EXHIBIT 10.11
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of March 18, 1998, by and between
TELETRAC, INC., a Delaware corporation (the "Company"), and XXXX X. XXXXX,
XX. (the "Employee").
W I T N E S S E T H:
WHEREAS the Company desires to induce the Employee to enter into
employment with the Company 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 two-year period beginning on April , 1998 (the
"Effective Date") and ending on April , 2000. 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 90 days prior to the date of termination. The
period from the Effective Date until the date the Employee's employment
hereunder is terminated (whether on April , 2000 or earlier or later as
provided herein) is hereinafter called the "Employment Term."
3. Duties. The Employee shall be employed as the Chairman and
Chief Executive Officer 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 Chief Executive Officer 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 out of the San
Diego 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. In that connection, the Company confirms and agrees, as a
material inducement to Employee to enter into and perform this Agreement,
to promptly relocate its principal executive offices to the San Diego
area. 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, Stock Option and Restricted Stock. (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 three
hundred twenty-nine thousand one hundred twenty-eight dollars ($329,128)
(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) shall be subject to review by the Board of
Directors of the Company no less frequently than annually, and may be
increased as determined from time to time (in connection with such review
or otherwise) by the Board of Directors of the Company in its sole
discretion.
(b) Bonus. For the Company's 1998 fiscal year, the Employee
shall
receive bonus compensation from the Company in the amount of $100,000.
For each subsequent fiscal year (or portion thereof) occurring during the
Employment Term, the Employee shall be eligible to receive bonus
compensation from the Company in an amount to be determined by 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.
(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. Effective the Effective Date, Teletrac
Holdings, Inc., the Company's corporate parent ("Holdings"), shall grant
to the Employee a stock option to purchase an aggregate 22,828 shares,
subject to adjustment as provided therein, of Class A Common Stock, $.01
par value ("Common Stock"), of Holdings. Such option is intended to the
maximum extent permissible to qualify as an "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 agreements between
Holdings and the Employee substantially in the forms attached hereto as
Exhibits X-0, X-0 and A-3.
(e) Additional Option. Effective the Effective Date, Holdings
shall grant to the Employee a stock option (the "Additional Option") to
purchase an aggregate 10,553 shares, subject to adjustment as provided
therein, of Common Stock of Holdings, at an exercise price of $220 per
share. Such option shall be fully exercisable upon grant, shall have a
term of five years (subject to earlier expiration in connection with the
termination of Employee's employment), and shall otherwise be upon the
terms and subject to the conditions provided in a stock option agreement
between Holdings and the Employee in respect of such option substantially
in the form attached hereto as Exhibit B.
(f) Deferred Compensation. As of each anniversary of the
Effective Date commencing in 1999, through and including 2003, Employee
shall be eligible to receive the additional sum of four hundred sixty-four
thousand three hundred thirty-two dollars ($464,332) subject to the terms
and conditions provided herein. Such amounts shall be payable in the
amounts and at the times directed by Employee, PROVIDED, that all such
payments are subject to the following conditions:
(i) Prior to or simultaneously with each such payment, the Employee
shall have exercised the Additional Option at least as to that
proportion of shares subject thereto as such payment, together with
all payments theretofore made under this paragraph (f), represents of
the aggregate two million three hundred twenty-one thousand six
hundred sixty dollars ($2,321,660) payable under this paragraph (f).
(ii) Employee is eligible to receive payments hereunder only at the
times and under the circumstances in which he is eligible to exercise
the Additional Option pursuant to its terms, and any amounts
otherwise due or to come due hereunder
shall cease to be due or accrue if the Additional Option shall lapse
unexercised.
(iii) If Employee fails to give payment instructions as to all or any
portion of the amounts payable under this paragraph (f), such amounts
shall be payable in full on the seventh anniversary of the Effective
Date provided that the Employee remains in the full-time employ of
the Company as of such date.
5. Other Benefits. (a) 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 (including, without limitation, those
incurred in connection with the Employee's travelling between his home and
the Company's principal executive offices until such offices are relocated
to the San Diego area) in accordance with the Company's policies
applicable thereto.
(b) In addition to the benefit plans described in clause
(a)(ii) above, if during the Employment Term a covered dependent of the
Employee exceeds (i) the lifetime benefits for outpatient services for
mental or nervous disorder, alcoholism or drug abuse, or (ii) the annual
benefit for outpatient services for mental or nervous disorder, alcoholism
or drug abuse available under such plans, then the Company shall pay such
overage up to a maximum of $50,000 per year or, at its option, shall
purchase supplemental insurance that would provide the Employee with the
equivalent benefit.
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, Holdings, and their respective subsidiaries and
affiliates (collectively, the "Companies"), including but 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 specifica-
tions 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, and at the expense
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 seek 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.
(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
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, as determined by the Board
of Directors of the Company in its reasonable discretion;
(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.
(b) In the event that the Employee's employment is terminated
pursuant to clause (i), (ii), (iv) or (vi) of Section 7(a) above, the
Company shall pay to the Employee, as severance pay or liquidated damages
or both, an amount equal to two times his then current annual Salary;
PROVIDED, HOWEVER,
that no such payment shall be due in the event such termination occurs on
or after March , 2003 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. At the election of the Company, such
payments may be made either (A) in a lump sum equal to the net present
value of such payments (at an interest rate determined by the Board of
Directors in its reasonable discretion) payable promptly after the date of
termination; or (B) in installments during the twenty-four month period
immediately following the date of termination, in accordance with the
Company's payroll practices from time to time in effect. In the event of
any termination following which payments are due under this paragraph (b),
in addition to such payments, the Company shall continue to pay for each
of the benefits to which Employee would have been entitled under Section
5(a)(ii) and 5(b) hereof but for such termination, for a period of twenty-
four months (or until Employee is entitled to receive comparable benefits
from a subsequent employer, if sooner).
(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 unless not paid when due.
(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, (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), or (3) a "Change of Control" of the
Company (as defined below);
(ii) The term "cause" shall mean only the following:
(1) conviction of a felony by Employee that is materially detrimental
to the Company and/or its affiliates, (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 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) other than the "Investors," as such term is defined
in the Stock Purchase Agreement dated as of November 14, 1995, among
the
Company and the Investors, or their respective affiliates.
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 one-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 primary
and direct competition with the Company or any of its affiliates in
its core metropolitan markets 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 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, 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.
(c) 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 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, illegal 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.
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/Xxxxxx X. Xxxxxxx
________________________________
Name: Xxxxxx X. Xxxxxxx
Title: General Counsel and Secretary
/s/Xxxx X. Xxxxx, Xx.
__________________________________
Xxxx X. Xxxxx, Xx.
