Exhibit 10.6
This EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into as of December 3, 2001, between Xxxxxx Automotive
Group L.L.C., a Delaware limited liability company (the
"Company"), and Xxxxxxx Xxxxxx, an individual resident of the
State of Ohio (the "Executive").
WHEREAS the Company wishes to employ Executive, and Executive wishes
to accept such employment, on the following terms and conditions, effective as
of December 3, 2001.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and intending to be legally bound hereby, the parties hereby agree as
follows:
SECTION 1. EMPLOYMENT. The Company hereby employs Executive and
Executive accepts employment by the Company, on the terms and conditions
contained in this Agreement.
SECTION 2. TERM. The employment of Executive pursuant hereto shall
commence on the date hereof (the "Commencement Date") and shall remain in effect
until December 31, 2004, unless terminated pursuant to Section 15. The period of
time between the Commencement Date and the termination of this Agreement
pursuant to its terms is herein referred to as the "Term". The "Term" shall also
include any Renewal Term (as defined in Section 12(c)).
SECTION 3. DUTIES AND EXTENT OF SERVICE. (a) During the Term,
Executive shall serve as a member of the Board of Directors of the Company (the
"Board of Directors") and as President and Chief Executive Officer of the
Company and, in addition, in such other executive capacity or capacities for the
Company, as may be commensurate with Executive's seniority and experience and as
determined by the Board of Directors.
(b) Executive shall report directly and exclusively to the Board of
Directors, and no other executive officer shall be appointed with authority over
the business operations of the Company superior to that of Executive. No other
officer, except for the Company's Chief Financial Officer, shall report directly
to the Board of Directors. During the Term, the Company shall use its reasonable
best efforts to ensure that Executive is elected and re-elected as a director of
the Company.
(c) The Executive shall perform such services and duties for the
Company as are customarily performed by an executive in Executive's position at
a business such as the Company's business and as the Board of Directors may
assign or delegate to him from time to time. Executive shall devote his full
business knowledge, skill, time and best efforts exclusively to the performance
of his duties for the Company and the promotion of its
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interests; PROVIDED, HOWEVER, that Executive shall be entitled to (i) engage in
civic and charitable activities, (ii) manage passive personal investments, and
(iii) with the consent of the Board of Directors (which shall not be
unreasonably withheld), serve on the board of directors of corporations not in
competition with the Company and (iv) comply with his continuing obligations
under his Separation Agreement with The Limited, Inc. dated August 27, 2001 (the
"Limited Agreement"); PROVIDED FURTHER that none of the foregoing activities
shall, individually or in the aggregate, interfere with Executive's ability to
devote the requisite time and effort to the performance of his duties and
responsibilities under this Agreement. Executive's duties hereunder shall be
performed at the Company's Stamford, Connecticut headquarters or at such other
place or places as the interests, needs, businesses or opportunities of the
Company shall require, provided that such location is not more than one hour
driving distance from Columbus Circle, Manhattan, New York.
SECTION 4. BASE SALARY. During the Term, Executive shall be paid a
base salary (the "Base Salary") at a rate of $750,000 per annum, payable in
arrears in equal monthly installments. The Board of Directors shall annually
review Executive's Base Salary and may increase (but not decrease) such Base
Salary in its sole discretion.
SECTION 5. INCENTIVE COMPENSATION. During the Term, Executive shall
be entitled to earn an annual bonus, on a calendar year basis commencing with
the year 2002, ("TARGET BONUS") of up to one times his Base Salary if the
Company achieves specified objectives (the "TARGETS") established by the Board
of Directors no later than January 31 of each such year after consultation with
the Executive. Such Targets shall be substantially similar to those Targets
established for purposes of computing annual bonuses for other senior officers
of the Company. If the Company's performance exceeds the Targets, Executive
shall be entitled to receive an additional annual bonus of up to one times his
Base Salary (the "ADDITIONAL BONUS"). The Board of Directors shall, after
consultation with the Executive, prescribe a schedule setting forth the
percentage of the Additional Bonus Executive shall earn based on the performance
of the Company in excess of the Targets. On or about December 15 of each year,
the Company shall pay Executive 80% of the Target Bonus and Additional Bonus
that the Board of Directors determines in good faith is likely to be earned by
Executive with respect to that year (the "Tentative Bonus"). The Board of
Directors shall determine the actual Target Bonus and Additional Bonus earned by
Executive with respect to the year described in the preceding sentence no later
than 30 days after delivery to the Board of Directors of audited financial
statements for the Company for the relevant calendar year (the "Actual Bonus").
