EXHIBIT 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of September 29, 1999, by and between
TELETRAC, INC., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(the "Employee").
W I T N E S S E T H:
WHEREAS, the Company is seeking confirmation pursuant to Section 1129
of the Bankruptcy Code, 11 U.S.C. S.1129, of a Second Amended Plan of
Reorganization of the Company (the "Plan of Reorganization"); and
WHEREAS, the Company desires to induce the Employee to enter into
employment with the Company commencing on the Effective Date (the "Effective
Date") of the Plan of Reorganization as defined therein for the period provided
in this Agreement, and the Employee is willing to accept such employment with
the Company on a full-time basis, all in accordance with the terms and
conditions set forth below;
NOW, THEREFORE, for and in consideration of the premises hereof and
the mutual covenants contained herein, the parties hereto hereby covenant and
agree as follows:
1. EMPLOYMENT. (a) The Company hereby employs the Employee, and the
Employee hereby accepts such employment with the Company, for the period set
forth in Section 2 hereof, all upon the terms and conditions hereinafter set
forth.
(b) The Employee affirms and represents that he is under no obligation
to any former employer or other party which is in any way inconsistent with, or
which imposes any restriction upon, the Employee's acceptance of employment
hereunder with the Company, the employment of the Employee by the Company, or
the Employee's undertakings under this Agreement.
2. TERM OF EMPLOYMENT. Unless earlier terminated as hereinafter
provided, the term of the Employee's employment under this Agreement shall
initially be for a period beginning on the Effective Date hereof and ending
twenty four months after the Effective Date. Thereafter, this Agreement will
continue in full force and effect from year to year unless terminated by either
the Employee or the Company by written notice given to the other not later than
two months before the end of the year of such termination. The period from the
date hereof until the date the Employee's employment hereunder is terminated
(whether twenty four months after the Effective Date or earlier or later as
provided herein) is hereinafter called the "Employment Term."
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3. DUTIES. The Employee shall be employed as the Chief Executive
Officer, a Vice President, General Counsel and Secretary of the Company, shall
faithfully and competently perform such duties as are specified in the Bylaws of
the Company and shall also perform and discharge such other executive employment
duties and responsibilities consistent with his position as the current Chief
Executive Officer, a Vice President, General Counsel and Secretary as the Board
of Directors of the Company may from time to time reasonably prescribe. The
Employee shall perform his duties at such places and times as the Board of
Directors of the Company may reasonably prescribe; provided, however, that if
compliance with this requirement would require the Employee to relocate more
than 40 miles from his current home in the San Diego, California area, the
Employee will only be required to relocate on such terms and to such location as
is mutually acceptable to the Employee and the Company. Except as may otherwise
be approved in advance by the Board of Directors of the Company, and except
during vacation periods and reasonable periods of absence due to sickness,
personal injury or other disability, personal affairs or non-profit public
service activities, the Employee shall devote his full time during normal
business hours throughout the Employment Term to the services required of him
hereunder. The Employee shall render his business services exclusively to the
Company during the Employment Term and shall use his best efforts, judgment and
energy to improve and advance the business and interests of the Company in a
manner consistent with the duties of his position.
4. SALARY, BONUS AND STOCK OPTION. (a) Salary. As compensation for the
performance by the Employee of the services to be performed by the Employee
hereunder during the Employment Term, the Company shall pay the Employee a base
salary at the annual rate of two hundred ten thousand dollars ($210,000) (said
amount, together with any increases thereto as provided in this Section 4(a),
being hereinafter referred to as "Salary"). Any Salary payable hereunder shall
be paid in regular intervals (but in no event less frequently than monthly) in
accordance with the Company's payroll practices from time to time in effect. The
Salary payable to the Employee pursuant to this Section 4(a) may be increased as
determined from time to time by the Compensation Committee of the Board of
Directors of the Company in its sole discretion.
