EMPLOYMENT AGREEMENT
Exhibit 10.2
This Employment Agreement (the “Agreement”) is made and entered into effective as of February
___, 2006 by and between DIRT Motor Sports, Inc., a Delaware corporation (“Employer”), and Xxx
Xxxxxxx, an individual residing at 000 Xxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000 (“Employee”).
Duties. Employee shall serve Employer as Executive Vice President of Operations of
Employer, and shall perform the services, functions and duties relating to management and oversight
of sponsorship fulfillment, national and regional touring series, sanctioned facilities, owned
facilities, and all matters associated with those areas of Employer’s business as well as support
of business development and marketing initiatives (“Duties”), or otherwise reasonably incident to
Employee’s Duties as may be designated from time to time by the Chief Executive Officer of Employer
(the “CEO”) or the Board of Directors (“Board”). Employee shall report directly to the CEO.
Employee shall be based in Atlanta, Georgia, but shall travel as reasonably required by his duties
under this Agreement. At the request of the Company, the Employee may relocate, in his sole
discretion. Employer shall pay all reasonable moving expenses of Employee associated with such
move if such relocation is determined to be in the best interest of Employer.
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of the business of Employer and its affiliates, the Trade Secrets, without the prior written
consent of Employer.
The expiration of the Term;
Employee’s death;
Employee’s Excessive Absence (as hereinafter defined);
Written notice to Employee from Employer of termination for Just Cause (as hereinafter
defined);
Written notice to Employee from Employer of termination for any reason other than subparts
(a), (b), (c) or (d) above;
Written notice to Employer from Employee of termination for any reason other than Good Reason
(as hereinafter defined); or
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Written notice to Employer from Employee of termination for Good Reason.
In the event of the termination of Employee’s employment pursuant to (a), (c), (d) or (f),
then this Agreement shall terminate without further obligations to Employee other than the payment
of Employee’s Annual Salary and Incentive Compensation as further described in Exhibit A,
earned by Employee as of, and payable for the period prior to, the date of the Termination Event
(“Accrued Compensation”) and the timely payment of benefits Employee shall be entitled to receive
after the Termination Event under such plans, programs, practices and policies as are applicable
at the time of the Termination Event (“Other Benefits”).
In the event of the termination of Employee’s employment pursuant to (b) or above, Employee
shall be entitled to receive all Accrued Compensation and Other Benefits, and all options,
restricted shares, and other incentive awards held by Employee which are unvested as of the date of
such termination shall vest in full, and all restrictions thereon shall lapse in full.
In the event of the termination of Employee’s employment pursuant to (e) or (g) above,
Employee shall be entitled to receive all Accrued Compensation and Other Benefits and shall
continue to receive the Annual Salary and Incentive Compensation, and Employer shall continue
benefits to Employee and Employee’s eligible dependents at least equal to those which would have
been provided to them in accordance with Employer’s Welfare Plans provided for in Exhibit A
or, if more favorable to Employee, as in effect generally at any time thereafter with respect to
other Peer Executives and their eligible dependents, for the remainder of the Term, or for a period
of six (6) months after the Termination Event, whichever is longer, as if no termination had
occurred. In addition, all options, restricted shares, and other incentive awards held by
Employee which are unvested as of the date of such termination shall vest in full, and all
restrictions thereon shall lapse in full. Notwithstanding anything to the contrary in this
Agreement, the provisions of Section 6 above shall survive any termination, for whatever reason, of
Employee’s employment under this Agreement.
