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EXHIBIT 99.1
SEVERANCE AGREEMENT AND RELEASE
This Severance Agreement and Release ("Agreement") is made and entered
into on this ___ day of June, 2000, by and between Championship Auto Racing
Teams, Inc. (hereinafter referred to as "CART") and Xxxxxx X. Xxxxx (hereinafter
referred to as "Xxxxx").
BACKGROUND INFORMATION
X. Xxxxx was employed by CART as its Chairman of the Board of
Directors, Chief Executive Officer and President, and also served as a director
of CART and an officer and director of various CART subsidiaries and affiliates.
B. On June 16, 2000, Xxxxx resigned his employment, offices and all
service positions with CART and any and all of its subsidiaries and affiliates
to explore other business opportunities. CART and Xxxxx now desire to enter into
an agreement resolving all matters among them, reciting the following terms and
conditions.
NOW THEREFORE, in consideration of the foregoing and the covenants and
conditions contained herein, and other good and value consideration, the receipt
and sufficiency of which are hereby acknowledged, CART and Xxxxx hereby agree as
follows:
STATEMENT OF AGREEMENT
The parties to this Agreement hereby acknowledge the accuracy of the
above Background Information and hereby agree as follows:
1. Resignation by Xxxxx. Effective as of June 16, 2000, Xxxxx resigns
each and every employment, office and service position with CART and its
subsidiaries and affiliates, including without limitation his position as an
officer, director, Chairman of the Board of Directors, Chief Executive Officer
and President of CART.
2. Termination of Employment Agreement, Stock Option Agreement and
Other Agreements and Benefits. CART and Xxxxx hereby agree that this Agreement
supersedes the Employment Agreement between them dated December 22, 1997 a copy
of which is attached hereto as Exhibit A, the Stock Option Agreement dated March
9, 1998, and any and all other agreements, whether written or oral, made among
or between the parties as all such agreements shall be null and void and of no
further force and affect, and shall be completely superseded by this Agreement
and its terms. As of the above separation date, neither CART nor their
respective affiliates shall have any further obligation to Xxxxx with respect to
any compensation, payments, or benefits or other rights under any agreements
except as provided by this Agreement.
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3. Payments. As consideration solely for entering into this Agreement,
including all of the conditions and covenants contained in Sections 5 and 6
herein, CART hereby agrees to:
(a) pay to Xxxxx, as a consulting fee, $23,076.92 biweekly, the
first payment due June 30, 2000 and the last payment due
December 29, 2000, and a monthly payment of $597.42 beginning
in July 2000 for a period of six (6) months thereafter, with
the last payment in December 2000;
(b) in the event that at December 31, 2001, Xxxxx is not employed,
provide a reimbursement to Xxxxx for medical insurance and
dental coverage, for a period of up to six (6) months
thereafter, in an amount not to exceed $545.06 for medical and
$52.36 for dental insurance;
(c) maintain Craig's private life insurance policy of $1,000,000
and maintain Craig's disability insurance policy, both
policies to expire on December 31, 2000;
(d) subject to Craig's insurability, as determined by the
insurance company, secure an additional $500,000 life
insurance policy on Craig's life, which policy shall expire on
December 31, 2000;
(e) provide Xxxxx with the same Mercedes Benz as he was provided
with on June 16, 2000, with CART being responsible for all
insurance and maintenance, but with Xxxxx being responsible
for all gasoline or other expenses. The car shall be provided
until December 31, 2000, and shall be subject to any
overriding decision made by Mercedes Benz USA pursuant to the
agreement between Mercedes Benz USA and CART, which could
include return of the vehicle by Xxxxx to Mercedes Benz. If
the Mercedes Benz is required to be returned, then CART will
provide Xxxxx with another vehicle commensurate with Craig's
former status with CART as President and CEO.
No deductions will be made from the payments or benefit amounts set
forth above and CART shall issue Xxxxx a Form 1099 for any payments disbursed as
set forth herein. In the event that any assessment or penalty for back
employment taxes, penalties or interest or failure to issue the appropriate tax
form(s) on these payments is made against CART, for which Xxxxx is responsible,
or because Xxxxx has failed to properly pay taxes regarding the payment, Xxxxx
agrees to pay any such assessment, including any and all penalties and interest
assessed against him or CART and to indemnify and hold CART harmless from any
and all claims, damages, causes of action or suits at law or equity relating in
any manner to the payments made hereunder to Xxxxx.
