CHAMPIONSHIP AUTO RACING TEAMS, INC.
EMPLOYMENT AGREEMENT
XXXXXX X. XXXXXXXX
This Employment Agreement (the "Agreement") is entered into as of December
4, 2000 by and between Championship Auto Racing Teams, Inc., a Delaware
corporation ("Company") and Xxxxxx X. Xxxxxxxx ("Employee").
In consideration of the promises below, the parties agree as follows.
1. TITLE. Employee shall hold the title of President and Chief Executive
Officer.
2. DUTIES.
2.1. GENERAL DUTIES. Employee shall undertake and render services as may
from time to time be assigned to him by the Board of Directors or their
designees. The duties shall be reasonably consistent with Employee's experiences
and shall include control and responsibility for the day to day operation and
activities of the Company, subject to the Bylaws of the Company and the Bylaws
of CART, Inc.
2.2. OUTSIDE ACTIVITIES. Employee shall devote his full time to the
performance of his duties, and agrees that his first duty of loyalty is to
Company. Except with the express written consent of the Board of Directors,
Employee 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. Employee is specifically permitted to be a member of the Board
of Directors of California Community Bank Corp. and Alpine Christian Conference.
3. TERM. This Agreement shall commence on December 4, 2000 and continue in
force for four years until December 31, 2004, (the "Employment Period") unless
sooner terminated by either party pursuant to Section 5 or Section 6 of this
Agreement and except as provided in Section 6.3 of this Agreement.
4. COMPENSATION. As payment in full for services rendered to Company,
Employee shall be entitled to receive from Company, and Company shall pay to
Employee, salary and benefits as follows.
4.1 SALARY. Company shall initially pay to Employee base salary at a
rate of $550,000 per annum, for 2001, $600,000 for 2002, $650,000 for 2003
and $700,000 for 2004, ("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.
4.2 BONUS. Annually, commencing for the year 2001, the Company shall
pay Employee a Bonus, which shall be based on established objective goals
to be agreed upon by the Company's Compensation Committee and the Employee.
The goals shall be quantitative, definite, qualifiable and reasonably
attainable and targeted at 50% of Base Salary. In no even shall Employee's
bonus for 2001 be less than $200,000. Any bonus earned and payable to the
Employee, pursuant to this section shall be paid to the Employee not later
than January 31 of each year of this agreement commencing 2002. Payment
shall be accompanied by a statement reflecting the bonus formula
computation. Employee shall have the right to review the bonus computation
so as to determine if the amount of the bonus is correct.
4.3 INITIAL BONUS. Employee shall be paid an initial bonus of
$100,000.
4.4 FRINGE BENEFITS. Employee shall be entitled to annual vacation of
four (4) 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,
$1,000,000 group term life insurance policy, accident, plan program or
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. Each year, the Company shall also
reimburse Employee for (a) one-half of his cost of life insurance policy
number 000859000 for $2,000,000; (b) one-half of the cost of his disability
policy number 5058860; and (c) $5,000 towards the cost of life insurance
policy number 1500088. The Company shall also acquire in the Company's
name, a membership interest in a mutually agreed upon country club close to
the Company's main office and pay the initiation fee and monthly dues.
4.5 EXPENSES REIMBURSEMENT. (a) Company shall reimburse Employee 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. Employee shall submit such proofs of expense for which
reimbursement is claimed in writing as the Company may reasonably require.
Company shall also reimburse Employee for all reasonable moving expenses in
an amount not to exceed $25,000; and (b) the Company shall also reimburse
Employee for tax, accounting and legal fees incurred by Employee related
solely to his duties for the Company in an annual amount not to exceed
$10,000.
4.6 SICKNESS AND DISABILITY. Except as set forth in Section 5 and
Section 6, Employee shall receive full compensation for any period of
illness or incapacity during the term of this Agreement.
4.7 HOLIDAYS. Employee 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 Employee'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.
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5.1. RIGHT TO TERMINATE BY COMPANY. Company may terminate Employee's
employment, through its Board of Directors, without cause upon 30 days' written
Notice of Termination (as defined in Section 7 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) Employee's gross dereliction of his duties; (ii) theft or
misappropriation of any property of Company 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 60 days' advance written notice by Company to Employee
containing reasonably specific details of the alleged breach failure of Employee
to cure the same within such 60 day period.
