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EXHIBIT 10.14
EMPLOYMENT AGREEMENT
This Agreement is made on March 15, 1996, by and between Karts
International Incorporated, a Nevada corporation (the "Corporation"), and Mr.
V. Xxxx Xxxxxxxx (the "Employee").
WHEREAS, the Corporation is engaged in the business of designing,
manufacturing, distributing and marketing go karts; and
WHEREAS, the Corporation desires to retain the services of the
Employee in the capacity of its President, Chief Executive Officer and Chairman
of the Board.
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants contained herein and for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
Section 1. Employment. The Corporation agrees to employ the Employee and
the Employee agrees to accept the employment described in this Agreement.
Section 2. Duties. The Employee shall serve as President, Chief
Executive Officer and Chairman of the Board, with such duties, power and
authority as are customarily associated with such positions. Without limiting
the generality of the foregoing, the Employee shall be responsible for and have
complete authority for: (a) day-to-day operations; (b) implementation of
strategic plans approved by the Board of Directors; (c) all personnel decisions
including complete hire and fire authority; and (d) determining an employee
organizational structure. The Employee will be a voting member of the Board of
Directors and be entitled to attend any and all meetings of the Board of
Directors or any committees established by the Board of Directors.
The Employee shall report to the Board of Directors. Without limiting
the generality of the foregoing, the Employee shall have the following
reporting obligations to the Board of Directors; (a) monthly operating
financial statements; (b) quarterly presentations at mutually agreed upon dates
and times regarding the Corporation's operations. In addition, without
limiting the generality of the foregoing, the Employee shall submit the
following to the Board of Directors for approval: (a) an annual budget; and
(b) any proposals regarding capital expenditures exceeding an aggregate of
$40,000, provided that such expenditures shall not include those incurred in
the ordinary course of business. Leases for the subsidiary company plant sites
and the Karts International corporate offices will be considered in the
category of ordinary course of business provided that such leases were approved
in the annual budget by the Board of Directors.
Section 3. Extent of Services. The Employee shall devote his entire
working time, (exclusive of vacation, reasonable personal matters, funeral
leave, illness, temporary disability, holidays and weekends) attention, and
energies to the performance of his duties. The Employee shall at all times
faithfully and to the best of his ability perform his duties under this
Agreement.
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The duties shall be rendered at the Corporation's principal office, at any of
the subsidiary company locations, or at such other place or places and at such
times as the needs of the Corporation may from time-to-time dictate.
Section 4. Term. The term of this Agreement shall begin on March 15,
1996 ("Effective Date"), and shall continue for a three-year period. The
parties presently anticipate that the employment relationship may continue
beyond this three-year term. This Agreement shall not give the Employee any
enforceable right to employment beyond this term.
Section 5. Compensation.
(a) Base Compensation.
(i) The Employee will receive a base salary of $150,000 per year,
payable in accordance with the Corporation's standard payroll
procedures.
(ii) The Employee shall receive, in the manner set forth herein,
210,000 shares of common stock of the Corporation. As soon as
practicable after the date hereof, the Corporation will place such
shares (the "Escrow Shares") in an escrow account pursuant to an
escrow agreement by and among the Corporation, the Employee and the
escrow agent. Such escrow agreement shall provide as follows: (A)
105,000 of the Escrow Shares shall be delivered to the Employee upon
the completion of the first year of his employment with the
Corporation; (B) 52,500 of the Escrow Shares shall be delivered to the
Employee upon the completion of the second year of his employment with
the Corporation; and (C) 52,500 of the Escrow Shares shall be
delivered to the Employee upon the completion of the third year of his
employment with the Corporation. In the event that this Agreement is
terminated by the Company "for cause" (as hereinafter defined) or by
the Employee for any reason, the Employee shall not receive any Escrow
Shares remaining in the escrow account at the time of such
termination. In the event that this Agreement is terminated for any
other reason, the Employee shall be entitled to receive any escrow
shares remaining in the escrow account at the time of such
termination.
(iii) The Employee is eligible for performance-based bonuses in the
form of common stock options. Such bonuses will be paid, if at all,
in the sole discretion of the Board of Directors.
The Employee shall not be entitled to additional compensation by
reason of service as a director of the Corporation.
(b) Benefits. The Employee and his spouse shall receive medical
insurance with the terms thereof to be mutually agreed by the parties hereto,
provided that the cost of such insurance will not exceed $7,200 per year.
