EXHIBIT 10.40
CHAMPIONSHIP AUTO RACING TEAMS, INC.
EMPLOYMENT AGREEMENT
XXXXX X. XXXXX
This Employment Agreement (the "Agreement") is entered into as of December
14, 2002 by and between Championship Auto Racing Teams, Inc., a Delaware
corporation ("Company"), and Xxxxx X. Xxxxx ("Clare").
In consideration of the promises below, the parties agree as follows.
1. Title. Clare shall hold the title of Chief Operating Officer or such
other position or positions as the Board of Directors determines from
time-to-time.
2. Duties.
2.1. General Duties. Clare shall undertake and render services as may
from time-to-time be assigned to him by the Chief Executive Officer and the
Board of Directors or their designees. The duties shall be reasonably consistent
with Clare's experiences and shall include control and responsibility for the
day-to-day operation and activities of the Company, reporting directly to the
Chief Executive Officer, subject to the Bylaws of the Company and of CART, Inc.
2.2. Outside Activities. Clare shall devote his full time to the
performance of his duties, and agrees that his first duty of loyalty is to the
Company and shall locate in or near Indianapolis, Indiana. Except with the
express written consent of the Board of Directors, Clare shall not, directly or
indirectly, alone or as a member of any partnership, or as an officer, director
or employee of any other corporation, partnership or other organization, be
actively engaged in any other duties or pursuits which interfere or compete with
the performance of his duties under this Agreement.
3. Term. This Agreement shall commence on January 6, 2003 and continue in
force for three (3) years, until December 31, 2005, (the "Employment Period")
unless sooner terminated by either party pursuant to Section 5 or Section 6 of
this Agreement.
4. Compensation. As payment in full for services rendered to Company,
Clare shall be entitled to receive from Company, and Company shall pay to Clare,
salary and benefits as follows.
4.1 Salary. Company shall initially pay to Clare base salary at a
rate of $235,000 per annum, from January 6, 2003 through December 31, 2003
("Base Salary") payable bi-weekly or at such other time or times as Company
may allow or provide to other similarly situated employees in accordance
with policies adopted from time-to-time by the Board of Directors. Base
Salary for any partial period of employment shall be prorated. All
compensation shall be subject to deductions or withholding for taxes.
Clare's salary shall be renewed annually by the Board of Directors or the
Compensation Committee thereof not later than November 30th of each year.
4.2 Bonus. Annually, commencing for the year 2003, the Company shall
pay Clare a Bonus, which shall be based on established objective goals to
be agreed upon by the Company's Compensation Committee and the Chief
Executive Officer, sixty percent (60%) of which will be based on meeting
budget numbers and forty percent (40%) based on other specific goals and
objectives, with an anticipated maximum bonus of $200,000. The criteria
will be agreed to by January 31, 2003.
4.3 Fringe Benefits. Clare shall be entitled to annual vacation of
three (3) weeks per year and to receive employee and fringe benefits
including but not limited to any compensation plan such as an incentive
stock option, restricted stock or stock purchase plan or any employee
benefit plan such as a thrift, pension, profit sharing, medical disability,
the Company's health plan at the Company's cost (with the right to include
his spouse at Clare's cost) coverage under the Company's directors and
officers and liability policy which the Company agrees to maintain in force
and group term life insurance policy, (the Company's "Plans") as Company
may allow or provide to other similarly situated employees in accordance
with policies adopted from time-to-time by the Board of Directors.
4.5 Expense Reimbursement. Company shall: (a) reimburse Clare for
expenses necessarily and reasonably incurred by him for travel and
entertainment which amounts shall be consistent with the size and
profitability of the Company and within the amounts budgeted for such
expenses, including coach airfare for domestic travel and business class
air travel for flights over two hours either domestically or
internationally. Clare shall submit such proofs of expense for which
reimbursement is claimed in writing as the Company may reasonably require.
Company shall also reimburse or pay directly for all travel expenses for
Clare's spouse to travel to Indianapolis; (b) provide use of a Company
automobile or a monthly allowance of Six Hundred Dollars ($600); (c) pay
for up to sixty (60) days accommodations for the first sixty (60) days of
employment at a rate of Forty-Five Dollars ($45) per day; (d) provide a
moving allowance of Ten Thousand Dollars ($10,000); and, (e) at Company
expense, and maintaining a U.S. work permit and green card covering the
term of this Agreement, and the appropriate residence visa for Clare's
spouse for the term of this Agreement.