(b) BONUS. The Employee shall be eligible to receive bonus
compensation from the Company in respect of the fiscal year ending December 31,
1999 and each fiscal year (or portion thereof) occurring during the Employment
Term. The Employee shall be eligible to receive bonus compensation in the amount
of $75,000 for the fiscal year ending December 31, 1999 if the Company shall
have met the target performance objectives established by the Board. The amount
of bonus compensation the Employee shall be eligible to receive during the
balance of the Employment Term shall be determined by the Compensation Committee
of the Board of Directors of the Company and shall be based on target
performance objectives set by the Compensation Committee of the Board of
Directors of the Company.
Any bonus payable hereunder shall be paid as promptly as practicable
as determined by the Board of Directors in its sole discretion.
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(c) WITHHOLDING, ETC. The payment of any Salary and bonus hereunder
shall be subject to applicable withholding and payroll taxes, and such other
deductions as may be required under the Company's employee benefit plans.
(d) STOCK OPTION. (i) Effective the Effective Date, the Company shall
grant to the Employee a stock option, pursuant to the Teletrac, Inc. and its
Subsidiaries 1999 Stock Option and Restricted Stock Purchase Plan (the "Stock
Option Plan") to purchase an aggregate 75,000 shares, subject to adjustment as
provided therein, of Common Stock, $.01 par value, of the Company. Such option
is intended to the maximum extent permissible to qualify as a "incentive stock
option" within the meaning of Section 422(b) of the Internal Revenue Code of
1986, as amended. Such option shall be at the purchase price and subject to the
other terms and conditions provided in stock option agreement between the
Company and the Employee substantially in the form attached hereto as Exhibit A.
(ii) The Employee shall be eligible to receive additional incentive
stock options and/or non-qualified stock options in accordance with the Stock
Option Plan to the extent and in the manner as determined by the Compensation
Committee of the Board of Directors.
5. OTHER BENEFITS. During the Employment Term, the Employee shall:
(i) be eligible to participate in employee fringe benefits and pension
and/or profit sharing plans that may be provided by the Company for its senior
executive employees in accordance with the provisions of any such plans, as the
same may be in effect from time to time;
(ii) be eligible to participate in any medical and health plans or
other employee welfare benefit plans that may be provided by the Company for its
senior executive employees in accordance with the provisions of any such plans,
as the same may be in effect from time to time;
(iii) be entitled to four weeks' annual paid vacation;
(iv) be entitled to sick leave, sick pay and disability benefits in
accordance with any Company policy that may be applicable to senior executive
employees from time to time; and
(v) be entitled to reimbursement for all reasonable and necessary
out-of-pocket business expenses incurred by the Employee in the performance of
his duties hereunder in accordance with the Company's policies applicable
thereto.
6. CONFIDENTIAL INFORMATION. The Employee hereby covenants, agrees and
acknowledges as follows:
(a) The Employee has and will have access to and will participate in
the development of or be acquainted with confidential or proprietary
information and trade secrets related to the business of the Company, its
subsidiaries and affiliates (collectively, the "Companies"), including but
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not limited to (i) business plans, operating plans, marketing plans,
financial reports, operating data, budgets, wage and salary rates, pricing
strategies and information, terms of agreements with suppliers or customers
and others, customer lists, patents, devices, software programs, reports,
correspondence, tangible property and specifications owned by or used in
the businesses of one or more of the Companies, (ii) information pertaining
to future developments such as, but not limited to, research and
development, future marketing, distribution, delivery or merchandising
plans or ideas, and potential new business locations, and (iii) other
tangible and intangible property, which are used in the business and
operations of the Companies but not made publicly available. The
information and trade secrets relating to the business of the Companies
described hereinabove in this paragraph (a) are hereinafter referred to
collectively as the "Confidential Information", provided that the term
Confidential Information shall not include any information (x) that is or
becomes generally publicly available (other than as a result of violation
of this Agreement by the Employee) or (y) that the Employee receives on a
nonconfidential basis from a source (other than the Company, its affiliates
or representatives) that is not known by him to be bound by an obligation
of secrecy or confidentiality to the Companies or any of them.