(c) Expenses. The Corporation shall reimburse the Employee for
reasonable out-of-pocket expenses incurred by the Employee in connection with
his relocation to Louisiana,
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provided such expenses shall not exceed $25,000. In addition, the Corporation
shall reimburse the Employee for reasonable out-of-pocket expenses incurred by
the Employee in fulfilling his duties. In addition, the Corporation shall
provide the Employee and any corporate staff members recruited by the Employee
with suitable office facilities not to exceed 3,500 square feet, at class A
office market rates, located on the North shore area in St. Tammany Parish,
Louisiana or other reasonable location selected by the Employee.
Section 6. Termination.
(a) For Cause. The Corporation may terminate the Employee's
employment at any time "for cause" with immediate effect upon delivering
written notice to the Employee. For purposes of this Agreement, "for cause"
shall include: (i) embezzlement, theft, larceny, material fraud, or other acts
of dishonesty; (ii) material violation by the Employee of any of his
obligations under this Agreement; (iii) conviction of or entrance of a plea of
guilty or nolo contendere to a felony or other crime which has or may have a
material adverse effect on the Employee's ability to carry out his duties under
this Agreement or upon the reputation of the Corporation; (iv) conduct
involving moral turpitude; (v) material or repeated insubordination to the
Board of Directors; or (vi) material and continuing failure by the Employee to
perform the duties described in Section 2 above in a quality and professional
manner for at least thirty (30) days after written warning by the Board of
Directors. Upon termination for cause, with the exception of cause items (v)
and (vi) above, the Corporation's sole and exclusive obligation will be to pay
the Employee his compensation earned under Section 5 (a)(i) hereof through the
date of termination, and the Employee shall not be entitled to any compensation
after the date of termination. If termination occurs for cause items (v) or
(vi) the Employee will receive severance pay in the amount of the Employee's
compensation, including health care benefits, then in effect for a period of
three (3) months subsequent to the date of termination.
(b) Upon Death. In the event of the Employee's death during the
term of this Agreement, the Corporation's sole and exclusive obligation will be
to pay to the Employee's spouse, if living, or to his estate, if his spouse is
not then living, the Employee's compensation earned through the date of death.
(c) Upon Disability. The Corporation may terminate the Employee's
employment upon the Employee's total disability. The Employee shall be deemed
to be totally disabled if he is unable to perform his duties under this
Agreement by reason of mental or physical illness or accident for a period of
three consecutive months. Upon termination by reason of the Employee's
disability, the Corporation's sole and exclusive obligation will be to pay the
Employee his compensation earned through the date of termination.
(d) Without Cause. The Corporation may terminate the Employee's
employment without cause at any time after expiration of the three-year term of
this Agreement. If termination occurs without cause, the Employee shall
receive severance pay in the amount of the Employee's compensation, including
health care benefits, then in effect for a period of six (6) months subsequent
to the date of termination.
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Section 7. Covenant Not to Compete.
(a) Covenant. Except as provided herein, for the period during
which the Employee is employed by the Corporation, and for a three-year period
after the Employee's employment with the Corporation has been terminated by
either party, the Employee will not directly or indirectly:
(i) enter into or attempt to enter into the "Restricted Business"
(as defined below) in any area in which the Corporation engages in the
Restricted Business;
(ii) induce or attempt to persuade any former, current or future
employee, agent, manager, consultant, director, or other participant
in the Corporation's business to terminate such employment or other
relationship in order to enter into any relationship with the
Employee, any business organization in which the Employee is a
participant in any capacity whatsoever, or any other business
organization in competition with the Corporation's business; or
(iii) use contracts, proprietary information, trade secrets,
confidential information, customer lists, mailing lists, goodwill, or
other intangible property used or useful in connection with the
Corporation's business.
This Section 7 will not apply to the Employee's activities in the
State of Louisiana, which will be governed by that Noncompetition Agreement
dated the date hereof by and between the parties hereto and by the laws of the
State of Louisiana.
(b) Indirect Activity. The term "indirectly," as used in this
Section 7, includes acting as a paid or unpaid director, officer, agent,
representative, employee of, or consultant to any enterprise, or acting as a
proprietor of an enterprise, or holding any direct or indirect participation in
any enterprise as an owner, partner, limited partner, joint venturer,
shareholder, or creditor.
