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XXXXX X. XXXXX
SUNBELT EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT is dated as of December 18, 1997,
(the "Effective Date"), and is entered into between, SUNBELT AUTOMOTIVE GROUP,
INC. ("Sunbelt") a Georgia corporation, (the "Company") and XXXXX X. XXXXX
("Executive").
WHEREAS, Sunbelt was organized in December of 1997 and intends to acquire,
merge and purchase certain businesses as a part of its strategy to engage in an
initial public offering of its stock (the "IPO") or such other change in
control; and
WHEREAS, the Company wishes to employ Executive as its Chief Financial
Officer and its Vice President of Finance & Controller (hereinafter
collectively, "CFO"), and Executive wishes to perform services for the Company
as CFO; and
WHEREAS, the Executive and the Company desire to enter into this Executive
Employment Agreement to govern the terms and conditions of Executive's
employment by and with the Company.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
and agreements of the parties hereto, the parties hereby covenant and agree as
follows:
ARTICLE I.
EMPLOYMENT, DUTIES AND RESPONSIBILITIES
1.1 EMPLOYMENT. The Company and through its Board of Directors (the
"Board"), hereby agrees to employ Executive as CFO of the Company for the Term
(defined in Section 2.1 below), and Executive hereby agrees to accept such
employment on the terms and conditions set forth herein. Executive agrees to
devote substantially all of his business time and efforts to the business of the
Company. Anything herein to the contrary notwithstanding, nothing shall preclude
Executive from (a) serving on the boards of directors of a reasonable number of
other corporations or trade associations and/or charitable organizations, (b)
engaging in charitable activities and community affairs, and (c) managing his
and his immediate family's personal investments and affairs, provided that such
activities do not materially interfere with the proper performance of his duties
and responsibilities.
1.2 DUTIES AND RESPONSIBILITIES. Commencing as of December 18, 1997,
Executive shall assume the responsibilities, perform the duties and exercise the
powers as CFO. Executive shall be responsible for the general financial affairs
of the Company and its Subsidiaries as prescribed by the Board of the Company
and Sunbelt.
1.3 REPORTING. Executive shall report, in the performance of his duties,
directly to the Chief Executive Officer ("CEO") of the Company.
ARTICLE II.
TERM
2.1 TERM. The term of Executive's employment as the CFO, or such other
acceptable senior level management position, under this Agreement (the "Term")
shall commence on the Effective Date and shall continue until earlier of (a)
June 30, 2003, or (b) the occurrence of a
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Change in Control (as defined in Section 6.1 below); provided that (i) the Term
shall be renewed for an additional one-year period on the expiration of the
original Term of this Agreement and on each succeeding anniversary thereof
(each, a "Renewal Date"), unless the Company or Executive gives written notice,
at least ninety (90) days prior to a Renewal Date, of its or his intention not
to so renew the Term or any Renewal, and (ii) the Term may be terminated earlier
as provided in Article V hereof.
ARTICLE III.
COMPENSATION AND EXPENSES
3.1 SALARY, BONUSES AND BENEFITS. As compensation and consideration for the
services to be rendered hereunder during the Term by Executive, the Company
shall pay, and Executive shall accept, the following (subject, in each case, to
the provisions of Article V hereof):
(a) BASE SALARY. Commencing as of January 2, 1998, the Company shall pay
Executive an annual Base Salary during the Term of One Hundred Thirty-Five
Thousand Dollars ($135,000.00). All annual Base Salary shall be payable in
accordance with the normal payment procedures of the Company.
(b) ANNUAL CASH BONUS. Commencing with the fiscal year beginning July 1,
1998 and for each fiscal year of the Company during the Term and any Renewal
Term, the Company shall pay Executive an annual cash bonus (the "Annual Cash
Bonus") as determined by the Compensation Committee (or in the absence of such a
committee, by either the Executive Committee or the Board), based on
satisfaction of certain performance criteria to be established by agreement
between the Compensation Committee (or in the absence of such a committee, by
either the Executive Committee or the Board) and Executive. If the Company meets
certain financial and other performance targets to be agreed upon by the
Compensation Committee (or in the absence of such a committee, by either the
Executive Committee or the Board) and the Executive, the Annual Cash Bonus shall
be targeted at an amount equal to at least fifty percent (50%) of Executive's
annual Base Salary as of the year in question, but in no event shall the Annual
Cash Bonus exceed the Executive's annual Base Salary. However, nothing herein
shall be construed as a guarantee of any Annual Cash Bonus. The Annual Cash
Bonus shall be determined (prorated for the final year of employment) and paid
within ninety (90) days after the end of each fiscal year of the Company during
the Term.
(c) STOCK GRANT. As compensation for services rendered by the Executive
for his part in helping the Company in its IPO process, and coming to work
full-time for the Company, the Company agrees to award to the Executive the
right to purchase 10,016 shares of its voting common stock (the "IPO Award").
These shares shall be granted pursuant to the Company's 1997 and 1998 Incentive
Stock Plan (the "Incentive Stock Plan") and shall be granted so as to minimize
the cash expenditure and tax consequences to the Executive.
(d) STOCK OPTIONS.
