1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT made as of May 15, 1997 between NORTH CAROLINA MOTOR SPEEDWAY,
INC., a North Carolina corporation (the "Company"), and XXX. XXXXXX X.
XXXXXX, a resident of Ellerbe, North Carolina ("Employee").
WITNESSETH:
WHEREAS, the parties hereto desire to provide for the continuation of
Employee's employment by the Company upon the consummation of a merger between
the Company and Penske Acquisition, Inc. ("Penske"), a wholly owned subsidiary
of Penske Motorsports, Inc. ("PMI") (the "Merger").
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. Employment.
The Company agrees to employ the Employee and the Employee agrees to enter
into the employ of the Company on the terms and conditions hereafter set forth.
2. Capacity and Duties.
The Employee shall be employed as Chairman of the Board of Directors of the
Company. The Employee shall perform her responsibilities in the same manner as
she has acted prior to the acquisition by Penske and she shall devote such
time, skill, energies, business judgment, knowledge and best efforts to the
business of the Company and the performance of such executive, administrative
and operational duties on behalf of the Company and its affiliates, appropriate
to the offices she holds or shall hold hereunder, as the Board of Directors of
the Company may request and she shall agree. The requirement that the Employee
devote her time to the business of the Company shall not preclude her from
undertaking other business and personal activities that do not, singly or in
the aggregate, materially impair her ability to fulfill her responsibilities
under this Agreement.
3. Term.
The term of the Employee's employment hereunder shall be for the a period
of five (5) years, commencing on the date of the
2
consummation of the Merger, and ending on the date prior to the fifth
anniversary of that date (the "Initial Expiration Date"), unless such term is
terminated earlier by or pursuant to Section 9. The term of employment shall
be automatically renewed for successive one-year terms, unless written notice
of termination is given by either party not less than ninety (90) days prior to
the end of the initial five-year, or the then current one-year, term (the
"Extended Expiration Date").
4. Compensation.
(a) Salary. The Company shall pay or cause to be paid to the Employee a
salary of ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($125,000) per year, payable
in equal semi-monthly installments (the "Base Salary"). The Base Salary shall
be reviewed prior to each anniversary date of this Agreement by the Board of
Directors of the Company and the Base Salary shall be increased in the
discretion of the Board.
(b) Bonuses. Employee shall receive an annual bonus payable at the
discretion of the Board of Directors, or any committee thereof, based upon the
Employee's performance and individual contributions to the Company.
5. Expenses. The Company shall reimburse Employee, to the extent not otherwise
paid for by the Company or one of its affiliates, for reasonable and necessary
out-of-pocket expenses, including, without limitation, entertainment, travel
and similar expenses incurred by her in performing the duties set forth in
Section 2 hereof. Employee shall present an itemized account of such expenses,
supported by such documentation as is required under the Internal Revenue Code
of 1986, as amended, to support the deductibility of such expenses for federal
income tax purposes.
6. Benefits and Vacations.
(a) Plans. The Employee shall be entitled to participate in any and all
employee benefit plans as may be in effect for executives of the Company to the
extent that she is eligible for participation therein and coverage thereunder.
Such right of participation in any such plan and the degree or amount thereof
shall be subject, however, to generally applicable Company policies and to
action by the Company's Board of Directors or any
2
3
administrative or other committee or to any other administrative or managerial
determination provided in or contemplated by such plan, it being agreed that
this Agreement is not intended to impair the right of any committee or other
group or person concerned with the administration of such plan to exercise in
good faith the full discretion reposed in him or them by such plan.
Notwithstanding the foregoing, the employee benefits provided to Employee shall
be equal to those benefits provided to comparable executive officers of other
subsidiaries of PMI.
(b) Vacation. The Employee shall be entitled to three (3) weeks annual
paid vacation during each year of this Agreement. Employee shall also be
entitled to the same paid holidays, sick and personal time as are available to
all other employees in accordance with the policies of the Company.
3
4
(c) Withholding. The Employee acknowledges that certain payments
provided for herein are subject to withholding and other taxes.
