighwayMaster shall have no right to, and shall not,
control the manner or determine the method which Hamilton performs
services pursuant to this Agreement; provided, however, that
HighwayMaster may require Hamilton's personnel to observe at all times
the security and safety policies of HighwayMaster. Notwithstanding the
preceding, HighwayMaster shall be entitled to exercise a broad general
power of supervision and control over the results of work performed by
Hamilton to ensure satisfactory performance.
1.13 Scheduling. In performing services under this Agreement, Hamilton
shall, to the extent reasonably possible, accommodate work schedule
requests of HighwayMaster. Should any personnel of Hamilton be unable
to perform scheduled services because of illness, resignation, or other
causes beyond Hamilton's reasonable control, Hamilton will replace such
personnel within a reasonable time.
1.14 Record Keeping. Hamilton shall maintain complete and accurate
accounting records, in a form in accordance with standard accounting
practices, to substantiate Hamilton's charges hereunder. Such records
shall include payroll records and time sheets, and Hamilton shall
retain such records for a period of one (1) year from the date of final
payment hereunder.
1.15 Hamilton's Agreements With Personnel. Hamilton shall obtain and
maintain in effect written agreements with each of its employees and/or
independent contractors who participate in providing services to
HighwayMaster under this Agreement. Such agreements shall contain terms
sufficient to enable Hamilton to comply with all provisions of this
Agreement, shall establish a duty of confidentiality enforceable by
HighwayMaster and shall confirm that such
INVESTOR RELATIONS SERVICES AGREEMENT - PAGE 8
<PAGE> 9
personnel shall have no status as employees of HighwayMaster and no
claim under any HighwayMaster employee benefit plan.
1.16 No Discrimination. Hamilton agrees that in the performance of this
Agreement it will not discriminate or permit discrimination against any
person or group of persons on the grounds of sex, race, color,
religion, or natural origin in any manner prohibited by the laws of the
United States.
1.17 Force Majeure. Neither party hereto shall be responsible for any
failure to perform due to unforeseen circumstances or to causes beyond
its reasonable control, including but not limited to acts of God, war,
riot, embargoes, acts of civil or military authorities, fire, floods,
accidents, strikes, or shortages of transportation, facilities, fuel,
energy, labor, or materials. In the event of any such delay, said party
is excused from performance for a period equal to the time of such
delay. In the event such delay exceeds sixty (60) days, either party
may terminate this Agreement.
1.18 Insurance. Hamilton shall secure and maintain adequate workmen's
compensation, disability benefits, unemployment insurance and the like,
if required by the law of each state wherein Hamilton shall perform
services for HighwayMaster. Hamilton further agrees to maintain
comprehensive general and vehicular liability insurance for claims for
damages arising out of bodily injury (including death) and property
damage, caused by, or arising out of, acts or omissions of its
employees. The minimum limits of such insurance shall be $300,000.00
for each person and $300,000.00 for each incident because of bodily
injury and $300,000.00 because of property damage for each incident.
Certificates of insurance shall be furnished to HighwayMaster at the
commencement of this Agreement and at the renewal date or dates of all
such insurance policies for as long as this Agreement remains in
effect. In no event shall any such insurance be canceled without thirty
(30) days prior written notice to HighwayMaster by Hamilton.
1.19 Entire Agreement of the Parties. This Agreement supersedes any and all
agreements, either oral or written, between the parties hereto with
respect to the rendering of services by Hamilton for HighwayMaster and
contains all the covenants and agreements between the parties with
respect to the rendering of such services in any manner whatsoever.
Each party to this Agreement acknowledges that no representations,
inducements, promises, or agreements, orally or otherwise, have been
made by any party, or anyone acting on behalf of any party, that are
not embodied herein, and that no other agreement, statement, or promise
not contained in this agreement shall be valid or binding. Any
modification of this Agreement will be effective only if it is in
writing signed by the party to be charged.
1.20 Partial Invalidity. If any provision in this agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable,
the remaining provisions will nevertheless continue in full force
without being impaired or invalidated in any way.
INVESTOR RELATIONS SERVICES AGREEMENT - PAGE 9
<PAGE> 10
1.21 Termination. Either party may terminate the Agreement upon thirty (30)
days written notice to the other party to the Agreement. In the event
that HighwayMaster terminates this Agreement, other than for cause,
HighwayMaster shall pay for services rendered by Hamilton prior to the
effective date of the termination.
1.22 Termination for Cause. If a party materially defaults in its
performance under this Agreement, other than non-payment of amounts due
to Hamilton, and fails to either substantially cure such default within
thirty (30) days after receiving written notice specifying the default
or, for those defaults which cannot reasonably be cured within thirty
(30) days, promptly commence curing such default and thereafter proceed
with all due diligence to substantially cure the same, then the party
not in default may terminate this Agreement as of a date specified in
such notice; provided, that any such termination by a party for cause
shall not serve as a waiver of any rights or remedies such party may
have against the breaching party at law or in equity. Notwithstanding
the preceding, in the event that HighwayMaster terminates this
Agreement for cause pursuant to this Section 4.18, any and all options
issued to Hamilton under Section 3.1.2 shall be forfeited as of the
date of such termination.