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4. Termination of Stock Option Agreements and Severance Compensation.
Xxxxx and CART agree that effective June 16, 2000, all stock options granted to
Xxxxx, whether vested or unvested, including those pursuant to the Stock Option
Agreement dated March 9, 1998, shall terminate and become null and void, and
Xxxxx shall not claim any benefits with respect to either the vested or unvested
stock options under such Stock Option Agreement, as indicated in this Section
and above Sections of this Agreement.
As sole consideration for the cancellation of such stock options, CART
shall pay to Xxxxx the total of One Million Two Hundred Thousand Dollars
($1,200,000), with such amount to be paid on or before June 30, 2000, and as a
one-time severance payment, One Million Two Hundred Thousand Dollars
($1,200,000) payable on or before January 5, 2001. If requested by Xxxxx, the
payment due January 5, 2001 shall be placed in a separate escrow account with
all interest being paid to CART. Xxxxx shall be responsible for payment of all
escrow fees.
All amounts to be paid to Xxxxx shall be payable in immediately
available funds to an account or accounts designated by Xxxxx.
CART shall issue Xxxxx a Form 1099 for any payments disbursed as set
forth in this Section. CART shall withhold any federal and state income, social
security or other taxes from all payments specified in this Section. In the
event that any assessment or penalty for back employment taxes, penalties or
interest or failure to issue the appropriate tax form(s) on these payments is
made against CART, for which Xxxxx is responsible, or because Xxxxx has failed
to properly pay taxes regarding the payment, Xxxxx agrees to pay any such
assessment, including any and all penalties and interest assessed against him or
CART and to indemnify and hold CART harmless from any and all claims, damages,
causes of action or suits at law or equity relating in any manner to the
payments made hereunder to Xxxxx.
5. Non-Competition; Non-Solicitation. Xxxxx agrees and acknowledges
that reasonable limits of his ability to engage in activities which are
competitive with CART are warranted in order to protect CART's trade secrets and
proprietary information, and further, are warranted in order to protect CART in
developing and maintaining its reputation, good will and status in the
marketplace. In that regard, during the period of six (6) months following the
date hereof, Xxxxx shall not engage in Competition (hereinafter defined) with
CART, its subsidiaries and affiliates. For purposes of this Agreement,
"Competition" by Xxxxx shall mean engaged in, or being employed by, or acting as
a consultant to, or being an officer, director, principal, shareholder, member,
owner or partner in any other business or organization anywhere in North
America, a principal business of which (i.e., a source of 20% or more of its
revenues) is providing services as a sanctioning body or race organizer or
promoter of any open-wheel racing group or series. In addition, for a period of
six (6) months following the date hereof, Xxxxx agrees that he will not, for his
benefit or the benefit of any other person, firm or entity, solicit the
employment or services of any person who is known to Xxxxx to be employed by
CART, its subsidiaries and affiliates at that time, provided that Xxxxx shall
not be deemed to have solicited
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any employee if that employee (a) first approaches Xxxxx concerning employment
or services or (b) responds to a general advertisement or search by an executive
search firm.
6. Assistance in Transition. Xxxxx agrees that for a period of six (6)
months from the date hereof, Xxxxx will provide consulting services to CART
and/or its affiliates, solely at CART's request, to assist CART in the
transition to new officers or other CART personnel. Xxxxx shall not be paid
additional consulting fees or compensation in addition to the payments set forth
herein, the receipt and sufficiency of which are hereby acknowledged, as the
payments set forth herein shall serve as reasonable consideration for the same.
Xxxxx will not be required to provide consulting services for more than six (6)
days per month during such (6) six-month period and shall be reimbursed for all
reasonable expenses associated with travel outside of Detroit, Michigan. The
parties acknowledge and agree that Xxxxx will perform such services as an
independent contractor and shall have no authority to act on behalf of or to
bind CART or its affiliates.