4.7 Holidays. Clare shall be entitled to holidays recognized as State
and/or National holidays and as Company may allow or provide in accordance
with policies adopted from time-to-time by the Board of Directors.
5. Termination of Employment. The following provisions shall apply in the
event of termination of Clare's employment for any reason other than a
termination that occurs concurrent with or subsequent to a Change in Control as
defined in Section 6.1.
5.1. Right to Terminate by Company. Company may terminate Clare's
employment, through its Board of Directors, without cause upon thirty (30) days'
written Notice of Termination (as defined in Section 7.1 of this Agreement) or
immediately upon Notice of Termination for Cause. The term "Cause" when
referring to termination by Company means only the following and any other
termination shall be without Cause: (i) Clare's gross dereliction of his duties;
or (ii) Clare's commission of an act that is adverse to, or not in the best
interest of, or the reputation of the Company; or (iii) Clare's willful refusal
to carry out the duties and responsibilities of the Chief Operating Officer of
the Company as reasonably requested by the Board of Directors; or (iv) fraud,
theft or misappropriation of any property of Company by Clare; or (v) conviction
of Clare of a felony or of any crime involving dishonesty or moral turpitude; or
(vi) violation by Clare of the provisions of this Agreement, provided that,
termination for violation by Clare of the provisions of
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this Agreement shall occur only after sixty (60) days' advance written notice by
Company to Clare containing reasonably specific details of the alleged breach
failure of Clare to cure the same within such sixty (60) day period, if a cure
is reasonable.
5.2. Termination for Death or Disability. Clare's employment shall
terminate upon the earliest of the events specified below:
(i) the death of Clare;
(ii) the Date of Termination (as defined in Section 7.2) specified in
a written Notice of Termination by reason of physical or mental condition of
Clare which shall substantially incapacitate him from performing his principal
duties ("Disability") delivered by the Company to Clare at least thirty (30)
days prior to the specified Date of Termination, which shall be any date after
the expiration of any one hundred twenty (120) consecutive days during all of
which Clare shall be unable, by reason of his Disability, to perform his
principal duties, provided however, that such Notice of Termination shall be
null and void if Clare fully resumes the performance of his duties under this
Agreement prior to the Date of Termination set forth in the Notice of
Termination.
5.3. Right to Terminate by Clare. Clare may terminate his employment
for any reason upon thirty (30) days' written Notice of Termination, including
the payment of money or material breach by the Company of its obligations under
this Agreement, and only after thirty (30) days' advance written notice of
Termination containing reasonably specific details of the alleged breach and
failure by the Company to cure the same within such thirty (30) day period.
5.4. Results of Termination by Company.
(i) Termination for Cause. On the Date of Termination for Cause of
Clare's employment by Company, Company shall pay the Base Salary then in effect
through the Date of Termination.
(ii) Termination Without Cause. On the Date of Termination by the
Company of Clare's employment, the Company shall pay Clare his Base Salary then
in effect throughout the Employment Period.
5.5. Results of Termination for Death or Disability.
(i) Death of Clare. If Clare's employment is terminated due to the
death of Clare, Company shall pay the Base salary due Clare through the date on
which death occurs;
(ii) Disability of Clare. If Clare's employment is terminated due to
the disability of Clare as described in Section 5.2 (ii) of this of this
Agreement, Company shall continue to pay Clare his Base Salary for the ninety
(90) day period following the specified Date of Termination. After this ninety
(90) period, Company agrees to pay to Clare during each month for the next six
months an amount equal to the difference between Clare's monthly Base Salary and
the amount which Clare receives or is entitled to receive from any long term
disability insurance coverage provided for Clare by Company. If Clare's
disability occurs in the course of his duties hereunder due to accident or
injury, Clare shall receive his Base Salary and fringe benefits throughout the
remaining Employment Period. In addition, the Company shall maintain in full
force and effect, for the continued benefit of Clare and Clare's dependents for
a period terminating on the earliest of (a) the expiration of the
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Employment Period or (b) the commencement date of equivalent benefits from a new
employer, all life, accidental death, medical and dental insurance plans or
programs in which Clare was entitled to participate immediately prior to the
Date of Termination, provided that Clare's continued participation is possible
under the general terms and provisions of such plans and Clare continues to pay
an amount equal to his regular contribution for such participation, if any.
