CONSULTING AGREEMENT
This
Consulting Agreement (the “Agreement”)
is
entered into and made effective as of August 20, 2007 (the “Effective
Date”)
by and
between American Racing Capital, Inc., a Nevada corporation (the “Company”),
and
Xxxxxx Xxxxxxxx, III (“Consultant”).
RECITALS
WHEREAS,
the Company desires to employ and retain the Consultant for the term specified
herein in order to advance the business interests of the Company on the terms
and conditions set forth herein; and
WHEREAS,
the Consultant desires to provide his services to the Company on and subject
to
the terms and conditions hereof including, but not limited to, the Company
using
its best efforts in hiring, within ninety (90) days of execution of this
Agreement, an experienced Chief Executive Officer and Chief Financial Officer
capable of handling all financial and reporting aspects related to the operation
of a public company; and
WHEREAS,
the Company desires to provide the Consultant, or his assigns, with the
opportunity to obtain stock in the Company in order that the Consultant may
have
the opportunity to participate in the growth and performance of the Company,
as
set forth herein; and
NOW,
THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
1. Adoption
of Recitals
.
The
Company and Consultant hereto adopt the above recitals as being true and
correct.
2. Consulting.
(a) Subject
to the terms and conditions set forth herein, the Company hereby employs
Consultant, and Consultant hereby agrees to serve the Company for a three-year
period from the Effective Date of this Agreement (“Consulting
Period”).
3. Duties
and Responsibilities.
(a) During
the Consulting Period, the Consultant will assist the Company with the Company’s
business development, including identification and investigation of business
opportunities, assisting the Company in acquisitions and assisting the Company
in general supervisory management of those acquisitions. Consultant shall have
absolutely no responsibility or involvement in connection with any of the
financial and reporting aspects relating to the operation of a public company.
During the Consulting Period, Consultant shall perform and discharge faithfully,
diligently, in good faith and to the best of Consultant’s ability such duties
and responsibilities. The Consultant agrees to devote as much of its time as
is
reasonably necessary to accomplish its duties and obligations under this
Agreement.
(b) Other
Activities.
The
Company recognizes that the position is not that of a full time Consultant,
but
that Consultant shall devote as much time to the job that the Consultant
believes is necessary to perform its duties under this agreement. The
Consultant, during the Consulting Period, may engage in other activities for
compensation outside this Consulting Agreement with the Company, as long as
those activities do not materially interfere with or detract from the
performance of Consultant’s duties or constitute a breach of any of the
provisions contained in this Agreement. Those activities will include but shall
not be limited to serving in a consulting role to any other affiliate or
subsidiary of the Company. Consultant is not prohibited from entering into
any
and all agreements, deals, arrangements or relationships with any Pocono Raceway
opportunities, whether competitive to the Company or otherwise. The Company
has
agreed to employ Consultant, conditioned upon the knowledge that Consultant
already competes with Company in the motor racing business and Company waives
it
right to object to any such competitive relationship, or any issue with respect
to the usurpation of corporate opportunity.
4. Compensation.
(b) Base
Fee.
During
the Consulting Period, the Company shall pay to Consultant an annual base fee
(“Base
Fee”)
of
Three Hundred Thousand Dollars ($300,000. 00) payable on a bi-weekly basis
or
otherwise in accordance with the Company’s customary practices, throughout the
term of such Consulting Period subject to the provisions of Section 6 hereof
(governing Terminations), and subject to any applicable tax and payroll
deductions. The Base Fee shall increase by five percent (5%) (the “Annual
Fee Increase”)
on the
anniversary date of the Effective Date on the same date each year during the
Consulting Period. The Board shall review the Annual Fee Increase and shall
have
the authority to modify the terms of the Annual Fee Increase. Any such
modifications in the Annual Fee Increase shall be communicated to the Consultant
thirty (30) days prior to the date when the Annual Fee Increase would be
effectuated.
(c) Bonus.
In
addition to the Fee, Consultant shall be entitled to such bonuses and benefits
as may be determined by the Board. Any bonus granted pursuant to Section 4(b)
shall be paid within forty-five (45) days after the end of the fiscal year
for
which such bonus is earned.
