EXHIBIT 10.47
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made on June 1, 2000, by
and between Karts International Incorporated, a Nevada corporation (the
"Employer"), and Xxxxxxx "Xxxxx" Xxxxxxx (the "Employee").
WHEREAS, the Employer is engaged in the business of designing,
manufacturing, distributing and marketing go-karts;
WHEREAS, the Employee is experienced and qualified to perform duties
connected and associated with the business of Employer;
WHEREAS, as a condition of Employee's employment, Employer desires to
receive from Employee certain covenants and agreements; and
WHEREAS, Employer and Employee desire to set forth in writing the terms
and conditions of their agreements and undertakings with respect to these
covenants, as this Agreement is a condition of Employee's employment and
ancillary thereto, but does not purport to set forth all the terms of such
employment.
NOW, THEREFORE, IN CONSIDERATION of the herein recited undertakings,
the compensation to be paid by Employer to Employee and the other covenants and
agreements contained herein, the receipt and sufficiency of which are hereby
acknowledged and confessed, the parties hereto agree as follows:
1. Employment. Employer hereby employs Employee as an employee of
Employer upon the terms and subject to the conditions hereinafter set forth.
2. Duties of Employee. The Employee shall serve as President and
Chief Executive Officer, with such duties, power and authority as are
customarily associated with such positions. Without limiting the generality of
the foregoing, the Employee shall be responsible for and have complete
authority: (a) for day-to-day operations; (b) implementation of strategic plans
approved by the Board of Directors; (c) all personnel decisions including
complete hire and fire authority; and (d) determining an employee organizational
structure. The Employee shall have such other duties and responsibilities as may
from time to time be assigned to Employee by the Board of Directors. The
Employee will be a voting member of the Board of Directors and be entitled to
attend any and all meetings of the Board of Directors or any committees
established by the Board of Directors.
3. Term of Agreement. The term of this Agreement shall begin on
June 1, 2000 (the "Effective Date") and shall, subject to early termination as
hereinafter set forth in this Agreement, continue until and terminate on the
third (3rd) anniversary date of the Effective Date of this Agreement (the
"Initial Term"); provided, however, that the term of Employment of Employee
under this Agreement shall be automatically extended for an additional period of
one year after the expiration of the Initial Term, unless at least thirty (30)
days prior to such date either Employer or Employee shall give written notice to
the other that Employee's term of employment under this Agreement shall end upon
the expiration of the Initial Term. If Employee's term of employment is
automatically extended at the expiration of the Initial Term, it shall be
further automatically extended from year to year thereafter unless at least
thirty (30) days prior to the anniversary date of any such extension, written
notice is given by either Employer or Employee to the other that Employee's term
of employment under this Agreement shall end on such anniversary.
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4. Place of Employment. The duties to be performed by Employee
shall be performed at the office of Employer, located in Roseland, Louisiana
(the "Company Headquarters"), as well as at such other temporary locations as
the Board of Directors of Employer may from time to time determine or require
for the performance of his duties as an employee of Employer. However, Employee
will not be required to permanently relocate during the Initial Term and any
requirement to work at a temporary location will be limited in duration to 7
days per month, unless specifically agreed to by Employee.
5. Time Requirements. Employee shall devote substantially his
entire productive time (exclusive of vacation, reasonable personal matters,
funeral leave, illness, temporary disability, holidays and weekends), ability
and attention to the business of Employer during the term of this Employment
Agreement. The Employee shall at all times faithfully and to the best of his
ability perform his duties under this Agreement. The duties shall be rendered at
the Corporation's principal office, at any of the subsidiary company locations,
or at such other place or places and at such times as the needs of the
Corporation may from time-to-time dictate. This section specifically
acknowledges that the Employee may continue to participate as a director of a
non-affiliated corporation and as an officer and director of a not-for-profit
karting association.