5.6. Results of Termination by Clare. Upon Clare's termination of his
employment as provided in Section 5.3, the Company shall make the same payments
to Clare through the Date of Termination as Company would be obligated to make
under Section 5.4 (ii).
5.7. Other Company Policies. Upon termination of Clare's employment
for any reason, Clare will be entitled to any additional rights pursuant to
policies of Company regarding employment termination established by the Board of
Directors from time-to-time.
5.8. Termination of Company's Obligation. If at any time within the
twenty-four (24) month period following termination of Clare's employment
without Cause by Company, pursuant to Section 5.1 of this Agreement, Clare
breaches any of his obligations under Sections 8, 9, 10, 11 and/or 12 of this
Agreement, then Company's obligation to make payments under Section 5.4 (ii) of
this Agreement shall cease as of the date such breach occurs.
6. Change in Control
6.1. Change in Control and Proposed Change in Control Defined.
(i) No benefits shall be payable to Clare pursuant to this Section 6
unless there has been a Change in Control of the Company as set for the below.
For purposes of this Agreement a "Change in Control" shall mean a Change in
Control of Company of a nature that would be required to be reported in response
to Item 1 (a) of the Current Report on Form 8-K, as in effect on the date
hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"); provided that, without limitation, such a
Change in Control shall be deemed to have occurred at such time as:
(a) any Person, as such term is used in Section 13 (d) and 14
(d) of the Exchange Act (other than Company, any trustee or other fiduciary
holding securities under an employee benefit plan of Company, or any
company owned, directly or indirectly, by the stockholders of Company in
substantially the same proportions as their ownership of stock of Company)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 25% or more of the combined
voting power of Company's outstanding securities;
(b) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by Company's
shareholders, was approved by a vote of at least a majority of the
directors comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of Company in which such person is named as
a nominee for director, without objection to such nomination) shall be, for
purposes of this clause (b), considered as though such person were a member
of the Incumbent Board.
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(c) the stockholders of Company approve a merger or
consolidation of Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding by or being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the combined voting
power of the voting securities of Company or such surviving entity
outstanding immediately after such merger or consolidation; or (2) a merger
or consolidation effected to implement a recapitalization of Company (or
similar transition) in which no "Person" (as defined above) acquires more
than fifty percent (50%) of the combined voting power of the Company's then
outstanding securities; or
(d) the stockholders of Company approve a plan of complete
liquidation of Company or an agreement for the sale or disposition by
Company of all or substantially all of Company's assets.
Notwithstanding anything in the foregoing to the contrary, no Change in
Control shall be deemed to have occurred for purposes of this Agreement by
virtue of any transaction which results in Clare, or a group of Persons which
includes Clare, acquiring, directly or indirectly, 50% or more of the combined
voting power of the Company's outstanding securities.
(ii) For purposes of this Agreement, a "Proposed Change in Control" of
Company shall be deemed to have occurred if:
(a) Company enters in an agreement, the consummation of which
would result in the occurrence of a Change in Control of Company;
(b) any person (including Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a change in Control of Company;
(c) any person (other than a trustee or other fiduciary holding
securities under an employee benefit plan of Company, or a company owned,
directly or indirectly, by the stockholders of Company in substantially the
same proportions as their ownership of stock of Company), who is or becomes
the beneficial owner, directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the combined voting power
of Company's then outstanding securities, increases his beneficial
ownership of such securities through either successive or simultaneous
acquisition by a total of three (3) percentage points or more over the
percentage so owned by such person prior to such acquisition; or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Proposed Change in Control of Company has
occurred.
6.2. Continued Employment. If a Proposed Change in Control occurs
prior to the expiration of this Agreement, Clare agrees that he will remain in
the employ of Company until the earliest of (a) a date which is one hundred
eighty (180) days from the occurrence of such Proposed Change in control of
Company, (b) the termination of Clare's employment by reason of death or
Disability as defined in Section 5.2 of this Agreement, or (c) the date on which
Clare first becomes entitled under this Agreement to receive the benefits
provided in Section 6.5 of this Agreement.
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If a Proposed Change in Control occurs prior to the expiration of this
Agreement, Company agrees that it will not terminate Clare's employment without
Cause until the earliest of (a) a date on which the Board adopts a resolution to
the effect that the actions leading to such Proposed Change in control have been
abandoned or terminated, (b) the termination of Clare's employment by reason of
Death or Disability as defined in Section 5.2 of this Agreement, or (c) the date
on which Clare first becomes entitled under this Agreement to receive the
benefits provided in Section 6.5 of this Agreement.
