INDEPENDENT CONTRACTOR AGREEMENT
THIS INDEPENDENT CONTRACT AGREEMENT (the "Agreement") is made this 12th
day of November, 1997 between PRECISION AUTO CARE, INC., a Virginia corporation
having its principal offices at 000 Xxxxxx Xxxxx XX, Xxxxxxxx, Xxxxxxxx 00000
(the "Company") and Xxxxxx X. Xxxxx, an Ohio resident having his principal
residence at 000 Xxxx Xxxx, Xxxxxxxxx, XX (the "Consultant").
WHEREAS, the Company is in need of a consultant and contractor to
assist it with business development; and
WHEREAS, the Consultant possesses certain experience, information,
skills and credential in the area of developing businesses; and
WHEREAS, the Company desires to obtain the benefits of the Consultant's
knowledge and experience as a consultant and contractor for the Company, and the
Consultant desires to perform consulting services for the Company, subject to
the terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises and covenants contained herein, and for other good and valuable
consideration, the sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. Engagement.
(a) The Company hereby engages the consultant for the Contract
Period set forth in Section 3, and the consultant hereby accepts such engagement
on the terms and conditions set forth in this Agreement.
(b) During the Contract Period, the Consultant shall devote full and
sufficient time to the performance of services as shall be necessary, and shall
make himself available to perform work assigned to the Consultant by the
Company.
2. Services.
(a) The Consultant agrees to perform the duties, responsibilities
and initiatives appropriate to the role of a senior business development
executive.
(b) The Consultant further agrees to perform these responsibilities
within the purview of the knowledge and expertise of the consultant and as
selected by the company
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according to the specifications explained to the Consultant by the Company. If
requested or required, the Consultant will prepare a written estimate of labor
and materials needed to complete each initiative. The Consultant understands
that the company will reimburse the Consultant for reasonable out-of-pocket
expenses actually incurred by the Consultant and that are incidental to this
engagement to include, without limitation, travel, lodging, meals, and
transportation mileage associated with required travel outside of the Mansfield,
Ohio area, (or such other area where Consultant subsequently may reside),
photocopying, postage, long distance telephone charges, facsimile transmissions,
courier fees and supplies (such supplies to be approved by the company),
subsequently verified by receipts and/or payroll records. Such costs shall not
include payroll or other general administrative costs of Consultant.
(c) The Consultant may utilize the equipment and space of the
Company.
3. Contract Period.
(a) Duration. The term of this Agreement (the "Contract Period")
shall be deemed to have commenced as of the date of this Agreement and shall
continue until the earliest to occur of (i) three years from the date hereof,
(ii) the death or disability of Consultant, or (iii) the inability of the
Consultant to perform his duties by reason of lack of staff or lack of
resources.
4. Termination.
(a) Death. The Consultant's engagement hereunder shall terminate in
the event of the Consultant's death. Except for any fees and expenses accrued,
vested and unpaid as of the date of any such termination and except for any
benefits to which the Consultant 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 Consultant or his heirs or personal
representatives, and the Consultant or his heirs and personal representatives no
longer shall be entitled to receive any payments or any other rights or benefits
under this Agreement.
(b) Disability. The Company may terminate the Consultant's
engagement hereunder for "Disability," if an independent physician mutually
selected by the Consultant or his representative and the Board of Directors or
its designee has determined that the Consultant 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 Consultant was on vacation). In the event of such Disability, the Consultant
shall be entitled to receive any fees and expenses accrued, vested and unpaid as
of the date of any such termination and any benefits to which the Consultant may
be entitled under and in accordance with the terms of any employee benefit plan,
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policy or program maintained by the Company. The Company shall be under no
further obligation hereunder to the Consultant, and the Consultant 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 Consultant's engagement hereunder for "Cause." For purposes of this
Agreement, "Cause" shall mean any of the following:
(i) The Consultant's repeated willful misconduct or gross
negligence;
(ii) The Consultant's repeated conscious disregard of his
obligations hereunder;
(iii) The Consultant'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 Consultant has demonstrated a
dependence upon any addictive substance, including alcohol, controlled
substances, narcotics or barbiturates; provided, however, that if the Board of
Directors of the Company desires to terminate the Consultant 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
Consultant 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 Consultant for Cause and, provided
further, that if the Board of Directors of the Company desires to terminate the
Consultant on the basis of clause (iii) of this Section 7(c), it must be able to
demonstrate that the Consultant has been furnished with a copy of the by-law
provision, policy, standard or regulation, the violation of which the Consultant
is being accused, at a time prior to the alleged commission of the violation.
