EXHIBIT (d)(9)
CONSULTING AGREEMENT
Whereas CART, Inc. ("CART") desires to retain Xxxxxxxxxxx Xxxx ("Pook") in
a capacity as a consultant and Pook desires to be retained in such a capacity;
and whereas Pook desires to assist Championship Auto Racing Teams, Inc., a
Delaware corporation ("CHAMP") in the continued and successful operation of
CART; and, to avoid any disputes between the parties as to their obligations to
each other, especially in light of the announced potential acquisition by Open
Wheel Racing Series LLC ("OWRS") of CART (the "Merger"); and whereas Pook is
willing to voluntarily terminate his Employment Agreement that was due to expire
on December 31, 2004 and voluntarily enter into this Consulting Agreement on
similar economic terms to those he enjoyed while employed with CART, excluding
those related to change in control, CART and Pook hereby agree as follows:
1. EFFECTIVE TIME. The parties agree that none of the provisions of this
Consulting Agreement will take effect until the Effective Time of the Merger, as
defined in the Agreement and Plan of Merger dated September 10, 2003 among OWRS,
Open Wheel Acquisition Corporation and CHAMP (the "Merger Agreement").
2. EMPLOYMENT AGREEMENT OF DECEMBER 2001 VOIDED. The parties agree that
the Employment Agreement between Pook and CHAMP dated December 18, 2001, as
amended by that certain Amendment between Pook and CHAMP dated September 30,
2003 (the "Employment Agreement" attached hereto as Exhibit A) is, as of the
Effective Time of the Merger, hereby voided and, provided that the merger
between CART and OWRS is consummated, all duties and obligations of the parties
under the Employment Agreement shall be extinguished and may not be enforced by
one party against the other. This means that Pook and CART agree that all
agreements and obligations under the Employment Agreement regarding any past or
future compensation, bonuses, or reimbursements whether upon termination, change
in control, death, disability, for cause or no cause, or otherwise, or that the
parties' duties and obligations under the Employment Agreement would survive or
be binding on any successors of CART are null and void, and may not be enforced
by either party against the other. Because the parties agree that the Employment
Agreement shall have no force and effect, Pook acknowledges that he is not owed
any payments, monies, compensation, bonuses, severance of any kind by CART, and
CART agrees that Pook is not obligated to perform any duties or obligations on
CART's behalf except for those expressly set forth herein.
3. EFFECT OF TERMINATION OF MERGER. In the event the merger agreement
between CHAMP and OWRS is terminated, this Consulting Agreement shall be void
and the parties agree that the Employment Agreement of February 18, 2001 shall
be automatically revived without further action of the parties, and the
Employment Agreement will govern Employee's and CART's duties and obligations to
each other as if this Consulting Agreement had never existed.
4. BREACH OF THIS CONSULTING AGREEMENT. If either party breaches the terms
of this Consulting Agreement, including the parties' agreement to void the
Employment Agreement without either party owing any further duties or
obligations to the other, the
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prevailing party shall be entitled to recover all reasonable attorney's fees and
costs of litigation, including fees and costs on appeal or in connection with
any petition for review.
5. TITLE AND DUTIES. CART shall retain Pook as a Consultant with a title
to be determined by OWRS. In this capacity, Pook shall make himself available on
an as needed basis to the Board of Directors and others designated by the Board
to facilitate the orderly transition of management and such other matters as
OWRS and CART shall request, including providing information and advice about
CART's contractual relationships, vendor associations, sponsor relationships,
and other data, practices, or information with which Pook may be familiar by
virtue of his prior employment with CART. As part of his duties, Pook may make
public appearances at CART events or may be called upon to represent CART's
interest in a public forum. Accordingly, if Pook discusses CART or CART's
business publicly, he agrees not to disparage CART. In addition, Pook agrees to
only make comments (whether in a public forum or otherwise) about CART and
CART's business approved in advance by the Board of Directors, and consistent
with the Board's business plan and/or stated direction for CART or specific
instructions relayed to Pook from the Board. Pook understands that his agreement
not to disparage CART and to only make comments approved in advance by the Board
of Directors is a material term of this Agreement and, that his failure to abide
by these requirements will be deemed a breach of this Agreement under paragraph
4 and pursuant to paragraph 4 above, CART will make no further payments to Pook
after such breach. For its part, CART agrees that no authorized spokesperson
(including owners of CART) will make any disparaging or defamatory remarks about
Pook or any remarks about Pook that are false, libelous or slanderous. CART's
failure to abide by the preceding sentence shall be deemed to be a breach of
this Agreement as defined in paragraph 4 above.
