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Exhibit 10.13
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered this 21st day of June,
1997, by and between CART Licensed Products, L.P. or such other entity presently
being organized by Championship Auto Racing Teams, Inc., (CART) as the joint
venture described below ("Employer") and Xxxxxx Xxxxxxxxx ("Xxxxxxxxx").
WHEREAS, Xxxxxxxxx is currently a party to that certain Consulting
Agreement dated November 6, 1995 by and between CART and Xxxxxxxxx (hereinafter
referred to as "November 6, 1995 Consulting Agreement"), wherein Xxxxxxxxx was
appointed CART's exclusive and sole consultant for the purpose of managing
CART's Product Licensing Program.
WHEREAS, CART and Hollander have agreed to participate in a joint
venture to operate and service CART's Product Licensing Program. It is
contemplated that said joint venture will be operated through a Limited
Partnership as "CART Licensed Products, L.P.", or another name to be determined
by CART.
WHEREAS, both Xxxxxxxxx and CART shall have an equity interest in the
joint venture.
WHEREAS, Xxxxxxxxx has substantial expertise in product licensing.
WHEREAS, the Employer desires to retain Hollander as President and
Chief Executive Officer.
WHEREAS, Hollander is willing to serve the Employer in that capacity
upon the terms and conditions set forth herein.
WHEREAS, the parties are desirous of reducing the terms and conditions
of such employment to a written agreement.
NOW THEREFORE, in consideration of the foregoing, the mutual covenants
and promises herein contained and other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I - EMPLOYMENT OF HOLLANDER BY EMPLOYER
A. Employer agrees to employ Xxxxxxxxx and Xxxxxxxxx agrees to be so
employed in the capacity of President and Chief Executive Officer. Employment
shall be for the term of five (5) years beginning October 1, 1996 and
terminating on September 30, 2001, unless earlier terminated as provided herein.
No later than March 31 during the last year of this Agreement, the parties will
commence good faith discussions regarding the renewal of this Agreement on terms
acceptable to both parties.
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B. During the term of his employment, Xxxxxxxxx will commit on a full
time basis all time and energy necessary and consistent with his position as
Chief Executive Officer. Xxxxxxxxx may engage in certain outside consulting
projects subject to the terms and conditions set forth herein.
C. During the term of this Agreement, Xxxxxxxxx will not engage in
licensing management or consulting for any other motorsport series or
motorsports property without written consent of the Managing General Partner of
the Employer.
D. Nothing contained within this Agreement shall be construed to limit
Hollander from engaging in other business ventures, subject to the following
conditions:
i) At all times the Employer's business will be Xxxxxxxxx'x first
business responsibility and priority.
ii) Any use of Employer's telephones or administrative services or
any other non-Employer related expenses will be paid or
reimbursed by Hollander.
iii) Consulting assignments must be communicated to the Chief
Executive Officer of CART, in advance. Xxxxxxxxx will not
engage in any outside consulting services the object to which
the Managing General Partner of the Employer reasonably deems
directly or indirectly competitive with its business.
iv) Xxxxxxxxx will not participate as an owner of a race team in
any category of motor sport without the approval of the
Managing General Partner of the Employer, which shall not
unreasonably be withheld.
v) It is expressly acknowledged that Xxxxxxxxx is currently and
will continue to act as a consultant for product licensing for
the following entities:
1) Salt Lake Olympic Committee;
2) House of Blues Entertainment Company.
ARTICLE II - DUTIES
Xxxxxxxxx shall serve Employer as President and Chief Executive Officer
and in this capacity his duties will be consistent with the general duties of
supervision and management usually vested in the Chief Executive Officer of a
corporation including the general management of the Employer's full range of
business, operational, financial and administrative functions, including the
placement of all staffing requirements, subject to the annual financial plan as
approved by the Chief Executive Officer of CART. Xxxxxxxxx agrees to perform
such functions and any other functions requested by the Employer that are
consistent with Xxxxxxxxx'x position
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of President and Chief Executive Officer. Xxxxxxxxx shall report directly and
solely to the Chief Executive Officer of CART.
ARTICLE III - COMPENSATION AND BENEFITS
A. Employer shall pay Xxxxxxxxx an annual base salary of Two Hundred
Thousand ($200,000.00) Dollars, which amount shall be increased by five (5%)
percent on January 1, 1998 and by five percent on January 1 of each successive
year during the term of this Agreement. Such amount shall be paid in equal
monthly installments.
B. In addition to the annual base salary as outlined in Article III(A)
above, Hollander shall also receive incentive compensation on an annual basis
equal to five (5%) percent of Net Revenues. Net Revenues are defined as gross
revenues collected from all royalties and revenues actually received by
Employer, less commissions paid to third parties.
C. Such additional incentive compensation shall not be less than One
Hundred Thousand ($100,000.00) Dollars on an annualized basis from the effective
date of this Agreement through December 31, 1997.