If the Tentative Bonus paid to Executive is less than the Actual Bonus, the
Company shall promptly pay Executive the difference. If the Tentative Bonus paid
to Executive is more than the Actual Bonus, the Company shall recover the amount
of the overpayments from other payments due Executive, including, without
limitation, Executive's Base Salary.
SECTION 6. FRINGE BENEFITS. (a) During the Term, Executive shall be
entitled to participate, to the extent eligible, in such medical, dental,
disability, life insurance, deferred compensation and other benefit plans (such
as pension and profit sharing plans) as the Company shall maintain for the
benefit of senior executives generally, on the terms and subject to the
conditions set forth in such plans. The Company shall either waive any waiting
period applicable to Executive under its medical plan or reimburse Executive for
Executive's
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cost to continue medical coverage with Executive's prior employer during such
waiting period. Until June 30, 2002, the Company shall provide Executive private
round trip air transportation once per week from the New York City metropolitan
area to Columbus, Ohio. During the Term, the Company will either obtain or
reimburse Executive the costs associated with obtaining $2,500,000 in term life
insurance protection on Executive's life.
(b) The Company shall reimburse Executive for the reasonable and
customary broker's fee incurred in connection with obtaining an apartment in New
York City (the "Temporary Apartment") and for the rent of such Temporary
Apartment (not to exceed $7,500 per month) for the lesser of one year from the
date hereof or the period reasonably required by Executive to acquire a
permanent residence in the New York City metropolitan area (the "Permanent
Residence"). The Company shall reimburse Executive for (i) the reasonable costs
incurred in connection with relocating a portion of his belongings to the
Temporary Apartment and for relocating the remainder of his belongings to the
Permanent Residence and (ii) for the reasonable and customary broker's
commission (not to exceed 6%) incurred in connection with the sale of
Executive's primary residence in Ohio.
(c) The Company shall gross up Executive for any income taxes
imposed on (i) the provision of round trip airfare described in Section 6(a) and
(ii) the benefits provided by the Company pursuant to Section 6(b).
SECTION 7. EXPENSES; VACATION. Upon the receipt from Executive of
expense vouchers and other documentation reasonably requested by the Company,
the Company shall reimburse Executive promptly in accordance with the Company's
policies and procedures for all reasonable expenses incurred by Executive in
connection with Executive's duties and responsibilities hereunder. During the
Term, the Company shall also reimburse Executive up to $1,500 per month to lease
an automobile. Executive shall be entitled to four weeks paid vacation per year.
SECTION 8. EQUITY INVESTMENT. On or before January 31, 2002,
Executive may elect to make an investment (the "Equity Investment") of up to
$4,000,000 in the Company. On the date on which such investment is made,
Executive will receive membership interests (the "Membership Interest")
representing his ownership interest in the Company and will enter into the Third
Amended and Restated Limited Liability Company Agreement of the Company, dated
as of February 1, 2000, as amended from time to time (the "LLC Agreement") in
accordance with the terms of Section 4.06 of the LLC Agreement. The Membership
Interest shall be subject to all terms of the LLC Agreement other than Section
4.04. The Board of Directors will determine Executive's percentage of the total
membership interests in the Company on the date that the Equity Investment is
made by dividing (a) the amount of the Equity Investment by (b) the sum of
$529,000,000 and the amount of the Equity Investment. Pursuant to Section 8.05
of the LLC Agreement, the Executive is granting an irrevocable proxy, which
shall be deemed coupled with an interest, to the Company to vote his Membership
Interest.