5. Share
Exchange Agreement
.
Consultant, or its assigns, shall be entitled to Capital Stock of the Company
as
set forth in the Share Exchange Agreement attached hereto and herein
incorporated by reference. As a condition to entering into this Agreement,
the
Company and Millennium Motorsports of Pennsylvania, a Pennsylvania company,
shall enter into a Share Exchange Agreement as of the date hereof (the
“Share
Exchange Agreement”).
6. Benefits.
(a) Other
Benefits.
During
the Consulting Period, Consultant shall be entitled to apply to participate
in
any and all benefit plans, programs or arrangements (collectively the
“Plans”),
implemented by the Company and available to Consultants of the Company
Consultant’s participation in such plans shall be governed by the terms of the
respective plans.
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(b) Fringe
benefits.
(i) During
the Consulting Period, the Company shall pay for directly or reimburse
Consultant for all reasonable, customary and necessary business-related expenses
incurred by Consultant in connection with the duties of Consultant hereunder,
in
accordance with the applicable Company policy, as may be revised from time
to
time, and upon submission by Consultant to the Company of such written evidence
of such expense as the Company may require.
(ii) The
Consultant shall be entitled to vacation, sick and personal leave as determined
by the Board and the Consultant.
(iii) Nothing
paid to Consultant under any Company Plan, bonuses, or fringe benefit
arrangements shall be deemed to be in lieu of Base Fee payable to Consultant
hereunder.
7. Restrictive
Covenants.
(a) Non
Disclosure of Confidential Information.
(i) Except
with respect to the terms set forth in 3(b) above, during and at all times
after
the Consulting Period, the Consultant shall not, directly or indirectly, without
the prior written consent of the Board, or a person duly authorized thereby,
other than a person to whom disclosure is reasonably necessary or appropriate
in
connection with the performance by Consultant of the duties of Consultant as
an
Consultant of the Company, access, maintain, keep, disclose or use for the
benefit of himself or herself or any other person, corporation, partnership,
joint venture, association, or other business organization, any of the trade
secrets or Confidential Information of the Company. If Consultant is legally
required to disclose any Confidential Information, Consultant will notify
Company prior to doing so by providing Company with written notice ten (10)
days
in advance of the intended or compelled disclosure. Notice shall be provided
as
defined in Section 7 below. For the purposes of its Agreement, “Confidential
Information” shall mean all information, whether written or oral, tangible or
intangible, of a private, secret, proprietary or confidential nature, of or
concerning the Company or any of its subsidiaries.
(b) Need
for Restrictions.
The
Consultant acknowledges and agrees that the restrictive covenant contained
in
this Section 7 is reasonable and necessary to protect the legitimate business
interests of the Company, including, without limitation, the need to protect
the
Company’s trade secrets and the Confidential Information.
(c) Breach
of Restrictive Covenants.
In the
event of a breach by the Consultant of the restrictive covenant set forth in
Section 7, the Consultant agrees that such a breach would cause irreparable
injury to the Company, and that if the Company shall bring legal proceedings
against the Consultant to enforce any restrictive covenant, the Company shall
be
entitled to seek all available civil remedies, at law or in equity, including,
without limitation, an injunction, damages, attorneys’ fees, and costs.
Consultant agrees that given the significance of the Company’s Confidential
Information, Consultant, as a material part of its Agreement, acknowledges
and
agrees that he will not oppose the Company’s request to post only the minimum
bond required by law in the event the relief sought by the Company requires
that
the Company post a bond. Consultant specifically agrees that he or she will
not
make any argument or seek any order from the court requiring the posting of
a
bond greater than the minimum imposed by any applicable statute.
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(d) Construction,
Survival.
If the
period of time or scope of any restrictions specified in Section 7 should be
adjudged unreasonable, void, or unenforceable in any proceeding, then the period
of time or scope shall be reduced or altered so that the restrictions may be
enforced as is adjudged to be reasonable and consistent with public policy
and
law. All the provisions of Section 7 shall survive the Consulting Period.
(e) Successors
and Assigns.