1. First Option. In addition to the IPO Award above, the Company
shall grant to the Executive, under the Incentive Stock Plan, an option (the
"First Option") to purchase up to 25,000 shares of the Company's voting common
stock at the exercise price adopted under the Company's Incentive Stock Plan and
as set forth on the Option Grant, attached hereto as Exhibit "A" and
incorporated herein. The First Option shall terminate on the tenth anniversary
of the grant of the First Option, subject to earlier termination as may be set
forth in this Agreement, the Incentive Stock Plan or the Option Grant. The First
Option is in addition to any other option award or grant which may be made to
the Executive during his employment.
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2. Second Option. In addition to the IPO Award and the First Option
above, the Company shall grant to the Executive, under the Incentive Stock Plan,
an option (the "Second Option") to purchase up to 70,000 shares of the Company's
voting common stock at the exercise price adopted under the Company's Incentive
Stock Plan and as set forth on the Option Grant, attached hereto as Exhibit "B"
and incorporated herein. The Second Option shall terminate on the tenth
anniversary of the grant of the Second Option, subject to earlier termination as
may be set forth in this Agreement, the Incentive Stock Plan or the Option
Grant. The Second Option is in addition to any other option award or grant which
may be made to the Executive during his employment.
3. Third Option. In addition to the IPO Award, the First Option and
Second Option above, the Company shall grant to the Executive, under the
Company's Incentive Stock Plan and the Option Grant, attached hereto as Exhibit
"C" and incorporated herein, an option (the "Third Option") to purchase up to
25,000 shares of the Company's voting common stock at an exercise price equal to
the price per share to the public set forth on the cover of the prospectus
relating to the IPO. The Third Option shall terminate on the tenth anniversary
of the grant of the Third Option, subject to earlier termination as may be set
forth in this Agreement, the Incentive Stock Plan or the Option Grant. The Third
Option is in addition to any other option award or grant which may be made to
the Executive during his employment.
(e) BENEFIT PROGRAMS. Executive shall be eligible to participate in or
receive benefits under all of the Company's employee and executive benefit plans
or arrangements including, without limitation, plans or arrangements providing
for health and disability insurance coverage, life insurance for the benefit of
Executive's beneficiaries, deferred compensation and pension benefits, and
personal financial, investment, legal or tax advice, all at the highest level
that is available through the Company and/or any of its Subsidiaries to their
senior executive management (the "Benefit Programs"). In addition, Executive
shall be entitled to such perquisites of employment, including, but not limited
to, two (2) Demo automobiles, insurance, etc., as are made available to the
senior executive management of the Company and/or its Subsidiaries. If this
Agreement is assigned to any Subsidiaries of the Company or any other party,
Executive shall be granted credit for all service with the Company and/or its
Subsidiaries prior to the date of such assignment for all purposes of the
Benefit Programs, including, but not limited to, eligibility, vesting and
benefits. To the extent there is a period of employment required as a condition
for full benefit coverage under any Benefit Programs, and Executive would not
otherwise meet the requirements taking into consideration past service granted
for service with the Company and/or its Subsidiaries, to the extent permissible
under applicable law, the Company agrees to take or to cause to be taken all
actions necessary so that Executive will be deemed to have met such requirement.
The Company agrees that whenever Executive is required to pay for coverage or
benefits under a Benefit Program from his own wages, the Company shall reimburse
him for the sum of the amount of such payments plus federal and state income
taxes on the entire reimbursement amount (including the tax on such taxes) so
that Executive will not have incurred any cost in obtaining such coverage or
benefit except as otherwise may be specifically set forth herein.
(f) VACATION. Executive shall be entitled to paid vacation during each
year of the Term in an amount equal to four (4) weeks per year. Executive shall
have the right to determine the time and duration of any vacation so taken, in
his sole discretion. Unused vacation days may be accumulated from year to year,
up to a maximum carryover of eight (8) weeks in any given year.
3.2 EXPENSES. The Company shall reimburse Executive for reasonable business-
related expenses incurred by him in connection with the performance of services
hereunder during the Term, subject to the Company's policies relating to
business-related expenses as in effect from time to time during the Term.
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ARTICLE IV.
EXCLUSIVITY, ETC.
4.1 EXCLUSIVITY. Executive agrees that during the Term he will not engage in
any other business activities, pursued for gain, profit or other pecuniary
advantage, that are competitive with the activities of the Company or any of its
Affiliates, except as permitted in Section 4.2 below. Executive agrees that all
of his activities as an employee of the Company shall be in conformity in all
material respects with all policies, rules and regulations and directions of the
Company not inconsistent with this Agreement and which have been expressly
communicated to him, whether orally or in writing.
4.2 OTHER BUSINESS VENTURES. Executive agrees that, so long as he is
employed by the Company, he will not have any financial or other beneficial
interest in any business enterprise which is competitive with any business
engaged in by the Company or any of its Affiliates. Notwithstanding the
foregoing or anything contained in Section 4.1 hereof, Executive may own,
directly or indirectly, up to two percent (2%) of the outstanding capital stock
of any such business having a class of capital stock which is traded on any U.S.
or foreign stock exchange or in the over-the-counter market.
