EXHIBIT 10.35
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of the 7th day of May, 1997, between Phoenix Fuel
Co., Inc., an Arizona corporation (the "Company"), and Jack Keller
(the "Executive").
RECITALS
A. The Company is engaged, among other things, in the
business of purchasing, terminaling, transporting, marketing and
selling gasoline, diesel fuel, lubricants and other petroleum
products and chemicals and providing trucking and other services
in connection with petroleum products and chemicals (the
"Business"). The Executive has substantial experience and
expertise in managing and operating the Business.
B. The Company desires to retain the services of the
Executive as an executive of the Company and the Executive desires
employment with the Company in that capacity.
C. The Company and the Executive desire to embody the
terms and conditions of the Executive's employment in a written
agreement, which will supersede all prior agreements of
employment, whether written or oral, between the Company and the
Executive, pursuant to the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of their mutual covenants
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I
DUTIES AND TERM
1.1 Employment.
(a) The Executive is employed as an executive of the
Company. The Executive shall have such duties and responsibilities
as shall be assigned to the Executive from time to time by the
President or by the Board of Directors of the Company (the
"Board"), including the performance of duties with respect to
affiliates of the Company, including, but not limited to, Giant
Industries Arizona, Inc. ("Giant") (as defined below).
(b) During the period of his employment hereunder,
the Executive shall devote substantially all of his business time,
attention, skill and efforts to the faithful performance of his
duties hereunder.
1.2 Term. The term of this Agreement shall commence upon
the date of the consummation of the transactions contemplated by
the Stock Purchase Agreement (the "Stock Purchase Agreement")
dated April 30, 1997, among the Company, the shareholders of the
Company and Giant, and shall continue, unless sooner terminated,
for three (3) years (the "Term"). Upon this Agreement's
termination at the end of the Term, Executive shall be an employee
at will and will be subject to all employment policies applicable
to other Company employees.
1.3 Location. During the Term of this Agreement, the
Executive shall be based in Maricopa County, Arizona, and shall
not be required to be based anywhere other than Maricopa County,
Arizona, except for travel reasonably required in the performance
of his duties hereunder and except as may be otherwise agreed to
by the Executive.
ARTICLE II
COMPENSATION
2.1 Base Salary. Subject to the further provisions of
this Agreement, the Company shall pay the Executive during the
Term a base salary equal to: (a) during the remainder of 1997,
the Executive's current salary of $95,000.00 per year shall
continue; (b) during 1998, $145,000.00 per year; and (c)
thereafter, such base salary as may be determined by the Board
(collectively, the "Base Salary"). Except as provided in clause
(a) above, the Base Salary of the Executive shall not be decreased
at any time during the Term of this Agreement below the amount
specified in clause (b) above. Any participation in deferred
compensation, discretionary bonus, retirement, stock option and
other employee benefit plans and in fringe benefits shall not
reduce the Base Salary payable to the Executive under this Section
2.1.
2.2 Bonuses.
(a) Subject to the further provisions of this
Agreement, the Company shall pay the Executive during the Term
bonuses (the "Regular Bonuses") as follows: (a) during the
remainder of 1997, such bonuses as are payable under the Company's
bonus plan in effect immediately prior to the execution of this
Agreement; and (b) thereafter, such bonuses as are payable under
the Company's bonus plan in effect immediately prior to the
execution of this Agreement, or, if the Company in its sole and
absolute discretion elects to discontinue such bonus plan, the
Executive shall be entitled to participate in an equitable manner
with all senior executives of Giant in such discretionary bonuses
as may be authorized and declared by Giant's Board of Directors
for Giant's senior executives.
(b) In addition to the Regular Bonuses described in
Section 2.2(a), the Executive shall be entitled to a stay-on bonus
of $270,000.00 (the "Stay-on Bonus"). Such Stay-on bonus shall
accrue and be payable as follows: (i) 50-75% of such Stay-on
Bonus shall be paid in cash; (ii) 25-50% of such Stay-on Bonus
shall be paid in stock of Giant Industries, Inc. ("Giant
Industries") with the number of shares determined based on the New
York Stock Exchange closing price of Giant Industries stock on the
date of closing of the transactions contemplated by the Stock
Purchase Agreement (the "Closing"); (iii) within the ranges
provided in clauses (i) and (ii) above, the Executive may select
the percentages to be paid in cash and stock; and (iv) such Stay-
on Bonus shall accrue and the Executive may elect to have such
Stay-on Bonus paid (x) one-third two years after the date of this
Agreement and two-thirds three years after the date of this
Agreement or (y) one-third two years after the date of this
Agreement, one-third three years after the date of this Agreement,
and one-third on the first day of the calendar year following the
third anniversary of this Agreement. The Executive shall inform
the Company in writing of his selections and elections under
subparts (iii) and (iv) of this paragraph at the time of the
Closing. Notwithstanding the foregoing provisions of this
paragraph, except as otherwise provided in Section 4.2(b), the
Executive shall not be entitled to any unpaid portion of the Stay-
on-Bonus unless he is employed by the Company at the time a
payment is to be made in accordance with clause (iv) above.
