EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this ____ day of ______________, 199__, by and
between Xxxxx X. Xxx, a resident of Annapolis, Maryland (the "Executive"), and
Precision Tune Auto Care, Inc., a Virginia corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Executive desires to provide his services to the Company
and the Company desires to employ the Executive upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
promises, covenants and agreements contained herein, and intending to be legally
bound, the parties hereby agree as follows:
1. Employment and Term.
The Company will employ the Executive, and the Executive hereby accepts
employment with the Company, for an initial term commencing on August 1, 1997
and continuing for a period of three (3) years until and including June 30, 2000
(the "Initial Term"), unless such employment is earlier terminated as provided
herein. After expiration of the Initial Term, Executive's employment under this
Agreement shall continue until terminated, as provided herein.
2. Duties.
The Executive shall serve in the capacity of Senior Vice President,
Retail Operations. During the term of his employment hereunder, the Executive
shall devote his full business time and attention to the performance of his
duties for the Company.
3. Compensation.
(a) Base Salary. The Company shall pay the Executive, and the
Executive shall accept, as full compensation for all services rendered
hereunder, a basic salary (the "Base Salary") and the other compensation and
benefits provided hereunder. The Executive's Base Salary effective the date his
employment commences with the Company shall be at an annual rate of One Hundred
Twenty Thousand Dollars ($120,000), payable in approximately equal installments
at such intervals as are consistent with the Company's pay periods for salaried
executive employees. The Executive's base salary will be reviewed annually on or
about the anniversary date of employment.
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(b) Performance Bonus. The Executive is entitled to receive a
Performance Bonus as designed consistent with the Company's performance bonus
plan(s) for all Senior Vice Presidents in the Company, the specifics of which
shall be determined at a later occasion, and which shall be approved by the
Board of Directors.
(c) Benefits.
(i) The Executive shall be eligible to participate
in retirement, group insurance, medical, dental, vacation and any other plans or
programs of substantially similar character as are made generally available to
executive employees of the Company which do not duplicate the benefits otherwise
specifically provided in this Agreement. If these programs are deleted after
implementation, the Executive will be eligible to receive or participate in the
programs offered to all of the Company's employees. All such benefits are to be
provided by the Company, subject to the terms of any welfare or pension plan
sponsored by the Company.
(ii) The Executive shall be eligible to receive an
allotment of up to Fifteen Thousand Dollars ($15,000) toward (a) relocation of
his residence to the Leesburg, Virginia area, or (b) temporary lodging expenses
incurred prior to the relocation, if either occurs on or before December 31,
1998.
(iii) The Executive shall be eligible to participate
in the anticipated Company Stock Option Plan as may approved by the Board of
Directors and the Chief Executive Officer. In the event the Stock Option Plan is
approved, ratified, and implemented by the Board of Directors for Company
executives, Executive shall receive an option to purchase Twenty Five Thousand
(25,000) shares with a three-year vesting period, one third of the total number
of options being eligible for exercise on each of the first, second, and third
anniversaries of the date of execution of Executive's Stock Option Plan. The
exercise price for these stock options will be at the offering price at the
commencement of trade on the date of the IPO and the term will be for ten (10)
years. All other parameters surrounding exercise and purchase of the Stock
Options, including but not limited to provisions for options following death of
Executive, are further outlined in the formal Plan Document governing the Stock
Option Plan.
(iv) The Company shall reimburse the Executive for
all expenses incurred by him in the performance of his duties pursuant to this
Agreement.
(iv) Executive shall receive such other benefits
and/or allowances as are permitted to him from time to time by the Company.
(d) Restructuring of Payments. Notwithstanding anything in
this Agreement to the contrary, in the event that, in the opinion of the
Company's auditors, any payments of compensation to be made hereunder would be
treated as "excess parachute payments" within the meaning of section 280G of the
Internal Revenue Code as amended, the Company and the
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Executive shall use their best efforts to restructure any of the payments so as
to avoid the imposition of excise tax upon the Executive and the loss of
deduction for such payments by the Company.
4. Confidentiality.
While employed by the Company under this Agreement and at all times
thereafter, the Executive shall not, without the prior written consent of the
Company, divulge to any third party or use for his own benefit or the benefit of
any third party, or for any purpose other than the exclusive benefit of the
Company, any confidential or proprietary business or technical information
revealed, obtained or developed in the course of his employment with the Company
or his duties performed for the Company or which is otherwise the property of
the Company or any of its subsidiaries or affiliated companies; provided that,
nothing contained herein shall restrict the Executive's use or disclosure of
such information (I) in the proper course of conduct of the Company's business,
(ii) known generally to the public (other than that which he may have disclosed
in breach of this Agreement) or (iii) as required by law or a court having
lawful jurisdiction so long as the Executive gives the Company prior notice of
such required disclosure, unless precluded from doing so by legal authority.
