EXHIBIT (d)(7)
EMPLOYMENT AGREEMENT
In consideration of Xxxxxx X. Xxxxxx'x ("Employee") continued employment
with CART, Inc. ("CART"), and, in particular, CART's agreement to continue
Employee's employment through CART's contemplated merger between a subsidiary of
Open Wheel Racing Series LLC ("OWRS") and CART (the "Merger") for a minimum of
six (6) months following the Effective Time of the Merger (as defined in the
Agreement and Plan of Merger dated as of September 10, 2003 among OWRS, Open
Wheel Acquisition Corporation and Championship Auto Racing Teams, Inc., a
Delaware corporation ("CHAMP")), Employee, CART and CHAMP hereby agree as
follows:
1. PRIOR AGREEMENT SUPERSEDED. Effective at the Effective Time of the
Merger, the parties agree that the prior Employment Agreement between Employee
and CHAMP dated March 16, 2001 (the "prior Employment Agreement" attached hereto
as Exhibit A) will be superseded, and provided that the Merger is consummated,
all duties and obligations of the parties under the prior Employment Agreement
will be extinguished and the prior Employment Agreement will be void, and of no
force and effect. This means that Employee and CHAMP agree that all agreements
and obligations under the prior Employment Agreement regarding any past or
future compensation, bonuses, or reimbursements whether upon termination, change
in 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 CHAMP 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
between CHAMP and OWRS is terminated, this Employment Agreement shall be void
and the parties agree that the prior Employment Agreement shall continue 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, 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 signed, or will sign by the date of his execution of
this Agreement, an agreement divesting himself of all stock options that have
already vested as of the closing date of the Merger.
5. TITLE AND DUTIES. CART shall employ Employee as its Chief Financial
Officer, reporting to the Interim CEO, or such other person as the Board of
Directors may designate. As Chief Financial Officer, Employee shall perform his
or her duties faithfully and to the best of Employee's ability, and Employee
shall devote all of his
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business time, energy and skill to the affairs of CART and shall discharge his
responsibilities in a manner commensurate with Employee's position.
6. EMPLOYMENT AT WILL. Employee is an "at will" employee of CART, and
Employee's employment may be terminated at any time by either CART or Employee
for any reason or no reason, by the giving of written notice to the other party,
subject to the terms and conditions of this Employment Agreement.
7. COMPENSATION. Until the Effective Time of the Merger between CART and
OWRS, Employee shall continue to receive his current base salary. Upon the
Effective Time of the Merger, the following shall become effective:
(a) BASE SALARY. For services rendered by Employee pursuant to this
Agreement, Employee shall receive a salary of $200,000, payable in
accordance with CART's normal payroll practices.
(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.
To the extent Employee has already been granted the use of an
automobile at CART's expense, Employee shall be able to continue
such use consistent with any automobile use plan or policy adopted
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, in accordance with CART's then-existing expense
reimbursement and/or travel policies.
8. DEFINITIONS. For purposes of the Agreement, the following terms shall
have the following meanings:
(a) "ACCRUED COMPENSATION" shall mean any accrued Total 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
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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 or her 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 the Employee's dishonesty or fraud, gross negligence in the
performance of his or her duties hereunder, material breach of this Agreement,
intentional engagement in acts seriously detrimental to CART's operations,
conviction of a felony involving moral turpitude, or violations of Employee's
duties as an employee or failure to perform Employee's duties fully and
satisfactorily, provided, however, that Employee must first receive written
notice of the performance deficiencies and given at least twenty (20) business
days to correct the deficiencies.
(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 for any reason other than as specified in paragraphs (c),
(d), or (e) hereof.
9. CONDITIONS OF SEPARATION.
(a) TERMINATION OTHER THAN FOR CAUSE. Upon Termination Other Than For
Cause, CART shall provide Employee with 60 days' written notice of the
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. CART will pay Employee's base
salary during the 60-day notice period in accordance with the normal payroll
schedule in effect at the time of termination, provided, however, that if the
termination occurs within six (6) months of the Effective Time of the Merger
(the "Post-Merger Period"), CART shall be obligated to pay Employee his base
salary for whatever remains of the Post-Merger Period. However, 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
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benefits under CART's benefit plans, including vacation or sick time, except
that if the termination occurs within the Post-Merger Period, Employee shall be
entitled to receive benefits for the Post-Merger Period. The final date of the
notice period shall be considered Employee's Termination Date, and on the
Termination Date, CART shall pay Employee all Accrued Compensation, if any.
(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
Employee Accrued Compensation, if any, through the date of termination.
10. NO KNOWLEDGE OF MISCONDUCT. By his signature below, Employee
represents and warrants that he is not aware of any claims, assertions or
accusations by third parties or employees that Employee has engaged in any
wrongful conduct, malfeasance, or violations of any laws or regulations,
including, but not limited to, conduct which could give rise to 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 Employee's knowledge
and belief, Employee has not engaged in conduct that could support such claims.
11. 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 Agreement must be
in writing and signed by CART and Employee.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
By: /s/ Xxxxxxxxxxx X. Xxxx
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Title: President
Date: 10/1/03
CART, INC.
By: /s/ Xxxxxxxxxxx X. Xxxx
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Title: President
Date: 10/1/03
/s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX
Date: 10-1-3