2.3 Participation in Retirement and Employee Benefit
Plans; Fringe Benefits. The Executive shall be entitled to
participate in all plans of Giant or Giant Industries, as
applicable, relating to stock options, stock purchases, pension,
thrift, profit sharing, life insurance, hospitalization and
medical coverage, disability, travel or accident insurance,
education or other employee benefits that Giant has adopted or may
adopt for the benefit of its senior executives. In addition, the
Executive shall be entitled to a car allowance of $450.00 per
month, to cardlock fuel to be used for Company business only, and
to insurance coverage (subject to deductibles and other terms and
conditions applicable to Giant's senior executives) on the
Executive's primary auto used for work. Notwithstanding the
foregoing, the Company may terminate or reduce benefits under any
benefit plans and programs to the extent such reductions apply
uniformly to all senior executives entitled to participate
therein, and the Executive's benefits shall be reduced or
terminated accordingly.
2.4 Vacations. The Executive's years of Employment with
the Company shall count as of years of employment with Giant for
purposes of Giant's vacation policies, and the Executive shall be
entitled to not less than three weeks of paid vacation per year.
2.5 Existing Life Insurance. The life insurance policy
currently provided to the Executive by the Company will be
assigned to the Executive. Upon such assignment, the Company
shall have no further obligations with respect to the payment of
premiums on such policy and all such premiums shall be the
responsibility of the Executive.
ARTICLE III
TERMINATION OF EMPLOYMENT
3.1 Death of Executive. This Agreement shall
automatically terminate upon the death of the Executive.
3.2 By the Executive. The Executive shall be entitled to
terminate this Agreement by giving at least thirty (30) days
written notice to the Company.
3.3 By the Company. The Company shall be entitled to
terminate this Agreement by giving written notice to the
Executive:
(a) in the event of the Executive's Disability (as
defined in Section 3.4);
(b) for Cause (as defined in Section 3.4); and
(c) at any time without Cause (subject to Section
4.2).
3.4 Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(a) "Cause" shall mean any of the following:
(i) the conviction of or a plea of guilty by
the Executive to a felony involving fraud, embezzlement or theft;
(ii) willful misrepresentation of material fact
by the Executive in connection with the performance of his duties
hereunder;
(iii) failure of or refusal on the part of the
Executive to substantially perform all of his duties hereunder;
(iv) the Executive's violation of the Company's
or Giant's then current drug and alcohol policy or the Executive's
flagrant violation of any other of the Company's or Giant's then
current personnel policies;
(v) the Executive's unauthorized absence from
his duties hereunder for a period exceeding thirty (30)
consecutive days; or
(vi) material breach of Article V of this
Agreement by the Executive.
(b) "Disability" shall mean the Executive's
inability, with or without reasonable accommodation, to perform
all of the essential functions of his position hereunder on a
full-time basis for a period exceeding ninety (90) consecutive
days or for periods aggregating more than ninety (90) days during
any one hundred eighty (180) day period as a result of incapacity
due to physical or mental illness not due to drug or alcohol
abuse.
ARTICLE IV
COMPENSATION UPON TERMINATION OF EMPLOYMENT
4.1 Upon Termination for Death, Disability, at Expiration
of Term, by the Company for Cause or by the Executive. If the
Executive's employment is terminated by reason of the Executive's
death, Disability, upon expiration of the Term of this Agreement,
by the Company for Cause or by the Executive, the Company shall:
(a) pay the Executive (or his estate or
beneficiaries) any Base Salary which has accrued but not been paid
as of the termination date;
(b) reimburse the Executive (or his estate or
beneficiaries) for expenses incurred by him prior to the date of
termination which are subject to reimbursement pursuant to
applicable Company policies then in effect;
(c) provide to the Executive (or his estate or
beneficiaries) any accrued and vested benefits required to be
provided by the terms of any Company or Giant-sponsored benefit
plans or programs, together with any benefits required to be paid
or provided in the event of the Executive's death or Disability
under applicable law;
(d) pay the Executive (or his estate or
beneficiaries) any Regular Bonus with respect to a prior fiscal
year which has accrued and been earned but has not been paid;
(e) if the Executive's employment is terminated by
reason of the Executive's death or Disability, pay the Executive
(or his estate or beneficiaries) a prorated portion of the "Stay-
on Bonus," computed by (x) multiplying the Stay-on Bonus by a
fraction, the numerator of which shall be the number of days from
the Closing to the termination date and the denominator of which
shall be the number of days in the Term of this Agreement (i.e.,
1,096) and (y) subtracting all prior Stay-on Bonus payments from
the amount so computed; and
(f) if the Executive's employment is terminated upon
expiration of the Term of this Agreement, by the Company for Cause
or by the Executive, pay the Executive (or his estate or
beneficiaries) any portion of the Stay-on Bonus which has accrued
and been earned but has not been paid.