6. Compensation. Effective as of the Effective Date of this
Agreement, Employer shall pay or provide to Employee during the Initial Term of
this Employment Agreement and any extension hereof (unless this Agreement is
earlier terminated as hereinafter provided in Section 7 hereof) the following
compensation and benefits set forth in subsections (a) through (c) (collectively
the "Benefits"), subject to deductions, offsets and credits as elsewhere set
forth in this Section 6:
(a) Base Compensation.
(i) Salary. Employee shall receive an annual salary
of $200,000 ("Base Salary"), subject to mandatory deductions
and withholdings as required by law, payable in cash in
accordance with Employer's established payroll procedures,
subject to proration for any partial employment period.
Employee's Base Salary may be increased at any time at the
sole discretion of the Board of Directors.
(ii) Stock Options. Employee shall receive options
(the "Options") to purchase an aggregate of 250,000 shares of
Employer's Common Stock at an exercise price equal to 100% of
the closing bid price of the Common Stock on the date this
Agreement is approved by the Company's Board of Directors, as
quoted on the Nasdaq SmallCap Market or OTC Electronic
Bulletin Board. The Options, whose terms shall not be
inconsistent with this Agreement, shall vest and be
exercisable as follows: (a) options to purchase 100,000 shares
shall vest and be exercisable on the date this Agreement is
approved by the Company's Board of Directors; (b) options to
purchase 75,000 shares of Common Stock shall vest and be
exercisable on the second anniversary of the Effective Date of
this Agreement; and (c) options to purchase the remaining
75,000 shares of Common Stock shall vest and be exercisable on
the third anniversary of the Effective Date of this Agreement.
All unvested Options shall vest immediately in the event this
Agreement is terminated either as the result of the death or
disability of Employee as contemplated in subsection (a) of
Section 7 of this Agreement, "without cause" as provided for
in subsection (c) of Section 7 of this Agreement or due to a
"change in ownership" as provided for in subsection (e) of
Section 7 of this Agreement. The Options shall expire on the
fifth anniversary of the Effective Date of this Agreement.
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(iii) Bonus. Employee may be eligible to receive an
annual bonus, which bonus shall be in the form of (a) options
to purchase up to 50,000 shares of Employer's Common Stock,
which options shall vest immediately upon issuance and shall
expire five years from the date of grant, and (b) cash in an
amount established in an annual performance based management
bonus program which will be approved by the Board of
Directors, subject to mandatory deductions and withholdings as
required by law.
(b) Employee Benefits.
(i) Medical, Dental and Life. Employer agrees to
include Employee and his dependents, if applicable, with no
delay in coverage, in any hospital, surgical, medical, dental,
term life insurance plan or plans of Employer for its
employees generally from time to time during the term of this
Employment Agreement. The costs of participating in such plan
or plans shall be borne by Employer provided such cost does
not exceed $8,400 per year. Any costs associated with
providing the benefits of this sub- section (b)(i) which
exceeds $8,400 per year shall be the responsibility of
Employee. In the event Employer does not subscribe to any form
of medical or dental plan, Employee and his dependents shall
be reimbursed for medical and dental insurance contracted for
by them on an independent basis or actual expenses incurred,
which reimbursement shall not exceed $8,400 per year. This
annual limitation will automatically increase at the same rate
that the Employer's medical and dental plan premiums increase.
(i) Other Benefit Plans. Employee may be eligible to
be included in any profit sharing, pension, deferred
compensation or other benefit plans of Employer, including
long-term group disability, for all or any portion of its
employees, including its key employees, from time to time
during the term of this Employment Agreement. The costs of
participating in any of such benefit plans shall be borne as
provided in rules and regulations adopted by Employer from
time to time dealing with any of such plans. It is agreed and
understood that there shall be no obligation on the part of
Employer to provide for the participation of Employee in, or
to institute, any such plan or plans or to make any
contribution or contributions thereunder.