4.3 CONFIDENTIALITY; NON-COMPETITION.
(a) Executive agrees that he will not, at any time during or after the
Term or any Renewal Term, make use of or divulge to any other person, firm or
corporation any trade or business secret, process, method or means, or any other
confidential information concerning the business or policies of the Company or
any of its subsidiaries or Affiliates (as defined in Section 5.3 hereof), except
(i) as such disclosure or use may be required or appropriate in connection with
his work as an employee of the Company or (ii) when required to do so by a court
of law, by any governmental agency having supervisory authority over the
business of the Company or by any administrative or legislative body (including
a committee thereof) with apparent jurisdiction to order him to divulge,
disclose or make accessible such information. For purposes of this Agreement, a
"trade or business secret, process, method or means, or any other confidential
information" shall mean and include information treated as confidential or as a
trade secret by the Company or any of its Subsidiaries or Affiliates, including
but not limited to, information regarding contemplated products, models,
compilations, business and financial methods or practices, marketing,
merchandising and selling techniques, customers, vendors, suppliers, trade
secrets, training programs, manuals or materials, technical information,
contracts, systems, procedures, mailing lists, know-how, trade names,
improvements, pricing, price lists, financial or other data (including the
revenues, costs or profits associated with any of the Company's products or
services), business plans, strategy, code books, invoices and other financial
statements, computer programs, software systems, databases, discs and printouts,
other plans (technical or otherwise), customer and industry lists, supplier
lists, correspondence, internal reports, personnel files, sales and advertising
material, telephone numbers, names, addresses or any other compilation of
information, written or unwritten, which is or was used in the business of the
Company or any of its subsidiaries or Affiliates. Executive's obligation under
this Section 4.3 (a) shall not apply to any information which is generally known
to the public or hereafter becomes generally known to the public without the
fault of Executive. Executive agrees not to remove from the premises of the
Company or except as specifically permitted in writing by the Company, and
Executive agrees and acknowledges that all of such information, in any form, and
copies and extracts thereof, are and shall remain the sole and exclusive
property of the Company, Executive shall return to the Company the originals and
all copies of any such information provided to or acquired by Executive in
connection with the performance of his duties for the Company, and shall return
to the Company all files, correspondence and/or other communications received,
maintained
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and/or originated by Executive during the course of his employment, and no copy
of any such shall be retained by him, except that he may retain his personal
notes, diaries, Rolodexes and correspondence.
(b)(i) Executive acknowledges that the agreements and covenants
contained in this Section 4.3(b) are essential to protect the value of the
Company's business and assets and by virtue of his employment with the Company,
Executive has obtained and will obtain knowledge, contacts, know-how, training,
experience and other information relating to the Company's business operations,
and there is a substantial probability that such knowledge, know-how, contacts,
training, experience and information could be used to the substantial advantage
of a competitor of the Company and to the Company's substantial detriment.
Accordingly, for a period commencing on the date of termination of Executive's
employment with the Company and ending one (1) year from and after such date
(the "Non-Compete Period"), Executive shall not, directly or indirectly, for
himself or on behalf of or in conjunction with any person, partnership,
corporation or other entity, compete, own, operate, control, or participate or
engage in the ownership, management, operation or control of, or be connected
with as an officer, employee, partner, director, shareholder, representative,
consultant, independent contractor, guarantor, advisor or in any other manner or
otherwise have a financial interest in, a proprietorship, partnership, joint
venture, association, firm, corporation or other business organization or
enterprise that competes with the Company (which for this purpose shall mean any
business or enterprise that operates dealerships for the retail sales of new
and used automobiles or trucks and businesses ancillary thereto), provided that
such business or enterprise (A) is or becomes located or otherwise engaged
within a 100 mile radius of the city of Atlanta, Georgia or within a 100-mile
radius of any automobile or truck dealership or ancillary business in which the
Company, directly or indirectly, has a 50% or greater economic or voting or
otherwise controlling ownership interest as of the termination of Executive's
employment hereunder, or (B) is an automobile or truck dealership or group of
affiliated automobile or truck dealerships (and all businesses ancillary
thereto) whose aggregate gross sales during the 12 month period immediately
preceding the date of Executive's termination exceeded $50,000,000, and provided
further that it shall not be a violation of this Section 4.3 (b) if (x)
Executive owns up to one percent (1%) of the outstanding capital stock of any
such business having a class of capital stock which is traded on any U.S. or
foreign stock exchange or in the over-the-counter market, (y) Executive owns,
operates, is employed by or is otherwise connected with an advertising agency
that serves automobile dealerships, provided Executive does not personally
perform any work for, or otherwise provide any advice with respect to, any
account that is engaged in competitive activity with the Company, or (z)
Executive is employed by or is a consultant or independent contractor for an
entity that competes with the Company but Executive is employed by or is a
consultant or independent contractor for a division or subsidiary of such entity
that does not engage in such competitive activity. During the Non-Compete
Period, Executive shall not interfere with or disrupt, or attempt to interfere
with or disrupt, the relationship, contractual or otherwise, between the Company
and any customer, client, supplier, manufacturer, distributor, consultant,
independent contractor or employee of the Company.
(ii) It is the desire and intent of the parties that the provisions
of this Section 4.3(b) shall be enforced to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. Accordingly, if any particular portion of this Section 4.3(b) shall
be adjudicated to be invalid or unenforceable, this Section 4.3(b) shall be
deemed amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of this
Section 4.3(b) in the particular jurisdiction in which such adjudication is
made.