The
restrictive covenant may be enforced by the Company and its successors and
assigns.
(f) Other
Knowledge.
Notwithstanding anything to the contrary stated herein, it is understood by
the
Company that Consultant has substantial experience in the operation and
management of motor sports businesses and venues. All of that knowledge and
experience and use thereof at anytime does not constitute Confidential
Information and can be used by Consultant for any and all purposes deemed
appropriate by Consultant for any and all purposes and will not constitute
a
violation of this Agreement.
8. Termination.
(a) Termination
upon Death.
Consultant’s consulting hereunder shall terminate upon the death of Consultant;
provided, however, that for purposes of its Agreement the Date of Termination
based upon the death of Consultant shall de deemed to have occurred on the
last
day of the month in which the death of the Consultant shall have occurred.
(b) Termination
upon Incapacity.
If the
Consultant is unable to perform the essential functions of its position, with
or
without reasonable accommodation, for a period in excess of twelve (12) weeks
during the previous twelve (12) months, due to a physical or mental illness,
disability or condition, the Company may terminate Consultant’s Consulting
hereunder at the end of any calendar month by giving written Notice of
Termination to Consultant. Any questions as to the existence, extent or
potentiality of illness or incapacity of Consultant upon which the Company
and
Consultant cannot agree shall be determined by a qualified independent physician
selected and paid for by the Company who is acceptable to Consultant or its
personal representative, as the case may be. The determination of such physician
certified in writing to the Company and to Consultant shall be final and
conclusive for all purposes of its Agreement. Section 8 (b) is intended to
be
interpreted and applied consistent with the Americans with Disabilities Act
and
Sections 503 and 504 of the Rehabilitation Act of 1973; the Family and Medical
Leave Act of 1993; the California Fair Housing and Consulting Act; and any
state
or local ordinance prohibiting discrimination, harassment and/or retaliation
on
the basis of a disability.
(c) Termination
for Cause.
The
Company may terminate Consultant’s Consulting hereunder for Cause by giving
written Notice of Termination to Consultant (as defined below in Section 8
(f)
hereof. The Date of Termination shall be specified in the Notice of Termination
and may be immediate. For the purpose of its Agreement, the Company shall have
“Cause” to terminate Consultant’s Consulting hereunder if Consultant is
convicted of a felony under federal or state law involving moral turpitude
or
that Consultant’s actions or omissions constitute fraud, or gross misconduct
that have a material adverse effect on the Company.
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(d) Termination
by the Consultant for Good Reason.
Consultant may terminate its Agreement for Good Reason. For purposes of its
Agreement ‘Good Reason’ shall mean (i) a material breach by the Company or its
affiliate of its obligations under this Agreement, or the Share Exchange
Agreement, or (ii) any material change in the assignment of duties or
responsibilities to Consultant by the Board which are inconsistent in a material
and adverse respect with Consultant’s position causing it to be of materially
less stature or responsibility. Any such breach by the Company, if curable,
may
be cured within ten (10) days after notice thereof to the Company.
(e) Termination
by the Consultant.
Consultant may terminate its Agreement by delivering written notice to the
Company. The Consultant shall provide ninety (90) calendar days written notice
to the Company. The Date of Termination shall be specified in the Notice of
Termination; provided however, that the Date of Termination shall not be earlier
than ninety (90) calendar days after delivery of the Notice of Termination.
(f) Notice
of Termination.
Notice
of Termination to effectuate a termination under Section 6 shall be made in
accordance with Notice defined in Section 8. For purposes of its Agreement,
a
“Notice of Termination” shall mean a notice, in writing, which shall indicate
the specific termination provision of its Agreement relied upon as the basis
for
the Termination and the Date of Termination. The Date of Termination shall
not
be earlier than the date such Notice of Termination is delivered (as defined
above); provided however, that the Company, at its option, may elect to have
the
Consultant not report to work after the date of the written notice.
(g) Date
of Termination.
“Date
of Termination” means the date on which its Agreement shall terminate (except
for those provisions which survive termination as specified in its Agreement)
in
accordance with the provisions of its Section 8.
(h) Obligation
to Pay.