(ii) Vacations, Personal Days and Holidays. Employee
shall be entitled to paid vacation and personal days as
follows (a) during the first year of the Initial Term of this
Agreement, Employee shall be entitled to three (3) weeks
vacation and five (5) personal days; and (b) during the second
and third years of the Initial Term of this Agreement, and
upon any extension thereof, Employee shall be entitled to four
(4) weeks vacation and ten (10) personal days, which vacation
shall be taken by Employee at reasonable times and on or
before each anniversary of the Effective Date of this
Agreement. Unused vacation days may not be carried over if not
taken prior to an annniversary date. In addition, Employee
shall be entitled to such holidays as Employer elects to
provide for its employees generally.
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(c) Other Benefits. Employee may be eligible to participate in
any stock option plan, incentive compensation plan or bonus plan which
may be provided by Employer or by any affiliate of Employer to its
officers, the actual participants therein, including Employee, and
benefits granted therunder, if any, to be at the sole discretion of
Employer or its affiliates. Such plans are subject to any rights
reserved by Employer or its affiliates to modify or terminate any such
plans.
7. Termination. This Employment Agreement shall terminate earlier
than provided in Section 3 hereof upon the first to occur of any of the
following:
(a) Death or Disability. In the event Employee shall die or
become disabled during the term of this Employment Agreement, then and
in such event, this Employment Agreement shall automatically terminate
as of such date. Employer shall pay to Employee or Employee's legal
representatives all Benefits, if any, then due and owing to Employee
figure prorata up to and including the date of death or disability.
As used in this Agreement, the term "disability" shall have
the meaning given such term in any disability insurance policy or
policies covering Employee if any such policy or policies is in force
at the time a determination of disability is to be made. If no such
policy is in force at such time, the term "disability" or "disabled"
shall mean the physical or mental incapacity of Employee which has
prevented or will prevent such Employee from substantially performing
the usual duties of his employment with Employer for a substantially
continuous period of at least one-hundred twenty (120) days. If there
is any dispute as to whether Employee is disabled (whether or not any
disability policy is in force), Employee and Employer shall each select
a medical doctor duly licensed in the state of Employee's permanent
residence within 15 days of the date the issue of disability first
arises. The two doctors so selected shall then within 15 days
thereafter mutually agree on a third medical doctor duly licensed in
such state. The three doctors so selected shall then within 30 days
following the selection of a third medical doctor make a determination
as to whether Employee is disabled. The decision of the three medical
doctors so selected shall be conclusive on all parties concerned. The
cost and expense of the three medical doctors so selected shall be
borne by Employer.
(b) Termination for Good Cause. This Employment Agreement may
be terminated, and Employee discharged, prior-to the expiration of the
Initial Term for "Good Cause" as defined in this section.
(i) if Employee fails to devote substantially his
entire productive time, ability and attention as a
representative of Employer, as defined in Section 5 of this
Agreement;
(ii) if Employee is conviction of or enters a plea of
guilty or nolo contendere to a felony which has or may have a
material adverse effect on the Employee's ability to carry out
his duties under this Agreement or upon the reputation of the
Employer;
(iii) material or repeated failure to comply with
reasonable and lawful directions of the Board of Directors; or
(iv) if Employee, without the express written consent
of the Company, engages in competition with the Company during
the term of this Agreement, accepts employment with any other
business or entity during the term of this Agreement.
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In the event the Company believes "Good Cause" exists
for terminating this Agreement pursuant to Sections 3(i)(iv)
or (v), the Company shall be required to give the Employee
written notice of such acts or omissions constituting "Good
Cause" (a "Cause Notice"), and no termination of this
Agreement shall be effective unless and until the Employee
fails to cure such acts or omissions within ten (10) business
days after receipt of the Cause Notice. With respect to any
other provisions herein constituting "Good Cause" the Company
shall not be required to give a Cause Notice to the Employee
and the Employee may be terminated immediately.
In the event of termination of this Employment
Agreement prior to the completion of the Initial Term of
employment specified in it, for any reasons set forth above,
Employee shall be entitled to the Benefits earned prior to the
date of termination, computed prorata up to and including the
date of termination. Employee shall be entitled to no further
Benefits and will be relieved of all duties and obligations
under this Employment Agreement as of the date of termination.