(c) Executive agrees that, at any time and from time to time during and
after the Term, he will execute any and all documents which the Company may
reasonably request to effectuate the provisions of this Section 4.3.
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ARTICLE V.
TERMINATION
5.1 TERMINATION BY THE COMPANY. The Company shall have the right to
terminate Executive's employment at any time, with or without "Cause."
(A) TERMINATION FOR CAUSE. For purposes of this Agreement, "Cause" shall
mean:
(i) Executive is convicted of or enters a plea of guilty to any
felony under federal or state law (except under any state's laws regulating the
enforcement of motor vehicles involved in accidents);
(ii) Executive engages in continued conduct that constitutes gross
neglect or willful misconduct in carrying out his duties under this Agreement as
the result of alcoholism, drug addiction, or nervous breakdown; or
(iii) Executive refuses to follow the instructions, orders or
directives of the Board or the Executive Committee with respect to his duties
and responsibilities hereunder, provided that such refusal shall constitute
Cause only if the instruction, order or directive in question has been furnished
to Executive in writing and provided further that such refusal shall not
constitute Cause if Executive has good faith and reasonable belief based on
advice of counsel, that to follow such instruction, order or directive would be
unlawful;
(iv) Executive engages in any of the following acts which have a
material adverse impact on the financial condition of the Company:
(a) actual fraud or other material acts or dishonesty in
fulfilling his assigned responsibilities hereunder, or
(b) the willful or grossly negligent destruction of any
material amount of the Company's tangible property.
The Board shall notify Executive of its intent to terminate him for
Cause by providing written notice ("Notice of Cause") stating in as much detail
as possible the particular event, act or acts, or failure or failures to act,
that constitute the grounds on which the proposed termination for Cause is
based; such Notice of Cause must be given within fifteen (15) days of the date
any of the members of the Board (exclusive of Executive) learns of the
circumstances giving rise to the Notice of Cause. Executive shall have fifteen
(15) days after receipt of the Notice of Cause in which to cure or otherwise
correct the circumstances detailed. Executive may also, within such fifteen (15)
day period, request by written notice that the Board hold a hearing at which
Executive may contest the proposed termination for Cause. The hearing shall be
held on a date set by the Board within fifteen (15) days of the date the Board
receives notice of the hearing whether Executive has been terminated for Cause
as set forth in the Notice of Cause. If Executive does not request a hearing and
the circumstances described in the Notice of Cause have not been cured within
the fifteen (15) day period following the date of the Notice of Cause, Executive
shall be deemed terminated for Cause, effective as of the day the Notice of
Cause was given by the Company.
(B) TERMINATION WITHOUT CAUSE. The Company may terminate Executive
without Cause upon sixty (60) days advance written notice to Executive and such
termination shall not constitute a breach of this Agreement.
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(C) IPO TERMINATION. This Agreement shall automatically terminate with
no further obligations by either party if the IPO has not been completed and
become effective on or before August 1, 1998.
5.2 TERMINATION BY EXECUTIVE.
(a) VOLUNTARY TERMINATION. Executive shall have the right to terminate
his employment at any time without cause (a "Voluntary Termination"). A
Voluntary Termination is not a termination for Good Reason (as hereafter
defined) or a termination as the result of Disability (as hereafter defined) or
death. A Voluntary Termination, excepting death) shall be effective upon sixty
(60) days' advance written notice to the Company and shall not constitute a
breach of this Agreement.
(b) TERMINATION FOR GOOD REASON. Termination for "Good Reason" shall
mean a termination of Executive's employment at the Executive's initiative
following the occurrence, without Executive's written consent, of one or more of
the following events:
(i) A reduction in Executive's then current base annual salary;
(ii) The removal of the Executive as CFO of the Company or such
other senior level executive management position;
(iii) Any (1) diminution in Executive's duties other than changes
which neither individually nor in the aggregate will or will likely cause any
actual or perceived material reduction in his powers, duties and
responsibilities as enumerated in this Agreement, or (2) assignment to Executive
of duties which are either fundamentally or materially inconsistent with his
position as CFO of the Company;
(iv) Executive determines that he cannot carry out his duties and
responsibilities as CFO or such other senior level management position in the
manner contemplated by this Agreement;
(v) The occurrence of a Change in Control (as defined in Section
6.1 hereof);
(vi) The failure of the Company to obtain the assumption in writing
of its obligation to perform this Agreement by any successor to the Company
within fifteen (15) days after a merger, consolidation or sale of all or
substantially all of the Company's operating assets or its stock or any such
similar transaction by the Company; or
(vii) The Company fails to make any payments due to the Executive
hereunder or otherwise materially breaches its obligations under this Agreement.
Prior to his termination for Good Reason, Executive shall give written
notice ("Notice of Good Reason") to the Board of his intention to terminate this
Agreement for Good Reason, such Notice of Good Reason (A) to state in detail the
particular event, act or acts or failure or failures to act that constitute the
grounds on which the proposed termination for Good Reason is based, and (B) to
be given within fifteen (15) days of his learning of such event, act or acts or
failures to act. The Company shall have fifteen (15) days after the date that
the Notice of Good Reason has been received by the Board in which to cure or
correct the circumstances giving rise to the Notice of Good Reason. If the
Company fails to cure such conduct within such fifteen (15)
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day cure period, Executive's employment shall be terminated for Good Reason as
of the expiration of the fifteen (15) day cure period.