SECTION 9. OPTIONS. (a) As of the date hereof, the Company grants
Executive an option (the "LLC Options") to purchase the Applicable Amount of
Membership Interests (as defined below) at the Applicable Strike Price (as
defined below). The
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Applicable Amount of Membership Interests means 2.5% of the amount of Membership
Interests outstanding as of the date hereof and the Applicable Strike Price
means $13,225,000. The LLC Options shall (i) have a five year term and (ii) vest
ratably on each of the first three anniversaries of the date hereof and shall
vest entirely immediately prior to a Change in Control. Vested LLC Options shall
not be exercisable until the earliest of (A) the time immediately prior to a
Change in Control, (B) termination of the Executive's employment by the Company
without Good Cause, (C) termination of the Executive's employment by the
Executive for Good Reason, (D) termination of Executive's employment due to
death or Total Disability or (E) the second anniversary of the date hereof. The
unexercised portion of the LLC Options shall immediately terminate and be of no
further force or effect upon the earliest of (I) the termination of Executive's
employment by the Company for Good Cause, (II) termination of the Executive's
employment by Executive without Good Reason, (III) the date of an initial public
offering involving the Company (the "IPO") or (IV) a Change in Control. In the
event of the termination of Executive's employment for any reason other than one
described in clause (I) or (II) of the preceding sentence, the vested portion of
the LLC Options shall terminate on the later of the expiration of the Put Right
(as defined in Section 14(b)) or the purchase of the vested LLC Options pursuant
to Section 14(d) if the call right described in Section 14(a) or the Put Right
has been exercised. The unvested portion of the LLC Options shall immediately
terminate upon the termination of Executive's employment for any reason. Prior
to exercise, the LLC Options shall be subject to Section 7.03 of the LLC
Agreement. In addition, in the event the Company determines that the exercise of
an LLC Option could cause any adverse tax effect to the Company or its members,
Executive and the Company shall negotiate in good faith to amend this Agreement
to restructure the LLC Options and related Membership Interests so as to
mitigate such tax effect to the extent possible while keeping Executive in
substantially the same economic position. As a condition to receiving Membership
Interests upon exercise of all or a part of the LLC Options, Executive shall
enter into the LLC Agreement with respect to such Membership Interests. Except
as provided herein, the LLC Options shall be otherwise subject to the terms of a
customary stock option plan of a private company
(b) If Executive is employed by the Company on the date of the IPO,
(i) Executive shall receive options (the "Initial Grant Options") to purchase
the Applicable Number of Shares (as defined below) of common stock ("Common
Stock") of the corporation into which the Company was converted for the purpose
of consummating such IPO and (ii) Executive shall have the right to allocate
(subject to the approval of the Board of Directors) to other members of senior
management of the Company options ("Management Options") to purchase up to an
additional 2.5% of the shares of Common Stock that are outstanding immediately
before consummation of the IPO. The Applicable Number of Shares means the
product of (A) 2.5% of the number of shares of Common Stock outstanding
immediately before consummation of the IPO and (B) a fraction the numerator of
which is the Applicable Amount of Membership Interests still subject to the LLC
Options at the time such LLC Options were canceled in connection with the IPO or
a prior Change in Control, as applicable, and the denominator of which is the
Applicable Amount of Membership Interests originally subject to the LLC Options.
The strike price of the Initial Grant Options and Management Options shall be
determined by the Board of Directors by dividing (i) the sum of (A) $529,000,000
and (B) the amount of any additional equity invested in the Company (including
the Equity Investment and due to the exercise of any LLC Options) from the date
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hereof to the date immediately before the IPO, by (ii) the number of shares of
Common Stock outstanding immediately before the consummation of the IPO.
(c) If Executive is employed by the Company on the second
anniversary of the IPO, Executive shall receive additional options (the
"Additional Options") to purchase the number of shares of Common Stock equal to
the lesser of (i) 0.5% of the number of shares of Common Stock outstanding on
such date or (ii) $5,000,000 divided by the Fair Market Value (defined below) of
a share of Common Stock on such date. The strike price of the Additional Options
shall be the Fair Market Value of a share of Common Stock. For purposes of this
Section 9(b), "Fair Market Value" of a share of Common Stock means the average
daily trading price of a share of Common Stock for the six month period
commencing three months prior to the date of grant of the Additional Options and
ending three months after such date of grant.
