EXHIBIT 10(n)
EMPLOYMENT AGREEMENT
[CHIEF EXECUTIVE OFFICER]
This Employment Agreement ("AGREEMENT") is made and entered into as
of this 12th day of March 1998 by and between GREASE MONKEY HOLDING
CORPORATION, a Utah corporation ("CORPORATION"), and XXXXXXX X. XXXXXXXXXXX
("EXECUTIVE").
WHEREAS, the Corporation and the Executive desire that the term of
this Agreement begin on January 20, 1997 ("EFFECTIVE DATE"); and
WHEREAS, the Corporation desires to employ the Executive as its
President and Chief Executive Officer and Executive is willing to accept such
employment by the Corporation, on the terms and subject to the conditions set
forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the Corporation and the Executive hereby agree
as follows:
SECTION 1. DUTIES. During the term of this Agreement, the Executive agrees to
be employed by and to serve the Corporation as its President and Chief
Executive Officer, and the Corporation agrees to employ and retain the
Executive in such capacities. In such capacity, the Executive shall render
such managerial, administrative and other services as are customarily
associated with or incident to such position and shall perform such other
duties and responsibilities for the Corporation as the Corporation may
reasonably require, consistent with such position. The Executive shall devote
a substantial portion of his business time, energy, and skill to the affairs
of the Corporation as the Executive shall report to the Corporation's board
of directors. The Corporation shall not appoint any individual to whom the
Executive shall report, or who shall have the right to supervise the
Executive, provided, however, that the Corporation's board of directors may
appoint one or more members of the board of directors to coordinate the
reporting from the Executive to the board of directors.
SECTION 2. TERM OF EMPLOYMENT.
2.1 DEFINITIONS. For the purposes of this Agreement the following terms shall
have the following meanings:
2.1.1 "Termination For Cause" shall mean termination by the Corporation
of the Executive's employment by the Corporation by reason of: (i) a conviction
of Executive of a felony (whether or not such conviction is subject to appeal),
(ii) fraud (iii) misappropriation of any property or business of Grease Monkey
or intentional damage to any property or business of Grease Monkey, (iv) default
of any term or obligation of this Agreement, (v) death of Executive, or (vi)
dishonesty, gross neglect of duty, disparagement of the Corporation or other
intentional acts or omissions which
negatively and materially impact or impair the Corporation's ability to
conduct its ordinary business in its usual manner.
2.1.2 "Termination Other Than For Cause" shall mean termination by
the Corporation of the Executive's employment by the Corporation (other than
in a Termination for Cause) and shall include constructive termination of the
Executive's employment by reason of material breach of this Agreement by the
Corporation, such constructive termination to be effective upon notice from
the Executive to the Corporation of such constructive termination.
2.1.3 "Voluntary Termination" shall mean termination by the
Executive of the Executive's employment by the Corporation other than (i)
Constructive Termination as described herein, (ii) "Termination Upon a Change
in Control," and (iii) termination by reason of the Executive's death or
disability as described herein.
2.1.4 "Termination Upon a Change in Control" shall mean a
termination by the Executive of the Executive's employment with the
Corporation within 120 days following a "Change in Control."
2.1.5 "Change in Control" shall mean (i) the time that the
Corporation first determines that any person and all other persons who
constitute a group (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934 ("Exchange Act")) have acquired direct or indirect
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act) of twenty percent (20%) or more of the Corporation's outstanding
securities, unless a majority of the "Continuing Directors" approves the
acquisition not later than ten (10) business days after the Corporation makes
that determination, or (ii) the first day on which a majority of the members
of the Corporation's board of directors are not "Continuing Directors."
2.1.6 "Continuing Directors" shall mean, as of any date of
determination, any member of the Corporation's board of directors of the
Corporation who (i) was a member of that board of directors on January 20,
1997, (ii) has been a member of that board of directors for the two years
immediately preceding such date of determination, or (iii) was nominated for
election or elected to the Corporation's board of directors with the
affirmative vote of the greater of (x) a majority of the Continuing Directors
who were members of the Corporation's board of directors at the time of such
nomination or election or (y) at least three Continuing Directors.
2.2 INITIAL TERM. The term of employment of the Executive by the Corporation
shall be for a period of three (3) years beginning with Effective Date ("INITIAL
TERM"), unless terminated earlier pursuant to this Agreement. At any time prior
to the expiration of the Initial Term, the Corporation and the Executive may by
mutual written agreement extend the Executive's employment under the terms of
this Agreement for such additional periods as they may agree.