5. Covenant Not to Compete.
(a) The Executive shall not, within any geographical area
while employed by the Company or while performing duties for the Company
hereunder, and within the United States of America for two (2) years thereafter,
directly or indirectly engage or become interested in (as owner, stockholder,
partner, co-venturer, director, officer, employee, agent, consultant or
otherwise) any business that engages in the auto care industry, except that the
Executive may hold as a passive investment not more than five percent (5%) of
the outstanding securities of any class of any publicly-held entity that engages
in the auto care industry.
(b) It is the desire and the intent of the parties that the
provisions of this Section 5 shall be enforceable to the fullest extent
permissible under applicable law and public policy. Accordingly, if this Section
5 or any portion thereof shall be adjudicated to be invalid or unenforceable,
the length and scope of this Section 5 shall be reduced to the extent necessary
so that this covenant may be enforced to the fullest extent possible under
applicable law.
(c) The Company recognizes that the Executive brings certain
auto care industry background including but not exclusive to a mechanicss
training, racing experience as well as other auto industry experience.
6. Enforcement.
(a) Injunctive Relief. The parties recognize that, in the
event of any breach by
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the Executive of any of the provisions of Section 4 or 5 hereof, the Company
will suffer continuing and irreparable harm for which the Company will not have
an adequate remedy at law. The Executive hereby waives any and all right to
assert any claim or defense that the Company has an adequate remedy at law for
any such breach. In recognition thereof, the Company and the Executive hereby
agree that, in the event of any such breach, the Company will be entitled to
seek injunctive relief or any other appropriate remedy to enforce such
provisions. The parties further agree that this Section 6 shall not in any way
limit remedies at law or in equity otherwise available to the Company. In the
event the Company seeks injunctive relief and is unsuccessful on the merits, or
terminates such action prior to entry of a judgment or other ruling on the
merits, other than a termination of such action due to a settlement agreement
between the Company and the Executive, the Company shall reimburse the Executive
for his reasonable attorneys' fees.
(b) Arbitration. In the event of any dispute between the
parties under or relating to this Agreement or relating to the Executive's
employment by the Company, such dispute shall be submitted to and settled by,
first, mediation, then arbitration in the Commonwealth of Virginia in accordance
with the Employment Dispute Resolution Rules of the American Arbitration
Association then in effect, by an arbitrator or arbitrators selected in
accordance with said rules. The arbitrator(s) shall have the right and authority
to determine how their award or decision as to each issue and matter in dispute
may be implemented or enforced. Any decision or award shall be final and
conclusive on the parties; there shall be no appeal therefrom other than for
claimed bias, fraud, misconduct or mistakes in law by the arbitrator(s);
judgment upon any award or decision may be entered in any court of competent
jurisdiction in the Commonwealth of Virginia or elsewhere; and the parties
hereto consent to the application by any party in interest to any court of
competent jurisdiction for confirmation or enforcement of such award. The party
against whom a decision or award is made shall pay the fees of the American
Arbitration Association. Notwithstanding the foregoing, the Company, at its sole
option, shall be entitled to enforce its rights, as contemplated by Section 6(a)
hereof, to injunctive and other equitable relief in the event of breach of
Section 4 or 5 hereof by arbitration, restricting the Arbitrator's authority to
only contract content and enforceability, not compensation amounts previously
outlined in this contract, pursuant to this Section 6(b) or directly in any
court of competent jurisdiction.
7. Termination of Employment.
(a) Death. The Executive's employment hereunder shall
terminate in the event of the Executive's death. Except for any salary and
benefits accrued, vested and unpaid as of the date of any such termination and
except for any benefits to which the Executive or his heirs or personal
representatives may be entitled under and in accordance with the terms of any
employee benefit plan, policy or program maintained by the Company, the Company
shall be under no further obligation hereunder to the Executive or his heirs or
personal representatives, and the Executive or his heirs and personal
representatives no longer shall be entitled to receive any payments or any other
rights or benefits under this Agreement.
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(b) Disability. The Company may terminate the Executive's
employment hereunder for "Disability," if an independent physician mutually
selected by the Executive or his representative and the Board of Directors or
its designee has determined that the Executive has been substantially unable to
render to the Company services of the character contemplated by Section 2 of
this Agreement, by reason of a physical or mental illness or other condition
continuing for more than one hundred and eighty (180) consecutive days or for
shorter periods aggregating more than two hundred and twenty (220) days in any
period of twelve (12) consecutive months (excluding in each case days on which
the Executive was on vacation). In the event of such Disability, the Executive
shall be entitled to receive any salary and benefits accrued, vested and unpaid
as of the date of any such termination and any benefits to which the Executive
may be entitled under and in accordance with the terms of any employee benefit
plan, policy or program maintained by the Company. The Company shall be under no
further obligation hereunder to the Executive, and the Executive no longer shall
be entitled to receive any other payments, rights of benefits under this
Agreement.