6.3. Term of Agreement. If a Change in Control occurs prior to the
expiration of this Agreement, this Agreement shall continue in effect for a
period of not less than twenty-four (24) months beyond the month in which the
Change in Control shall have occurred provided that (i) such Change in Control
shall have occurred prior to the end of the Employment Period and (ii) if
Clare's employment has not been terminated pursuant to Section 5 of this
Agreement prior to the occurrence of such Change in Control.
6.4. Termination Following Change in Control. If a Change in Control
shall have occurred, Clare shall be entitled to the benefits provided in Section
6.5. of this Agreement upon the termination of his employment within twenty-four
(24) months after such Change in Control has occurred, unless such termination
is (a) because of Clare's death, (b) by the Company for Cause, (c) because of
Clare's Disability or (d) by Clare other than for Good Reason (as all such
capitalized terms are hereinafter defined).
(i) Disability. Termination by Company of Clare's employment based on
Disability shall have the meaning as defined in Section 5.2 of this Agreement.
(ii) Termination by Company for Cause. Company may terminate Clare's
employment for Cause, through its Board of Directors, immediately upon Notice of
Termination. Termination by Company of Clare's employment for Cause shall have
the meaning as defined in Section 5.1 of this Agreement.
(iii) Termination by Clare for Good Reason. Clare may terminate his
employment for Good Reason upon ninety (90) day's written Notice of Termination.
Termination by Clare of his employment for Good Reason shall have meanings:
(a) a change in Clare's status, position(s) or responsibilities
as an officer of Company which, in his reasonable judgment, does not
represent a promotion from his status, title, position(s) and
responsibilities as in effect immediately prior to the Change in Control,
or the assignment to him of any duties or responsibilities which, in his
reasonable judgment, are inconsistent with such status, title or
position(s), or any removal of him from or any failure to reappoint or
reelect him to such position(s), except in connection with the termination
of his employment by Company for Cause, for Disability or as result of
Clare's death or by Clare as defined in Section 5.3 of this Agreement:
(b) a reduction by Company in Clare's Base Salary as in effect
immediately prior to the Change in Control;
(c) the failure by Company to continue in effect any Plan (as
defined in Section 4.4. of this Agreement) in which he is participating at
the time of the Change in Control (or Plans providing him with at least
substantially similar benefits) other than as a result of the normal
expiration of any such Plan in accordance with its terms in effect at the
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time of the Change in Control, or the taking of any action, or the failure
to act, by Company which would adversely affect his continued participation
in any of such Plans on at least as favorable a basis to him as is the case
on the date of the Change in Control or which would materially reduce his
benefits in the future under any of such Plans or deprive him of any
material benefit enjoyed by him at the time of the Change in Control;
(d) Company's requiring Clare to be based anywhere other than
where Clare's office is located immediately prior to the Change in Control
except for required travel on Company's business to an extent substantially
consistent with the business travel obligations which Clare undertook on
behalf of the Company prior to the Change in Control;
(e) the failure by Company to obtain from any Successor (as
hereinafter defined) the assent to this Agreement contemplated by Section
6.6 of this Agreement; and
(f) any purported termination by Company of Clare's employment
is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1. of this Agreement which purported termination
shall not be effective for purposes of this Agreement.
(iv) Termination by Company Without Cause. Company may terminate
Clare's employment, through its Board of Directors, without Cause upon ninety
(90) days' written Notice of Termination. Termination by Company of Clare's
employment without Cause shall have the meaning as defined in Section 5.1 of
this Agreement.
(v) Termination by Clare Without Good Reason. Clare may terminate his
employment without Good Reason upon ninety (90) days' written Notice of
Termination.
6.5. Compensation Upon Termination or During Disability.
(i) Compensation Upon Disability. During any period following a
Change in Control that Clare fails to perform his duties as a result of
Disability, Company shall make the payments set forth in Section 5.5. (ii) of
this Agreement.
(ii) Compensation Upon Termination by Company for Cause. If Clare's
employment shall be terminated by Company for Cause following a Change in
Control, Company shall make the payments set forth in Section 5.4 (i) of this
Agreement.