(c) Restricted Business. The term "Restricted Business" means the
the design, manufacture, distribution and marketing of go karts. Nevertheless,
the Employee may own not more than five percent of the outstanding equity
securities of a corporation that is engaged in the Restricted Business if the
equity securities are listed for trading on a national stock exchange or are
registered under the Securities Exchange Act of 1934.
Section 8. Miscellaneous
(a) Severability. It is the desire and intent of the parties that
the provisions of Section 7 shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, to the extent that the covenants
hereunder shall be adjudicated to be invalid or unenforceable in any one such
jurisdiction, Section 7 shall be deemed amended to delete therefrom or reform
the portion thus adjudicated to be invalid or unenforceable, such deletion or
reformation to apply only with respect to the operation of Section 7 in the
particular jurisdiction in which such adjudication is made. Moreover, each
provision of this Agreement is intended to be severable; and in the event
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that any one or more of the provisions contained in this Agreement shall for
any reason be adjudicated to be invalid or unenforceable in any jurisdiction,
the same shall not affect the validity or enforceability of any other
provisions of this Agreement in that jurisdiction, but this Agreement shall be
construed in such jurisdiction as if such invalid or unenforceable provision
had never been contained therein.
(b) Confidentiality. The Employee acknowledges that he will
develop and be exposed to information that is or will be confidential and
proprietary to the Corporation. The information includes customer lists,
marketing plans, pricing data, product plans, software, and other intangible
information. Such information shall be deemed confidential to the extent not
generally known within the trade. The Employee agrees to make use of such
information only in the performance of his duties under this Agreement, to
maintain such information in confidence and to disclose the information only to
persons with a need to know.
(c) Remedies. The Employee acknowledges that monetary damages
would be inadequate to compensate the Corporation for any breach by the
Employee of the covenants set forth in Section 7 above. The Employee agrees
that, in addition to other remedies which may be available, the Corporation
shall be entitled to obtain injunctive relief against the threatened breach of
this Agreement or the continuation of any breach, or both, without the
necessity of proving actual damages.
(d) Waiver. The waiver by the Corporation of the breach of any
provision of this Agreement by the Employee shall not operate or be construed
as a waiver of any subsequent breach by the Employee.
(e) Notices. Any notices permitted or required under this
Agreement shall be deemed given upon the date of personal delivery or
forty-eight (48) hours after deposit in the United States mail, postage fully
prepaid, return receipt requested, addressed to the Corporation at:
Xxxxxxx X. Xxxxxx
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
addressed to the Employee at:
V. Xxxx Xxxxxxxx
00 Xxx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxx 00000
or at any other address as any party may, from time to time, designate by
notice given in compliance with this Section.
(f) Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
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(g) Titles and Captions. All section titles or captions contained
in this Agreement are for convenience only and shall not be deemed part of the
context nor effect the interpretation of this Agreement.
(h) Entire Agreement. This Agreement contains the entire
understanding between and among the parties and supersedes any prior
understandings and agreements among them respecting the subject matter of this
Agreement.
(i) Agreement Binding. This Agreement shall be binding upon the
heirs, executors, administrators, successors and assigns of the parties hereto.
(j) Attorney Fees. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or in
any appeal therefrom, it is agreed that the prevailing party shall be entitled
to reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
(k) Computation of Time. In computing any period of time pursuant
to this Agreement, the day of the act, event or default from which the
designated period of time begins to run shall be included, unless it is a
Saturday, Sunday, or a legal holiday, in which event the period shall begin to
run on the next day which is not a Saturday, Sunday, or legal holiday, in which
event the period shall run until the end of the next day thereafter which is
not a Saturday, Sunday, or legal holiday.
(l) Pronouns and Plurals. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular, or
plural as the identity of the person or persons may require.
(m) Presumption. This Agreement or any section thereof shall not
be construed against any party due to the fact that said Agreement or any
section thereof was drafted by said party.
(n) Further Action. The parties hereto shall execute and deliver
all documents, provide all information and take or forbear from all such action
as may be necessary or appropriate to achieve the purposes of the Agreement.
(o) Parties in Interest. Nothing herein shall be construed to be
to the benefit of any third party, nor is it intended that any provision shall
be for the benefit of any third party.