5.3 DEATH. In the event Executive dies during the Term, this Agreement shall
automatically terminate effective upon the date of Executive's death.
5.4 DISABILITY. In the event that Executive shall suffer a Disability, the
Company shall have the right to terminate the Agreement, which shall be
effective upon written notice to Executive. "Disability" means a physical or
mental condition which renders Executive incapable of performing Executive's
regular duties hereunder for a period of one hundred twenty (120) consecutive
days. In the event of any disagreement between Executive and the Company as to
whether Executive is suffering from a Disability, the determination of
Executive's Disability shall be made by one or more board certified licensed
physicians practicing the specialty of medicine applicable to Executive's
disorder in the Atlanta metropolitan area in accordance with the provisions of
this Section. If either the Company or Executive desires to initiate the
procedure provided in this Section, such party (the "Initiating Party") shall
deliver written notice to the other party (the "Responding Party") in accordance
with the provisions of this Agreement specifying that the Initiating Party
desires to proceed with a medical examination and the procedures specified in
this Section. Such notice shall include the name, address and telephone number
of the physician selected by the Initiating Party (the "Disability Examination
Notice"). If the Responding Party fails within ten (10) days after the receipt
of the Disability Examination Notice to designate a physician meeting the
standards specified herein, the physician designated by the Initiating Party in
the Disability Examination Notice shall make the determination of Disability as
provided in this Section. If the Responding Party by written notice notifies the
Initiating Party within ten (10) days of the receipt by the Responding Party of
the Disability Examination Notice by notice specifying the physician selected by
the Responding Party for purposes of this Section, then each of the two
physicians as so designated by the respective parties shall each examine
Executive. Examinations shall be made by each such physician within ten (10)
days of such physician's respective designation. Each physician shall render a
written report as to whether in such physician's opinion Executive is suffering
a Disability. If the two physicians agree on the status of Executive for
purposes of this Section, such determination shall be conclusive and dispositive
for all purposes of this Section. If the two physicians cannot so agree, the two
physicians shall jointly select a third physician meeting the standards
specified in this Section within ten (10) days after the later report of the two
physicians is submitted. The third physician shall render a written report on
the status of Executive within ten (10) days of selection and such report shall
be dispositive for purposes of this Section. For purposes of this Section,
Executive agrees that he shall promptly submit to such examinations and tests as
such physicians shall reasonably request for purposes of making a determination
of Disability as provided herein. Failure or refusal of Executive to submit to
the examination as required by this Section shall constitute a conclusive
admission by the Executive that Executive is suffering from a Disability as
provided herein.
5.5 SEVERANCE PAY UPON TERMINATION. Amounts due under this Section 5.5 are
in the nature of severance payments considered to be reasonable by the Company
and are not in the nature of a penalty, provided that such payments shall be
Executive's exclusive remedy relating to the termination of his employment
hereunder.
(a) FOR CAUSE/VOLUNTARY TERMINATION/DEATH/END OF TERM. In the event of
termination of Executive's employment (i) by the Company for Cause, (ii) by
Executive other than for Good Reason, (iii) by reason of Executive's death, or
(iv) by reason of either party's election not to extend the Term as provided in
Section 2.1 hereof, the Company shall pay to Executive (or his beneficiary in
the event of his death), any base annual salary and any annual bonus earned (for
a full fiscal year or prorated for a partial fiscal year) but not paid to
Executive prior to the effective date of such termination, and Executive shall
be entitled to other additional
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benefits in accordance with the benefit plans of the Company. In addition,
Executive and his spouse shall be entitled to continued participation in all
medical, dental and hospitalization coverage as set forth in Section 5.5(e)
hereof.
(b) GOOD REASON/WITHOUT CAUSE. In the event of termination of
Executive's employment (i) by the Company other than for Cause, or (ii) by
Executive for Good Reason, then the Executive shall receive the following:
(i) Salary. The Executive shall be paid all earned but unpaid
annual Base Salary and will continue to receive his current annual Base Salary
(subject to withholding of all applicable taxes) for the remainder of the Term
of this Agreement plus the amounts to be paid under Section 1.5 for the
Consulting Term. For purposes hereof, the Executive's "current annual Base
Salary" shall be the highest rate in effect during the six-month period prior to
the termination of Executive's employment. The amounts due hereunder for the
annual Base Salary shall be paid in single lump payment which shall be paid
within ninety (90) days of termination. The amounts due for the Consulting Term
Payments shall be payable monthly commencing on the first month (1st) after
termination and continuing each month thereafter.
(ii) Bonuses and Incentives. The Executive shall receive any Annual
Cash Bonus then earned (for a full fiscal year or prorated for a partial fiscal
year) plus bonus payments from the Company for the thirty-six (36) months
following the month in which his employment is terminated in an amount for each
such month equal to one-twelfth of the average of the Annual Cash Bonuses paid
to him for the two calendar years immediately preceding the calendar year in
which such termination occurs (provided that calendar years prior to 1998 shall
not be considered). Any Annual Cash Bonus that the Executive had previously
earned but which may not yet have been paid as of the date of termination shall
be due and payable. All such bonus amounts shall be paid in a single lump sum
payment which shall be paid not later than ninety days after his termination.