(iii) Compensation Upon Termination by Company Without Cause or by
Clare for Good Reason. If, within twenty-four (24) months after a Change in
Control shall have occurred Clare's employment by Company shall be terminated
(a) by Company without cause or (b) by Clare for Good Reason based on an event
occurring concurrent with or subsequent to a Change in Control, then, at the
time specified in Subsection (vii), Clare shall be entitled, without regard to
any contrary provisions of any Plan, to the benefits as provided below:
(a) the Company shall pay Clare his full Base Salary through the
Date of Termination at the rate in effect just prior to the time a Notice
of Termination is given plus any benefits or awards (including both cash
and stock components) which pursuant to the terms of any Plans have been
earned or become payable, but which have not yet been paid to Clare
(including amounts which previously had been deferred at Clare's request);
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(b) as severance pay and in lieu of any further salary for
periods subsequent to the Date of Termination, Company shall pay to Clare
at the time specified in subsection (vii), a single lump sum severance
payment (the "Severance Payment") in an amount in cash equal to three times
Clare's annual Base Salary at the rate in effect just prior to the time a
Notice of Termination is given;
(c) Company shall maintain in full force and effect, for the
continued benefit of Clare and Clare's dependents for a period terminating
on the earliest of (x) two (2) years after the Date of Termination or (y)
the commencement date of equivalent benefits from a new employer all life,
accidental death, medical and dental insurance plans or programs in which
Clare was entitled to participate immediately prior to the Date of
Termination, provided that Clare's continued participation is possible
under the general terms and provisions of such plans and Clare continues to
pay an amount equal to his regular contribution for such participation, if
any. In the event that Clare's participation in any such plan is barred,
Company at its sole cost and expense, shall arrange to have issued for the
benefit of Clare and Clare's dependents individual policies of insurance
providing benefits substantially similar (on an after-tax basis) provided
that, Company shall be responsible for the payment of such benefits (on an
after tax basis) to those which Clare otherwise would have been entitled to
receive under such plans pursuant to this paragraph (c) or, if such
insurance is not available at a reasonable cost to Company, Company shall
otherwise provide Clare and Clare's dependents equivalent benefits (on an
after tax basis) for a period not to exceed five (5) years following the
end of the two (2) years after the Termination Date. Clare shall not be
required to pay any premiums or other charges in an amount greater than
that which Clare would have paid in order to participate in such plans.
Company shall pay Clare for any vacation time earned but not taken at
the Date of Termination, at an hourly rate equal to Clare's annual Base
Salary as in effect immediately prior to the time a Notice of Termination
is given divided by 2080.
Company shall pay to Clare all legal fees and expenses incurred by
Clare as a result of such termination, including all such fees and
expenses, if any, incurred in contesting or disputing any such termination
in seeking to obtain or enforce any right or benefit provided by this
Section 6 of this Agreement (other than any such fees or expenses incurred
in connection with any such claim which is determined to be frivolous) or
in connection with any tax audit or proceeding to the extent attributable
to the application of Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code").
(iv) Compensation Upon Termination by Clare Without Good Reason. If
Clare's employment shall be terminated by Clare without Good Reason following a
Change in Control, Company shall make the payments set forth in Section 5.6 of
this Agreement.
(v) No Offsets or Reductions. Except as specifically provided above,
the amount of any payment provided for in this Section 6.5. shall not be reduced
offset or subject to recovery by Company by reason of any compensation earned by
Clare as the result of employment by another employer after the Date of
Termination, or otherwise. Clare's entitlements under Section 6.5. of this
Agreement are in addition to, and not in lieu of, any rights, benefits or
entitlements Clare may have under the terms or provisions of any Plan.
(vi) Company's Deduction of Payment. Notwithstanding anything in the
foregoing to the contrary, Company shall not be obligated to pay any portion of
any amount otherwise payable to
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Clare pursuant to this Agreement if the payment would cause any amount to be
paid by Company to Clare to not be reasonably deductible by the Company solely
by operation of Section 280G of the Internal Revenue Code of 1986, as amended,
or any equivalent successor provision of law.
(vii) Time of Payment. The payments provided for in Subsection (iii)
shall be made not later than the fifth day following the Date of Termination;
provided, however, that if the amounts of such payments cannot be finally
determined on or before such day, Company shall pay to Clare on such day an
estimate, as determined in good faith by Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together with interest at
the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the thirtieth day after the
Date of Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess shall
constitute a loan by Company to Clare payable on the fifth (5th) day after
demand therefore by Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).