5.2. TERMINATION FOR DEATH OR DISABILITY. Employee's employment shall
terminate upon the earliest of the events specified below:
(i) the death of Employee:
(ii) the Date of Termination (as defined in Section 7) specified in a
written Notice of Termination by reason of physical or mental condition of
Employee which shall substantially incapacitate him from performing his
principal duties ("Disability") delivered by the Board of Directors to
Employee at least 30 days prior to the specified Date of Termination, which
shall be any date after the expiration of any 120 consecutive days during
all of which Employee 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 Employee 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 EMPLOYEE. Employee may terminate his employment
for good reason or without good reason upon 60 days' written Notice of
Termination. The term "Good Reason" when referring to termination by Employee
means a material breach by Company of its obligations under this Agreement, or
as provided in Section 6.4, including the payment of money, and only after 60
days' advance written notice of Termination containing reasonably specific
details of the alleged breach and failure to cure the same within such 60 day
period. Termination for any other reason shall be without Good Reason.
5.4. RESULTS OF TERMINATION BY COMPANY.
(i) TERMINATION FOR CAUSE. On the Date of Termination for Cause of
Employee'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 Without Cause of
Employee's employment by Company, Company shall pay the Base Salary then in
effect throughout the Employment Period together with the minimum annual bonus
of $200,000 if not yet paid with respect to the 2001 employment year and Company
shall maintain in full force and effect, for the continued benefit of Employee
and Employee's dependents for a period terminating on the earliest of (a) the
expiration of the 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
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Employee was entitled to participate immediately prior to the Date of
Termination, provided that Employee's continued participation is possible under
the general terms and provisions of such plans and Employee continues to pay an
amount equal to his regular contribution for such participation, if any.
5.5. RESULTS OF TERMINATION FOR DEATH OR DISABILITY.
(i) DEATH OF EMPLOYEE. If Employee's employment is terminated due to the
death of Employee, Company shall pay the Base salary due Employee through the
date on which death occurs;
(ii) DISABILITY OF EMPLOYEE. If Employee's employment is terminated due to
the disability of Employee as described in Section 5.2 (ii) of this of this
Agreement, Company shall continue to pay Employee his Base Salary for the 90-day
period following the specified Date of Termination. After this 90 period,
Company agrees to pay to Employee during each month for the next six months an
amount equal to the difference between Employee's monthly Base Salary and the
amount which Employee receives or is entitled to receive from any long term
disability insurance coverage provided for Employee by Company. If Employee's
disability occurs in the course of his duties hereunder due to accident or
injury, Employee shall receive his Base Salary and fringe benefits throughout
the remaining Employment Period.
5.6. RESULTS OF TERMINATION BY EMPLOYEE.
(i) TERMINATION WITHOUT GOOD REASON. Upon Employee's termination without
Good Reason of his employment, Company shall pay the Base Salary due Employee
through the Date of Termination.
(ii) TERMINATION FOR GOOD REASON. Upon Employee's termination of his
employment for Good Reason, Company shall make the same payments to Employee as
Company would be obligated to make under 5.4 (ii) of this Agreement if
Employee's employment was terminated without Cause by Company.
5.7. OTHER COMPANY POLICIES. Upon termination of Employee's employment for
any reason, Employee 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 24
month period following termination of Employee's employment without Cause by
Company pursuant to Section 5.1 of this Agreement or termination by Employee for
Good Reason pursuant to Section 5.3 of this Agreement, Employee breaches any of
his obligations under Sections 8, 9, 10, 11 and 12 of this Agreement, then
Company's obligation to make payments under Sections 5.4 (ii) or 5.6 (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.
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(i) No benefits shall be payable to Employee pursuant to this Section 6
unless there shall have 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.
(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 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 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 Employee, or a group of Persons which
includes Employee, 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:
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(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 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 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, Employee agrees that he will remain in the
employ of Company until the earliest of (a) a date which is 180 days from the
occurrence of such Proposed Change in control of Company, (b) the termination of
Employee's employment by reason of death or Disability as defined in Section 5.2
of this Agreement, or (c) the date on which Employee first becomes entitled
under this Agreement to receive the benefits provided in Section 6.5 of this
Agreement.