(p) Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
(q) Separate Counsel. The parties acknowledge that the
Corporation has been represented in this transaction by its own attorneys, that
the Employee has not been represented
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in this transaction by the Corporation's attorneys, and the Employee has been
advised to seek separate legal advice and representation in this matter.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day first above written.
KARTS INTERNATIONAL INCORPORATED
By: /s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
Vice President
By: /s/ V. XXXX XXXXXXXX
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V. Xxxx Xxxxxxxx, individually
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ADDENDUM TO EMPLOYMENT AGREEMENT
BETWEEN KARTS INTERNATIONAL INCORPORATED
AND V. XXXX XXXXXXXX
THIS ADDENDUM TO THE EMPLOYMENT AGREEMENT, dated March 15, 1996,
entered into by and between Karts International Incorporated, a Nevada
corporation (the "Corporation"), and Mr. V. Xxxx Xxxxxxxx (the "Employee") is
made and effective as of March 15, 1996 (the "Effective Date").
WHEREAS, the Corporation and Employee began negotiations for an
agreement reflecting the terms and conditions of the Employee's employment by
the Corporation during December 1995 and early January 1996;
WHEREAS, on January 17, 1996, the Employee and Halter Financial Group,
Inc., as representative of Karts International Incorporated, agreed to a letter
of intent which set forth the basic terms and conditions of Employee's
employment with the Corporation;
WHEREAS, on March 15, 1996, the parties executed an Employment
Agreement;
WHEREAS, immediately after execution of the Employment Agreement, the
parties agreed and determined that Section 5(a)(ii) did not accurately set
forth the previous agreement and understanding between the Employee and
Corporation regarding the subject matter as set forth in said Section; and
WHEREAS, the parties now desire to amend the Employment Agreement, and
in particular, Section 5(a)(ii) of the Employment Agreement to accurately set
forth and reflect the parties' previous understanding and agreements.
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants contained herein and for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
a. The parties hereto agree that Section 5(a)(ii) of the
Employment Agreement should be deleted in its entirety and in
its place and stead the parties have hereto agreed to the
following provisions:
Section 5(a)(ii). The Employee shall receive as additional
consideration for entering into this Agreement with the Corporation
and for accepting employment with the Corporation under the terms and
conditions as herein set forth, a signing bonus in the amount of 10%
of the Employee's base salary of $150,000 (or $15,000) to be paid
concurrent with the execution of this Agreement by the Corporation
with the issuance to Employee of 210,000 shares of common stock of the
Corporation. It is further agreed and understood between the parties
that the 210,000 shares of common stock of the Corporation to be
issued to Employee (the "Escrowed Shares") shall be subject to an
Escrow Agreement by and among the Corporation, the Employee and the
Escrow Agent. Such Escrow Agreement shall provide, in part, as
follows:
ADDENDUM TO EMPLOYMENT AGREEMENT - Page 1
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(a) If the Employee's employment with the
Corporation is terminated for cause or voluntarily by Employee
prior to the completion of the first year of his employment
with the Corporation, the Corporation shall have the right to
buy back all of the Escrowed Shares from the Employee for
$16,800 or $0.08 per share;
(b) If the Employee's employment with the
Corporation is terminated for cause or voluntarily by Employee
prior to the completion of the second year of his employment
with the Corporation, then the Corporation shall have the
right to purchase from the Employee 105,000 of the Escrowed
Shares for $8,400 or $0.08 per share; and
(c) If the Employee's employment with the
Corporation is terminated for cause or voluntarily by Employee
prior to the completion of the third year of his employment
with the Corporation, then the Corporation shall have the
right to purchase from the Employee 52,500 of the Escrowed
Shares for $4,200 or $0.08 per share. In the event that this
Agreement is terminated for any reason other than "for cause"
(as hereinafter defined in this Agreement) or voluntarily by
the Employee for any reason, the provisions relating to the
repurchase right of the Corporation of the Escrowed Shares
shall terminate and any such Escrowed Shares which shall
remain subject to such repurchase right of the Corporation
shall be delivered to the Employee or his legal
representatives.
IN WITNESS WHEREOF, on this 15th day of March, 1996, the parties have
executed this Addendum to the Employment Agreement to be effective as of March
15, 1996.
KARTS INTERNATIONAL INCORPORATED
By: /s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx, Vice President
/s/ V. XXXX XXXXXXXX
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V. XXXX XXXXXXXX, Individually
ADDENDUM TO EMPLOYMENT AGREEMENT - Page 2
