Exhibit 99.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, entered into on
September 28, 2007 and effective as of October 1, 2007
(the “Effective Date”), between Monro Muffler Brake,
Inc. (the “Company”) and Robert G. Gross (the
“Executive”).
WHEREAS, the Company and the
Executive wish for the Executive to continue to be employed by the
Company upon the terms and conditions as set forth herein;
and
NOW, THEREFORE, in consideration of
the mutual covenants and promises herein contained, and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Employment and Duties
.
1.1
Employment by the Company . The Company hereby agrees to
employ the Executive for the Term (as herein defined), to render
exclusive and full-time services in the capacity of Chief Executive
Officer (“CEO”) of the Company, subject to the control
and direction of the Company’s Board of Directors (the
“Board”).
1.2
Duties/Authority . The Executive shall have responsibility
for the conduct of the business and fiscal affairs of the Company
and the general supervision of and control over the assets,
business interests, and agents of the Company, in each case subject
to the control and direction of the Board. The Executive’s
duties hereunder shall be consistent with the duties,
responsibilities, and authority generally incident to the position
of CEO and such other reasonably related duties as may be assigned
to him from time to time by the Board.
2. Term of Employment .
The term of this Agreement shall commence on the Effective Date and
end on the fifth anniversary of the Effective Date (the
“Term”), unless sooner terminated as provided
herein.
3. Compensation .
3.1
Salary . As consideration for services rendered, the Company
shall pay the Executive during the Term a salary of $840,000 per
annum (the “Base Salary”), payable not less frequently
than monthly. The Executive’s Base Salary will be reviewed
annually by the Compensation Committee of the Board (the
“Committee”) and may be increased (but not decreased)
to reflect the Executive’s performance and
responsibilities.
3.2
Special Bonus . In consideration for the Executive entering
into this Agreement and agreeing to serve as CEO during the Term,
the Company shall pay to the Executive an amount equal to $750,000,
payable in five (5) equal installments of $150,000, beginning
on the Effective Date and continuing until the fourth anniversary
of the Effective Date. The Special Bonus is subject to repayment or
acceleration in certain circumstances, as set forth in
Sections 5 and 6 of this Agreement.
3.3
Annual Bonus . Pursuant to the Monro Muffler Brake, Inc.
Management Incentive Compensation Plan (as such plan may be amended
or replaced from time to time, the “Bonus Plan”), the
Company shall pay the Executive, within 120 days of its fiscal
year-end, a bonus in respect of each prior fiscal year during the
Term (beginning with the fiscal year ending in March 2008), of
90% of Base Salary if the Company achieves its performance targets
set by the Committee with respect to such year, increased up to a
maximum of 150% of Base Salary if the Company exceeds such
performance targets by amounts to be determined by the Committee
(the “Annual Bonus”). If this Agreement terminates
other than at the end of a fiscal year and if the Executive is
entitled to a pro rata bonus for such partial year pursuant to
Section 5 hereof, such pro rata bonus shall be equal to the
bonus the Executive would have received under the Bonus Plan had he
been employed by the Company for the entire fiscal year multiplied
by a fraction, the numerator of which shall be the number of days
during such fiscal year he was so employed and the denominator of
which shall be 365 (the “Pro Rata Bonus”). The
Executive may be entitled to the Annual Bonus for the year prior to
the year in which the Executive is terminated, to the extent not
yet paid (the “Preceding Bonus”). The Executive shall
be entitled to receive the Preceding Bonus or the Pro Rata Bonus,
as applicable: (i) at the same time the annual bonuses for the
same periods are paid to other senior-level executives of the
Company; and (ii) only to the extent the Company’s Board
or any Committee designated by the Board determines to pay such
bonus to the executive-level employees of the Company. The Annual
Bonus shall, in all respects, be subject to the terms of the Bonus
Plan.
3.4
Option Grant . The Board shall recommend to the Compensation
Committee of the Board that the Compensation Committee grant to the
Executive, an option to purchase 375,000 shares of the
Company’s Common Stock (the “Option”) under the
terms of the 2007 Stock Incentive Plan (the “Plan”).
The Option shall have an exercise price per share equal to the fair
market value of one share of the Company’s Common Stock on
the date of grant, as determined in accordance with the Plan, and
shall have a five year term. Subject to the Executive’s
continued employment with the Company, and subject to final
determination by the Compensation Committee, the Option shall
become exercisable with respect to the shares of Common Stock in
accordance with the following schedule:
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Date |
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Amount Exercisable |
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October 1,
2007
|
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25 |
% |
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October 1,
2008
|
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50 |
% |
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October 1,
2009
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75 |
% |
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October 1,
2010
|
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100 |
% |
3.5
Non-Compete Payment . In consideration for the
Executive’s agreement not to compete with the Company or to
solicit its employees in Sections 7.2 and 7.3, respectively,
the Company agrees to pay the Executive an amount equal to $750,000
(the “Non-Compete Payment”), payable in five
(5) equal installments of $150,000, beginning on the fifth
anniversary of the Effective Date and continuing until the ninth
anniversary of the Effective Date. To the
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extent that the Executive violates the terms of Section 7.2 or
7.3, the Non-Compete Payment shall be forfeited and the Executive
agrees to repay to the Company promptly any and all installments
thereof.