(b) The Employee hereby assigns to the Company, in consideration of
his employment, all Confidential Information developed by or otherwise in
the possession of the Employee at any time during the Employment Term,
whether or not made or conceived during working hours, alone or with
others, which relates, directly or indirectly, to businesses or proposed
businesses of any of the Companies, and the Employee agrees that all such
Confidential Information shall be the exclusive property of the Companies.
Upon request of the Board of Directors of the Company, the Employee shall
execute and deliver to the Companies any specific assignments or other
documents appropriate to vest title in such Confidential Information in the
Companies or to obtain for the Companies legal protection for such
Confidential Information.
(c) The Employee shall not disclose, use or make known for his or
another's benefit any Confidential Information or use such Confidential
Information in any way except in the best interests of the Companies in the
performance of the Employee's duties under this Agreement. The Employee may
disclose Confidential Information when required by applicable law or
judicial process, but only after notice to the Company of the Employee's
intention to do so and opportunity for the Company to challenge or limit
the scope of the disclosure.
(d) The Employee acknowledges and agrees that a remedy at law for any
breach or threatened breach of the provisions of this Section 6 would be
inadequate and, therefore, agrees that the Companies shall be entitled to
injunctive relief in addition to any other available rights and remedies in
case of any such breach or threatened breach; provided, however, that
nothing contained herein shall be construed as prohibiting the Companies
from pursuing any other rights and remedies available for any such breach
or threatened breach.
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(e) The Employee agrees that upon termination of his employment by the
Company for any reason, the Employee shall forthwith return to the Company
all Confidential Information, documents, correspondence, notebooks,
reports, computer programs and all other materials and copies thereof
(including computer discs and other electronic media) relating in any way
to the business of the Companies in any way developed or obtained by the
Employee during the period of his employment with the Company.
(f) The obligations of the Employee under this Section 6 shall, except
as otherwise provided herein, survive the termination of the Employment
Term and the expiration or termination of this Agreement and shall
terminate three years after the termination of the Employment Term.
(g) Without limiting the generality of Section 10 hereof, the Employee
hereby expressly agrees that the foregoing provisions of this Section 6
shall be binding upon the Employee's heirs, successors and legal
representatives.
7. TERMINATION. (a) The Employee's employment hereunder shall be
terminated upon the occurrence of any of the following:
(i) death of the Employee;
(ii) termination of the Employee's employment hereunder by the
Employee at any time for "good reason" (as defined below);
(iii) termination of the Employee's employment hereunder by the
Employee at any time for any reason whatsoever (including, without
limitation, resignation or retirement), other than "good reason" as
contemplated by clause (ii) above;
(iv) termination of the Employee's employment hereunder by the Company
because of the Employee's inability to perform his duties on account of
disability or incapacity for a period of one hundred eighty (180) or more
days, whether or not consecutive, within any period of twelve (12)
consecutive months;
(v) termination of the Employee's employment hereunder by the Company
at any time "for cause" (as defined below), such termination to take effect
immediately upon written notice from the Company to the Employee; and
(vi) termination of the Employee's employment hereunder by the Company
at any time, other than (x) termination by reason of disability or
incapacity as contemplated by clause (iv) above or (y) termination by the
Company "for cause" as contemplated by clause (v) above.
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(b) In the event that the Employee's employment is terminated pursuant
to clause (i), (ii), (iv) or (vi) of Section 7(a) above, or in the event of a
Change in Control (as defined below), the Company shall pay to the Employee, as
severance pay or liquidated damages or both, during the twelve-month period
immediately following such termination, the amount of Salary that the Employee
would have otherwise been entitled to receive during such twelve-month period
had the Employee's employment not been so terminated; provided, however, that no
such payment shall be due (i) in the event such termination occurs as a result
of a notice of termination given by the Company or by the Employee in connection
with a failure to renew this Agreement as provided in Section 2 or (ii) in the
event the Employee is terminated solely from his position as Chief Executive
Officer and maintains his position as a Vice President, General Counsel and
Secretary and all other terms and conditions of this Agreement remain in full
force and effect.