7. [RESERVED]
8. Indemnification.
(a) Notwithstanding the termination of Employee's employment under Section 9
of this Agreement, it is confirmed that, with respect to all periods during
which Employee shall be employed by the Company, (i) the Company shall
indemnify and reimburse expenses to the fullest extent permitted by the
indemnification and expenses to reimbursement provisions of Company's
Certificate of Incorporation and By-Laws in effect as of the date of this
Agreement, provided that such coverage is not prohibited under the provisions
of the applicable General Corporation Law; and (ii) the Company shall use its
best efforts to maintain in effect its Directors' and Officers' Indemnification
Insurance policies (under which Employee shall be deemed an "insured" to the
fullest extent provided in them) and to purchase substitute policies in form
and content substantially similar to those presently in force during all
periods open under the applicable statutes of limitations. The Company shall
promptly provide Employee with copies of all such policies and any notice of
cancellation of them.
(b) In addition to the foregoing, as authorized by the Company's Certificate
of Incorporation and By-Laws in effect as of the date of this Agreement, the
Company further agrees, to the extent not prohibited by the applicable General
Corporation Law, to defend Employee by legal counsel reasonably acceptable to
Employee in any threatened or pending action, suit or proceeding as to which
Employee may be entitled to indemnification under this Agreement. In this
regard, payment in advance by the Company of all expenses incurred or to be
incurred by Employee in defending or investigating each and every such action,
suit or proceeding which has been instituted and is pending on the date of this
Agreement or which shall subsequently be instituted is authorized by the Board
of Directors of the Company, and Employee agrees to repay such advanced amounts
in the event it is ultimately determined that Employee is not entitled to be
indemnified by the Company as authorized under its Certificate of Incorporation
and By-Laws, in
4
5
accordance with the provisions of the Company's By-Laws and the applicable
General Corporation Law. As regards any decision to provide interim
indemnification as to any action, suit or proceeding not already referred to in
this subparagraph, Employee will be given the same consideration in the
reaching of any such decision as shall be given to any person who is a director
or officer of the Company at the time of such decision.
5
6
(c) The Company further agree to notify Employee of all threatened or pending
actions, suits, or other proceedings by or against the Company to which
Employee is named a party, and to be filed in connection with it, and shall
otherwise keep Employee reasonably informed of the status of such actions and
any offers of settlement.
9. Termination.
Notwithstanding Section 3, the term of the Employee's employment hereunder
shall terminate on the earliest of the (i) termination date provided for under
Section 3 or (ii) under any of the paragraphs of this Section 9.
(a) Death. In the event of the Employee's death, the Employee's
employment shall terminate automatically, effective as of the date of death,
and the Company shall pay to her estate the salary that otherwise would have
been paid to the Employee pursuant to Section 4(a) up to the end of the fiscal
quarter in which she died.
(b) Disability. If the Employee, due to physical or mental illness,
shall be disabled to perform the essential functions of her employment
hereunder, with or without reasonable accommodation, for a period of one
hundred eighty (180) days (a "disability"), then either the Employee or the
Company may by notice terminate the Employee's employment under this Agreement
effective as of a date 30 days after the date such notice is given. The
Employee's compensation prior to such termination, shall be reduced by the
amount of any disability or similar benefits to which she is entitled,
notwithstanding anything contained elsewhere in this Agreement to the contrary.
The Company shall pay Employee for the remaining term of this Agreement from
the date of termination to the Initial Expiration Date or the Extended
Expiration Date, as applicable, disability compensation equal to sixty percent
(60%) of Employee's salary as of the date of termination. At the Company's
option, the Company may procure an insurance policy for the benefit of Employee
to provide this disability compensation. The obligation to pay disability
compensation shall terminate upon the death of Employee.
(c) By Company for Cause. The Employee's employment may be terminated
effective immediately by the Company for "cause" by
6
7
notice of termination to the Employee. "Cause" for such termination shall be
limited to convictions of a felony, malfeasance in office or a material breach
by the Employee of the covenants contained in this Agreement or of Employee's
gross negligence or wilful misconduct in the performance of her duties, which
breach continues for 30 days following receipt of written notice given by the
Company's Board of Directors specifying the breach and requesting that the
Employee correct the same.