(iii) Health and Life Insurance Coverage. The Executive shall
receive post-termination medical, dental, and hospitalization insurance coverage
as provided in Section 5.5(c).
(iv) Employee Retirement Plans. In addition to the benefits
provided herein, to the extent permitted by the applicable plan, the Executive
will be entitled to continue to participate, consistent with past practices, in
all employee retirement plans maintained by the Company in effect as of the date
of the termination of his employment. The Executive's participation in such
retirement plans shall continue for a period of thirty-six (36) months from the
date of the termination of his employment (at which point he will be considered
to have terminated employment within the meaning of the plans) and the
compensation payable to the Executive under (i) and (ii) above shall be treated
(unless otherwise excluded) as compensation under such plans. If continued
participation if any plan is not permitted or if any such plan does not continue
to exist, the Company shall pay to the Executive and, if applicable, his
designated beneficiary, a supplemental benefit equal to the present value on the
date of termination of employment (calculated as provided in the plan) of the
excess of (i) the benefit the Executive would have been paid under such plan if
he had continued to be covered for the 36-month period (less any amounts he
would have been required to contribute) with assumed earnings calculated at
eight percent (8%) per annum, over (ii) the benefit actually payable under such
plan. The Company shall pay such additional benefits (if any) in a lump sum.
(v) Effect of Lump Sum Payment. The lump sum payments under (i) or
(ii) above shall not alter the amounts Executive is entitled to receive under
the benefit plans described in (iv) above. Benefits under such plans shall be
determined as if Executive had remained employed and received such payments over
a period of thirty-six (36) months.
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(vi) Effect of Death. The benefits payable or to be provided under
this Agreement shall not cease in the event of the Executive's death and such
benefits shall be payable to his designated beneficiary (in accordance with
Section 7.2 hereof) or, if none, the legal representative of Executive's estate.
(vii) Options. Any options awarded to and granted to the Executive
but not yet vested shall immediately vest and become exercisable by the
Executive as provided in Section 5.6(b).
(c) DISABILITY. In the event of termination of Executive's employment
for Disability as described in Section 5.4 hereof, then, in addition to the
amounts described in Section 5.5(a) hereof, Executive and his spouse shall be
entitled to continued participation in medical, dental and hospitalization
coverage and, if not prohibited by law, in all other employee plans and programs
in which they were participating on the date of termination of Executive's
employment due to Disability until the earlier of (A) the end of the period
during which he is receiving salary continuation payments, and (B) the date, or
dates, they receive similar coverage and benefits under the plans and programs
of a subsequent employer (such coverages and benefits to be determined on a
coverage-by-coverage, or benefit-by-benefit, basis); and (C) plus the benefits
as provided in 5.5(e) herein. In addition, Executive shall be entitled to
continue to receive for one hundred twenty (120) days his base salary in effect
as of the date of the onset of his Disability.
(d) DEATH. In the event of termination of Executive's employment due to
death, then, in addition to the amounts and other benefits described in this
Agreement, the Company shall pay to the legal representative of Executive's
estate the greater of $135,000 or his most recent annual Base Salary plus his
average Cash Bonus for a period of one (1) year following the death of the
Executive.
(e) POST-TERMINATION MEDICAL, DENTAL AND HOSPITALIZATION INSURANCE
COVERAGE. In the event of termination of Executive's employment for any reason
whatsoever, Executive and his spouse shall be entitled to continued
participation in all medical, dental and hospitalization insurance coverage on
the same terms and conditions that are provided to the senior corporate
management of the Company, as any of such insurance coverage may be modified
from time to time with respect to such senior corporate management. Executive
and his spouse shall be entitled to continued participation in the applicable
coverage until the date on which Executive is employed by any Person other than
the Company, or any Affiliate of the Company, and Executive becomes covered by
the medical, dental and hospitalization insurance coverage through such other
Person's plan.
(f) GOLDEN PARACHUTE PAYMENTS. If the aggregate present value
(determined as of the date of termination of employment of Executive in
accordance with the provisions of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") (or any successor section thereof) and the
regulations and rulings thereunder ("Section 280G")) of the sum of (i) severance
payments made to Executive due to his termination for Good Reason as a result of
a Change in Control under this Section, and (ii) all other payments to Executive
in the nature of compensation which are contingent on a change in ownership or
effective control of the Company or in the ownership of a substantial portion of
the assets of the Company would result in an excess parachute payment (as
determined under Section 280G), then the Company shall pay to Executive an
additional severance amount under this Subsection (e) equal to the sum of (A)
the amount of tax imposed by Code Section 4999 upon excess parachute payments
received by Executive, and (B) federal and state income taxes payable on both
the tax amount in (A) and the entire amount paid under (B), such that Executive
is reimbursed for, and has no out-of-pocket expenses with respect to, the cost
of all income taxes payable upon amounts paid to Executive under this Subsection
(f).
5.6 TREATMENT OF OPTIONS UPON TERMINATION
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(a) FOR CAUSE/VOLUNTARY TERMINATION. In the event of termination of
Executive's employment (i) by the Company for Cause, or (ii) voluntarily by
Executive other than for Good Reason, the Options, to the extent not then vested
and exercisable on the date of such termination, shall be immediately cancelled.