6.6. Successors; Binding Agreement.
(i) Successors. Company will require any Successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Company to expressly assume
and agree to perform Company's obligations under this Agreement in the same
manner and to the same extent that Company would be required to perform it if
not such succession had taken place. Failure of Company to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle Clare to compensation from
Company in the same amount and on the same terms to which Clare would be
entitled hereunder if Clare terminated his employment for Good Reason following
a Change in Control of Company, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any Successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(ii) Binding Agreement. This Agreement shall inure to the benefit of
and be enforceable by Clare and Clare's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Clare should die while any amount would still be payable to him
hereunder if Clare had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Clare's devisee, legatee or other designee or, if there be no such designee, to
Clare's estate.
6.7. Arbitration. Any dispute or controversy arising under or in
connection with Section 6 of this Agreement shall be settled exclusively by
arbitration in Indianapolis, Indiana by three arbitrators in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrators' award in any court having jurisdiction; provided,
however, that Clare shall be entitled to seek specific performance of Clare's
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with the Agreement.
Company shall bear all costs and expenses arising in connection with any
arbitration proceeding pursuant to this Section 6.7.
6.8. Survival. The respective obligations of, and benefits afforded
to, Company and Clare as provided in Section 6.5, 6.6 and 6.7 of this Agreement
shall survive termination of this Agreement.
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6.9. Termination of Company's Obligation. If at any time within the
twenty-four (24) month period following termination of Clare's employment
without Cause by Company pursuant to Section 6.4 (iv) or termination by Clare
for Good Reason pursuant to Section 6.4 (iii) of this Agreement, Clare breaches
any of his obligations under Sections 8, 9, 10, 11, and/or 12 of this Agreement,
then Company's obligation to make payments under Section 6.5 (iii) shall cease
as of the date such breach occurs.
7. Definitions. For purposes of Section 5 and Section 6 of this
Agreement, Notice of Termination and Date of Termination shall have the
following meanings:
7.1. Notice of Termination. Any purported termination by Company
or by Clare pursuant to Section 5 or Section 6 of this Agreement shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 18.3 of this Agreement. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and, except in the event of
termination by Clare without Good Reason or termination by Company without
Cause, such Notice of Termination shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Clare's
employment under the provisions so indicated.
7.2. Date of Termination. "Date of Termination" following a
termination of Clare's employment by Company or Clare pursuant to Section 5 or
Section 6 of this Agreement shall mean (i) if Clare's employment is to be
terminated for Disability, thirty (30) days after Notice of Termination is
delivered by the Board to Clare provided that such notice shall be given only
after the expiration of any one hundred twenty (120) consecutive days during all
of which Clare shall be unable by reason of his disability to perform his
principal duties (provided that such Notice of Termination shall be null and
void if Clare fully resumes the performance of Clare's duties under this
Agreement prior to the Date of Termination as set forth in the Notice); (ii) if
Clare's employment is to be terminated by company for cause, the date on which a
Notice of Termination is given; and (iii) if Clare's employment is terminated by
Clare with Good Reason or without Good Reason or by Company without Cause, the
date specified in the Notice of Termination, which shall be a date no earlier
than thirty (30) days after the date on which Notice of Termination pursuant to
Section 5 is given and no earlier than ninety (90) days after the date on which
a Notice of Termination pursuant to Section 6 is given, unless an earlier date
has been agreed to by the party receiving the Notice of Termination either in
advance of, or after, receiving such Notice of Termination. Notwithstanding
anything in the foregoing to the contrary, if the party receiving the Notice of
Termination pursuant to Section 6 has not previously agreed to the termination,
then within thirty (30) days after any Notice of Termination is given, the party
receiving such Notice of Termination may notify the other party that a dispute
exists concerning the termination, in which event the Date of Termination shall
be the date set either by mutual written agreement of the parties or by the
arbitrators in a proceeding as provided in Section 6.7 of this Agreement.
8. Confidentiality.
8.1. Definition of Confidential Information. As used in this
Agreement, the term "Confidential Information" means: (a) proprietary
information of Company; (b) information marked or designated by Company as
confidential; (c) information, whether or not in written form and whether or not
designated as confidential, which is known to Clare as being treated by Company
as confidential; and (d) information provided to Company by third parties which
Company is obligated to keep confidential. Confidential Information includes but
is not limited to, discoveries, ideas, designs,
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drawings, specifications, techniques, models, devises, data, formula, programs,
documentation, processes, know-how, customer lists, marketing plans, and
financial and technical information.