(c) Notwithstanding anything to the contrary expressed or implied
herein, except as required by applicable law and except as set forth in Section
7(b) above, the Company (and its affiliates) shall not be obligated to make any
payments to the Employee or on his behalf of whatever kind or nature by reason
of the Employee's cessation of employment (including, without limitation, by
reason of termination of the Employee's employment by the Company for "cause"),
other than (i) such amounts, if any, of his Salary as shall have accrued and
bonus as shall have been determined to be due by the Board of Directors and, in
each case, remained unpaid as of the date of said cessation and (ii) such other
amounts, if any, which may be then otherwise payable to the Employee from the
Company's benefits plans or reimbursement policies. The termination of this
Agreement shall not relieve the Employee of any liability for any willful breach
hereof.
(d) No interest shall accrue on or be paid with respect to any portion
of any payments hereunder.
(e) For purposes of this Agreement, the following definitions shall
apply:
(i) The term "good reason" shall mean only the following: (1) material
default by the Company in the performance of its obligations hereunder, or
(2) material diminishment of the duties, position or responsibilities of
the Employee hereunder (provided that, in either such case, the Employee
shall have provided the Board of Directors of the Company with written
notice of such default or other event and a reasonable opportunity to
discuss the matter with the Employee, followed by a notice that the
Employee adheres to his position and a reasonable opportunity to cure);
(ii) The term "cause" shall mean only the following: (1) conviction of
the Employee of having committed a felony, (2) acts of dishonesty or moral
turpitude by the Employee that are materially detrimental to the Company
and/or its affiliates, (3) acts or omissions by the Employee that the
Employee knew were likely to materially damage the business of the Company
and/or any affiliate of the Company whose business, operations, assets or
properties are material to the Company, (4) gross negligence by the
Employee in the performance of, or willful disregard by the Employee of,
his obligations hereunder, or willful and material breach by the Employee
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of the terms hereof or (5) failure by the Employee to obey the reasonable
and lawful orders of the Board of Directors that are consistent with the
provisions of this Agreement (provided that, in the event such failure
shall not also constitute "cause" under any of clauses (1) through (4)
above, the Employee shall have received written notice of such failure and
a reasonable opportunity to discuss the matter with the Board of Directors,
followed by a notice that the Board of Directors adheres to its position
and a reasonable opportunity to comply with such orders). It is understood
and agreed that the performance of the Company, whether financial,
operational or otherwise, shall not (in the absence of "cause" as provided
in clauses (1) through (5) above) constitute "cause."
(iii) "Change of Control" shall mean the acquisition of (a) beneficial
ownership of more than 50% of the voting equity securities of the Company
or any successor to the Company (by merger or otherwise) or (b) all or
substantially all the assets of the Company, by any person or entity
(including, without limitation, any group within the meaning of Section
13(d)(3) of the Securities Exchange Act, as amended).
8. NON-ASSIGNABILITY. (a) Neither this Agreement nor any right or
interest hereunder shall be assignable by the Employee or his beneficiaries or
legal representatives without the Company's prior written consent; provided,
however, that nothing in this Section 8(a) shall preclude the Employee from
designating a beneficiary to receive any benefit payable hereunder upon his
death or incapacity.
(b) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation or to exclusion,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
9. COMPETITION, ETC. (a) During the Employment Term and during the
two-year period following the end of the Employment Term for any reason
whatsoever, provided that payments, if any, required pursuant to Section 7(b)
hereof are made in full and in a timely fashion:
(i) the Employee will not directly or indirectly (as a director,
officer, employee, manager, consultant, independent contractor, advisor or
otherwise) engage in competition with, or own any interest in, perform any
services for, participate in or be connected with any business or
organization which engages in competition with the Company or any of its
affiliates in any State where any business shall be carried on (or formally
contemplated to be carried on) by the Company or any of its affiliates
during the Employment Term or as of the end of the Employment Term, as the
case may be, provided, however, that the provisions of this Section 9(a)(i)
shall not be deemed to prohibit (A) the Employee's ownership of not more
than five percent (5%) of the total shares of all classes of stock
outstanding of any publicly held company, or ownership, whether through
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direct or indirect stock holdings or otherwise, of one percent (1%) or more
of any other business or (B) non-profit public service activities, as
contemplated by Section 3 hereof; and
(ii) the Employee will not directly or indirectly induce or attempt to
induce any employee of the Company or any affiliate of the Company to leave
the employ of the Company or such affiliate, or in any way interfere with
the relationship between the Company or any such affiliate and any employee
thereof.