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2.3 TERMINATION FOR CAUSE. Termination For Cause may be effected by the
Corporation at any time during the term of this Agreement and shall be
effected by written notification to the Executive. Upon Termination For
Cause, the Executive shall promptly be paid all accrued salary, bonus
compensation to the extent earned, vested deferred compensation (other than
pension plan, stock incentive plan or profit sharing plan benefits which will
be paid in accordance with the applicable plan), any benefits under any plans
of the Corporation in which the Executive is a participant to the full extent
of the Executive's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by the Executive in connection with
his duties hereunder, all to the date of termination, but the Executive shall
not be paid any other compensation or reimbursement of any kind, including
without limitation, Severance Compensation.
2.4 TERMINATION OTHER THAN FOR CAUSE. Notwithstanding anything else in this
Agreement, the Corporation may effect a Termination Other Than For Cause at
any time upon giving written notice to the Executive of such termination.
Upon any Termination Other Than For Cause, the Executive shall promptly be
paid all accrued salary, bonus compensation to the extent earned, vested
deferred compensation (other than pension plan, stock incentive plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Corporation in which
the Executive is a participant to the full extent of the Executive's rights
under such plans (including accelerated vesting, if any, of awards granted to
the Executive under the Corporation's stock option plan), accrued vacation
pay and any appropriate business expenses incurred by the Executive in
connection with his duties hereunder, all to the date of termination, and all
Severance Compensation provided, but no other compensation or reimbursement
of any kind.
2.5 TERMINATION BY REASON OF DISABILITY. If, during the term of this
Agreement, the Executive, in the reasonable judgment of the Corporation's
board of directors, has failed to perform his duties under this Agreement on
account of illness or physical or mental incapacity, and such illness or
incapacity continues for a period of more than two consecutive months, the
Corporation shall have the right to terminate the Executive's employment
hereunder by written notification to the Executive and payment to the
Executive of all accrued salary, bonus compensation to the extent earned,
vested deferred compensation (other than stock incentive plan, pension plan
or profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Corporation in which
the Executive is a participant to the full extent of the Executive's rights
under such plans, accrued vacation pay and any appropriate business expenses
incurred by the Executive in connection with his duties hereunder, all to the
date of termination, with the exception of medical and dental benefits which
shall continue through the expiration of this Agreement, but the Executive
shall not be paid any other compensation or reimbursement of any kind,
including without limitation, Severance Compensation.
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2.6 DEATH. In the event of the Executive's death during the term of this
Agreement, the Executive's employment shall be deemed to have terminated as
of the last day of the month during which his death occurs and the
Corporation shall promptly pay to his estate or such beneficiaries as the
Executive may from time to time designate all accrued salary, bonus
compensation to the extent earned, vested deferred compensation (other than
stock incentive plan, pension plan or profit sharing plan benefits which will
be paid in accordance with the applicable plan), any benefits under any plans
of the Corporation in which the Executive is a participant to the full extent
of the Executive's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by the Executive in connection with
his duties hereunder, all to the date of termination, but the Executive's
estate shall not be paid any other compensation or reimbursement of any kind,
including without limitation, Severance Compensation.
2.7 VOLUNTARY TERMINATION. In the event of a Voluntary Termination, the
Corporation shall promptly pay all accrued salary, bonus compensation to the
extent earned, vested deferred compensation (other than stock incentive plan,
pension plan or profit sharing plan benefits which will be paid in accordance
with the applicable plan), any benefits under any plans of the Corporation in
which the Executive is a participant to the full extent of the Executive's
rights under such plans, accrued vacation pay and any appropriate business
expenses incurred by the Executive in connection with his duties hereunder,
all to the date of termination, but no other compensation or reimbursement of
any kind, including without limitation, Severance Compensation.
Notwithstanding the above to the contrary, if the Corporation changes the
Executive's title, working conditions or specifies duties so that the
Executive's powers and duties are diminished or reduced, or include powers,
duties or working conditions which are not generally consistent with the
title of Chief Executive Officer (a "CONSTRUCTIVE TERMINATION"), or if the
Corporation changes the reporting relationship so that the Executive reports
to another officer or employee, other than the Corporation's board of
directors as a whole, then at any time thereafter, at the Executive's option
and upon thirty days notice, and provided that such changes shall not have
been rescinded or corrected to the reasonable satisfaction of the Executive
within said thirty day period, the Executive shall have the right to
terminate the employment relationship, and in such event, the employment
shall be deemed to have been terminated by the Corporation without cause.