(d) The Initial Grant Options, Management Options and Additional
Options (i) shall each have a five year term and shall vest and become
exercisable ratably on each of the first three annual anniversaries of (A) the
date hereof in the case of the Initial Grant Options, (B) the later of the date
hereof or the date the applicable optionee is first employed by the Company in
the case of the Management Options or (C) the date of grant in the case of the
Additional Options, and (ii) shall, except as otherwise provided in this
Agreement, be otherwise subject to the terms of a customary stock option plan of
a public company. To the extent Executive cannot sell the Common Stock delivered
pursuant to the exercise of the Options under federal securities laws without an
effective registration statement, Company shall grant Executive the right to
require the Company (at the Company's expense) to register such shares under
applicable federal securities laws (the "Registration Right"). Executive may
exercise the Registration Right once beginning on the second anniversary of the
IPO. The terms and conditions of the Registration Right shall be customary for
the private equity industry; PROVIDED THAT the Company shall use its
commercially reasonable efforts to cause such registration to be effective
within 90 days of Executive's exercise of the Registration Right; and PROVIDED
FURTHER Executive may not exercise the Registration Right at any time
underwriters to the Company believe such exercise would adversely affect any
offering of securities issued by the Company.
SECTION 10. NONCOMPETE AND NONSOLICITATION. During the Term and for
two years thereafter (one year in the case of a termination described in Section
12(b)), Executive shall not directly or indirectly (other than as an employee of
or consultant to the Company):
(a) accept employment with, or render services to, any Competing
Business (defined below) or solicit business on behalf of any Competing Business
from any customers or clients of the Company or its affiliates.
(b) solicit, recruit or hire any employee of the Company (or any
person who was an employee of the Company during the 12 month period preceding
Executive's date of termination) or encourage any such employee to terminate
employment with the Company.
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For purposes of this Agreement, "Competing Business" means any
corporation, partnership, sole proprietorship or other entity that engages in
activities or businesses within the United States that are substantially in
competition with the Company or any of its controlled affiliates.
Notwithstanding anything to the contrary contained in this
Agreement, the Company hereby agrees that the foregoing covenant shall not be
deemed breached as a result of the passive ownership by Executive of: (i) less
than an aggregate of 5% of any class of stock of a Competing Business; PROVIDED,
HOWEVER, that such stock is listed on a national securities exchange or is
quoted on the National Market System of NASDAQ; or (ii) less than an aggregate
of 10% in value of any instrument of indebtedness of a Competing Business;
PROVIDED, HOWEVER, that, for a period of two years from the date hereof,
Executive shall not engage in any activities described in Section 10(a) or (b)
even if otherwise permitted hereby, except to the extent Executive engages in
such activities as of the date hereof.
If a judicial determination is made that any of the provisions of
this Section 10 constitutes an unreasonable or otherwise unenforceable
restriction against Executive, the provisions of this Section 10 shall be
rendered void only to the extent that such judicial determination finds such
provisions to be unreasonable or otherwise unenforceable. Moreover,
notwithstanding the fact that any provision of this Section 10 is determined not
to be specifically enforceable, the Company shall nevertheless be entitled to
recover monetary damages as a result of Executive's breach of such provision.
Executive agrees that the provisions of this Section 10 are
reasonable and properly required for the adequate protection of the business and
the goodwill of the Company.
SECTION 11. NONDISCLOSURE. The parties hereto agree that during the
course of his employment by the Company, Executive will have access to, and will
gain knowledge with respect to, the Company's Confidential Information (defined
below). The parties acknowledge that unauthorized disclosure or misuse of such
Confidential Information would cause irreparable damage to the Company.
Accordingly, Executive agrees to the nondisclosure covenants in this Section 11.