For purposes of this Section 7 the following terms have the following meanings:
“Good Reason” shall mean: (a) without the written consent of
Employee, the assignment to Employee of any duties inconsistent in
any material respect with Employee’s position (including status,
offices, and titles) authority, duties or responsibilities as in
effect on the Effective Date, or any other action by Employer which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by Employer promptly after receipt of notice
thereof given by Employee; (b) a reduction by Employer of Employee’s
Annual Salary as in effect on the Effective Date or as the
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same may be increased from time to time; (c) any breach by Employer
of any of the material terms of, or the failure to perform any
material covenant contained in this Agreement, including, but not
limited to, the failure by Employer to fulfill all of its
obligations as set forth on Exhibit A hereto, and following written
notice thereof from Employee to Employer, Employer does not cure
such breach or failure within thirty (30) days thereafter; provided,
however, that Employer will not be entitled to cure any such breach
or failure more than one time in any consecutive three month period;
(d) Employer’s requiring Employee, without his consent, to be based
at, or to regularly work from, any office or location other than in
Atlanta, Georgia; or (e) Employee’s termination for any reason
within ninety (90) days following a Change in Control of Employer as
defined in Exhibit A. Employee’s continued employment
shall not constitute consent to, or waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
“Excessive Absence” of Employee shall mean an unauthorized absence
from work (other than any absence resulting from Employee’s
incapacity due to physical or mental illness or injury) for a
continuous period of 60 days or for 120 days out of a continuous
period of 240 days.
“Just Cause” shall mean (a) the willful and continued failure of
Employee to substantially perform his Duties under this Agreement
(other than any failure resulting from Employee’s incapacity due to
physical or mental illness or injury, and specifically excluding any
failure by Employee, after reasonable efforts, to meet performance
expectations), provided that Employee does not cure such failure
within thirty (30) days following written notice thereof from
Employer setting forth the specific grounds upon which Employer
maintains a failure to perform has arisen under this subsection; (b)
the material breach by Employee of any of the terms of this
Agreement, or the willful and continued failure to perform any
material covenant contained in this Agreement, provided that
Employee does not cure such breach within thirty (30) days following
written notice from Employer setting forth the specific grounds upon
which Employer maintains a breach or failure to perform has
occurred; or (c) Employee’s conviction of felony under state or
federal law involving dishonestly, fraud, or malfeasance in the
performance of his Duties. For the purposes of this provision, no
act or failure to act on the part of Employee shall be considered
“willful” unless it is done, or omitted to be
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done, by Employee in bad faith or without the reasonable belief that
Employee’s action or omission was in the best interest of Employer.
Any act or omission based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of
counsel for the Employer shall be conclusively determined to have
been done, or omitted to be done, by Employee in good faith and in
the best interest of Employer. The cessation of employment of
Employee shall not be deemed to be for Just Cause unless and until
there shall have been delivered to Employee a copy of a resolution
duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board of Employer (excluding Employee,
if Employee is a member of the Board), finding that, in the good
faith opinion of such Board, Employee is guilty of the conduct
described above, and specifying the particulars thereof in detail.
Such finding shall be effective to terminate Employee’s employment
for Just Cause only if Employee was provided reasonable notice of
the proposed action and was given an opportunity, together with
counsel, to be heard by the Board.
Arbitration. Any claim or dispute arising under this Agreement shall be subject to
arbitration, and prior to commencing any court action, the parties agree that they shall arbitrate
all controversies. The arbitration shall be conducted in Atlanta, Georgia, in accordance with the
Employment Dispute Rules of the American Arbitration Association (“AAA”) (though the parties may
choose an arbitrator outside the AAA) and the Federal Arbitration Act, 9 U.S.C. §1, et. seq. The
arbitrator shall be authorized to award both liquidated and actual damages, in addition to
injunctive relief, but not punitive damages. The arbitrator(s) may also award attorney’s fees and
costs, without regard to any restriction on the amount of such award under Georgia or other
applicable law. Such an award shall be binding and conclusive upon the parties hereto, subject to
9 U.S.C. §10. Each party shall have the right to have the award made the judgment of a court of
competent jurisdiction.
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necessary to ensure the preservation and continuity of the business and good will of Employer
and its affiliates and Employee’s livelihood.
If to Employer:
|
DIRT MotorSports, Inc. | |
0000 XxXxx Xxxxx, Xxxxx 000 | ||
Xxxxxx, XX 00000 | ||
Attn: Chief Executive Officer | ||
If to Employee:
|
Xxx Xxxxxxx | |
000 Xxxx Xxxxx | ||
Xxxxxxx, Xxxxxxx 00000 |
Notices delivered personally or by courier service or overnight delivery shall be deemed
communicated as of actual receipt, and mailed notices shall be deemed communicated as of three days
after the date of mailing.