(d) Compensation Upon Termination By the Company. Except as provided in
Sections 9(a) and 9(b), Employee shall receive compensation upon termination as
follows: in the event that the Company terminates Employee's Employment under
this Agreement other than for cause as provided in Section 9(c), Employee shall
be entitled to receive the full amount of all compensation set forth in Section
4 and all fringe benefits in Section 6 for the remaining term of this
Agreement. In the event that Employee is terminated for cause, Employee shall
be entitled to receive compensation and benefits through the date of
termination.
(e) Termination by Employee. If Employee shall voluntarily resign from
employment by the Company prior to the expiration of this Agreement, any
compensation payable to Employee under Section 4 shall be prorated through the
date of termination.
10. Representation by the Employee.
The Employee hereby represents and warrants to the Company that the
execution of this Agreement and the performance of her duties and obligations
hereunder will not breach or be in conflict with any other agreement to which
she is a party or by which she is bound and that she is not now subject to any
covenant against competition or similar covenant that would affect the
performance of her duties hereunder.
11. Confidentiality; Non-Compete.
(a) Except as required in Employee's duties to the Company, or as
authorized in writing by the Board, Employee will not at any time, either
during or after employment with the Company, disclose or use, directly or
indirectly, any Confidential Information of which Employee gains knowledge
during employment by the Company under this Agreement, and Employee will retain
all such information
7
8
in trust in a fiduciary capacity for the sole use and benefit of the Company.
Confidential Information includes information that is not available through
sources outside the Company, PMI or their subsidiaries or affiliates and that
is treated as confidential by the Company, PMI or their subsidiaries or
affiliates, whether now owned or hereafter obtained, concerning plans,
marketing and sales methods, materials, processes, procedures, devices utilized
by the Company, PMI or either of their respective subsidiaries or affiliates,
business forms, prices, plans for development of new products or services and
expansion into new areas or markets, internal operations, and any variations,
trade secrets, proprietary information and other confidential information of
any type together with all written, graphic, and other materials relating to
all or any part of the same. Employee acknowledges that the Confidential
Information is valuable, special and unique to the respective businesses and on
which such businesses depend, and is proprietary to the Company, PMI, and their
respective subsidiaries and other affiliates. Employee further acknowledges
that the Company wishes to protect such Confidential Information by keeping it
secret and confidential for the sole use and benefit of the Company and PMI.
Employee further agrees to take all steps necessary, and all steps reasonably
requested by the Board, to insure that all such Confidential Information is
kept secret and confidential for the sole use and benefit of the Company, PMI,
and their respective subsidiaries and other affiliates.
(b) Upon termination of this Agreement or at any other time the Board may in
writing so request, Employee will promptly deliver to the Company all materials
concerning any Confidential Information, copies thereof, and any other
materials of the Company, PMI, or their respective subsidiaries and other
affiliates which are in Employee's possession or under Employee's control, and
Employee will not make any copy, portion, or extract thereof.
(c) During (i) the period of Employee's employment with the Company, or (ii)
the period ending on the Initial Expiration Date or the Extended Expiration
Date if the term of employment has been extended while Employee was employed by
the Company, whichever is the last to end, Employee will not, directly or
indirectly, affiliate or seek to affiliate (including as an employee, director,
shareholder, joint venturer, partner, consultant or agent) with, or receive any
compensation or remuneration from, any person or entity, whose business is the
operation of events sanctioned by the
8
9
National Association for Stock Car Racing, Inc. ("NASCAR") or by an entity in
direct competition with NASCAR for stock car racing (the "Business") except
that Employee may own securities issued by PMI, Penske or affiliates or less
than one percent of the outstanding publicly held securities of any issuer
engaged in the Business.