To the extent the Options are then vested and exercisable on the date of such
termination, they may be exercised (A) in the event of termination by the
Company for Cause, for a period of ninety (90) days after the date of such
termination, or (B) in the event of Voluntary Termination by Executive for a
period of one (1) year after the date of such termination.
(b) WITHOUT CAUSE OR FOR GOOD REASON OR DUE TO RETIREMENT, DEATH OR
DISABILITY. In the event of the termination of Executive's employment by the
Company without Cause or by Executive for Good Reason or due to the Retirement,
Death or Disability of Executive, all grants of stock and all stock options
granted to Executive pursuant to the Company's Incentive Stock Plan shall, to
the extent not then vested and exercisable on the date of such termination,
become immediately vested and exercisable for a period of ninety (90) days after
the date of such termination, or such longer period of time as is permitted
under the applicable plan or grant.
5.7 NO MITIGATION; NO OFFSET. In the event of any termination of employment
under this Article V, Executive shall be under no obligation to seek other
employment and there shall be no offset against amounts due Executive under this
Agreement on account of any remuneration attributable to any subsequent
employment that he may obtain, except as specifically provided for fringe
benefits in this Article V.
ARTICLE VI
CHANGE IN CONTROL
6.1 CHANGE IN CONTROL. A "Change in Control" shall mean the occurrence of
any one of the following events:
(a) Prior to an IPO, the shareholders of the Company or any of its
Affiliates (as defined in Section 6.2 below, individually or collectively, sell
or otherwise transfer to persons or entities who are not Affiliates of the
Company, in one transaction or a series of related transactions, 75% or more of
the Voting Stock (as defined below) of the Company or any of its Affiliates;
(b) Any "person," as such term is used in Sections 3(a)(9) and 13(d) of
the Securities Exchange Act of 1934, becomes a "beneficial owner," as such term
is used in Rule 13s-3 promulgated under that act (other than an Affiliate of the
Company or any "person" who was a "beneficial owner" of 10% or more of the
Voting Stock of the Company on the date hereof or who has received Voting Stock
from Executive), of 50% or more of the Voting Stock of the Company or any of
its Affiliates prior to any IPO and 40% or more of the Voting Stock of the
Company or any of its Affiliates after an IPO;
(c) The majority of the Board consists of individuals other than
"Incumbent Directors," which term means the members of the Board on the date of
this Agreement (excluding Executive) or otherwise designated pursuant to various
agreements among the Company's stockholders in effect on the date hereof;
provided, that any person becoming a director subsequent to such date whose
election or nomination for election was supported by a majority of the directors
who then comprised the Incumbent Directors shall be considered to be an
Incumbent Director;
(d) All or substantially all of the assets or business of the Company or
any of its Affiliates is disposed of pursuant to a merger, consolidation or
other transaction other than to an Affiliate of the Company (unless the
shareholders of the Company immediately prior to such merger, consolidation or
other transaction beneficially own, directly or indirectly, 50% or more of
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the Voting Stock or other ownership interests of the entity or entities, if any,
that succeed to the business of the Company); or
(e) the Company combines with another company (other than an Affiliate
of the Company) and is the surviving corporation but, immediately after the
combination, the shareholders of the Company immediately prior to the
combination, hold, directly or indirectly, less than 50% of the Voting Stock of
the combined company.
6.2 OTHER TERMS. For the purposes of this Agreement, (i) "Affiliate" of a
specified person or other entity shall mean any person or other entity that
directly or indirectly controls, is controlled by, or is under common control
with the person or other entity specified, and in the case of a specified person
who is a natural person, his spouse, his issue, his parents, his estate and any
trust entirely for the benefit of his spouse and/or issue; (ii) "Voting Stock"
shall mean capital stock of any class or classes having voting power under
ordinary circumstances, in the absence of contingencies, to elect the directors
of a corporation; and (iii) "IPO" shall mean the completion of an underwritten
sale of Common Stock or securities convertible into Common Stock of the Company
(or an entity formed by the Company for the purpose of issuing Common Stock (or
securities convertible into Common Stock) in connection with the IPO) pursuant
to a registration statement which has become effective under the Securities Act
of 1933, as amended.
ARTICLE VII
MISCELLANEOUS
7.1 INDEMNIFICATION.
(a) The Company agrees that if Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that he is or was a director, officer or employee of the Company or is or
was serving at the written request of the Company as a director, officer,
member, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether or not the basis of such Proceeding is Executive's alleged action
in an official capacity while serving as a director, officer, member, employee
or agent, Executive shall be indemnified and held harmless by the Company to the
fullest extent legally permitted or authorized by the Company's articles of
incorporation or bylaws or resolutions of the Company's Board of Directors
against all cost, expense, liability and loss (including, without limitation,
reasonable attorney's fees, judgments, fines or penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by Executive in
connection therewith, and such indemnification shall continue as to Executive
event if he has ceased to be a director, officer, member, employee or agent of
the Company or other entity and shall inure to the benefit of Executive's heirs,
executors and administrators. The Company shall advance to Executive all
reasonable costs and expenses incurred by him in connection with a Proceeding
within twenty (20) days after receipt by the Company of a written request for
such advance. Executive shall not be required to repay the amount of such
advance unless it shall ultimately be determined that he has acted willfully and
was grossly negligent in conduct given rise to the Proceeding.