Governing Law and Venue. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
INTERPRETED, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA, WITHOUT
REGARD TO ITS CHOICE OF LAW PRINCIPLES.
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Estate. If Employee dies prior to the payment of all sums owed, or to be owed, to
Employee pursuant to this Agreement, then such sums, as they become due, shall be paid to
Employee’s estate.
EMPLOYER | EMPLOYEE | |
DIRT MotorSports, Inc. |
Xxx Xxxxxxx |
By:
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/s/ Xxxx X. Xxxxxx | By: | /s/ Xxxxxxxx X. Xxxxxxx | |||
Name: Xxxx X. Xxxxxx | Xxxxxxxx X. Xxxxxxx | |||||
Title: Chief Executive Officer |
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EXHIBIT A
1. | Annual Salary: During the Term, Employer shall pay to Employee base salary at the rate of not less than ONE HUNDRED EIGHTY THOUSAND DOLLARS ($180,000) per year (“Annual Salary”), payable in equal monthly or more frequent installments as are customary under Employer’s payroll practices from time to time. The Board of Directors or a Compensation Committee of the Board of Directors of Employer shall review Employee’s Annual Salary annually and may increase, but not decrease, Employee’s Annual Salary from year to year. The annual review of Employee’s Annual Salary shall consider, among other things, Employee’s own performance and the performance of Employer. | |
2. | Formulaic Incentive Compensation: Employee shall be entitled to not less than fifteen percent (15%) of the Executive Incentive Compensation Pool, as hereinafter described. The Board of Directors, in conjunction with and under the advisement of Employer’s Executive Management Team, shall create and ratify an Executive Incentive Compensation Plan no later than June 30, 2006 for FY 2006. Should the Board of Directors not ratify such a plan by June 30, 2006, said Employee shall be entitled to a bonus of $180,000 payable July 1, 2006. Should the Board of Directors not ratify an Executive Incentive Compensation Plan by December 1, 2006 and for every year after that an Executive Incentive Compensation Plan is not ratified by December 1st of the same year, Employee shall be entitled to a bonus of no less than two times his annual salary payable January 1 of the following year. | |
3. | Discretionary Incentive Compensation: All compensation distributed through this portion of the compensation plan shall be solely at the discretion of the Board Compensation Committee as deemed appropriate, except, however, that the Board Compensation Committee shall review the Employee eligibility for discretionary bonuses at least once a year being December 1 of each year (“Discretionary Bonus Review”). Employee’s Discretionary Bonus Review shall always be preceded by a formal review by the CEO of Employee’s overall performance for the period since the last review. The factors to be considered are as follows: |
• | Employee’s ability to execute against strategic business objectives | ||
• | Leadership, work ethic, and the sum of intangible contributions to the success of DIRT Motor Sports |
Employee shall be reviewed and awarded discretionary bonuses on an independent basis, apart from other Officers in Employer, regardless of how closely other aspects of their compensation may be tied. Discretionary bonuses may come in the form of cash, grants, options, benefits, salary increases, or other mediums as deemed appropriate by the Board Compensation Committee. |
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4. | Welfare Benefit Plans. During the Employment Period, Employee and Employee’s eligible dependents shall be eligible for participation in, and shall receive all benefits under, the welfare benefit plans, practices, policies and programs provided by Employer and/or its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) (“Welfare Plans”) to the extent applicable generally to Peer Executives. The Welfare Plans shall include, but not be limited to, full medical and dental coverage for Employee and Employee’s eligible dependents to be provided at Employer’s expense. Employer also shall reimburse Employee for the cost of a full and complete executive physical examination each year during the Term of the Agreement. | |
5. | Equipment: Employer shall provide Employee with office equipment, including but not limited to a laptop computer, printer, and cellular phone/wireless PDA. | |
6. | Retirement: Employee shall be immediately eligible to participate in Employer sponsored retirement plan as of the date of this Agreement. Employer shall match Employee’s contributions up to 5% of gross compensation. | |
7. | Vacation: Employee shall accrue 1.5 days of vacation per month of employment in addition to traditional holidays, shut down periods and/or applicable sick/comp days. Unused vacation shall accumulate during the term of the Agreement and shall be paid to Employee upon the termination of this Agreement for any reason, at Employee’s Annual Salary rate effective immediately prior to the termination of this Agreement. | |