If a Proposed Change in Control occurs prior to the expiration of this
Agreement, Company agrees that it will not terminate Employee'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 Employee's
employment by reason of Death or Disability as defined in Section 5.2 of this
Agreement, or (c) the date on which Employee 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
Employee's employment has not been terminated pursuant to Section 5 of this
Agreement prior to the occurrence of such Change in Control. Notwithstanding
anything in this Section 6.3 to the contrary, the provisions of this Section 6
shall terminate at the end of the month in which Employee attains "normal
retirement age" under the provisions of any tax-qualified retirement plan of
Company or any of its subsidiaries in which Employee is participating.
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6.4. TERMINATION FOLLOWING CHANGE IN CONTROL. If a Change in Control shall
have occurred, Employee 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 Employee's death, (b) by the Company for Cause, (c) because of
Employee's Disability or (d) by Employee other than for Good Reason (as all such
capitalized terms are hereinafter defined.).
(i) DISABILITY. Termination by Company of Employee'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 Employee's
employment for Cause, through its Board of Directors, immediately upon Notice of
Termination. Termination by Company of Employee's employment for Cause shall
have the meaning as defined in Section 5.1 of this Agreement.
(iii) TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may terminate his
employment for Good Reason upon 90 day's written Notice of Termination.
Termination by Employee of his employment for Good Reason shall have the meaning
defined in Section 5.3 of this Agreement and, for the purposes of this Section
6, shall have the following additional meanings:
(a) a change in Employee'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 Employee's death or by Employee for Good
Reason as defined in Section 5.3 of this Agreement:
(b) a reduction by Company in Employee'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
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 Employee to be based anywhere other than where
Employee'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
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obligations which Employee 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 Employee'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 Employee's
employment, through its Board of Directors, without Cause upon 90 days' written
Notice of Termination. Termination by Company of Employee's employment without
Cause shall have the meaning as defined in Section 5.1 of this Agreement.
(v) TERMINATION BY EMPLOYEE WITHOUT GOOD REASON. Employee may terminate his
employment without Good Reason upon 90 days' written Notice of Termination.
Terminating by Employee of Employee's employment without Good Reason shall have
the meaning defined in Section 5.3 of this Agreement.
6.5. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(i) COMPENSATION UPON DISABILITY. During any period following a Change in
Control that Employee 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 Employee'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 EMPLOYEE
FOR GOOD REASON. If, within twenty-four (24) months after a Change in Control
shall have occurred Employee's employment by Company shall be terminated (a) by
Company without cause or (b) by Employee 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), Employee shall be entitled, without regard
to any contrary provisions of any Plan, to the benefits as provided below:
(a) the Company shall pay Employee 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 Employee
(including amounts which previously had been deferred at Employee's
request);
(b) as severance pay and in lieu of any further salary for periods
subsequent to the Date of Termination, Company shall pay to Employee at the
time specified in subsection (vii), a single lump sum severance payment
(the "Severance Payment") in an amount in cash
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equal to three times Employee'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 Employee and Employee's dependents for a period terminating on
the earliest of (x) two 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
Employee was entitled to participate immediately prior to the Date of
Termination, provided that Employee's continued participation is possible
under the general terms and provisions of such plans and Employee continues
to pay an amount equal to his regular contribution for such participation,
if any. If, at the end of two years after the Termination Date Employee has
not previously received or is not then receiving equivalent benefits from a
new employer, Company shall arrange, at its sole cost and expense, to
enable Employee to convert Employee and Employee's dependents' coverage
under such plans to individual policies or programs upon the same terms as
employees of company may apply for such conversions. In the event that
Employee's participation in any such plan is barred, Company at its sole
cost and expense, shall arrange to have issued for the benefit of Employee
and Employee'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 Employee 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 Employee and Employee's dependents equivalent benefits
(on an after tax basis) for a period not to exceed five years following the
end of the two years after the Termination Date. Employee shall not be
required to pay any premiums or other charges in an amount greater than
that which Employee would have paid in order to participate in such plans.
