EXHIBIT (d)(8)
EMPLOYMENT AGREEMENT
In consideration of Xxxx X. Xxxxx'x ("Employee") continued employment with
CART, Inc. ("CART"), and, in particular, CART's agreement to continue Employee's
employment following CART's contemplated acquisition by merger (the "Merger") by
Open Wheel Racing Series LLC ("OWRS") for the later of a minimum of twelve (12)
months following the Effective Time (as defined in the Agreement and Plan of
Merger among OWRS, Open Wheel Acquisition Corporation and Championship Auto
Racing Teams, Inc. ("Parent") dated September 10, 2003 (the "Merger Agreement"))
or December 31, 2004, Employee and CART hereby agree as follows:
1. PRIOR AGREEMENT SUPERSEDED. The parties agree that, upon execution of
this Employment Agreement, (a) this Employment Agreement shall supersede the
prior Employment Agreement between them dated August 15, 2001, signed by the
parties on September 1, 2001 and guaranteed by Championship Auto Racing Teams,
Inc. ("Parent") (the "Prior Employment Agreement" attached hereto as Exhibit A),
and (b) except as otherwise set forth in Section 9 hereof, all duties and
obligations of the parties under the Prior Employment Agreement shall be
extinguished and the Prior Employment Agreement shall be void and of no force
and effect. This means that, except as set forth in Section 9 hereof, Employee
and CART agree that automatically upon execution of this Employment Agreement,
all agreements and obligations under the Prior Employment Agreement regarding
any compensation, bonuses, or payments whether upon termination, Change of
Control, death, disability, for cause or no cause, or otherwise, or that the
parties' duties and obligations under the Prior Employment Agreement would
survive or be binding on any successors of CART are null and void, and may not
be enforced by either party against the other.
2. EFFECT OF TERMINATION OF MERGER. In the event the Merger Agreement is
terminated, this Employment Agreement shall be void and the parties agree that
the Prior Employment Agreement shall automatically be revived and continue in
full force and effect without further action of the parties, and the Prior
Employment Agreement will govern Employee's and CART's duties and obligations to
each other as if this Employment Agreement had never existed.
3. BREACH OF THIS EMPLOYMENT AGREEMENT. If either party breaches the terms
of this Employment Agreement, including the parties' agreement to void the Prior
Employment Agreement without either party owing any further duties or
obligations to the other (except as expressly set forth in Section 9), the
prevailing party shall be entitled to recover all reasonable attorney's fees and
costs of litigation, including fees and costs on appeal or in connection with
any petition for review.
4. STOCK DIVESTITURE. As a condition of Employee's continued employment
with CART, Employee has, or will by the date of his execution of this Agreement,
divest himself of all stock options in Parent that have already vested.
5. TITLE AND DUTIES. CART shall employ Employee as its Senior Vice
President of Operations, reporting to the Interim CEO, or such other person as
the Board of
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Directors may designate. As Senior Vice President of Operations, Employee shall
perform his duties faithfully and to the best of Employee's ability, and
Employee shall devote all of his business time, energy and skill to the affairs
of CART and shall discharge his responsibilities in a manner commensurate with
Employee's position.
6. COMPENSATION.
(a) BASE SALARY. Until the Effective Time of the Merger between CART and
OWRS, Employee shall continue to receive his current base salary of
$302,500 per annum, payable in accordance with CART's normal payroll
practices. For services rendered by Employee pursuant to this
Agreement, upon the Effective Time of the Merger (as defined in the
Merger Agreement), Employee shall receive a base salary (the "Base
Salary") of $275,000 per annum, payable in accordance with CART's
normal payroll practices. CART agrees that it will not reduce
Employee's Base Salary during the term of this Employment Agreement.
(b) BONUS. Employee is not guaranteed any bonus. However, to the extent
a management bonus plan or management incentive plan is developed
following the merger, Employee shall participate in any such plan(s)
adopted by CART on terms comparable to other senior officers of
CART.
(c) FRINGE BENEFITS. Employee shall be eligible to participate in such
of CART's benefit plans as are now generally available or later made
generally available to senior officers of CART, including, without
limitation, medical, dental, life, and disability insurance plans.
At CART's expense for all aspects of such use, Employee shall
continue to be entitled to the use of the automobile previously
provided to Employee by CART or any equivalent replacement vehicle
provided by CART.
(d) VACATION. Employee shall be entitled to 4 weeks of vacation per year
or to that amount of vacation per year generally available or later
made generally available to senior officers of CART. Unused vacation
may be accrued by Employee up to a maximum of six weeks, when it
will cease accruing until Employee reduces the accrued, unused
amount through use of vacation time.
(e) EXPENSE REIMBURSEMENT. CART will reimburse Employee for all
reasonable, ordinary and necessary travel, entertainment and other
expenses incurred by the Employee in conjunction with his or her
services to CART (whether arising before or after the date of this
Employment Agreement), in accordance with CART's then-existing
expense reimbursement and/or travel policies.