Executive represents that his experience and capabilities are such that the
provisions of Section 10 and this Section 11 will not prevent him from earning
his livelihood. Executive agrees that he shall not (except as may be required by
law), without the prior written consent of the Company during his employment
with the Company under this Agreement, and any extension or renewal hereof, and
thereafter for so long as it remains Confidential Information, use or disclose,
or knowingly permit any unauthorized person to use, disclose or gain access to,
any Confidential Information; PROVIDED, HOWEVER, that Executive may disclose
Confidential Information to a person to whom disclosure is reasonably necessary
or appropriate in connection with the performance by Executive of his duties
under this Agreement. Upon termination of this Agreement for any reason,
Executive shall return to the Company the original and all copies of all
documents and correspondence in his possession relating to the business of the
Company or any affiliate, including but not limited to all Confidential
Information, and shall not be entitled to any lien or right of retention in
respect thereof.
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For purposes of this Agreement, "Confidential Information" shall
mean all business information (whether or not in written form) which relates to
the Company, any of its affiliates or their respective businesses or products or
services and which is not known to the public generally, including but not
limited to technical information or reports; trade secrets; unwritten knowledge
and "know-how"; operating instructions; training manuals; customer lists;
customer buying records and habits; product sales records and documents, and
product development, marketing and sales strategies; market surveys; marketing
plans; profitability analyses; product cost; long-range plans; information
relating to pricing, competitive strategies and new product development;
information relating to any forms of compensation and other personnel-related
information; contracts; and supplier lists.
SECTION 12. SEVERANCE. (a) If Executive's employment is terminated
for any reason, in addition to the other applicable benefits set forth in this
Section 12, Executive shall be entitled to receive his Base Salary through the
date of his termination and any Target Bonus or Additional Bonus earned in a
previous year that has not yet been paid (the "Accrued Obligations"). If
Executive's employment is terminated (i) by the Company for Good Cause, (ii) by
Executive without Good Reason, or (iii) due to Executive's death or Total
Disability (defined below), Executive shall not be entitled to any additional
severance or termination pay.
(b) (i) In addition to the Accrued Obligations, if Executive's
employment hereunder is terminated pursuant to Section 15 (i) by Executive for
"Good Reason" or (ii) by the Company for any reason other than for (A) "Good
Cause" or (B) the occurrence of the death or Total Disability of Executive, the
Company shall pay to Executive (after execution and delivery by Executive of a
Termination Release (defined below) as severance pay:
(A) a lump sum cash payment in the amount of 200% of the
present value, as of the date of such termination, of his current
Base Salary, said present value to be determined in good faith by
the Board of Directors based on an assumption that such amount would
be paid over a 24 month period, using the Prime Rate reported by XX
Xxxxxx Xxxxx Manhattan Bank as of the close of business on the date
of such termination; and
(B) an amount equal to the total bonus, if any, actually
earned by Executive pursuant to Section 5 for the year preceding the
year in which such termination occurred, provided that if
termination occurs on or before December 31, 2002, the amount
payable under this paragraph (B) shall be $750,000.
(ii) Payment of such severance pay will be made in a lump sum
within 30 days of such termination.
(c) If Executive has indicated his desire to renew this Agreement
and the Company fails to deliver notice within two (2) months prior to the
expiration of the Term (or two (2) months prior to the expiration of any Renewal
Term) of its intention to renew this Agreement for an additional year (a
"Renewal Term"), (i) Executive's employment shall terminate at the end of the
original Term (or the Renewal Term if this Agreement has
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previously been renewed) and (ii) the Company shall pay to Executive (in
addition to the Accrued Obligations) within 30 days of such termination (after
execution and delivery by Executive of a Termination Release as defined above)
as severance pay a lump sum cash payment in the amount of 100% of Executive's
current Base Salary, plus an amount equal to the total bonus, if any, earned by
Executive pursuant to Section 5 for the year preceding the year in which the
Term expires.