2.8 TERMINATION UPON A CHANGE IN CONTROL. In the event of a Termination Upon
a Change in Control, the Executive shall immediately be paid all accrued
salary, bonus compensation to the extent earned, vested deferred compensation
(other than pension plan or profit sharing plan benefits which will be paid
in accordance with the applicable plan), any benefits under any plans of the
Corporation in which the Executive is a participant to the full extent of the
Executive's rights under such plans (including accelerated vesting, if any,
of any awards granted to the Executive under the Corporation's Stock Option
Plan), accrued vacation pay and any appropriate
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business expenses incurred by the Executive in connection with his duties
hereunder, all to the date of termination, and all Severance Compensation,
but no other compensation or reimbursement of any kind.
2.9 NOTICE OF TERMINATION. The Corporation may effect a termination of this
Agreement pursuant to the provisions of this Section upon giving thirty (30)
days' written notice to the Executive of such termination. The Executive may
effect a termination of this Agreement pursuant to the provisions of this
Section upon giving thirty (30) days' written notice to the Corporation of
such termination.
SECTION 3. SALARY, BENEFITS AND BONUS COMPENSATION.
3.1 BASE SALARY. As payment for the services to be rendered by the Executive
as provided in Section 1 and subject to the terms and conditions of Section
2, the Corporation agrees to pay to the Executive a base salary for the
twelve (12) calendar months beginning the Effective Date at the rate of
$125,000 per annum payable in 12 equal monthly installments of $10,416.66.
The Executive's base salary shall be reviewed annually by the Compensation
Committee of the Corporation's board of directors ("COMPENSATION COMMITTEE"),
and the base salary for each year (or portion thereof) beginning January 1,
1998 shall be determined by the Compensation Committee which shall authorize
an increase in the Executive's base salary.
3.2 BONUSES. The Executive shall be eligible to receive a discretionary bonus
for each year (or portion thereof) during the term of this Agreement and any
extensions thereof, with the actual amount of any such bonus to be determined
in the sole discretion of the Corporation's board of directors based upon its
evaluation of the Executive's performance during such year. All such bonuses
shall be reviewed annually by the Compensation Committee.
3.3 ADDITIONAL BENEFITS. During the term of this Agreement, the Executive
shall be entitled to the following fringe benefits:
3.3.1 EXECUTIVE BENEFITS. The Executive shall be eligible to participate
in such of the Corporation's benefits and deferred compensation plans as are
now generally available or later made generally available to executive
officers of the Corporation, including, without limitation, the Corporation's
Stock Incentive Plan, profit sharing plans, annual physical examinations,
dental and medical plans, personal catastrophe and disability insurance, life
insurance, financial planning, retirement plans and supplementary executive
retirement plans, if any. For purposes of establishing the length of service
under any benefit plans or programs of the Corporation, the Executive's
employment with the Corporation will be deemed to have commenced on the
Effective Date.
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3.3.2 VACATION. The Executive shall be entitled to four weeks of vacation
during each year during the term of this Agreement and any extensions
thereof, prorated for partial years.
3.3.3 REIMBURSEMENT FOR EXPENSES. During the term of this Agreement, the
Corporation shall reimburse the Executive for reasonable and properly
documented out-of-pocket business and/or entertainment expenses incurred by
the Executive in connection with his duties under this Agreement.
3.3.4 STOCK OPTIONS. The Corporation shall grant to Executive, stock
options on 750,000 shares of the Corporation's common stock with an exercise
price of $1.3125. Such stock options shall be issued and held in accordance
with the Corporation's Stock Incentive Plan currently in effect. Such stock
options shall vest as follows: (i) 100,000 as of January 20, 1997, and (ii)
the remaining 650,000 shall vest over the three (3) year period following the
date of this agreement based on performance criteria (set forth below) as
follows:
SHARES EXERCISABLE
------ -----------
200,000 December 31, 1997
200,000 December 31, 1998
250,000 December 31, 1999
3.3.5 PERFORMANCE CRITERIA. Executive shall not be entitled to exercise
the stock options in any year unless the Board of Directors of the Corporation
has determined that the Corporation has met the following performance criteria
for the previous year, which determination shall be at the Board's sole and
absolute discretion. The performance criteria for each year is set forth below:
3.3.5.1 MINIMUM CORPORATE EARNINGS. The Corporation must obtain minimum
corporate earnings (net earnings based on Generally Accepted Accounting
Principals) as follows:
YEAR ENDED MINIMUM CORPORATE EARNINGS
---------- --------------------------
December 31, 1997 $ 500,000
December 31, 1998 1,000,000
December 31, 1999 1.500,000
3.3.5.2 REVENUE GROWTH. The Corporation must achieve a compounded growth
rate in gross revenue of 20% for each year from 1997 through 1999.