4.2 Termination by the Company Without Cause. If the
Executive's employment is terminated by the Company without Cause,
the Company shall:
(a) pay the Executive as provided in Section 4.1;
(b) pay the Executive the Stay-on Bonus in
accordance with the schedule in Section 2.2(b) notwithstanding the
fact that the Executive did not remain in the employ of the
Company until the payment dates specified in Section 2.2(b); and
(c) at the Company's sole election either: (i)
release the Executive from his duties and obligations under
Section 5.2 of this Agreement; or (ii) pay in one lump sum any
unpaid Base Salary to which the Executive would have been entitled
had he remained employed through the end of the Term.
4.3 For purposes of Section 4.2(c) of this Agreement, if
at the time of the Executive's termination the Board has not
determined the Executive's base salary for periods after 1998, the
Executive's annual base salary for these periods shall be deemed
to be the 1998 base salary specified in Section 2.1 of this
Agreement.
4.4 For purposes of this Article IV of this Agreement, a
Regular Bonus and a Stay-on Bonus shall not be deemed to have
accrued unless all conditions for its award have been satisfied,
such as any condition that an employee be employed on the date
that a Regular Bonus is paid.
ARTICLE V
RESTRICTIVE COVENANTS
5.1 Confidentiality.
(a) The Executive agrees to keep all trade secrets
and/or proprietary information (collectively, "Confidential
Information") of the Company or its affiliates (the
"Corporations") in strict confidence and agrees not to disclose
any Confidential Information to any other person, firm,
association, partnership, corporation or other entity for any
reason except as such disclosure may be required in connection
with his employment hereunder. The Executive further agrees not
to use any Confidential Information for any purpose except on
behalf of the Company.
(b) For purposes of this Agreement, "Confidential
Information" shall mean any information, process or idea that is
not generally known in the industry, that the Corporations
consider confidential, and/or that gives the Corporations a
competitive advantage, including, without limitation: customer
lists and records; suppliers; production costs or production
information; marketing plans; business forecasts; and sales
records. The Executive understands that the above list is
intended to be illustrative and that other Confidential
Information may currently exist or arise in the future. If the
Executive is unsure whether certain information or material is
Confidential Information, the Executive shall treat that
information or material as confidential unless the Executive is
informed by the Company, in writing, to the contrary.
"Confidential Information" shall not include any information
which: (i) is or becomes publicly available through no act or
failure of the Executive; (ii) was or is rightfully learned by the
Executive from a source other than the Corporations before being
received from the Corporations; or (iii) becomes independently
available to the Executive as matter of right from a third party.
If only a portion of the Confidential Information is or becomes
publicly available, then only that portion shall not be
Confidential Information hereunder.
(c) The Executive further agrees that upon
termination of his employment with the Company, for whatever
reason, the Executive will surrender to the Company all of the
property, client lists, notes, manuals, reports, documents and
other things in the Executive's possession, including copies or
computerized records thereof, which relate directly or indirectly
to Confidential Information.
5.2 Competition.
(a) The Executive agrees that from the date of
execution of this Agreement until the date which is three years
after such date (regardless of whether this Agreement is
terminated for any reason, voluntarily or involuntarily, prior to
such date) (the "Non-Competition Period"), the Executive shall
not:
(i) except as a passive investor in publicly-
held companies, and except for investments held as of the date
hereof and disclosed to the Board prior to the execution of this
Agreement, directly or indirectly own, operate, manage, consult
with, control, participate in the management or control of, be
employed by, maintain or continue any interest whatsoever in any
business that directly competes with the Company or the Business
in Arizona, New Mexico, Nevada, Texas, or Mexico; or
(ii) directly or indirectly solicit any
business of a nature that is directly competitive with the
Business or the Company from any individual or entity that
obtained products or services from the Company or its affiliates
at any time during his employment with the Company; or
(iii) directly or indirectly solicit any
business of a nature that is directly competitive with the
Business or the Company from any individual or entity solicited by
him on behalf of the Company or its affiliates; or
(iv) employ, or directly or indirectly solicit,
or cause the solicitation of, any employees of the Company or its
affiliates who are in the employ of the Company or its affiliates
at any time during the Term for employment by others.