For such six (6) month period, Xxxxx agrees to reasonably assist CART
and/or its affiliates for no more than the six days per month identified in the
preceding paragraph, at CART's request, in the prosecution or defense of any
litigation currently pending or that may subsequently be initiated that relates
in any way to his activities or position as an employee, officer or service
provider for CART, including, but not limited to, appearing on behalf of CART to
provide assistance or testimony, without judicial process or compensation. Xxxxx
shall be reimbursed for all reasonable expenses associated with travel outside
of Detroit, Michigan in providing such assistance.
7. Non-Disclosure; Statements to Third Parties.
(a) Except as otherwise agreed to by the parties hereto or as
may be required to carry out the terms of this Agreement and to the extent that
this Agreement or the terms hereof become publicly known or available because of
legally mandated disclosure and filing requirements of the Securities and
Exchange Commission or the New York Stock Exchange, the parties will keep this
Agreement, its terms, and transactions contemplated hereby confidential and no
party hereto, or any of its employees, representatives or agents, will make any
public announcements or communicate with any employees of CART regarding the
subject matter of this Agreement. CART and Xxxxx will agree on and cooperate in
making all public announcements, and no party will make any public announcement
unless the other party has agreed to the substance of such announcement.
(b) Neither Xxxxx nor CART or any of its officers, directors
or employees (or officers, directors or employees of its subsidiaries) shall,
directly or indirectly, make or cause to be made any statements to any third
parties criticizing or disparaging the other or commenting on the character or
business reputation of the other or relating to the subject matter of this
Agreement, but this provision shall not limit the ability or responsibility of
either party to
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respond to the best of its knowledge to administrative or regulatory inquiries
or to testify to the best of its knowledge in legal proceedings.
(c) The above named parties also agree that they shall not
disparage, harass, or otherwise direct any improper conduct, either directly or
indirectly, towards any of the other above named parties, or any of their agents
and employees, personally and in their respective capacities, and any other
person or entity representing or succeeding to any person or entity, as a result
of or in connection with this matter.
(d) The confidentiality and nondisparagement provisions of
this Agreement are of the utmost importance to the above named parties, and the
parties agree that the provisions of this Section are a material part of this
agreement.
8. Release by CART. In consideration of the rights and obligations
created by this Agreement, the receipt and sufficiency of which is hereby
acknowledged, CART hereby fully and forever releases and discharges Xxxxx, his
heirs, personal representatives, and successors and assigns from and against any
and all claims, demands, obligations, actions, liabilities, damages, and other
costs and expenses of every kind and nature whatsoever, at law or in equity,
known or unknown, suspected or unsuspected, liquidated or unliquidated,
contingent or fixed, that CART may now have, based in whole or in part upon any
act or omission through the date of Craig's separation from employment with
CART, including, without limitation, those claims, demands, obligations,
actions, liabilities, damages, and costs and expenses arising, directly or
indirectly, from or relating to or based upon Craig's employment with CART or
separation from employment with CART.
9. Release by Xxxxx. In consideration of the rights and obligations
created by this Agreement, the receipt and sufficiency of which is hereby
acknowledged, Xxxxx hereby fully and forever releases and discharges CART, and
its subsidiaries, divisions, affiliated companies, directors, officers,
shareholders, employees, administrators, agents, attorneys, and predecessors,
successors and assigns personally and in their respective capacities, and any
other person or entity, representing or succeeding to any such person or entity
from and against any and all claims, demands, rights, charges, interests, debts,
liabilities, obligations, actions, damages, or causes of action, and other costs
and expenses of every kind and nature whatsoever, at law or in equity, known or
unknown, suspected or unsuspected, liquidated or unliquidated, contingent or
fixed, that Xxxxx may now have or at any future time may have against them,
either individually, jointly, or severally, before any municipal, state, federal
or international court or governmental or administrative agency, based in whole
or in part upon any act or omission which may have occurred from the beginning
of time through the date of Craig's separation from employment with CART,
including, without limitation, those claims, demands, obligations, actions,
liabilities, damages, and costs and expenses arising, directly or indirectly,
from or relating to or based upon Craig's employment with CART or separation
from employment with CART, including but not limited to wrongful discharge,
breach of contract, tort, defamation, negligence, fraud, any state, federal or
international civil rights laws, and any rights or causes of action he may have
under the
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laws of any state in the United States, including both federal and state law,
including the claims that may have been raised before, and any claims under the
Age Discrimination in Employment Act (as amended by the Older Workers Benefit
Protection Act), Americans with Disabilities Act, Employee Retirement Income
Security Act, or any other international, federal, state or local law relating
to employment or discrimination in employment, termination of employment, wages,
benefits or otherwise, including under Craig's Employment Agreement or any other
agreements, be they written or oral.