In the event that the Company terminates the Consultant's engagement for
Cause, the Consultant shall be entitled to receive a severance benefit of two
(2) months' Monthly Fee in effect at the time of termination. The Consultant
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 Consultant, and the Company shall
have such rights and remedies as may be available to it for any breach of this
Agreement or otherwise.
(d) Termination by the Company other than for Cause. The Company may
terminate the Consultant's engagement hereunder at any time for any other
reason, provided that the Company has given the Consultant ninety (90) days'
written notice of termination, termination being effective upon expiration of
the notice period. In the event of such termination, the Consultant shall be
entitled to receive a severance benefit equal to Monthly Fee
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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
Consultant 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
Consultant's receipt of such severance benefit, salary and benefits, the Company
shall be under no further obligation hereunder to the Consultant and the
Consultant no longer shall be entitled to receive any payment or any other
rights or benefits under this Agreement.
(e) Termination by the Consultant for Good Reason. Notwithstanding
anything herein to the contrary, the Consultant shall be entitled to terminate
his engagement 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 Consultant;
(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 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 Consultant, the Consultant shall
nonetheless be entitled to receive a severance benefit equal to Monthly Fee 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 Consultant 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 Consultant following any such termination.
(f) Termination by the Consultant for other than Good Reason. The
Consultant may terminate his engagement hereunder at any time for any other
reason, provided the Consultant 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
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termination, the Consultant 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 Consultant 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
Consultant and the Consultant no longer shall be entitled to receive any other
payments, rights or benefits under this Agreement.
5. Independent Contractor. The parties agree that the Consultant is
providing services to the Company as an independent contractor and nothing in
this Agreement shall be construed so as to create the relationship of employer
and employee between the Company and the Consultant. The Consultant shall be
responsible for all federal, state and local taxes, FICA, FUTA and SUTA
unemployment, workers' compensation and any other taxes or insurance obligations
for himself arising out of the fees, expenses and/or reimbursements to be paid
to the Consultant under this Agreement. The Consultant agrees to indemnify the
Company against all liability with regard to such taxes and insurance
obligations. The Consultant shall not be entitled to any employee benefit plans
or fringe benefits offered by the Company during the term of this Agreement,
except as may be made available within all established guidance in the Company's
existing and future Plan documents governing stock option benefits normally
afforded to members of the Board of Directors (the "Board"), so long as
Consultant also operates as a member of such Board. Nothing in this Agreement
shall give either party any authority or responsibility to hire or terminate
employees of the other party, to supervisor or direct such employees, to
discipline them, to accept and resolve their grievances, to provide workers'
compensation coverage, or to otherwise exercise control over agents or employees
of the other party.
6. Compensation.
(a) In consideration of the Consultant's undertakings and the
performance of the obligations contained in this Agreement, the Company shall
pay to the Consultant a retainer fee of Ten Thousand Dollars ($10,000.00) per
month (the "Monthly Fee"), which shall be payable on the first (1st) day of each
calendar month during the Contract Period, starting January 1, 1998.
(b) Payment for expenses described in Section 2(b) shall be due and
payable within thirty (30) days of the date of Consultant's expense report.