(i) For
Terminations under Subsection 8(a), the estate of Consultant shall be paid
all
sums otherwise payable to Consultant, including without limitation all pro-rated
Base Fee, Bonuses or other benefits accrued or accruable to Consultant through
the end of the month in which the death of Consultant occurred. The Bonuses
will
be pro-rated to the Date of Termination and will be pro-rated after receipt
of
year-end results.
(ii) For
Terminations under Subsection 8(b), the Consultant or the person charged with
legal responsibility for the Consultant’s estate shall be paid all sums
otherwise payable to the Consultant, including the pro-rated Base Fee, Bonuses
and other benefits accrued or accruable to the Consultant through the Date
of
Termination, and the Company shall have no further obligation to the Consultant
under its Agreement. The Bonuses will be pro-rated to the Date of Termination
and will be pro-rated after receipt of year-end results to the extent any
additional sums would be owed after receipt of year end results.
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(iii) For
Terminations for Cause under Subsection 8(c), the Company shall pay the
Consultant its Base Fee and benefits accrued through the Date of Termination.
The Consultant shall receive pro-rated Bonuses and benefits through the Date
of
Termination and will not be entitled to receive any other Bonuses or benefits
not earned or accrued as of the Date of Termination. The Bonuses will be
pro-rated to the Date of Termination and will be pro-rated after receipt of
year-end results. The Company shall have no further obligation to the Consultant
under its Agreement.
(iv) For
Terminations for Good Reason under Subsection 8(d), the Consultant shall be
entitled to the lesser of (i) the Base Fee for the remainder of the Consulting
Period, as well as medical and dental benefits included in section 4(d) of
its
Agreement provided that such benefits are in place at the time of termination),
without regard to the Date of Termination set forth in the Notice of Termination
or (ii) the Base Fee for two (2) years, in one lump sum. The Consultant shall
receive pro-rated Bonuses and benefits through the Date of Termination and
will
not be entitled to receive any other Bonuses or benefits not earned or accrued
as of the Date of Termination. The Bonuses will be pro-rated to the Date of
Termination and will be pro-rated after receipt of year-end results.
(v) For
Terminations by the Consultant under Subsection 8(e), the Company shall pay
the
Consultant its Base Fee and benefits accrued through the Date of Termination.
The Consultant shall receive pro-rated Bonuses and benefits through the Date
of
Termination and will not be entitled to receive any other Bonuses or benefits
not earned or accrued as of the Date of Termination. The Bonuses will be
pro-rated to the Date of Termination and will be pro-rated after receipt of
year-end results. The Company shall have no further obligation to the Consultant
under its Agreement.
9. Notice
.
For the
purpose of its Agreement, notices and all other communications to either party
hereunder provided for in the Agreement shall be in writing and shall be deemed
to have been duly given when delivered in person or three (3) business days
after being mailed by certified mail, return receipt requested, postage prepaid,
two (2) business days after being provided to a courier for next business day
delivery, or 24 hours after being sent by telecopy:
|
in
the case of the Company to:
|
American
Racing Capital
X.X.
Xxx 00000
Xxx
Xxxxx, XX 00000
Attention:
Xxx Xxxxxxxxx
Telephone:
(000)000-0000
|
|
in
the case of Consultant to:
|
Xxxxxx
Xxxxxxxx, III
XX
Xxx 000
Xxxx
Xxxx, XX 00000
Telephone:
(000) 000-0000
|
|
With
a copy (not constituting notice) to:
|
Xxxxxx
X. Xxxxxxxx
Suite
1800 - 18th
Floor
000
X. Xxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Telephone:
(000)000-0000
|
or
to
such other address as either party shall designate by giving written notice
of
such change to the other party.
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10.
Liability Insurance
.
To
protect the Consultant from any liability, loss, claims, damages, or costs,
including legal fees and costs, the Company shall purchase and maintain
liability insurance (the “Insurance”) in an amount not less than One Million
Dollars ($1,000,000), or in such amount as is later agreed upon by the
Consultant and the Company and which shall include a duty to defend clause.