6. TERM. Unless there is a breach of this Agreement, this Consulting
Agreement shall expire on the earlier of (i) May 31, 2006 or (ii) upon the
expiration of sixty (60) days' written notice (the "Termination Notice") to the
other party. In the event CART terminates this Agreement through a Termination
Notice prior May 31, 2006, Pook will be relieved of the duties described in
Paragraph 5 at the end of the Termination Notice period, but CART shall continue
to pay Pook through May 31, 2006, except as provided in Paragraphs 4 and 12. If
Pook terminates this Agreement under the 60-day notice provision prior to May
31, 2006, Pook will be relieved of the duties described in Paragraph 5 at the
end of the Termination Notice period, but will not be entitled to any additional
payments under this Agreement.
7. NO EMPLOYMENT RELATIONSHIP. As of the Effective Time of the Merger,
Pook will he retained as a Consultant and will not be treated as or considered
an employee by CART. Accordingly, CART will not make any deductions or
withholdings from Pook's retainer fee and Pook will be solely responsible for
all employment taxes. Pook agrees and understands he is not eligible to
participate in any of CART's employee benefit plans, including pension and 401k
plans, incentive plans, bonus plans or any other compensation or reward programs
now in existence or later developed for CART employees.
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8. COMPENSATION.
(a) RETAINER FEE. As full consideration for Pook's services, including
his agreement to make himself available to members of the CART Board
of Directors on an as-needed basis, beginning as of the Effective
Time of the Merger, CART agrees to pay Pook the sum of Twenty-One
Thousand Seven Hundred Sixty-Five Dollars ($21,765) per month for
the first 12 months of this Agreement. Thereafter, CART agrees to
pay Pook the sum of Sixteen Thousand One Hundred Forty Dollars
($16,140) per month. Said payments shall be made by check payable by
the 30th of each month. The parties agree that the amounts set forth
herein are based on the assumption that Pook will commence work
under this agreement on December 18, 2003. In the event Pook's
services under this Agreement commence before or after this date,
the parties agree that the monthly fee amounts described above will
be adjusted (upward or downward).
(b) EXPENSE REIMBURSEMENT. CART will reimburse Pook for all reasonable,
ordinary and necessary travel, entertainment and other expenses
incurred by Pook in conjunction with his consulting services to
CART, provided that such expenses are submitted on an invoice to
CART within 45 days after the expenses are incurred. Pook agrees
that all travel arrangements will be submitted for pre-approval by
the Interim CEO or other individual designated by the Board of
Directors in order to ensure that Pook's travel arrangements are
consistent with CART's then-existing travel policies. In addition,
provided that written approval is obtained from the Interim CEO or
other individual designated by the Board of Directors in advance,
CART agrees to reimburse Pook for all travel expenses for Pook's
wife to accompany him to CART events.
(c) DISABILITY/ILLNESS. In the event Pook becomes disabled or ill during
the term of this Agreement, and is unable, therefore, to perform his
duties hereunder, CART agrees to pay Pook 80% of his retainer fee
(the "disability payment") for a period of up to 12 months provided
that this Agreement has not expired. However, regardless of the
length of the term remaining in this Agreement at the time Pook
becomes disabled or ill and unable to perform his duties, CART
agrees that the disability payment shall be made for a period of no
less than 8 months. The parties agree that if Pook is unable to
resume his duties at the end of the 12-month period, this Agreement,
and the parties' duties and obligations hereunder will expire.