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3.3.5.3 UNIT OPENINGS. The Corporation must be within 75% of the growth
target for new unit openings which shall be established by the Board of
Directors in the business plan for the Corporation.
SECTION 4. SEVERANCE COMPENSATION.
4.1 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION UPON A CHANGE IN
CONTROL. In the event the Executive's employment is terminated in a
Termination Upon a Change in Control, the Executive shall be paid as
severance compensation ("SEVERANCE COMPENSATION") his base salary (at the
rate payable at the time of such termination), for a period of the lesser of
the remaining portion of the Initial Term or two (2) years from the date of
such termination provided, however, that if the Executive is employed by a
new employer during such period, the Severance Compensation payable to the
Executive during such period will be reduced by the amount of compensation
that the Executive actually receives from the new employer. However, the
Executive is under no obligation to mitigate the amount owed the Executive
pursuant to this Section by seeking other employment or otherwise.
Notwithstanding anything in this Section to the contrary, the Executive may
in the Executive's sole discretion, by delivery of a notice to the
Corporation within thirty (30) days following a Termination Upon a Change in
Control, elect to receive from the Corporation, a lump sum Severance
Compensation payment by bank cashier's check equal to the present value of
the flow of cash payments that would otherwise be paid to the Executive
pursuant to this Section. The Executive shall also be entitled to an
accelerated vesting of any awards granted to the Executive under the
Corporation's Stock Incentive Plan to the extent provided in the stock option
agreement entered into at the time of grant. The Executive shall continue to
accrue retirement benefits and shall continue to enjoy any benefits under any
plans of the Corporation in which the Executive is a participant to the full
extent of the Executive's rights under such plans, including any perquisites
provided under this Agreement, though the remaining term of this Agreement;
provided, however, that the benefits under any such plans of the Corporation
in which the Executive is a participant, including any such perquisites,
shall cease upon re-employment by a new employer.
4.2 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION OTHER THAN FOR
CAUSE. In the event the Executive's employment is terminated in a Termination
Other Than for Cause, the Executive shall be paid as Severance Compensation
his Base Salary (at the rate payable at the time of such termination), for a
period of the lesser of the remaining portion of the Initial Term or two (2)
years from the date of such termination, on the dates specified in Section
3.1; provided, however, that if the Executive is employed by a new employer
during such period, the Severance Compensation payable to the Executive
during such period will be reduced by the amount of compensation that the
Executive is receiving from the new employer, officer. However, the Executive
is under no obligation to mitigate the amount owed to the officer pursuant to
this Section by seeking employment or otherwise. The
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Executive shall be entitled to an accelerated vesting of any awards granted
to the Executive under the Corporation's Stock Incentive Plan to the extent
provided in the stock option agreement entered into at the time of grant.
4.3 NO SEVERANCE COMPENSATION UPON OTHER TERMINATION. In the event of a
Voluntary Termination, Termination For Cause, termination by reason of the
Executive's death or disability as described herein, the Executive or his
estate shall not be paid any Severance Compensation.
4.4 LIMIT ON AGGREGATE COMPENSATION UPON A CHANGE IN CONTROL. Notwithstanding
anything else in this Agreement, solely in the event of a Termination Upon a
Change in Control, the amount of Severance Compensation paid to the
Executive, but exclusive of any payments to the Executive in respect of any
stock options then held by the Executive (or any compensation deemed to be
received by the Executive in connection with the exercise of any stock
options at any time) or by virtue of the Executive's exercise of a right
under the Stock Incentive Plan upon a Change in Control, shall not include
any amount that the Corporation is prohibited from deducting for federal
income tax purposes by virtue of Section 280G of the Internal Revenue Code
or any successor provision.
SECTION 5. WITHHOLDINGS. All compensation and benefits to the Executive
hereunder shall be reduced by all federal, state, local and other
withholdings and similar taxes and payments required by applicable law.
SECTION 6. INDEMNIFICATION. In addition to any rights to indemnification to
which the Executive is entitled to under the Corporation's articles of
incorporation and bylaws, the Corporation shall indemnify the Executive at all
times during and after the term of this Agreement to the maximum extent
permitted under the Colorado Business Corporation Act or any successor provision
thereof and any other applicable state law, and shall pay the Executive's
expenses in defending any civil or criminal action, suit, or proceeding in
advance of the final disposition of such action, suit or proceeding, to the
maximum extent permitted under such applicable state laws.