(b) The Executive expressly agrees and acknowledges
that:
(i) this covenant not to compete is reasonably
necessary for the protection of the interests of the Company and
is reasonable as to time and geographical area and does not place
any unreasonable burden upon him;
(ii) the general public will not be harmed as a
result of enforcement of this covenant not to compete;
(iii) his personal legal counsel has reviewed
this covenant not to compete; and
(iv) he understands and hereby agrees to each
and every term and condition of this covenant not to compete.
5.3 Remedies. The Executive expressly agrees and
acknowledges that the covenant not to compete set forth in Section
5.2 is necessary for the Company's and its affiliates' protection
because of the nature and scope of their business and his position
with the Company. Further, the Executive acknowledges that, in
the event of his breach of his covenant not to compete, money
damages will not sufficiently compensate the Company for its
injury caused thereby, and he accordingly agrees that in addition
to such money damages he may be restrained and enjoined from any
continuing breach of the covenant not to compete without any bond
or other security being required. The Executive acknowledges that
any breach of the covenant not to compete would result in
irreparable damage to the Company. The Executive further
acknowledges and agrees that if the Executive fails to comply with
this Article V, the Company has no obligation to provide any
compensation or other benefits described in Article IV hereof.
The Executive acknowledges that the remedy at law for any breach
or threatened breach of Sections 5.1 and 5.2 will be inadequate
and, accordingly, that the Company shall, in addition to all other
available remedies (including without limitation, seeking such
damages as it can show it has sustained by reason of such breach),
be entitled to injunctive relief or specific performance.
ARTICLE VI
MISCELLANEOUS
6.1 No Assignments. This Agreement is personal to the
Executive and no party may assign or delegate any rights or
obligations hereunder without first obtaining the written consent
of the other party hereto, except that this Agreement shall be
binding upon and inure to the benefit of any successor corporation
to the Company and may be assigned by the Company to any affiliate
of the Company.
6.2 Notices. For the purpose of this Agreement, notices
and all other communications provided for in this Agreement shall
be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other addresses
as either party may have furnished to the other in writing in
accordance herewith, except that notice of a change of address
shall be effective only upon actual receipt:
To the Company: Phoenix Fuel Co., Inc.
c/o Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85267
Attention: Morgan Gust, Vice President
and General Counsel
To the Executive: Jack Keller
2029 East Caroline Lane
Tempe, Arizona 85284
6.3 Amendments or Additions. No amendments or additions
to this Agreement shall be binding unless in writing and signed by
each of the parties hereto.
6.4 Section Headings. The section headings used in this
Agreement are included solely for convenience and shall not
affect, or be used in connection with, the interpretation of this
Agreement.
6.5 Severability. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the
other provisions hereof. If, in any judicial proceedings, a court
shall refuse to enforce one or more of the covenants or agreements
contained herein because the duration thereof is too long, or the
scope thereof is too broad, it is expressly agreed between the
parties hereto that such scope or duration shall be deemed reduced
to the extent necessary to permit the enforcement of such
covenants or agreements.
6.6 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the
same instrument.
6.7 Arbitration. If any dispute, controversy or claim
arises out of or relates to this Agreement or the breach,
termination or validity thereof, and if such dispute, controversy
or claim cannot be settled through direct, good faith discussions
among the parties, the same shall be settled by arbitration in
accordance with the Arizona Arbitration Act, A.R.S. 12-1501
through 12-1518, in effect on the date of this Agreement. The
arbitration shall be the sole and exclusive forum for resolution
of the dispute, controversy or claim, and the award of the
arbitrator shall be final and binding to the extent permitted by
law. Any arbitration shall be conducted in Phoenix, Arizona. The
prevailing party in any such arbitration shall be reimbursed by
the other party for all costs and expenses of such arbitration,
including reasonable attorneys' fees.
6.8 Modifications and Waivers. No provision of this
Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and
signed by the Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party
hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time.
6.9 Governing Law. The validity, interpretation,
construction and performance of this Agreement shall be governed
by the laws of the State of Arizona without regard to its
conflicts of law principles.
6.10 Taxes. Any payments provided for hereunder shall be
paid net of any applicable withholding or other employment taxes
required under federal, state or local law.
6.11 Survival. The obligations of the Company under
Article IV hereof and the obligations of the Executive under
Article V hereof shall survive the expiration of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement as of the date first indicated above.
THE COMPANY:
PHOENIX FUEL CO, INC.,
an Arizona corporation
By: /s/ J. W. WILHOIT
--------------------
Title: COB
-----------------
THE EXECUTIVE:
/s/ JACK W. KELLER
-----------------------
Jack Keller
ACKNOWLEDGED:
GIANT INDUSTRIES ARIZONA, INC.
By: /s/ G. W. YATES
-----------------------------
Guy W. Yates
TITLE: Vice President Corporate Planning and Development