(c) Termination Without Cause. This Employer may terminate the
Employee's employment without cause at any time after expiration of the
three-year term of this Agreement. If termination occurs without cause
prior to the expiration of the three-year term of this Agreement, the
Employee shall receive severance pay in the amount of the Employee's
compensation in cash, including health care benefits, then in effect
for a period of thirty-six (36) months subsequent to the date of
termination.
(d) Early Termination by Employee. If Employee resigns prior
to the expiration of the term provided in Section 3 hereof, Employee
shall forfeit and shall not be entitled to receive any Benefits from
Employer whatsoever except any salary and bonus actually earned by him
prior to the date of termination as provided for in this Agreement. Any
termination pursuant to this Section 7(d) shall not limit any right or
remedy that Employer may have against Employee.
(e) Change in Control. If this Agreement is terminated by
either Employer or Employee as a result of a Change in Control, as
hereinafter defined, Employee shall be entitled to a cash payment of $
200,000 and the immediate vesting of all Options granted but not yet
vested at the effective date of such Change in Control, as full and
final satisfaction of all obligations due and owing to Employee by
Employer under the terms of this Employment Agreement. In addition, any
amounts due to the Employee from the Employer, whether in the form of
unreimbursed expenses, loans or accrued and unpaid interest will be
immediately paid by Employer.
A Change in Control will be deemed to have occurred for purposes hereof
(i) when a change of stock ownership of Employer of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and any successor Item of a similar nature has
occurred; or (ii) upon the acquisition of beneficial ownership,
directly or indirectly, by any person (as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act) of securities of Employer
representing 50% or more of the combined voting power of Employer's
then outstanding securities; or (iii) a change during any period of
twelve (12) consecutive months of a majority of the members of the
Board of Directors of Employer for any reason, unless the election, or
the nomination for election by Employer's shareholders, of each
director was approved by a vote of a majority of the directors then
still in office who were directors at the beginning of the period;
provided that a Change in Control will not be deemed to have occurred
for purposes hereof with respect to any person meeting the requirements
of clauses (i) and (ii) of Rule 13-d(b)(1) promulgated under the
Exchange Act, as amended.
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Anything to the contrary in the foregoing notwithstanding, a Change in
Control shall not mean or be deemed to have occurred for any reason
whatsoever regarding any circumstance(s) when any change in the actual
or beneficial ownership of any type of stock of Employer held by the
Xxxxxxxxx Foundation is transferred by the Xxxxxxxxx Foundation to
another person or persons, trust, corporations or entities, which are
by contract either affiliated with, in voting trust with, or
effectively controlled by the Xxxxxxxxx Foundation.
8. Status of Agreement. The Benefits or payments made under this
Employment Agreement shall be independent of and in addition to those under any
other agreement which may be in effect between the parties hereto or any other
compensation payable to Employee or his designees or estate by Employer and
unless specifically referred to herein or unless otherwise provided by agreement
or law, nothing contained herein shall be deemed to exclude Employee from any
pension, profit-sharing, insurance or other benefits to which he may otherwise
be or might become entitled as an employee of Employer.
9. Ownership of Work Product. The Employee acknowledges and
agrees that the Employer shall be the sole and exclusive owner of any work
product (including, without limitation, all ideas, methods, inventions,
formulae, processes, trade secrets, know-how, techniques, confidential or
proprietary information, research, software, computer programs, designs, plans,
discoveries, improvements or developments, whether patentable or not patentable,
television, radio, film, audio or video productions, photographs, literary
works, records or recordings, publications and/or images, photographs or
displays of the Employee's name, likeness, voice and/or talents), which is (i)
made or conceived by the Employee, solely or jointly with other employees of the
Employer, while employed by the Employer as President and Chief Executive
Officer or suggested by any work done for the Employer whether on the time of
the Employer or the Employee's own, but only so far as the same either related
to work assigned by the Employer, the Employer's business, or the Employer's
actual or demonstrably anticipated research, or (ii) made or conceived at the
Employer's expense, or utilizing the Employer's facilities in any material
manner or (iii) the result of any services created or performed by the Employer
during the term of this Agreement, and that any such work product shall be
considered a "work for hire." Employer acknowledges and agrees that the patents
and applications for patent listed on Schedule A to this Agreement are owned by
the Employee.