(c) Termination by the Company for Cause. The Company may
terminate the Executive's employment hereunder for "Cause." For purposes of this
Agreement, "Cause" shall mean any of the following:
(i) The Executive's repeated willful misconduct or
gross negligence;
(ii) The Executive's repeated conscious disregard of
his obligations hereunder;
(iii) The Executive's repeated conscious violation of
any provision of the Company's by-laws or of its other stated policies,
standards or regulations;
(iv) A determination that the Executive has
demonstrated a dependence upon any addictive substance except for a licensed
physician's legal, written prescription, including alcohol, controlled
substances, narcotics or barbiturates; provided, however, that if the Board of
Directors of the Company desires to terminate the Executive for any of the
reasons set forth in clauses (i), (ii) or (iii) of this Section 7(c), the
Company within the sixty (60) day period immediately following each alleged
commission of a proscribed act or omission, shall have furnished to the
Executive a written description of the allegedly proscribed act or omission and
a statement advising him that the Company views such conduct as being of the
type that could lead to termination of the Executive for Cause and, provided
further, that if the Board of Directors of the Company desires to terminate the
Executive on the basis of clause (iii) of this Section 7(c), it must be able to
demonstrate that the Executive has been furnished with a copy of the by-law
provision, policy, standard or regulation, the violation of which the Executive
is being accused, at a time prior to the alleged commission of the violation.
In the event that the Company terminates the Executive's employment for
Cause, the
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Executive shall be entitled to receive a severance benefit of two (2) months'
Base Salary in effect at the time of termination. The Executive shall not be
entitled to receive any other payment or any other rights or benefits under this
Agreement (except for any salary and benefits accrued, vested and unpaid as of
the date of any such termination); the Company shall be under no further
obligation hereunder to the Executive, and the Company shall have such rights
and remedies as may be available to it for any breach of this Agreement or
otherwise.
(1) In the event the Executive is terminated for
cause, the Company agrees to furnish only the Executive's position title and the
dates of employment with the Company, unless the Executive authorizes otherwise
in writing.
(d) Termination by the Company other than for Cause. The
Company may terminate the Executive's employment hereunder at any time for any
other reason, provided that the Company has given the Executive ninety (90)
days' written notice of termination, termination being effective upon expiration
of the notice period. In the event of such termination, the Executive shall be
entitled to receive a severance benefit equal to Base Salary at the rate in
effect at the time of termination for eighteen (18) months, and shall also be
entitled to receive any salary and benefits accrued, vested and unpaid as of the
date of any such termination and any benefits to which the Executive may be
entitled under and in accordance with the terms of any employee benefit plan,
policy or program maintained by the Company; and upon the Executive's receipt of
such severance benefit, salary and benefits, the Company shall be under no
further obligation hereunder to the Executive and the Executive no longer shall
be entitled to receive any payment or any other rights or benefits under this
Agreement.
(e) Termination by the Executive for Good Reason.
Notwithstanding anything herein to the contrary, the Executive shall be entitled
to terminate his employment hereunder for "Good Reason" without breach of this
Agreement. For purposes of this Agreement, "Good Reason" shall exist in the
event of any of the following:
(i) A material change in title or a substantial
elimination of the duties and responsibilities of the Executive;
(ii) A material breach by the Company of its
obligations hereunder.
(iii) A change in control of the Company; provided
that, for the purposes of this Section 7(e)(iii), a "change in control of the
Company" shall mean (A) the acquisition, directly or indirectly, by any "person"
(as such term is defined in Section 13(d) and 14(d) of the Securities Exchange
Act of 1934 as in effect on the date hereof), of voting power over voting shares
of the Company that would entitle holders thereof to cast at least fifty percent
(50%) of the votes that all shareholders would be entitled to cast in the
election of directors of the Company; or (B) during any period of two
consecutive years during the Initial Term of this Agreement, individuals who at
the beginning of such period constitute the Company Board of Directors cease for
any reason to constitute at least a majority thereof, unless the election of
each
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director who is not a director at the beginning of such period shall have been
approved in advance by directors representing at least three fourths of the
directors then in office who are directors at the beginning of such period.
In the event of such termination by the Executive, the Executive shall
nonetheless be entitled to receive a severance benefit equal to Base Salary at
the rate in effect at the time of termination for eighteen (18) months. Except
for such severance benefit and except for any salary and benefits accrued,
vested and unpaid as of the date of such termination, the Executive no longer
shall be entitled to receive any payments or any other rights of benefits under
this Agreement, and the Company shall have no further obligation hereunder to
the Executive following any such termination.