8. | Stock Options/Restricted Stock: Employee shall be entitled to receive grants of stock options as may be determined by the Board of Director’s from time to time in its sole discretion. Employer shall grant to Employee a five year option to purchase 300,000 shares of the Employer’s common stock at an exercise price of $3.75 per share (“Options”). Such Options shall become exercisable as follows: 75,000 upon the effective date of this Agreement, 75,000 on the one year anniversary of this Agreement, 75,000 on the two year anniversary of this Agreement and 75,000 on the three anniversary of this Agreement. If the Employee is terminated or the Employment Agreement is not renewed, for any reason, or if said Agreement otherwise expires, any of such Options which have not vested as of the date of such termination shall become vested in full and immediately exercisable for a sixty (60) day period after such termination (or, in the event of Employee’s death or Excessive Absence, exercisable for a period of one year after such termination) and shall expire following such sixty (60) day period (or one year period, as the case may be). Additionally, Employee shall be issued 150,000 shares of restricted common stock (the “Restricted Shares”). Upon the mutual agreement of the parties hereto, the Restricted Shares may be granted in the form of restricted stock units. The Restricted Shares shall xxxxx xxxx upon the occurrence of the one of the following events, whichever occurs first: |
(a) an initial public offering of Employer;
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(b) a Change in Control of Employer, described as follows:
(i) any person within the meaning of Section 13(d) and 14(d) of the Securities
Exchange Act or 1934, as amended (the “Exchange Act”), other than Employer
(including its subsidiaries, directors or executive officers) has become the
beneficial owner, within the meaning of Rule 13d-3 under the Exchange Act, of 50
percent or more of the combined voting power of Employer’s then outstanding common
stock or equivalent in voting power of any class or classes of Employer’s
outstanding securities ordinarily entitled to vote in elections of directors
(“voting securities”);
(ii) shares representing fifty (50%) percent or more of the combined voting power of
the Employer’s voting securities are purchased pursuant to a tender offer or
exchange offer (other than an offer by Employer or its subsidiaries or affiliates);
(iii) as a result of, or in connection with, any tender offer or exchange offer,
merger or other business combination, sale of assets or contested election, or any
combination of the foregoing transactions (a “Transaction”), the persons who were
directors of the Employer before the Transaction shall cease to constitute a
majority of the Board of Directors of Employer or of any successor to Employer;
(iv) Employer is merged or consolidated with another corporation and as a result of
such merger or consolidation less than fifty (50%) percent of the outstanding voting
securities of the surviving or resulting corporation shall then be owned in the
aggregate by the former shareholders of Employer, other than (A) any party to such
merger or consolidation, or (B) any affiliates of any such party; or
(v) Employer transfers more than 50 percent of its assets, or the last of a series
of transfers results in the transfer of more than 50 percent of the assets of
Employer, to another entity that is not wholly-owned by Employer. For purposes of
this Paragraph 8, the determination of what constitutes fifty (50%) percent of the
assets of Employer shall be made by the Board of Directors of the Employer, as
constituted immediately prior to the events that would constitute a change of
control if 50 percent of the Employer’s assets were transferred in connection with
such events, in its sole discretion;
(c) upon the discretion of the Board of Directors with Employee consent;
(d) upon termination of Employee’s employment under Section 7(a), (b),(e), or (g) of this
Agreement; or
(e) January 1, 2009.
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If Change in the Control of Employer, as described above, occurs, then all shares identified in this paragraph 8 shall immediately vest upon the date of such change. Employer shall file and provide to Employee all the necessary paperwork as required for ownership of stock grants and restricted stock within 30-days of execution of this Agreement. | ||
9. | Legal Fees Reimbursement: Employer agrees to reimburse Employee upon receipt of written invoice, within thirty (30) days of execution of this Agreement, for all costs, including legal fees, associated with the negotiation and execution of this Agreement, such amount not to exceed Five Thousand Dollars ($5,000). |
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