8.2. Acknowledgment of Receipt of Confidential Information. Clare
acknowledges that in the course of performing his duties for Company he will
have access to Confidential Information, the ownership and confidential status
of which are highly important to company, and Clare agrees in addition to the
specific covenants contained herein to comply with all Company policies and
procedures for the protection of such Confidential Information.
8.3. Ownership. Clare acknowledges that all Confidential Information
is and shall continue to be the exclusive property of Company, whether or not
prepared in whole or in part by him and whether or not disclosed to or entrusted
to him in connection with employment by Company.
8.4. Acknowledgment of Irreparable Harm. Clare acknowledges that any
disclosure of Confidential Information will cause irreparable harm to Company.
8.5. Covenant of Nondisclosure. Clare agrees not to disclose
Confidential Information, directly or indirectly, under any circumstances or by
any means, to any third person without the express written consent of Company.
8.6. Covenant of Nonuse. Clare agrees that he will not copy, transmit,
reproduce, summarize, quote, or make any commercial or other use whatsoever of
Confidential Information, except as may be necessary to perform work done by him
for Company.
8.7. Safeguard of Confidential Information. Clare agrees to exercise
the highest degree of care in safeguarding Confidential Information against
loss, theft, or other inadvertent disclosure and agree generally to take all
steps necessary or requested by Company to insure maintenance of
confidentiality.
8.8. Exclusions. This Agreement shall not apply to the following
information: (a) information now and hereafter voluntarily disseminated by
Company to the public or which otherwise becomes part of the public domain
through lawful means; (b) information already known to Clare as documented by
written records which predate this Agreement; (c) information subsequently and
rightfully received from third parties and not subject to any obligation of
confidentiality; (d) information independently developed by Clare.
8.9. Work Made for Hire. Clare agrees that all creative work,
including computer programs or models, prepared or originated by him for Company
or during or within the scope of his employment by Company which may be subject
to protection under Federal copyright Law, constitutes "work made for hire," all
rights to which are owned by Company; and, in any event, Clare assigns to
Company all intellectual property rights in such work whether by right of
copyright, trade secret or otherwise and whether or not subject to protection by
copyright laws.
9. Company Ownership of Trade Secrets.
9.1. Company Ownership. Clare agrees that all inventions, discoveries,
improvements, trade secrets, formula, techniques, processes, know-how and
computer programs, whether or not patentable, and whether or not reduced to
practice, conceived or developed during his employment by Company, either alone
or jointly with others, which relate to or result from the actual or anticipated
business, work, research, or investigation of Company or any affiliated company,
or
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which result to any extent from use of Company or any affiliated company's
premises or property, shall be owned exclusively by the Company, Clare hereby
assigns to Company all his right, title and interest in all such inventions,
trade secrets, etc., and Clare agrees that Company shall be the sole owner of
all domestic and foreign patents or other rights pertaining thereto, and further
agree to execute all documents which Company reasonably determines to be
necessary or convenient for use in applying for, perfecting, or enforcing
patents or other intellectual any assignments, patent applications, or other
documents which may be requested by Company. Notwithstanding the above, this
provision does not apply to an invention for which no equipment, supplies,
facilities, or trade secret of Company was used and which was developed entirely
on Clare's own time, unless (a) the invention relates (i) directly to the
business of Company, or (ii) to Company's actual or demonstrably anticipated
research or development, or (b) the invention results from any work performed by
Clare for Company.
9.2. Clare Inventions. All inventions, if any, of Clare made prior to
Clare's employment by Company are excluded from the scope of this Agreement and
a complete list of such inventions, if any, is attached to this Agreement as
Exhibit A. Clare agrees to disclose to Company at the time of employment or
thereafter, all inventions being developed by Clare for the purposes of
determining Clare or Company rights to the invention.
10. Ventures. If Clare, during the term of this Agreement, is engaged in
or associated with the planning or implementing of any project, program or
venture involving Company and any third party or parties, all rights in the
project, program or venture shall belong to Company, and Clare shall not be
entitled to any interest therein or to any commission, finder's fee or other
compensation in connection therewith other than the salary to be paid to Clare
as provided in this Agreement.
11. Covenant of Good Faith. Clare agrees that the subject of this
Agreement involves sensitive matters which go to the very heart of the corporate
existence and well-being of Company and that it may be difficult for Company to
protect adequately its interest through agreement or otherwise. Clare agrees to
exercise the highest degree of good faith in his dealings with Company and to
refrain from any actions which might reasonably be deemed to be contrary to its
interests.