(c) The Consultant shall be eligible to participate in the any Stock
Option Plan as may approved by the Board of Directors and the Chief Executive
Officer. In the event such Stock Option Plan(s) are approved, ratified, and
implemented by the Board of Directors for Company executives, Consultant shall
receive an option to purchase a minimum of 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. The exercise price for said stock options will be at fair
market value on the date of
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grant and the term will be for ten (10) years.
(d) Consultant shall be considered eligible for an Incentive Bonus
program to be developed in conjunction with the President.
7. Covenant Not to Compete.
(a) The Consultant 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, quick lube or car wash industries,
except that the Consultant 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 and may own Precision Auto Care
franchises.
(b) It is the desire and the intent of the parties that the
provisions of this Section 6 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.
8. Licenses. The Consultant covenants and agrees that it will obtain and
will keep current licenses required by any governmental agency to perform the
services required by this Agreement. The Consultant understands that the costs
of these licenses are not reimbursable to the Consultant by the Company under
this Agreement.
9. Indemnification. The Company agrees to defend, indemnify and save
harmless the Consultant from and against any and all claims, actions and suits,
and from and against all liabilities, losses, damages, costs, charges and
expenses (including reasonable attorneys' fees) of every nature and kind arising
out of or in consequence of the company's acceptance of or failure to accept the
Consultant's opinions and/or recommendations. The Consultant agrees to defend,
indemnify and save harmless the Company from and against any and all claims,
damages, costs, charges and expenses (including reasonable attorneys' fees) of
every nature and kind arising out of or in consequence of the gross negligence,
recklessness or intentional wrongdoing of the Company.
10. Notices. Any notice required or permitted to be given under this
Agreement shall be given in writing, and shall be delivered by hand or by
certified mail, postage prepaid and return receipt requested, addressed as set
forth below:
If to the Company: Precision Auto Care, Inc.
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000 Xxxxxx Xxxxx, XX
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
If to the Consultant: Xxxxxx X. Xxxxx
000 Xxxx Xxxx
Xxxxxxxxx, XX 00000
All notices delivered by hand or certified mail shall be deemed delivered on the
day of delivery to the designated address of the addressee set forth above. Any
change of address by either the Company or the consultant must be promptly
communicated in writing and shall be delivered by hand or by certified mail,
postage prepaid and return receipt requested.
11. Waiver. The waiver by any party hereto of a breach of any provision of
this Agreement by any other party hereto shall not operate or be construed as a
waiver of any subsequent breach by the breaching party.
12. Binding Effect.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns (it being
understood that the Consultant shall not be able to assign its obligations under
this Agreement to any third party without the company's prior written consent
which the Company may withhold in its sole and absolute discretion).
Notwithstanding anything else in this Agreement to the contrary, the Company's
obligations as set forth in this Agreement shall survive any sale of the
business, shares or operating assets of the Company or any change of management
or control of the Company except for the following.
13. Entire Agreement. This Agreement constitutes the entire understanding
of the consultant and the Company with respect to the subject matter hereof and
supersedes any and all prior understandings and agreement, written or oral,
relating to the subject matter of this Agreement. This Agreement and the
provisions hereof may be changed, waived or canceled orally, but may be changed,
waived, or canceled only by an instrument in writing signed by the parties
hereto.
14. Section Headings. The section headings of this Agreement are for
convenience of reference only and shall not limited or otherwise affect any of
the provisions of this Agreement.
15. Law and Interpretation. This Agreement shall be governed by the laws
of the State of Virginia, and the invalidity or unenforceability of any
provision hereof shall in no way affect the validity of enforceability of any
other provision.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement under seal as of the date first above written.
ATTEST: PRECISION AUTO CARE, INC.
By: (SEAL)
________________________ ______________________________
Xxxx X. Xxxxxx
ATTEST: XXXXXX X. XXXXX
By: (SEAL)
________________________ ______________________________
Xxxxxx X. Xxxxx
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