10. Non-Competition Agreement. Employee and Employer acknowledge
that as an employee and representative of the Employer, the Employee will be
responsible for building and maintaining business relationships and goodwill
with customers and employees. The Employee acknowledges and agrees that this
responsibility creates a special relationship of trust and confidence between
the Employer, the Employee and these persons or entities. The Employee
acknowledges and agrees that this special relationship of trust and confidence
between the Employer, the Employee and the Employer's customers and other
employees creates a high risk and opportunity for the Employee to misappropriate
these relationships and goodwill existing between the Employer and such persons
and entities. The Employee acknowledges and agrees that it is fair and
reasonable for the Company to take steps to protect the Company from the risk of
such misappropriation.
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(a) Consideration. The Employee acknowledges and agrees that
he has received and will continue to receive substantial, valuable
consideration for the agreements set forth in this section, including:
(i) access to Confidential Information; (ii) continued employment; and
(iii) compensation and benefits as described above in Section 6.
(b) Scope of Non-Solicitation Obligation. In consideration for
the valuable consideration described above, the Employee acknowledges
and agrees that for a period of twelve (12) months following the
termination of this Agreement by either party, for whatever reason
except for the Employer's filing of a petition in a court of
bankruptcy, the Employee will not solicit any person, company or
business that was customer, vendor, client or prospect of the Company,
at any time during the twelve (12) months preceding termination of this
Agreement, for the purpose of engaging or becoming involved in,
directly or indirectly, the Same or a Similar Business as the Company.
The Employee acknowledges and agrees that these non-solicitation
agreements shall survive any termination, including non-renewal, of
this Agreement and shall be fully enforceable by the Employer or its
successor or assignee subsequent to the termination or non-renewal of
the Employee's employment, regardless of the reason for such
termination or non-renewal except for the Employer's filing of a
petition in a court of bankruptcy.
(c) Scope of Non-Competition Obligation. In consideration for
the valuable consideration described above, the Employee acknowledges
and agrees that for a period of twelve (12) months following the
termination of this Agreement by either party, for whatever reason
except for the Employer's filing of a petition in a court of
bankruptcy, the Employee will not engage or become involved in,
directly or indirectly, the Same or a Similar Business as the Company,
including becoming an owner of or working for any company or business
as an agent, consultant, partner, employee, officer, shareholder or
independent contractor, in any Market Area in which the Company did
business in the twelve (12) months preceding the termination of this
Agreement. The Employee acknowledges and agrees that these
non-competition agreements shall survive any termination, including
non-renewal, of this Agreement and shall be fully enforceable by the
Employer or its successor or assignee subsequent to the termination or
non- renewal of the Employee's employment, regardless of the reason for
such termination or non- renewal except for the Employer's filing of a
petition in a court of bankruptcy.
(d) Definitions. For the purpose of this section, the
following definitions shall apply:
(1) The term "Same or a Similar Business as the
Company" shall be defined as developing, promoting, marketing,
providing, or subcontracting any business in which (i) the
Company engages during the term of this Agreement or (ii) the
Company has notified the Employee during the term of this
Agreement of its intent to engage in within twelve (12) months
of such notice.
(2) The term "Market Area" shall be defined as any
state, U.S. territory or foreign country in which the Company
either (i) markets any of its services; (ii) broadcasts or
circulates any promotional material related to its services;
or (iii) has actively engaged in preparations for engaging in
any of the foregoing activities.
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11. Miscellaneous Provisions.
(a) Notice. All notices, demands, changes of address, requests
or other communications that may be or are required to be given, served
or sent by any party to any other party pursuant to this Agreement
shall be in writing and shall be mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or
transmitted by hand delivery or telegram, or by overnight courier.