9. AUTOMOBILE COSTS. CART agrees to reimburse Pook for the costs of his
automobile through the term of his current lease which expires March 3, 2004.
However, once the lease expires, the parties agree that Pook shall be
responsible for his own transportation costs.
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10. SALE OF CART. In the event this Agreement has not otherwise already
been terminated and CART is sold or merged with another entity during the
remaining term, upon consummation of such sale or merger, CART agrees to
accelerate all remaining retainer payments so that within 10 days of the closing
of such sale or merger, CART will pay Pook the balance of his retainer payments
under this Agreement in a lump sum.
11. INDEMNIFICATION. CART agrees to indemnify Pook against all claims
against him arising out of his performance under this Consulting Agreement,
unless judgment is entered against him for fraud or misappropriation in the
performance of his consulting duties. This obligation to indemnify Pook will
cover all claims arising from Pook's performance under this Consulting
Agreement, including those claims that are not raised until after the expiration
of this Agreement. Notwithstanding anything in this Agreement, any
indemnification or similar coverage of any claims (whether arising before or
after the effective time of the Merger) related to Pook's performance of the
Employment Agreement and provided to Pook by CART pursuant to its charter
documents, insurance or otherwise, shall not be affected by the provisions of
this Agreement for the period of time from December 18, 2001 through the
Effective Time of the Merger.
12. NON-COMPETE. Pook agrees that until December 31, 2004 (the "Initial
Non-Compete Period"), he will not directly or indirectly participate as an
owner, stockholder, manager, agent, consultant, director or employee of a
professional motor sport sanctioning body, league or series, or any affiliated
organization ("motor sport group"), provided, however, that ownership of one
percent (1%) or less of the outstanding shares of a publicly traded corporation
shall not constitute a violation of this provision. Pook further agrees that
during the period January 1, 2005 through June 30, 2005 (the "Additional
Non-Compete Period"), he must obtain written permission from CART before
negotiating with another motor sport group for employment or consulting
services, or ownership or sponsorship rights. CART shall not unreasonably
withhold such permission during the Additional Non-Compete Period. Pook further
agrees that if he obtains employment, ownership or sponsorship rights with, or
is engaged to provide consulting services to, another motor sport group during
the Initial Non-Compete Period or without CART's prior written permission during
the Additional Non-Compete Period, this Agreement shall terminate, and Pook will
not be entitled to any additional payments under this Agreement. Pook
understands that his agreement not to compete with CART during the Initial
Non-Compete Period or the Additional Non-Compete Period without prior written
approval is a material term of this Agreement, and, that a violation of this
provision will be determined by CART in its sole discretion not unreasonably
withheld, shall be deemed a material breach of this Agreement, and that in
addition to the provisions of paragraph 4, CART shall be entitled to seek
damages for such breach, including injunctive relief, as well as its attorney's
fees and costs incurred in bringing an action for a violation of this provision.
13. FUTURE COOPERATION. Pook agrees to make himself available to CART,
upon reasonable notice from CART, in connection with any and all claims,
disputes, lawsuits or administrative proceedings involving CART about which Pook
has
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knowledge or information whether such knowledge or information was obtained
during Pook's employment with CART or during the course of this Consulting
Agreement. Such cooperation includes providing information, declarations or
statements to CART, meeting with attorneys or other representatives of CART, and
preparing for and giving testimony, and/or otherwise cooperating in CART's
investigation or defense of such matters. The parties agree that Pook's
obligations under this provision continue after the expiration of this
Agreement.