(d) Employee acknowledges and agrees that the covenants and undertakings
contained in this Section 11 relate to matters which are of a special, unique
and extraordinary character and that a violation of any of the terms hereof
will cause irreparable injury to the Company, and PMI, the amount of which will
be impossible to estimate or determine and which cannot be adequately
compensated. Therefore, Employee agrees that the Company, and PMI, shall be
entitled, as a matter of course, to an injunction, restraining order, or other
equitable relief from any court of competent jurisdiction, restraining any
violation or threatened violation of any of such terms by Employee and such
other persons as the court shall order.
(e) Employee agrees that the covenants and undertakings in this Section
11 shall survive the termination of this Agreement.
(f) Employee agrees to reimburse the Company and PMI for any and all
costs incurred by either in securing their rights and remedies pursuant to this
Section 11, including, without limitation, reasonable attorneys' fees actually
incurred.
(g) Rights and remedies provided for in this Section 11 are cumulative
and shall be in addition to right and remedies otherwise available to the
Company and PMI under other agreement or applicable law.
12. No Assignment.
This Agreement is personal and shall in no way be subject
to assignment, except by the Company incident to the sale of all or
substantially all of its business (whether by asset sale, stock sale or
merger). Any attempt by one party to assign this Agreement in any other
circumstances without the prior written consent of the other party shall be
null and void.
13. Enforceability.
9
10
If any portion or provision of this Agreement shall to any extent be
declared illegal or unenforceable by a duly authorized court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
14. Notices.
All notices and other communications required or permitted to be given
hereunder shall be given by delivering the same in hand or by mailing the same
by certified or registered mail, return receipt requested, postage prepaid, as
follows:
if to the Company, to:
North Carolina Motor Speedway, Inc.
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
if to the Employee, to:
Xxx. Xxxxxx X. XxXxxx
X.X. Xxx 00
Xxxxxxx, XX 00000
(or to such other address as either party shall have furnished to the other by
like notice).
A notice shall be effective as of the date of such delivery or mailing, as the
case may be.
10
11
15. Entire Agreement.
This Agreement constitutes the only agreement and understanding between
Company and the Employee in relation to the subject of the Employee's
employment by Company; and there are no promises, representations, conditions,
provisions or terms related thereto other than those set forth herein. This
Agreement supersedes all previous understandings, agreements and
representations, written or oral, between Company and the Employee regarding
the Employee's employment by Company.
16. Governing Law.
This contract shall be construed under and be governed in all respects by
the internal laws, and not the laws pertaining to choice or conflicts of laws,
of the State of North Carolina.
17. Waiver; Amendment.
No waiver in any instance by either party of any provision of this
Agreement shall be deemed a waiver by such party of such provision in any other
instance or a waiver of any other provision hereunder in any instance. This
Agreement cannot be amended, supplemented or otherwise modified except in a
writing signed by Company, and by the Employee (so long as she shall be
employed by Company).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
North Carolina Motor Speedway, Inc.
By: /s/ Xx XxXxxx Xxxxxx
---------------------------------
Name: Xx XxXxxx Xxxxxx
-------------------------------
Title: President
------------------------------
ATTEST:
By: /s/ Xxxxx XxXxxx Xxxxxxxxx
---------------------------
Xxxxx XxXxxx Xxxxxxxxx, Secretary
----------------------
[CORPORATE SEAL]
11
12
/s/ Xxxxxx X. XxXxxx (SEAL)
--------------------
Xxxxxx X. XxXxxx
12
13
As an inducement for Xxx. Xxxxxx X. XxXxxx to enter into this employment
agreement, Penske Acquisition, Inc., Penske Motorsports, Inc. and PSH Corp. do
hereby affirm and adopt the obligations set forth in the foregoing Agreement,
by their duly authorized representatives.
Dated: August 5, 1997 Penske Acquisition, Inc.
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------
Xxxxxx X. Xxxxxxxxx,
Vice President
Dated: August 5, 1997 Penske Motorsports, Inc.
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------
Xxxxxx X. Xxxxxxxxx,
Vice Chairman
Dated: August 5, 1997 PSH Corp.
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------
Xxxxxx X. Xxxxxxxxx,
Vice President
13