The
policy shall name the Consultant by name or title as an additional insured
in
each (and all) policy of Insurance.
11. Indemnification
.
The
Company shall hereby
absolutely and unconditionally, indemnify, hold harmless, remise, release,
acquit and forever discharge Consultant and its agents, servants, attorneys,
heirs, successors, officers, directors, shareholders, employees, former
employees, executors, administrators, assigns and representatives, of and from
any and all claims, demands, damages, losses, actions, causes of action, suits
at law or in equity, of whatsoever kind or nature, for or because of any matter
or thing which was done, omitted or suffered to be done in connection with
the
work undertaken pursuant to this Consulting Agreement.
12. Hiring
of CEO and CFO.
The
Company hereby agrees that it shall use its best efforts to hire an experienced
Chief Executive Officer and Chief Financial Officer within ninety (90) days
hereof.
13. Right
to
Review and Seek Counsel
.
The
Consultant hereby acknowledges that he has actively engaged in the discussion
and negotiation of its Agreement and its terms and has had full and fair
opportunity to discuss and review the Agreement and its terms with any legal
or
other advisor of its choice and has either done so, or voluntarily declined
to
do so. Consultant further agrees that its Agreement has been fully negotiated
by
parties acting at arms’ length with full opportunity to negotiate terms such
that its Agreement and all of its terms shall be deemed to have been drafted
mutually by both parties.
14. Waiver
.
The
waiver by the Company of a breach or threatened breach of its Agreement by
the
Consultant shall not be construed as a waiver of any subsequent breach by the
Consultant. Inaction or silence by the Company shall not be deemed a waiver.
No
waiver of any breach is effective unless expressly stated in writing and signed
by a duly authorized member of the Board or its authorized designee.
15. Entire
Agreement/Amendments
.
No
provision of its Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is approved by the Board and agreed to in
writing signed by Consultant and such officer as may be specifically authorized
by the Board. Its Agreement contains the entire understanding of the parties
hereto and no agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party, which are not set forth expressly in its Agreement. Its Agreement
supersedes all negotiations, preliminary agreements, and all prior and
contemporaneous discussions and understandings of the parties hereto and/or
their affiliates. The Consultant acknowledges that he has not relied on any
prior or contemporaneous discussions or understandings in entering into its
Agreement.
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16. Governing
Law
.
Its
Agreement shall be governed and construed in accordance with the laws of the
State of Nevada without regard to conflicts of law.
17. Consent
to Personal Jurisdiction and Venue
.
Each
party hereby consents to personal jurisdiction and exclusive venue of the
Federal and State courts located in Maryland and waive any objections to such
courts based on venue in connection with any claim or dispute arising under
its
Agreement. For purposes of its Section, the term “Consultant” includes any
business entity owned or controlled by the Consultant.
18. Headings
and Captions
.
The
titles and captions of paragraphs and subparagraphs contained in its Agreement
are provided for convenience of reference only, and shall not be considered
terms or conditions of its Agreement.
19. Validity
.
The
invalidity or unenforceability of any provision of its Agreement shall not
affect the validity or enforceability of any other provision of its Agreement,
which shall remain in full force and effect.
20. Survival
.
The
following provisions of its Agreement shall survive the termination of
Consulting Agreement hereunder and shall be binding upon the parties.
21. Successors
and Assigns
.
Its
Agreement shall be binding upon and inure to the benefit of the Company and
its
successors and assigns, and the Consultant agrees that its Agreement may be
assigned by the Company. Its Agreement is not assignable by the Consultant.
22. Counterparts
.
Its
Agreement may be executed in one or more counterparts and by facsimile, each
of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
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IN
WITNESS WHEREOF,
the
parties hereto have executed its Agreement on the day, month and year first
above mentioned.
| AMERICAN RACING CAPITAL, INC. | CONSULTANT | |||
| By: | /s/ A. Xxxxxx Xxxxxxxxx | |||
| Name: | A. Xxxxxx Xxxxxxxxx | By: | /s/ Xxxxxx Xxxxxxxx, III | |
| Title: | President & Chief Executive Officer | Xxxxxx Xxxxxxxx, III | ||
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