10. Indemnification. For the entire period from the date hereof until
at least six years thereafter (i) CART's certificate of incorporation and/or
by-laws shall contain the provisions with respect to the indemnification and
exculpation from liability set forth in its certificate of incorporation and
by-laws as of the date of this Agreement, which provisions shall not be amended,
repealed or otherwise modified during such period in any manner that would
adversely affect the rights of Xxxxx thereunder, and (ii) CART shall maintain in
effect its current directors' and officers' liability insurance covering Xxxxx
in his capacity as a director and officer of CART with respect to those matters
covered by, and subject to the same terms and limitations imposed by, the
directors' and officers' liability insurance policy that CART generally provides
for its own directors and officers.
11. No Future Lawsuit. Xxxxx agrees never to file any lawsuit asserting
any claims or causes of action that are waived or released under the terms of
this Agreement. Without limiting the foregoing, Xxxxx acknowledges and agrees
that, if Xxxxx brings any claim or cause of action that is waived or released
under this Agreement, Xxxxx shall reimburse CART for all of CART's costs,
including, but not limited to, reasonable attorneys' fees, incurred by CART.
Xxxxx further acknowledges and agrees that Xxxxx shall relinquish his right to
individual damages in connection with any administrative or court proceeding
arising out of or relating to any claim or cause of action that is waived or
released under this Agreement and, if CART is awarded money damages with respect
thereto, Xxxxx shall assign to CART, Craig's right and interest to such money
damages.
The releases provided by CART and Xxxxx in Sections 8 and 9 shall not
adversely affect either parties right to enforce the terms of this Agreement.
12. Acknowledgments. Xxxxx acknowledges that, before entering into this
Agreement, Xxxxx had the opportunity to consult with any attorney or other
advisor of Craig's choice, and Xxxxx has been advised to do so. Xxxxx further
acknowledges that he has entered into this Agreement of his own free will and
that no promises or representations have been made to Xxxxx by any person to
induce Xxxxx to enter into this Agreement, other than the express terms set
forth herein. Specifically, Xxxxx is aware the financial position and prospects
of CART and has been provided with the opportunity to investigate on his own
behalf the financial situation and future prospects of CART and does not desire
any additional information with respect to making the decisions contained in
this Agreement, including the relinquishment of all of Craig's right, title and
interest to stock options of CART. Xxxxx further acknowledges that he has read
this
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Agreement and understands all of its terms, including, but not limited to, the
waiver and release of claims set forth herein.
13. Period for Review and Consideration. Xxxxx acknowledges that he has
been given a period of at least twenty-one (21) days to review and consider this
Agreement before signing, dating and returning it. Xxxxx understands that he may
use as much of the twenty-one (21) day period as he wishes for such period of
review and consideration.
14. Voluntary Execution and Right of Revocation. Xxxxx acknowledges
that he has specifically waived any rights under 29 U.S.C. ss.621 et seq. and
that all provisions of the Older Workers Benefit Protection Act have been
complied with, including that this Agreement has been explained to him. Xxxxx
acknowledges that he has been advised herein in writing to consult with an
attorney regarding whether he wishes to execute this Agreement. Xxxxx further
acknowledges that he has been given a period of twenty-one (21) days within
which to consider this Agreement and that by signing this Agreement prior to the
expiration of such twenty-one (21) day period that he voluntarily and knowingly
waives such twenty-one (21) day period. Xxxxx further acknowledges that he
hereby voluntarily and knowingly waives such twenty-one (21) day period without
fraud, misrepresentations, or threat.
Xxxxx may not revoke this Agreement after signing it, except to the
extent of Craig's waiver and release of claims under the Age Discrimination in
Employment Act (as amended by the Older Workers Benefit Protection Act) by
delivering a signed revocation notice within seven (7) days of Craig's signing
and dating this Agreement:
To CART as follows:
Championship Auto Racing Teams, Inc.