D. In the event that at least one hundred ten (110%) percent of the Net
Revenues targeted for the particular year is achieved, based on the financial
plan which is to be prepared by Hollander and approved by the Chief Executive
Officer of CART on an annual basis, such additional incentive compensation shall
be six (6%) percent of Net Revenues. In reviewing the annual financial plan, the
Chief Executive Officer of CART will not act unreasonably, and will give due
consideration to the input from Xxxxxxxxx. A good faith effort shall be made to
ensure that the targeted Net Revenues are consistent with the best interests of
the Employer and Hollander. The past sales performance will be used as a
reference point in such determination.
E. Except as provided in Article III(C) above, no additional incentive
compensation shall be due if Employer is not profitable as of year-end, as
determined by the Employer's accountants, in accordance with generally accepted
accounting principals, and any such incentive compensation shall be limited in
amount to the then available net profit in the business. Furthermore, in the
event that unforeseeable special circumstances reduce the net profit so as to
affect the amount of incentive compensation payable to Xxxxxxxxx under this
Agreement, the parties shall review such circumstances and make a good faith
determination as to whether fairness warrants a waiver of this limitation, in
whole or in part.
F. Additional incentive compensation shall be paid within sixty (60)
days following the end of each year of this Agreement and shall be in addition
to the base salary outlined in Article III(A) above.
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X. Xxxxxxxxx shall be entitled to participate in the fringe benefits
generally available to the most senior executives (other than the Chief
Executive Officer) of CART.
H. The Employer shall pay, either directly or by reimbursement, upon
presentation of appropriate vouchers, all travel, business, and entertainment
expenses reasonably incurred in the performance by Xxxxxxxxx of his duties
hereunder. For such purpose, Xxxxxxxxx shall submit to the Employer periodic
reports of such expenses and other disbursements not less often than once in
each calendar month.
I. After the termination of Xxxxxxxxx'x employment, or the expiration
of this Agreement, he shall only be entitled to such compensation (including
additional incentive compensation) and benefits as shall have been earned by him
or shall have accrued to his benefit prior to the termination of his employment,
except as specifically provided in this Agreement. Additional incentive
compensation, calculated on a pro rata basis, based upon revenues actually
received as of the effective date of any termination of Xxxxxxxxx'x employment,
shall be paid to Hollander subject to the limitation contained in Article III(E)
above.
ARTICLE IV - TERMINATION OF EMPLOYMENT
The employment of Hollander under this Agreement may be terminated in
accordance with any of the following:
A. By Xxxxxxxxx'x death, or if in the reasonable opinion of the
Managing General Partner of the Employer, Xxxxxxxxx shall by reason of ill
health or incapacity, physical or mental, be or become unable to perform his
duties hereunder;
B. By either party for reasonable cause; termination shall be deemed
for reasonable cause if the non-terminating party commits any of the following:
i) dishonesty in dealing with the other party,
ii) conviction of a felony inconsistent in the reasonable
judgment of the other party with continued
employment;
iii) material breach of this Agreement, including failure
to perform duties hereunder in a competent and
conscientious manner, or
iv) conduct tending in the reasonable judgment of the
other party to bring the Employer, Xxxxxxxxx, or any
sponsor of the Employer into material disrepute;
C. By mutual written agreement.
D. By Xxxxxxxxx, without cause, upon six (6) months written notice to
the Employer delivered on or after July 1, 1997;
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E. At the election of the Managing General Partner of the Employer,
without cause, upon six (6) months written notice to Xxxxxxxxx, delivered on or
after July 1, 1997 provided, however, that in the event less than six (6) months
notice is given, the Employer shall continue to pay Xxxxxxxxx the annual base
salary provided herein for the duration of the six (6) months notice period.
F. Upon the termination of Xxxxxxxxx'x employment, for any reason, his
limited partnership interest in the Employer and the general partnership
interest of Top Gear, Inc. in the Employer shall be purchased by Employer based
on a formula to be agreed by the parties in a separate writing, and attached
hereto.
ARTICLE V - ASSIGNABILITY
This is a contract for personal services of Xxxxxx Xxxxxxxxx and may
not be assigned by him without the written consent of the Employer. This
Agreement may be assigned by the Employer without the consent of Xxxxxxxxx to
any successor of the Employer by operation of law, provided, however, that any
such assignment shall not relieve Championship Auto Racing Teams, Inc. from its
guaranty of payment and performance of any of Employer's obligations under this
Agreement. The Employer may not, except as provided above, assign this Agreement
without the prior written consent of Xxxxxxxxx. Subject to the foregoing, this
Agreement and the obligations and benefits herein contained shall inure to the
benefit of and be binding upon the successors, assigns and personal
representatives of the parties hereto.
ARTICLE VI - NON-COMPETITION
Xxxxxxxxx agrees that so long as he is in the employ of the Employer
and for a period of twelve (12) months after (i) a notice of termination is
delivered by the Managing General Partner of the Employer pursuant to Article IV
(B) or pursuant to Article IV (E); (ii) the end of the notice period where
notice is delivered by Hollander pursuant to Article IV (D); or (iii) the
effective date of a termination of employment pursuant to Article IV (C), as the
case may be, he will not directly or indirectly participate as an owner,
stockholder, manager, agent, consultant, director or employee of a United States
domiciled professional motor racing sanctioning body, league or series, or any
affiliated organization which provides trademark licensing services for such
sanctioning body, league or series, provided, however, that ownership of one
(1%) percent or less of the outstanding shares of a publicly traded corporation
shall not constitute a violation of this provision. Nor shall Xxxxxxxxx attempt
to induce any employee of the Employer to render services for any other
employer.