SECTION 7. PROPRIETARY INFORMATION. Executive shall use his best efforts to
preserve and protect the confidentiality of all proprietary and confidential
information regarding the Corporation and its affiliates which he obtains or
of which he otherwise becomes aware during the course of providing the
services described in this Agreement (other than information that is already
publicly available or which he may be required by law to disclose)
("Confidential Information"). Executive shall not disclose any Confidential
Information to any entity other than (i) the Corporation's employees or its
designated agents, or (ii) other than as necessary in the ordinary course of
business. Executive acknowledges that the Confidential Information is a
unique and valuable asset of the Corporation, represents a substantial
investment of time and expense by the
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Corporation, and that any disclosure or other use of such information other
than for the benefit of the Corporation would cause irreparable harm.
SECTION 8. RECORDS. Executive will keep complete, accurate and authentic
accounts, notes, data and records ("Records") of his actions. The Records
shall be the property of the Corporation. Upon request, Executive will
promptly deliver the Records to the Corporation. Upon termination of this
Agreement, Executive shall deliver promptly to the Corporation all Records,
manuals, books, blank forms, documents, letters, memoranda, notes, notebooks,
reports, data, tables, calculations or copies thereof, which relate in any
way to the business, property, practices or techniques of the Corporation,
including, but not limited to, all documents which in whole or in part
contain any Confidential Information.
SECTION 9. NON-COMPETITION COVENANT.
a. AGREEMENT NOT TO COMPETE. Executive agrees that, during the term of
this Agreement and for a period of two years following the termination of
this Agreement, he shall not, without the express written consent of the
Corporation, engage in competition with the Corporation, directly or
indirectly, in any manner or capacity (e.g., as an advisor, principal, agent,
partner, officer, director, stockholder, employee, member of any association,
or otherwise) in any phase of any business of a type conducted by the
Corporation.
b. GEOGRAPHIC EXTENT OF COVENANT. The obligations of Executive under
this Section 9 shall apply to the United States.
c. INDIRECT COMPETITION. Executive further agrees that, during the term
of this Agreement, he will not, directly or indirectly, assist or encourage
any other person in carrying out, directly or indirectly, any activity that
would be prohibited by the above provisions of this Section 9 if such
activity were carried out by Executive, either directly or indirectly.
SECTION 10. MISCELLANEOUS.
a. COUNTERPARTS. This Agreement may be executed in several
counterparts, and all so executed shall constitute one Agreement, binding on
all parties hereto, notwithstanding that all of the parties are not
signatories to the original or the same counterpart.
b. ASSIGNMENT. The agreement of Executive to render services hereunder
is personal in nature and shall not be assignable by Executive. The rights
and benefits of Executive under this Agreement shall not be subject to
voluntary or involuntary alienation, assignment or transfer. The terms and
provisions of this
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Agreement shall be binding upon and shall inure to the benefit of the
successors and permissible assigns of the respective parties.
c. ENTIRE AGREEMENT. This Agreement is the entire agreement between
Executive and The Corporation pertaining to the subject matter hereof and
supersedes any and all prior negotiations, agreements, understandings and
dealings pertaining to the subject matter hereof, whether written or oral.
d. AMENDMENTS AND MODIFICATIONS. This Agreement cannot be changed
orally, and no agreement shall be effective to waive, change, modify or
discharge it in whole or in part unless such agreement is in writing and is
signed by the parties against whom enforcement of any waiver, change,
modification or discharge is sought.
e. SEVERABILITY. If any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder
of this Agreement shall nonetheless remain in full force and effect.
f. EFFECT OF HEADINGS. Paragraph titles or captions contained in this
Agreement are inserted only as a matter of convenience and for reference.
Such titles and captions in no way define, limit, extend or describe the
scope of this Agreement nor the intent of any provision hereof.
g. GOVERNING LAW. The parties expressly agree that all the terms and
provisions hereof shall be construed in accordance with the substantive laws
of the State of Colorado.
h. NOTICES. All notices provided for hereunder shall be in writing and
shall be deemed given and received (a) when personally delivered; (b)
transmitted by facsimile transmission, provided sender obtains an electronic
confirmation and also delivers a copy by mail or personal delivery, or (c)
forty-eight (48) hours after the same are deposited in the United States
mail, postage prepaid, registered or certified mail, return receipt
requested, addressed to the applicable party at the following address: (i) if
to Executive, to his office at the Corporation and (ii) if to the
Corporation, then to 000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000,
Attention Chairman of the Board, or at such other address as he may designate
from time to time.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day and year first above written.
The Grease Monkey Holding Corporation, a
Utah corporation
By: /s/ XXXXX X. XXXXXXX
--------------------------
Xxxxx X. Xxxxxxx, Chairman
/s/ XXXXXXX X. XXXXXXXXXXX
---------------------------
Xxxxxxx X. Xxxxxxxxxxx
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