000 Xxxx Xxx Xxxxxx Xxxx, Xxxxx 000
Xxxx, XX 00000
Attention: President
(000) 000-0000
(000) 000-0000
For a revocation to be effective, the President of CART must receive
the signed revocation notice no later than the close of business on the seventh
(7th) day after Xxxxx signs and dates this Agreement. Upon a revocation by
Xxxxx, this Agreement shall continue in full force and effect, except to the
extent of Craig's waiver and release of claims under the Age Discrimination in
Employment Act (as amended by the Older Workers Benefit Protection Act), and
Xxxxx shall, as of the date of such revocation, release CART's obligation for
all payments paid to Xxxxx under this Agreement, and reimburse CART for the full
amount of any payments previously made under this Agreement, including interest
thereon.
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Finally, Xxxxx acknowledges that no promise, inducement or agreement
not expressed herein has been made by anyone to influence execution of this
Agreement, and that he is entering into this Agreement of his own voluntary act
and deed.
15. Notices. All notices, requests, demands, letters, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
sent by next-day or overnight mail or delivery, or (d) sent by fax, as follows:
To Xxxxx:
Xxxxxx X. Xxxxx
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In each instance with a copy to:
Xxxxx X. Xxxxxxxxx, Esq.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
To CART:
Championship Auto Racing Teams, Inc.
000 Xxxx Xxx Xxxxxx Xxxx, Xxxxx 000
Xxxx, XX 00000
Attention: President
Fax: (000) 000-0000
In each instance with a copy to:
Xxxx X. Xxxxxx, Esq.
Xxxxx & Xxxxxxxxx LLP
00 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000
or to such other person or address as any party shall specify by notice in
writing to the party or parties entitled to notice. All such notices, requests,
demands, letters, waivers and other communications shall be deemed to have been
received (a) if by personal delivery on the day of delivery, (b) if by certified
mail or registered mail, on the fifth business day after the mailing thereof,
(c) if by next-day or overnight mail or delivery, on the next day following the
day on
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which it was sent or (d) if by fax, on the next day following the day on which
such fax was sent, provided that a copy is also sent by certified or registered
mail or next-day or overnight mail or delivery.
16. Governing Law. The validity, interpretation, construction and
performance of this Agreement (and every other issue arising hereunder) shall be
governed by the laws of the State of Michigan, without giving effect to the
principles of conflicts of laws of such state.
17. Successors; Binding Agreement.
(a) This Agreement shall be binding upon and inure to the
benefit of CART and any successor of or to CART.
(b) This Agreement shall inure to the benefit of and be
enforceable by Craig's personal or legal representatives, executors,
administrators, successors, heirs, distributees and/or legatees.
18. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all prior verbal or written agreements, covenants, communications,
understandings, commitments, representations or warranties, whether oral or
written, by any party hereto or any of its representatives pertaining to such
subject matter.
19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement.
20. Validity. If and to the extent that any of the parties breach part
or all of any provision of this Agreement, such alleged breach shall not affect
the remaining provisions of this Agreement, which shall remain in full force and
effect. Similarly, if, and to the extent that, any court of competent
jurisdiction holds that part or all of any provision of this Agreement is
invalid, such invalidity shall not affect the balance of that provision or the
remaining provisions of this Agreement, which shall remain in full force and
effect.
21. Non-Waiver. No failure by any party to insist upon strict
compliance with any term of this Agreement, to exercise any option, enforce any
right, or seek any remedy upon any default of the other shall affect, or
constitute a waiver of, the first party's right to insist upon such strict
compliance, exercise that option, enforce that right, or seek that remedy with
respect to that default or any prior, contemporaneous, or subsequent default. No
custom or practice of the parties at variance with any provision of this
Agreement shall affect, or constitute a waiver of, any party's right to demand
strict compliance with all provisions of this Agreement.
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22. Captions and Section Headings. Captions and Section headings used
herein are for convenience and are not part of this Agreement and shall not be
used in construing this Agreement.
23. Further Assurances. Each party hereto shall execute such additional
documents and do such additional things as may reasonably be requested by the
other party to effectuate the purposes and provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first set forth above.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, President
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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