3.6
Participation in Employee Benefit Plans . The Executive
shall be permitted during the Term, if and to the extent eligible,
to participate in any group life, hospitalization or disability
insurance plan, health program, or any pension plan or similar
benefit plan of the Company, which is available generally to other
senior executives of the Company.
3.7
Expenses . Subject to such policies generally applicable to
senior executives of the Company, as may from time to time be
established by the Board of Directors, the Company shall pay or
reimburse the Executive for all reasonable expenses (including
travel expenses) actually incurred or paid by the Executive during
the Term in the performance of the Executive’s services under
this Agreement (“Expenses”) upon presentation of
expense statements or vouchers or such other supporting information
as it may require.
3.8
Vacation . The Executive shall be entitled to such amount of
vacation which is available generally to other senior executives of
the Company.
3.9
Additional Benefits . The Executive shall be entitled to the
use of an automobile comparable to that provided to other senior
executives in connection with the rendering of services to the
Company pursuant to this Agreement, together with reimbursement for
all gas, maintenance, insurance and repairs required by reason of
his use of such vehicle.
3.10
Controlling Document . To the extent there is any
inconsistency between the terms of this Agreement and the terms of
any plan or program under which compensation or benefits are
provided hereunder, this Agreement shall control. Otherwise, the
Executive shall be subject to the terms, conditions and provisions
of the Company’s plans and programs, as applicable.
4. Termination or Removal
from Duties .
4.1
Termination Upon Death . This Agreement shall terminate
automatically upon the Executive’s death.
4.2
Removal from Position Upon Disability . If during the Term,
as a result of a physical or mental incapacity or infirmity, the
Executive is unable to perform the essential functions of his job
with or without reasonable accommodation for a period or periods
aggregating 90 days during any twelve month period, the
Executive shall be deemed disabled (the “Disability”)
and the Company, by written notice to the Executive, shall have the
right to remove him from his position. The Executive’s status
as an employee of the Company shall continue after such removal for
the period of time that his Disability continues. However, the
Company shall have no obligation to reinstate or otherwise continue
the Executive’s employment if he should recover from his
Disability and any such termination shall not constitute a
termination without Cause or without Good Reason (as herein
defined). The existence of a Disability shall be determined by a
reputable, licensed physician selected by the Company in good
faith, whose determination shall be final and binding on the
parties.
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4.3
Termination for Cause . The Company may at any time, by
written notice to the Executive, terminate the Executive’s
employment hereunder for Cause. For purposes hereof, the term
“Cause” shall mean: (A) Executive’s
conviction of or pleading guilty or no contest to a felony;
(B) failure or refusal of the Executive in any material
respect (i) to perform the duties of his employment or to
follow the lawful and proper directives of the Board, provided such
duties or directives are consistent with this Agreement and such
duties or directives have been given to the Executive in writing,
or (ii) to comply with the reasonable and substantial written
policies, practices, standards or regulations of the Company (so
long as same are not inconsistent with this Agreement) as may be
established from time to time, if such failure or refusal under
either clause (i) or clause (ii) continues uncured for a
period of 10 days after written notice thereof, specifying the
nature of such failure or refusal and requesting that it be cured,
is given by the Company to the Executive; (C) any willful or
intentional act of the Executive committed for the purpose, or
having the reasonably foreseeable effect, of injuring the Company,
its business or reputation or of improperly or unlawfully
converting for the Executive’s own personal benefit any
property of the Company; or (D) any violation or breach of the
provisions of Section 7 of this Agreement.
4.4
Termination without Cause . During the Term, the Company may
terminate the Executive’s employment without Cause at any
time.
4.5
Termination with or without Good Reason . With forty-five
(45) days prior written notice to the Company, this Agreement
and the Executive’s employment hereunder may be terminated by
the Executive with or without Good Reason. For purposes of this
Agreement, “Good Reason” means if the Executive is able
to document, to the reasonable satisfaction of the Company’s
outside counsel, that the reason for such resignation is as a
direct result of either: (i) the Company’s material
breach of this Agreement; or (ii) the Board of Directors
requiring the Executive to act, or omit to act, in a way that the
Executive reasonably believes is illegal; provided, however, that a
termination by the Executive for Good Reason pursuant to
(i) or (ii) shall be effective only if, within
30 days following the delivery of written notice of a
termination for Good Reason by Executive to the Company, the
Company has failed to cure the circumstances giving rise to the
Good Reason. The written notice of termination for Good Reason must
specify in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment
under the provision so indicated, if applicable.
Any resignation pursuant to the terms of this Section shall not
constitute a breach of this Agreement by either party.
5. Rights and Obligations of
the Company and the Executive Upon Termination, or Removal .
Other provisions of this Agreement notwithstanding, upon the
occurrence of an event described in Section 4, the parties
shall have the following rights and obligations:
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5.1
Death . If the Executive’s employment is terminated by
reason of the Executive’s death, the Company shall pay the
Executive’s estate in one lump sum amount: (A) the
lesser of (i) one year’s Base Salary (as in effect as of the
date of termination), or (ii) the amount of Base Salary that
would have been payable to the Executive from the date of death
through the fifth anniversary of the Effective Date; plus
(B) any Special Bonus payments not yet received during the
Term as of the date of death; plus (C) any Preceding and/or
Pro Rata Bonus to which the Executive is entitled.
5.2
Disability .
(A) If
the Executive is removed from his position because of a Disability,
the Executive, for the period of time during which his Disability
continues, may continue to participate in certain of the employee
benefit p
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