(f) TERM LIFE INSURANCE. From the Effective Time until December 31,
2005, CART will, at its expense, cause Employee to be continuously
covered by
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a $500,000 term life insurance policy with such beneficiary or
beneficiaries as Employee shall designate from time to time.
(g) 401(K) PLAN. If CART elects to have a 401(k) Plan, then Employee
shall be entitled participate in such 401(k) Plan under terms no
less favorable than those offered to other senior executives of
CART.
7. DEFINITIONS. For purposes of the Agreement, the following terms shall
have the following meanings:
(a) "ACCRUED COMPENSATION" shall mean any accrued cash compensation, any
benefits under any plan of CART in which Employee is a participant to the full
extent of Employee's rights under such plans, any accrued vacation pay, and any
appropriate business expenses incurred by the Employee in connection with he
performance of Employee's duties hereunder, all to the extent unpaid on the date
of termination.
(b) "BASE SALARY" shall have the meaning set forth in Section 7(a) above.
(c) "DISABILITY TERMINATION" means termination by CART of Employee's
employment by reason of the Employee's incapacitation due to disability.
Employee shall be deemed to be incapacitated due to disability if at the end of
any month Employee is unable to perform substantially all of his duties under
this Agreement in the normal and regular manner due to illness, injury or mental
or physical incapacity, and has been unable so to perform for either (i) three
consecutive full calendar months then ending, or (ii) 90 or more of the normal
working days during the 12 consecutive full calendar months then ending. Nothing
in this paragraph shall alter CART's obligations under applicable law, which
may, in certain circumstances, result in the suspension or alteration of the
foregoing time periods.
(d) "TERMINATION FOR CAUSE" means termination of Employee's employment by
CART by reason of (i) Employee's gross dereliction of his duties; (ii) theft or
misappropriation of property of CART by Employee; (iii) conviction of Employee
of a felony or of any crime involving dishonesty or moral turpitude; or (iv)
violation by Employee of the provisions of this Agreement; provided that,
termination for violation by Employee of the provisions of this Agreement shall
occur only after 20 days' advance written notice by CART to Employee containing
reasonably specific details of the alleged breach and Employee's failure to cure
the same within such 20-day period.
(e) "VOLUNTARY TERMINATION" means termination of Employee's employment by
the voluntary action of Employee other than by reason of a Disability
Termination or by Employee's death.
(f) "TERMINATION OTHER THAN FOR CAUSE" means termination of Employee's
employment by CART after the expiration of the later of twelve (12) months
following the Effective Time of the Merger (as defined in the Merger Agreement)
or December 31, 2004 for any reason (other than as specified in paragraphs (c),
(d), or (e) hereof) or for no reason.
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8. CONDITIONS OF SEPARATION.
(a) TERMINATION OTHER THAN FOR CAUSE. CART may terminate this Employment
Agreement by Termination Other Than For Cause after the expiration of the later
of twelve (12) months following the Effective Time of the Merger (as defined in
the Merger Agreement) or December 31, 2004 (the "Initial Period"), by providing
Employee with nine (9) months' prior written notice of termination. Upon the
issuance of the notice of termination (the "Notice Date"), Employee shall be
relieved of his duties and obligations as an Employee, and shall have no
authority to act on CART's behalf. As of the Notice Date, Employee shall no
longer be eligible to participate in CART's incentive plan programs, bonus
programs, or 401(k) plans and will no longer accrue benefits under CART's
benefit plans, including vacation or sick time. Within 10 days of the Notice
Date, CART will pay to Employee a lump sum amount equal to nine months' Base
Salary less applicable taxes and withholdings (the "Separation Pay") and any
other amounts, including without limitation any Accrued Compensation, owing to
Employee under this Employment Agreement for the Initial Period (together with
the Separation Pay, the "Termination Other Than For Cause Payment"). The date
that Employee receives the Termination Other Than For Cause Payment from CART
shall be considered the date of Employee's Termination Other Than For Cause (the
"Termination Date"). Employee will be entitled to receive the Base Salary up to
the Termination Date. If CART desires to terminate this Employment Agreement as
of the end of the Initial Period, CART will orally advise Employee of that fact
no later than the Tuesday following the last race of the 2004 CART racing
season.
(b) DISABILITY TERMINATION. CART shall have the right to effect a
Disability Termination by giving 60 days' written notice thereof to the
Employee. Upon Disability Termination CART shall pay Employee all Accrued
Compensation, if any, and at CART's option, CART may elect to pay Employee in
lieu of the 60 days' notice either upon the normal payroll schedule in effect at
the time of termination or in a lump sum payment.
(c) TERMINATION FOR CAUSE. Upon Termination For Cause, CART shall pay the
Employee Accrued Compensation, if any, through the date of termination.