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ARTICLE VII - DISCLOSURE OF CONFIDENTIAL INFORMATION
Xxxxxxxxx acknowledges that all manuals, systems, procedures, rules and
regulations, business methods and any other communications and documents, trade
names, drawings, engineering or other data, photographs, samples, literature and
all sales aids of any kind furnished by the Employer or by CART, or otherwise
obtained by him from CART, which are not in the public domain, are confidential
information and shall not be used in any manner without the prior written
consent of CART. Upon the termination or expiration of this Agreement, as the
case may be, all aforementioned and described items, that have come into the
possession of Hollander, shall be returned to the Employer. The restrictions
contained in this paragraph shall continue in effect until such time as such
confidential information shall cease to be confidential and shall become part of
the public domain. The duties and obligations contained in this and the
preceding paragraph shall survive the termination of this Agreement.
ARTICLE VIII - GOVERNING LAW
The validity, interpretation and performance of this Agreement shall be
governed and construed by the laws of the State of Michigan.
ARTICLE IX - SEVERABILITY
The provisions of this Agreement are severable and, in the event that
any court of competent jurisdiction shall determine that the covenants herein
contained are invalid as to any part of the period or any part of the territory
covered hereby, such covenant shall nevertheless be enforceable as to the
balance of such period or territory.
ARTICLE X - MODIFICATION
This Agreement contains the entire agreement of the parties hereto with
respect to its subject matter, and no representations, inducements, promises, or
agreements, oral or otherwise, not embodied herein shall be of any force or
effect. This Agreement may be modified only upon the written consent of the
parties hereto.
ARTICLE XI - NOTICES
All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
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To the Employer: To the Xxxxxxxxx:
Mr. Xxxxxx Xxxxx, Chief Executive Officer Mr. Xxxxxx Xxxxxxxxx
Championship Auto Racing Teams, Inc. 000 Xxxxxxxxxxx Xxxxx
000 X. Xxx Xxxxxx Xxxx, Xxxxx 000 Xxxxxxx, Xxxxxxx 00000
Xxxx, Xxxxxxxx 00000
With a Copy to: With a Copy to:
Xxxxxxx X. Xxxxx, Esq. Xxxxxxx X. Xxxxxxxx, Esq.
0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx X Moses & Singer, LLP
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
ARTICLE XII - INDEMNIFICATION
Employer shall, and hereby does, indemnify and hold Xxxxxxxxx harmless
against any and all claims, liabilities, demands, causes of action, judgments,
settlements and expenses, including, without limitation, reasonable costs of
investigations and legal counsel fees which may be imposed on Hollander due to,
arising from, connected with or in any way relating to Hollander as long as such
claim, etc., arises either directly or indirectly from any act or omission of
Hollander occurring in the scope of his employment. It shall be irrebuttable
presumption that Xxxxxxxxx is operating within the scope of his employment if
the action or omission taken may lead to some direct or indirect benefit to the
Employer or CART no matter how remote said benefit may be. The indemnification
contained herein shall remain in full force and effect and survive the
expiration and/or Termination of this Agreement.
ARTICLE XIII - SURVIVAL OF RIGHTS
A. All monthly and Incentive Compensation which has accrued and has not
yet been paid to Hollander pursuant to the November 6, 1995 Consulting Agreement
and any extensions thereof and the unpaid base salary under this Agreement,
through February 3, 1997, shall be liquidated in the amount of Forty Five
Thousand One Hundred Ninety Two Dollars ($45,192.00) and paid to Xxxxxxxxx
within thirty (30) days of this Agreement.
B. The November 6, 1995 Consulting Agreement shall terminate as of
December 31, 1996 and shall be of no further force or effect, except that the
Indemnification provision contained in Article VII of the November 6, 1995
Consulting Agreement shall continue in full force and effect and shall survive
and continue in full force and effect after the Termination or expiration of
this Agreement.
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ARTICLE XIV - HEADINGS
Titles or captions of articles, sections or paragraphs contained in
this Agreement are intended for reference convenience only, and shall not
define, limit, extend or describe the scope of this Agreement or the meaning of
any provision hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by its duly authorized officers and the parties hereto as
hereunto set their hands and seals all as of this day and year first above
written.
CART LICENSED PRODUCTS, L.P.
Witness Xxxxxx Xxxxx, Chairman
CART Properties, Inc.
General Partner
Witness Xxxxxx Xxxxxxxxx, Individually
GUARANTEE OF PAYMENT AND PERFORMANCE
For the sum of ten ($10.00) dollars and other good and valuable
consideration, the sufficiency and receipt of which is hereby acknowledged,
Championship Auto Racing Teams, Inc. ("CART") guarantees the payment and
performance of all of the obligations of the Employer under this Agreement.
CHAMPIONSHIP AUTO RACING
TEAMS, INC.
Witness Xxxxxx Xxxxx, President and
Chief Executive Officer
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