Company shall pay Employee for any vacation time earned but not taken
at the Date of Termination, at an hourly rate equal to Employee'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 Employee all legal fees and expenses incurred by
Employee 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 EMPLOYEE WITHOUT GOOD REASON. If
Employee's employment shall be terminated by Employee without Good Reason
following a Change in Control, Company shall make the payments set forth in
Section 5.6(ii) 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
Employee as the result of employment by another employer after the Date of
Termination, or otherwise. Employee's entitlements under Section 6.5 of
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this Agreement are in addition to, and not in lieu of, any rights, benefits or
entitlements Employee 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 Employee pursuant to this Agreement if the
payment would cause any amount to be paid by Company to Employee 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 Employee 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 Employee payable on the fifth day after demand
therefor 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 Employee to compensation from
Company in the same amount and on the same terms to which Employee would be
entitled hereunder if Employee 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 Employee and Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Employee should die while any amount would still be payable to him
hereunder if Employee had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there be no such designee,
to Employee'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
California 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
Employee
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shall be entitled to seek specific performance of Employee'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 Employee as provided in Section 6.5, 6.6 and 6.7 of this Agreement
shall survive termination of this Agreement.
6.9. TERMINATION OF COMPANY'S OBLIGATION. If at any time within the 24
month period following termination of Employee's employment without Cause by
Company pursuant to Section 6.4(iv) or termination by Employee for Good Reason
pursuant to Section 6.4(iii) of this Agreement, Employee breaches any of his
obligations under Sections 8, 9, 10, 11, and 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
Employee 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 Employee 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 Employee's
employment under the provisions so indicated.
7.2. DATE OF TERMINATION. "Date of Termination" following a termination of
Employee's employment by Company or Employee pursuant to Section 5 or Section 6
of this Agreement shall mean (i) if Employee's employment is to be terminated
for Disability, thirty (30) days after Notice of Termination is delivered by the
Board to Employee provided that such notice shall be given only after the
expiration of any 120 consecutive days during all of which Employee 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 Employee fully resumes
the performance of Employee's duties under this Agreement prior to the Date of
Termination as set forth in the Notice); (ii) if Employee's employment is to be
terminated by company for cause, the date on which a Notice of Termination is
given; and (iii) if Employee's employment is terminated by Employee 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
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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 Employee 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, 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. Employee
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 Employee 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. Employee 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. Employee acknowledges that any
disclosure of Confidential Information will cause irreparable harm to Company.
8.5. COVENANT OF NONDISCLOSURE. Employee 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. Employee 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. Employee 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 Employee 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 Employee.
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8.9. WORK MADE FOR HIRE. Employee 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, Employee 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 Inventions.
9.1. COMPANY OWNERSHIP. Employee 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 which result to any extent from use of Company or any affiliated company's
premises or property, shall be owned exclusively by the Company, the Employee
hereby assigns to Company all his right, title and interest in all such
inventions, and Employee 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 the Employee'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
the Employee for Company.
9.2. EMPLOYEE INVENTIONS. All inventions, if any, of Employee made prior to
Employee'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. Employee agrees to disclose to Company at the time of employment or
thereafter, all inventions being developed by Employee for the purposes of
determining Employee or Company rights to the invention.
10. VENTURES. If Employee, 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 Employee 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
Employee as provided in this Agreement.
11. COVENANT OF GOOD FAITH. Employee 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. Employee 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,
Employee 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
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inventions or Confidential Information, which are in Employee's possession or
under his control, whether or not the materials were prepared by Employee.
13. SUBPOENAS. If Employee is served with any subpoena or other compulsory
judicial or administrative process calling for production of Confidential
Information or if Employee is otherwise required by law or regulation to
disclose Confidential Information, Employee 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. Employee 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 Employee 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 Employee's breach, and to the rights and duties of Company and
Employee, 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.
15. TERMINATION CERTIFICATE. Upon termination of this Agreement, Employee
will give a written statement in the form attached hereto as Exhibit A 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. Employee 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. Employee 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 Employee'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)(E), 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 Michigan exclusive of
choice of law rules.
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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 Employee.
18.4. ASSIGNMENT. Employee acknowledges that the services to be rendered
are unique and personal. This Agreement may not be assigned by Employee.
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 Employee 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 EMPLOYEE AND CONSTITUTES THE ENTIRE
AGREEMENT BETWEEN THE PARTIES, AND 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.
NOTICE TO EMPLOYEE
THIS AGREEMENT MAY REQUIRE TRANSFER TO YOUR EMPLOYER OF CERTAIN INVENTIONS
OR WORKS OF AUTHORSHIP. YOU MAY WISH TO CONSULT YOUR LEGAL COUNSEL FOR ADVICE.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx, Chief Financial Officer
EMPLOYEE
/s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxx
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