(b) The failure of the Company (including the Board, independent legal
counsel or stockholders) to have made a determination prior to the commencement
of any Proceeding concerning payments of amounts claimed by Executive under
Section 6.1(a) above that indemnification of Executive is proper because he has
met the applicable standard of conduct, shall create a presumption that
Executive has met the applicable standard of conduct.
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(c) The Company agrees to maintain appropriate insurance coverage for
directors' and officers' liability, errors and omissions and/or blanket
liability protecting against any costs arising from a Proceeding which may be
assessed against Executive. Such coverage shall be provided at the highest level
provided for any employee or director of the Company.
7.2 BENEFIT OF AGREEMENT; ASSIGNMENT; BENEFICIARY. This Agreement shall
inure to the benefit of and be binding upon the Company and its successors and
assigns. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that such rights or obligations
may be assigned or transferred pursuant to a merger or consolidation in which
the Company is not the continuing entity, or sale of all or substantially all of
the assets of the Company, provided that the assignee or transferee is the
successor to all or substantially all of the assets of the Company and such
assignee or transferee assumes the localities, obligations and duties of the
Company, as contained in this Agreement, either contractually or as a matter of
law. It is contemplated that Sunbelt Automotive Group, Inc. will assume any
obligations of Xxxxxxxxxxx Automotive Group, Inc. hereunder in contemplation of
an initial public offering. This Agreement shall also inure to the benefit of,
and be enforceable by, Executive and his personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Executive should die while any amount would still be payable to the
Executive hereunder if he had continued to live, all such amounts shall be paid
in accordance with the terms of this Agreement to Executive's beneficiary,
devisee, legatee or other designee, or if there is no such designee, to
Executive's estate. Without limiting the foregoing, Executive shall be entitled,
to the extent permitted under any applicable law, to select and change a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following Executive's death by giving the Company written notice
thereof. In the event of Executive's death or a judicial determination of his
incompetence, reference in this Agreement to Executive shall be deemed, where
appropriate, to refer to his beneficiary, estate or other legal representative.
7.3 NOTICES. Any notice required or permitted hereunder shall be in writing
and shall be sufficiently given if personally delivered or if sent by telephone
or telex or by registered or certified mail, postage prepaid, with return
receipt requested, addressed: (a) in the case of the Company of 5901 Peachtree
Xxxxxxxx Xxxx, Xxxxxxxx X, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, Attention: General
Counsel, or to such other address and/or to the attention of such other person
as the Company shall designate by written notice to Executive; and (b) in the
case of Executive, to Xxxxx X. Xxxxx at 0000 Xxxx Xxxx, Xxxxxxxxxxxxx, Xxxxxxx,
00000, or to such other address as Executive shall designate by written notice
to the Company. Any notice given hereunder shall be deemed to have been given at
the time of receipt thereof by the person to whom such notice is given.
7.4 AMENDMENT. This Agreement may not be changed or modified except by an
instrument in writing signed by both of the parties hereto.
7.5 WAIVER. The waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a continuing waiver or as a
consent to or waiver of any subsequent breach hereof. Any waiver must be in
writing and signed by Executive or an authorized officer of the Company, as the
case may be.
7.6 HEADINGS. The Article and Section headings herein are for convenience of
reference only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof.
7.7 GOVERNING LAW. This Agreement shall be governed by, and construed and
interpreted in accordance with, the internal laws of the State of Georgia
without reference to the principles of conflict laws.
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7.8 AGREEMENT TO TAKE ACTIONS. Each party hereto shall execute and deliver
such documents, certificates, agreements and other instruments, and shall take
such other actions, as may be reasonably necessary or desirable in order to
perform his or its obligations under this Agreement or to effectuate the
purposes hereof.
7.9 SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
7.10 VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not effect the validity or enforceability of
any other provision or provisions of this Agreement, which shall remain in full
force and effect.
7.11 ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement between the parties concerning the subject matter hereof and
supersedes all prior agreements, understanding, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect thereto.
7.12 RESOLUTION OF DISPUTES. Any disputes arising under or in connection
with this Agreement shall, at the election of either Executive or the Company,
be resolved by binding arbitration, to be held in Atlanta, Georgia in accordance
with the rules and procedures of the American Arbitration Association. Judgment
upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Each party shall bear his or its own costs of the
arbitration or litigation. Pending the resolution of any arbitration or court
proceeding, the Company shall continue payment of all amounts due Executive
under this Agreement and all benefits to which Executive is entitled at the time
the dispute arises.
7.13 REPRESENTATIONS. The Company represents that it is fully authorized and
empowered to enter into this Agreement and that the performance of its
obligations under this Agreement will not violate any agreement to which it is a
party or by which it is bound. Executive represents that there is no agreement
to which he is a party or by which he is bound that would be violated by the
performance of his obligations under this Agreement.
7.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute on and the same instrument.
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement effective as of the date first above written.
COMPANY: EXECUTIVE:
/s/ Xxxxx X. Xxxxx
SUNBELT AUTOMOTIVE -----------------------------
GROUP, INC. Xxxxx X. Xxxxx
By: Xxxxx X. Uhizl
----------------------------------
TITLE: Secretary, General Counsel
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