(b) For purposes of this Section 9, a person or entity (including,
without limitation, the Employee) shall be deemed to be a competitor of the
Company or any of its affiliates, or a person or entity (including, without
limitation, the Employee) shall be deemed to be engaging in competition with the
Company or any of its affiliates, if such person or entity in any way conducts,
operates, carries out or engages in (i) the business of vehicle location and
fleet management services or related services and supplies, or (ii) such other
business or businesses as the Company may conduct in the future in such
geographical area or areas as such business or businesses are conducted.
(c) For purposes of this Section 9, no company or entity that may be
deemed to be an affiliate of the Company solely by reason of its being
controlled by, or under common control with, any of the Investors or their
respective affiliates other than the Company, will be deemed to be an affiliate
of the Company.
(d) In connection with the foregoing provisions of this Section 9, the
Employee represents that his experience, capabilities and circumstances are such
that such provisions will not prevent him from earning a livelihood. The
Employee further agrees that the limitations set forth in this Section 9
(including, without limitation, time and territorial limitations) are reasonable
and properly required for the adequate protection of the businesses of the
Company and its affiliates. It is understood and agreed that the covenants made
by the Employee in this Section 9 (and in Section 6 hereof) shall survive the
expiration or termination of this Agreement, except as otherwise expressly
provided herein.
(e) The Employee acknowledges and agrees that a remedy at law for any
breach or threatened breach of the provisions of this Section 9 would be
inadequate and, therefore, agrees that the Company and any of its affiliates
shall be entitled to injunctive relief in addition to any other available rights
and remedies in cases of any such breach or threatened breach; provided,
however, that nothing contained herein shall be construed as prohibiting the
Company or any of its affiliates from pursuing any other rights and remedies
available for any such breach or threatened breach.
10. BINDING EFFECT. Without limiting or diminishing the effect of
Section 8 hereof, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
11. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and either delivered in person or
sent by first class certified or registered mail, postage prepaid, if to the
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Company, at the Company's principal place of business, and if to the Employee,
at his home address most recently filed with the Company, or to such other
address or addresses as either party shall have designated in writing to the
other party hereto.
12. LAW GOVERNING. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
13. SEVERABILITY. The Employee agrees that in the event that any court
of competent jurisdiction shall finally hold that any provision of Section 6 or
9 hereof is void or constitutes an unreasonable restriction against the
Employee, the provisions of such Section 6 or 9 shall not be rendered void but
shall apply with respect to such extent as such court may judicially determine
constitutes a reasonable restriction under the circumstances. If any part of
this Agreement other than Section 6 or 9 is held by a court of competent
jurisdiction to be invalid, illegible or incapable of being enforced in whole or
in part by reason of any rule of law or public policy, such part shall be deemed
to be severed from the remainder of this Agreement for the purpose only of the
particular legal proceedings in question and all other covenants and provisions
of this Agreement shall in every other respect continue in full force and effect
and no covenant or provision shall be deemed dependent upon any other covenant
or provision.
14. WAIVER. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
15. ENTIRE AGREEMENT; MODIFICATIONS. This Agreement constitutes the
entire and final expression of the agreement of the parties with respect to the
subject matter hereof and supersedes all prior agreements, oral and written,
between the parties hereto with respect to the subject matter hereof. This
Agreement may be modified or amended only by an instrument in writing signed by
both parties hereto.
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and the Employee have duly executed
and delivered this Agreement as of the day and year first above written.
TELETRAC, INC.
By /s/ ▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇
Title: Chief Financial Officer
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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