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Exhibit 10.3
CHAMPIONSHIP AUTO RACING TEAMS, INC.
EMPLOYMENT AGREEMENT
XXXXXX X. XXXXX
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This Employment Agreement (the "Agreement") is entered into as of
December __, 1997 by Championship Auto Racing Teams, Inc., a Delaware
corporation ("Company") and Xxxxxx X. Xxxxx ("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.
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.
3. TERM. This Agreement shall commence on January 1, 1998 and continue
in force for three years until December 31, 2000, (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 $500,000 per annum ("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. The Base Salary shall be increased to $550,000 for the calendar year 1999
and to $600,000 for the calendar year 2000.
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4.2. BONUS. After each anniversary of January 1, 1998, 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. Notwithstanding information contained herein to the
contrary, in the event Employee shall become totally and permanently disabled
during the term of this agreement, a bonus of forty percent (40%) of Employee's
Base Salary shall be due and payable, without regard to the bonus formula. 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.
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. FRINGE BENEFITS. Employee shall be entitled to annual
vacation 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, 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, and not less than Employee received at the effective date of this
Agreement.
4.4. EXPENSES REIMBURSEMENT. Company shall reimburse Employee
for expenses necessarily and reasonably incurred by him in travel which have
been authorized in advance by the Chief Executive Officer or his designee.
Employee shall submit such proofs of expense for which reimbursement is claimed
in writing as Company may reasonably require.
4.5. 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.
4.6. 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.
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 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 30 days'
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advance written notice by Company to Employee containing reasonably specific
details of the alleged breach failure to cure the same within such 30 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 o 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 30 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 30 days' advance written notice of Termination containing reasonably
specific details of the alleged breach and failure to cure the same within such
30 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 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 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 the Employment Period Employee has
not previously received or is not then receiving equivalent benefits from 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
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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) to those which Employee and
Employee's dependents equivalent benefits (on an after-tax basis); PROVIDED THAT
Company shall be responsible for the payment of such benefits (on an after tax
basis) for a period not to exceed two years following the end of the one year
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.
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 180-day period following the specified Date of Termination. After this
180-day period, Company shall have the right to terminate the Employee's
employment without prejudice to the right of the Employee to receive long term
disability insurance benefits.
The Employer shall, at its expense, provide Employee with a
long term disability policy. Such insurance shall, upon the occurrence of a
qualifying disability and completion and satisfaction of any and all other
policy terms and conditions, provide for payment to the Employee of an amount
not less than is provided in the Company's policy(s) on Employee as of the date
of this Agreement, commencing six (6) months after the Employee becomes disabled
and continuing for the duration of such disability or until age 65, whichever is
shorter. In addition, the Employer shall secure an excess policy or the Company
will pay the Employee such that his Base Salary and a 40% bonus shall be paid to
Employee through December 31, 2000.
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
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Company regarding employment termination established by the Board of Directors
from time to time.
6. 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 (i) of this
Agreement shall cease as of the date such breach occurs.
7. CHANGE IN CONTROL
7.1. CHANGE IN CONTROL AND PROPOSED CHANGE IN CONTROL DEFINED.
(i) No benefits shall be payable to Employee pursuant to the
this Section 6 unless there shall have been a Change in Control of the Company
as set for the below. For purposes of Company of a nature that 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
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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:
(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.
7.2. 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 in 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.
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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.
7.3 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.
7.4. 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
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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 4.3 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 hi ) 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 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.
7.5. 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.
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(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 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
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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. Employer's entitlements under Section 6.5 of
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
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day after demand therefor by Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
7.6 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.
7.7 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 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.
7.8 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.
7.9 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.
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8. DEFINITIONS. For purposes of Section 5 and Section 6 of this
Agreement, Notice of Termination and Date of Termination shall have the
following meanings:
8.1 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.
8.2 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 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.
9. CONFIDENTIALITY.
9.1 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,
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formula, programs, documentation, processes, know-how, customer lists, marketing
plans, and financial and technical information.
9.2 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.
9.3 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.
9.4 ACKNOWLEDGMENT OF IRREPARABLE HARM. Employee acknowledges
that any disclosure of Confidential Information will cause irreparable harm to
Company.
9.5 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.
9.6 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.
9.7 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.
9.8 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.
9.9 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.
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10. COMPANY OWNERSHIP OF INVENTIONS.
10.1. 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 a 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.
10.2 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.
11. 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.
12. 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.
13. 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
inventions or Confidential Information, which are in Employee's possession or
under his control, whether or not the materials were prepared by Employee.
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14. 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.
15. 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.
16. 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.
17. 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.
18. 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.
19. GENERAL PROVISIONS.
19.1 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.
19.2 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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19.3 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.
19.4 ASSIGNMENT. Employee acknowledges that the services to be
rendered are unique and personal. This Agreement may not be assigned by
Employee.
19.5 SUCCESSORS OF COMPANY. This Agreement shall inure to the
benefit of and shall be binding upon Company, its successors, or assigns.
19.6 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.
19.7 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/ Xxxxx X. Xxxxxxxxxxx
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Xxxxx X. Xxxxxxxxxxx, Vice President
EMPLOYEE
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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