(f) Termination by the Executive for other than Good Reason.
The Executive may terminate his employment hereunder at any time for any other
reason, provided the Executive has given the Company ninety (90) days' written
notice of termination, termination being effective upon expiration of the notice
period. In the event of such termination, the Executive shall be entitled to
receive any salary benefits accrued, vested and unpaid as of the date of any
such termination and any benefits to which the Executive may be entitled under
and in accordance with the terms of any employee benefit plan, policy or program
maintained by the Company. The Company shall be under no further obligation
hereunder to the Executive and the Executive no longer shall be entitled to
receive any other payments, rights or benefits under this Agreement.
8. Place of Employment.
The Company agrees that the principal location at which the Executive
is to render his services hereunder will be Leesburg, Virginia, unless a
modification is understood and agreed to in writing by Executive and Company. If
the Company, a successor corporation or a company purchasing the Company's
assets requires a relocation, then the Company will reimburse the Executive's
moving costs up to a finite amount to be determined by mutual agreement.
9. Withholding.
Anything to the contrary herein notwithstanding, all payments required
to be made hereunder by the Company to the Executive, or his estate or
beneficiaries, shall be subject to the withholding of such amounts as the
Company may reasonably determine it should withhold pursuant to any applicable
law or regulation.
10. Survival.
The Agreement shall survive any termination of the Executive's
employment hereunder
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unless otherwise provided herein.
11. Miscellaneous.
(a) Successors and Assigns. The Company may assign this
Agreement to, and only to, an entity which is owned more than fifty percent
(50%), directly or indirectly, by the Company, and any person or entity which
acquires all or substantially all of the Company's business, and subject to the
foregoing, upon such assignment this Agreement shall inure to the benefit of and
be binding upon such entity. This Agreement shall not be assignable by the
Executive and shall inure to the benefit of and be binding upon him and his
personal representative and other legal representatives. It is understood that
this Section 11(a) shall not effect the right of the Executive to terminate his
employment for "Good Reason" pursuant to Section 7(e) hereof.
(b) Notice. Any notice or communication required or permitted
under this Agreement shall be made in writing or sent by certified or registered
mail, return receipt requested and postage prepaid, addressed as follows:
If to the Executive:
Xxxxx X. Xxx
0000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
If to the Company:
Precision Tune Auto Care, Inc.
000 Xxxxxx Xxxxx, XX
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
or to such other address as either party may from time to time duly specify by
notice given to the other party in the manner specified above. Notice shall be
deemed given when received by the other party, including by his or its agent.
(c) Entire Agreement; Amendments. This Agreement contains the
entire agreement and understanding of the parties relating to the subject matter
hereof and supersedes all prior discussions, agreements and understandings
relating thereto between them. This Agreement may not be changed or modified,
except by an agreement in writing executed by the Company, and by the Executive.
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(d) Waiver. The waiver of a breach of any term or provision of
this Agreement shall not operate as or be construed to be a waiver of any other
subsequent breach of this Agreement.
(e) Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement, and the performance
of the obligations imposed by this Agreement, shall be governed by the laws of
the Commonwealth of Virginia applicable to contracts made and wholly to be
performed in such state, without regard to choice of law principles.
(f) Severability. In the event that any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable, in any respect, such invalidity or
unenforceability shall not affect any other provision of this Agreement. Such
invalid, illegal or unenforceable provision(s) shall be deemed modified to the
extent necessary to make it (them) valid, legal and enforceable.
(g) Indemnification. The Executive shall be entitled to the
benefit of the indemnification provided by Article 7 of the Bylaws of the
Company; provided that the Company shall be permitted to amend such provision
from time to time so long as the Executive, to the extent permitted by
applicable law, is afforded indemnification at least as favorable as that
provided by such Article 7 as in effect on the date hereof.
(h) Captions. All captions and section headings used herein
are for convenient reference only and do not form a part of this Agreement.
(i) Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute one and the same Agreement.
(j) Computation of Time. In computing any period of time
pursuant to this Agreement, the day of the act, event or default from which the
designated period of time begins to run shall be included, unless it is a
Saturday, Sunday, or a legal holiday, in which the period shall begin to run on
the next day which is not a Saturday, Sunday, or legal holiday. Likewise, if the
period of time concludes on a Saturday, Sunday or legal holiday, the period
shall run until the end of the next day thereafter which is not a Saturday,
Sunday, or legal holiday.
(k) Pronouns and Plurals. All pronouns and variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular, or plural
as the identity of the person or persons may require.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
PRECISION TUNE AUTO CARE, INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
------------------------------------
Xxxxx X. Xxx, Individually
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