12. Delivery of Materials. Upon termination of his employment status,
Clare will deliver to Company all materials, including without limitation
documents, records, drawings, prototypes, models and schematic diagrams, which
describe, depict, contain, constitute, reflect, record or in any way relate to
inventions or Confidential Information, which are in Clare's possession or under
his control, whether or not the materials were prepared by Clare.
13. Subpoenas. If Clare is served with any subpoena or other compulsory
judicial or administrative process calling for production of Confidential
Information or if Clare is otherwise required by law or regulation to disclose
Confidential Information, Clare will immediately, and prior to production or
disclosure, notify Company and provide it with such information as may be
necessary in order that Company may take such action as it deems necessary to
protect its interest.
14. Remedies. Clare acknowledges that breach of Sections 8, 9, 10, 11, 12,
13, 15 and 16 of this Agreement will cause irreparable harm to the Company and
if Clare fails to abide by these obligations, Company will be entitled to
specific performance, including immediate issuance of a temporary restraining
order of preliminary injunction enforcing this Agreement, and to judgment for
damages caused by Clare's breach, and to the rights and duties of Company and
Clare, respectively, under this Agreement are in addition to, and not in lieu
of, those rights and duties afforded to and imposed upon them by law or at
equity.
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15. Termination Certificate. Upon termination of this Agreement, Clare
will give a written statement to Company certifying that he has complied with
his obligations under Sections 9, 11 and 12 and acknowledging his continuing
obligations under Section 8 to preserve and confidentiality of Company's
confidential or secret knowledge or information, and under Section 13 to notify
Company if he is served with a subpoena.
16. Other Obligations. Clare acknowledges that Company from time-to-time
may have agreements with other persons or with various governmental agencies
that impose obligations or restrictions on Company regarding inventions or
creative works made during the course of work thereunder or regarding the
confidential nature or such work. Clare agrees to be bound by all such
obligations and restrictions of which he is informed by Company and to take all
action necessary to discharge the obligations of Company thereunder.
17. Durations. The obligations set forth in Sections 8, 9, 10, 11, 12 and
13 of this Agreement will continue beyond the term of Clare's employment by
Company for two years following such termination.
18. General Provisions.
18.1. Severability. The provisions of this Agreement are severable and
if any provision hereof is held to be invalid, illegal, or unenforceable in any
respect, it shall be enforced to the maximum extent permissible, and the
remaining provision of the agreement shall not be affected thereby and in full
force and effect.
18.2. Attorney's Fees/Applicable Law/Venue. Except as provided in
Section 6.5(iii), in any action or suit arising out of this Agreement, the
prevailing party shall be entitled to recover all reasonable attorneys' fees and
expenses of litigation, including fees on appeal or in connection with any
petition for review. The rights and obligations of the parties under this
Agreement shall in all respects be governed by the laws of the State of Indiana
exclusive of choice of law rules.
18.3. Notice. Any notice provided for hereunder may be delivered to
the designated recipient either by personal delivery or by certified mail,
return receipt requested. If mailed, the notice when enclosed in an envelope
properly addressed to the proposed recipient at his address last of record with
the notifying party and deposited postage paid in a mail depository of the
United States post office, shall be deemed given when so mailed. Notice to
Company shall be so delivered or addressed to an officer of Company other than
Clare.
18.4. Assignment. Clare acknowledges that the services to be rendered
are unique and personal. This Agreement may not be assigned by Clare.
18.5. Successors of Company. This Agreement shall inure to the benefit
of and shall be binding upon Company, its successors, or assigns.
18.6. Waiver. Company may waive any obligation Clare has under this
Agreement, but such waiver will not affect Company's right to require strict
compliance with the Agreement in the future.
18.7. Entire Agreement. This Agreement supersedes all previous
agreements, oral or written, between Company and Clare and constitutes the
entire agreement between the Parties, and
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unless otherwise provided in this Agreement, no modification or waiver of any of
the provisions or any future representation, promise, or addition shall be
binding upon the Parties unless made in writing and signed by both Parties.
In witness whereof, the parties have executed this contract on the date
first set forth above.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
By: /s/ Xxxxxxxxxxx X. Xxxx
---------------------------------------------
Xxxxxxxxxxx X. Xxxx, Chief Executive Officer
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
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