1.23 Notices. Unless otherwise specifically provided, all notices required
or permitted by this Agreement shall be in writing and may be delivered
personally, or may be sent by facsimile or certified mail, return
receipt requested, to the following addresses, unless the parties are
subsequently notified of any change of address in accordance with this
Section 4.19:
If to HighwayMaster:
HighwayMaster Communications, Inc.
1155 Kas Drive, Suite 100
Richardson, Texas 75081
Attention: General Counsel
Facsimile: (972) 301-2263
If to Hamilton:
N.D. Hamilton Associates, Inc
Attn: David Hamilton
115 S.E. Spanish Trail
Boca Raton, Florida 33432
Attention: David Hamilton
Facsimile: (561) 393-0068____
Any notice shall be deemed to have been received as follows: (1) by
personal delivery, upon receipt; (2) by facsimile upon receipt; (3) by
certified mail, five (5) business days after delivery to the U.S.
postal authorities by the party serving notice. If notice is sent by
facsimile, a confirming copy of the same shall be sent by mail to the
same address.
INVESTOR RELATIONS SERVICES AGREEMENT - PAGE 10
<PAGE> 11
1.24 GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS (RULES) OR
CHOICE OF LAWS (RULES) THEREOF. HAMILTON HEREBY CONSENTS TO THE
EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF THE STATE DISTRICT COURT
RESIDING IN DALLAS COUNTY, DALLAS, TEXAS (OR IF APPLICABLE, THE FEDERAL
DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION) FOR
ALL LITIGATION WHICH MAY BE BROUGHT WITH RESPECT TO OR ARISING OUT OF
THE TERMS OF AND THE TRANSACTIONS AND RELATIONSHIPS CONTEMPLATED BY
THIS AGREEMENT.
1.25 Assignment. Hamilton is being retained as per this Agreement because of
HighwayMaster's confidence in Hamilton's abilities which confidence is
personal in nature. This Agreement shall not be assignable by either
party without the prior written consent of the other party which shall
not be unreasonably withheld, and Hamilton may not delegate its duties
hereunder without the prior written consent of HighwayMaster. Any
attempt by Hamilton to assign any of its rights or delegate any of its
duties hereunder without the prior written consent of HighwayMaster
shall be null and void.
1.26 Successors. This Agreement shall inure to the benefit of, and be
binding upon, Hamilton and HighwayMaster, their successors and assigns.
1.27 Survival. In the event of any termination of this Agreement, Sections
3.1, 4.1, 4.2, 4.3, 4.4, 4.5 and 4.20 hereof shall survive and continue
in effect.
IN WITNESS THEREOF, HighwayMaster and Hamilton have caused this
Investor Relations Service Agreement to be signed and delivered by their duly
authorized officers, all as of the date first hereinabove written.
INVESTOR RELATIONS SERVICES AGREEMENT - PAGE 11
<PAGE> 12
HIGHWAYMASTER
COMMUNICATIONS, INC., N.D. HAMILTON ASSOCIATES, INC.
A DELAWARE CORPORATION
By: /s/ W. MICHAEL SMITH By: /s/ DAVID HAMILTON
----------------------------- -----------------------------
Title: CFO Title: PRESIDENT
-------------------------- --------------------------
Date: April 3, 2000 Date: March 31, 2000
--------------------------- ---------------------------
INVESTOR RELATIONS SERVICES AGREEMENT - PAGE 12
<PAGE> 1
Exhibit 11
@TRACK COMMUNICATIONS, INC. AND SUBSIDIARY
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three months ended March 31,
-----------------------------
2000 1999
------------ -----------
<S> <C> <C>
Net income (loss) applicable to common stockholders:
Net income (loss) $ (4,793,000) $ 390,000
============ ===========
Weighted average number of shares outstanding:
Weighted average number of shares outstanding, net of treasury shares-
Basic
EPS 25,188,885 24,933,261
Additional weighted average shares for assumed exercise of stock options,
net of shares assumed to be repurchased with exercise proceeds -- 510,957
------------ -----------
Weighted average number of shares outstanding, net of treasury shares-
Diluted EPS 25,188,885 25,444,218
============ ===========
Net income (loss) per common share applicable to common stockholders:
Basic EPS $ (0.19) $ 0.02
============ ===========
Diluted EPS $ (0.19) $ 0.02
============ ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000944400
<NAME> @ TRACK COMMUNICATIONS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 15,866
<SECURITIES> 3,040
<RECEIVABLES> 17,974
<ALLOWANCES> 7,096
<INVENTORY> 9,917
<CURRENT-ASSETS> 49,255
<PP&E> 29,912
<DEPRECIATION> 15,158
<TOTAL-ASSETS> 66,577
<CURRENT-LIABILITIES> 16,986
<BONDS> 92,189
0
0
<COMMON> 256
<OTHER-SE> (42,854)
<TOTAL-LIABILITY-AND-EQUITY> 66,577
<SALES> 1,870
<TOTAL-REVENUES> 14,103
<CGS> 1,341
<TOTAL-COSTS> 8,445
<OTHER-EXPENSES> 7,778
<LOSS-PROVISION> 223
<INTEREST-EXPENSE> 3,342
<INCOME-PRETAX> (4,793)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,793)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,793)
<EPS-BASIC> (0.19)
<EPS-DILUTED> (0.19)
</TABLE>