14. ENTIRE AGREEMENT; MODIFICATIONS. This Agreement represents the entire
understanding between the parties with respect to the subject matter of this
Agreement, and supersedes any and all prior and contemporaneous understandings,
agreements, plans, and negotiations, whether written or oral, with respect to
the subject matter hereof, including, without limitation, any understandings,
agreements, or obligations respecting any past or future compensation, bonuses,
reimbursements, or other payments to Pook by CART, including those set forth in
the prior Employment Agreement. All modifications to this Agreement must be in
writing and signed by CART and Pook.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Title: CFO
Date: 9/30/03
CART, INC.
By: /s/ Xxxxxxxxxxx X. Xxxx
------------------------------
Title: President
Date: Sept. 30th 2003
/s/ Xxxxxxxxxxx X. Xxxx
------------------------------------
XXXXXXXXXXX X. XXXX
Date: Sept. 30th 2003
EXHIBIT A
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment (the "AMENDMENT") to the Employment Agreement between
Xxxxxxxxxxx X. Xxxx ("XX. XXXX") and Championship Auto Racing Teams, Inc., a
Delaware corporation (the "COMPANY"), dated December 18, 2001 (the "EMPLOYMENT
AGREEMENT") is entered into by Xx. Xxxx and the Company as of September 30,
2003.
1. CHANGE IN CONTROL. The parties hereby agree that Section 6 of the
Employment Agreement is, as of the date of the execution of this Amendment,
hereby voided and all duties and obligations of the parties under Section 6 of
the Employment Agreement shall be extinguished and may not be enforced by one
party against the other. This means that Xx. Xxxx and the Company agree that all
agreements and obligations under Section 6 of the Employment Agreement regarding
any past or future compensation, bonuses, or benefits payable pursuant to the
provisions of Section 6 of the Employment Agreement are null and void and may
not be enforced by one party against the other. The parties understand that
their agreement to void Section 6 of the Employment Agreement is a material term
of this Amendment, and that a failure to abide by this term will be deemed a
breach of this Agreement.
2. CONSULTING AGREEMENT. In consideration for voiding Section 6 of the
Employment Agreement, the Company hereby agrees to cause its operating
subsidiary, CART, Inc., a Michigan corporation ("CART"), to enter into a
Consulting Agreement, substantially in the form attached hereto as Exhibit A,
with Xx. Xxxx whereby Xx. Xxxx will provide certain services to CART in exchange
for a retainer fee as set forth in detail in the Consulting Agreement. The
Consulting Agreement will become effective at the effective time of the merger
between the Company and Open Wheel Acquisition Corporation as defined in the
Agreement and Plan of Merger dated as of September 10, 2003 between Open Wheel
Racing Series LLC, Open Wheel Acquisition Corporation and the Company (the
"MERGER AGREEMENT").
3. EFFECT OF TERMINATION OF MERGER. In the event the Merger Agreement is
terminated, this Amendment shall be null and void and the parties agree that all
of the provisions, including without limitation Section 6, of the Employment
Agreement shall be automatically revived without further action of the parties,
and the Employment Agreement will govern Xx. Xxxx'x and the Company's duties and
obligations to each other as if this Amendment had never existed.
4. BREACH OF THIS AMENDMENT. If either party breaches the terms of this
Amendment, the prevailing party shall be entitled to recover all reasonable
attorney's fees and costs of litigation, including fees and costs on appeal or
in connection with any petition for review.
5. ENTIRE AGREEMENT. This Amendment and the Employment Agreement represent
the entire understanding between the parties with respect to the subject matter
hereof and supersede any and all prior and contemporaneous understandings,
agreements, plans and negotiations, whether written or oral, with respect to the
subject matter hereof,
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including those set forth in Section 6 of the Employment Agreement. All
modifications to this Amendment must be in writing and signed by both parties.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Title: CFO
Date: 9/30/03
/s/ Xxxxxxxxxxx X. Xxxx
-----------------------------------------
XXXXXXXXXXX X. XXXX