9. CHANGE OF CONTROL PRIOR TO JUNE 1, 2005.
(a) In the event Employee is still employed by CART, and there is a Change
of Control (as hereafter defined) prior to June 1, 2005, then Employee shall be
entitled under this Employment Agreement to the payment amounts and benefits set
forth in subparagraphs (a) through (e) of Section 7.5(iii) of the Prior
Employment Agreement automatically upon the occurrence of such Change of Control
and without any further action by any person or entity. The parties agree that
only the payment amounts and benefits described in subparagraphs (a) through (e)
of Section 7.5(iii) of the Prior Employment Agreement survive and shall apply in
the event of a Change of Control prior to June 1, 2005. The parties further
agree that all other provisions in the Prior Employment Agreement, including all
other "Change of Control" provisions, and, in particular, the definition of
"Change of Control" thereunder, and the introductory
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sentence in Section 7.5(iii), are null and void, and in the event of a conflict
between this Employment Agreement and Section 7.5(iii) of the Prior Employment
Agreement, this Employment Agreement shall control and prevail. However, nothing
in this paragraph or in subparagraphs (a) through (e) of Section 7.5(iii) of the
Prior Employment Agreement, in the event those subparagraphs are applicable,
obligates CART to employ Employee through June 1, 2005. In addition, Employee
acknowledges that this provision, and Employee's entitlement to the payment
amounts and benefits set forth in subparagraphs (a) through (e) of Section
7.5(iii) of the Prior Employment Agreement applies only to a Change of Control
that occurs prior to June 1, 2005 and does not apply to a liquidation of CART's
business.
(b) In the event Employee is still employed by CART and there is a Change
of Control (as hereafter defined) that occurs prior to June 1, 2005, CART and
Parent will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of CART ("Successor") to expressly assume and agree to perform CART's
obligations under this Employment Agreement in the same manner and to the same
extent that Company would be required to perform it if such succession had not
taken place. Failure of CART and Parent to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Employment Agreement and shall entitle Employee to compensation from CART in the
same amount and on the same terms to which Employee would be entitled hereunder
if Employee was terminated by CART by Termination Other Than For Cause, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Notice Date.
(c) The term "Change of Control" in this Employment Agreement means (i)
all or substantially all of the equity or assets of Parent or CART are sold to
any person or entity in one or more transactions following the Merger, (ii) the
equity owners of Parent, or CART approve the merger of Parent or CART with any
other person or entity following the Merger (other than a reincorporation
merger), (iii) after the Effective Time of the Merger, any transaction whereby
the aggregate indirect or direct owners of Parent prior to such transaction
would no longer be at least 50% of the aggregate indirect or direct owners of
Parent after such transaction, or (iv) a definitive agreement is entered into
prior to June 1, 2005 which would cause any of the transactions described in
(i), (ii) or (iii) to occur, provided that such transaction is subsequently
consummated.
10. ENTIRE AGREEMENT; MODIFICATIONS. This Agreement represents the entire
understanding between the parties with respect to the subject matter of this
Agreement, and supersedes any and all prior and contemporaneous understandings,
agreements, plans, and negotiations, whether written or oral, with respect to
the subject matter hereof, including, without limitation, any understandings,
agreements, or obligations respecting any past or future compensation, bonuses,
reimbursements, or other payments to Employee by CART, including those set forth
in the Prior Employment Agreement. All modifications to this Employment
Agreement must be in writing and signed by CART and Employee.
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11. GUARANTEE. By executing this Employment Agreement, Parent hereby
guarantees to Employee the performance by CART of all obligations (financial or
otherwise) owed to Employee by CART.
12. LEGAL FEES. CART will pay up to $5,000 of Employee's legal fees
incurred in connection with the negotiation and preparation of this Employment
Agreement.
13. NO AFFECT ON INDEMNIFICATION COVERAGE PRIOR TO MERGER. Nothing in this
Employment Agreement waives, limits, restricts or enhances existing
indemnification rights, if any, that Employee may have under applicable law,
charter documents or any insurance coverage.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement.
CART, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Title: CFO
Date: 10-3-03
/s/ Xxxx X. Xxxxx
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XXXX X. XXXXX
Date: Oct. 3, 2003
Executed by the undersigned pursuant to Section 11.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Title: CFO
Date: 10-3-03
CART, Inc.
To: Xxxx Xxxxx
From: The Chief Executive Officer
In view of Open Wheel Racing's proposed acquisition of CART, we are asking
you (as well as all members of the executive management team) to confirm that
you are not aware of assertions that you have engaged in wrongful conduct that
may have created liability for CART. Accordingly, by your signature below, you
represent and warrant that you are not aware of any valid claims, assertions or
accusations by third parties or employees that you have engaged in any wrongful
conduct, malfeasance, or violations of any laws or regulations, including, but
not limited to, conduct which could give rise to valid claims for breach of
contract, trademark infringement, violation of licensing or trade agreements,
defamation, tortious interference, unpaid wages or commissions, discrimination,
harassment, retaliation, and to the best of your knowledge and belief, you have
not engaged in conduct that could support such valid claims.
Employee Name: Xxxx X. Xxxxx Dated: Oct. 3, 2003
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Signature: /s/ Xxxx X. Xxxxx
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