(b) Governing Law. This Agreement shall be subject to,
governed by and construed in accordance with federal law and the
internal substantive laws, not the law of conflicts, of the State of
Louisiana.
(c) Captions. The captions used herein are for administrative
and convenience purpose only and shall not be construed in interpreting
this Agreement.
(d) Gender. Whenever the context so requires, the masculine
shall include the feminine and neuter, and the singular shall include
the plural, and conversely.
(e) Legal Construction. If any portion of this Agreement shall
be held invalid or inoperative, then so far as reasonable and possible
(i) the remainder of this Agreement shall be considered valid and
operative, and (ii) effect shall be given to the intent manifested by
the portion held invalid or inoperative and that portion shall be
modified to the extent necessary to render it enforceable.
(f) Amendments. This Agreement may be amended from time to
time by an instrument in writing signed by all those who are parties to
this Agreement at the time of such amendment, such instrument being
designated on its face as an "Amendment" to this Agreement.
(g) Waiver. The failure of any party to insist in one or more
instances upon the performance of any of the terms or conditions of
this Agreement shall not be construed as a waiver or relinquishment of
any right granted hereunder or of the future performance of any such
term or condition, but the obligations of any party with respect
thereto shall continue in full force and effect.
(h) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one instrument.
(i) Remedies. Each party hereto acknowledges that a remedy at
law for any breach or attempted breach of this Agreement will be
inadequate, agrees that each other party hereto shall be entitled to
specific performance and injunctive and other equitable relief in case
of any such breach or attempted breach and further agrees to waive any
requirement for securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief. Such remedy
shall be cumulative and not exclusive and shall be in addition to any
other rights or remedies any party may have against the other.
(j) Attorneys' Fees. If any action at law or in equity,
including any action for injunctive or declaratory relief, is brought
to enforce or interpret any of the provisions of this Agreement, the
prevailing party shall be entitled to recover attorneys' fees and
expenses from the other party, which fees and expenses may be set by
the court in the trial of such action or may be enforced in a separate
action brought for that purpose and which fees and expenses shall be in
addition to any other relief which may be awarded.
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(k) Prior Agreements. This Agreement (and the exhibits hereto)
contains the entire employment agreement between the parties hereto and
supersedes any and all prior employment agreements, whether written or
oral, between the parties with respect to the within subject matter.
All other employment, salary continuation, bonus, incentive
compensation and other similar agreements heretofore entered into
between Employer and Employee and in effect as of the date hereof are
hereby cancelled and shall be of no further force or effect. This
Agreement does not supersede, modify, limit or otherwise effect any
stock options previous granted, any existing or future license or lease
agreements between the Employer, including its subsidiaries, and
Employee.
(l) Separate Counsel. The parties acknowledge that the
Employer has been represented in this transaction by its own attorneys,
that the Employee has not been represented in this transaction by the
Employer's attorneys; and the Employee has been advised to seek
separate legal advice and representation in this matter.
12. Time of the Essence. Time shall be of the essence throughout
the term of this Employment Agreement.
13. Effective Date. The effective date of this Agreement is June
1, 2000.
EMPLOYER:
KARTS INTERNATIONAL INCORPORATED
By: ___________________________________
Address: 00000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxx 00000
EMPLOYEE:
________________________________________
Xxxxxxx Xxxxxxx
Address: 000 Xxxxx Xxxx
Xxxxx, Xxxxxxxxx 00000
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SCHEDULE A
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PATENTS AND PATENT APPLICATIONS FILED
BY XXXXXXX XXXXXXX
1) Acceleration Peal Override Apparatus for Self-Propelled Motorized Cart
with Aligned Brake and Accelerator Pushrod Type Pedals (Pedal Override
Apparatus) Patent No. 5,477,940
2) Clutch Assembly for Chain-Driven Cart
Patent No. 5,328,011
3) Safety Fuel Tank and Filler Cap Apparatus
Patent Application No. 09/288,402 and 09/267,877
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