(d) For purposes of this Agreement, the following terms shall have
the meaning set forth below:
(i) "Good Cause" shall mean a finding by the Board of
Directors, after notice and an opportunity for Executive to be heard with
counsel, that any of the following has occurred:
(A) Executive is convicted of, pleads guilty to, confesses to,
or enters a plea of nolo contendere to, any felony or any crime that
involves moral turpitude or any act of fraud, misappropriation or
embezzlement;
(B) Executive has wilfully engaged in a fraudulent act to the
damage or prejudice of the Company or any affiliate;
(C) any act or omission by Executive involving malfeasance or
gross negligence in the performance of Executive's duties to the
Company that (x) results in damage or prejudice to the Company or
any affiliate or (y) is not corrected by Executive within 30 days
after written notice from the Company of such act or omission;
(D) Executive otherwise wilfully fails to comply in any
material respect with the terms of this Agreement or deviates in any
material respect from any reasonable written policies or reasonable
directives of the Board of Directors and, within 30 days after
written notice from the Company of such failure or deviation,
Executive has not corrected such failure; or
(E) the representation provided by Executive in Section 21(b)
is not true and accurate in all material respects.
(ii) "Good Reason" shall mean a termination of employment by
Executive within 40 days following:
(A) any material breach by the Company of its obligations
under this Agreement;
(B) Executive's removal from the Board of Directors or the
failure to elect, or re-elect, Executive as a member of the Board of
Directors, except in connection with the termination of Executive's
employment for Good Cause;
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(C) any substantial diminution in Executive's duties or
responsibilities set forth herein, except in connection with the
termination of Executive's employment for Good Cause;
(D) Executive no longer reports directly to the Board of
Directors, except in connection with the termination of Executive's
employment for Good Cause; or
(E) the existence of a direct reporting relationship between
the Board of Directors and any employee of the Company other than
Executive or the Company's Chief Financial Officer;
(F) provided that (A) Executive shall have given the Company
written notice of the circumstances constituting Good Reason and the
Company shall have failed to cure such circumstances within 30 days
(five (5) business days in the event of wilful failure to make a
Base Salary payment), and (B) Executive shall not have directly
caused the occurrence constituting "Good Reason" through the
exercise of his authority as an officer of the Company.
(iii) "Total Disability" means the failure of Executive to
perform his normal required services hereunder for a period of three consecutive
months during the Term by reason of Executive's mental or physical disability,
as determined by an independent physician selected by the Company who is
reasonably satisfactory to Executive.
(iv) "Termination Release" means an irrevocable agreement
releasing any and all claims against the Company, its affiliates and their
directors and employees, other than claims for indemnification under Article XI
of the Company's Third Amended and Restated Operating Agreement or similar
provisions hereafter adopted that do not reduce the Executive's level of
protection).
SECTION 13. CHANGE IN CONTROL. (a) In the event of a Change in
Control, (i) all unvested Options held by Executive shall immediately vest and
remain exercisable through the date specified in the applicable option agreement
and (ii) the provisions of Section 12(b)-(c) shall terminate and, in lieu of any
current or future obligations under Section 12, the Company shall pay Executive
a lump sum cash payment in the amount of 299% of the average annual cash
compensation actually paid to Executive by the Company pursuant to Sections 4
and 5 over the shorter of (A) Executive's period of employment with the Company
or (B) the five full calendar years preceding Executive's termination of
employment. If Executive has not been employed by the Company for five full
calendar years, any cash compensation paid to Executive for the 2001 calendar
year pursuant to Section 4 shall be annualized to determine the average annual
cash compensation actually paid to Executive. If Executive's employment
hereunder is terminated pursuant to Section 12(b) during the three-month period
preceding a Change in Control, Executive shall be entitled to the benefits
described in this Section 13(a) less any benefits provided to Executive under
Section 12(b).
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(b) Notwithstanding anything to the contrary contained herein, if
the accelerated vesting of the Options in connection with a Change in Control
causes Executive to be subject to any excise tax (the "Excise Tax") imposed
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended, then
(i) the vesting of such Options shall not be accelerated to the extent necessary
to avoid imposition of such Excise Tax and (ii) the Options shall continue to
vest in accordance with their terms; PROVIDED THAT (A) if Executive's employment
is terminated by the Company (or its successor) for Good Cause after the Change
in Control, the vested Options shall immediately terminate and (B) if
Executive's employment is terminated after the Change in Control for any other
reason, the unvested Options shall continue to vest so long as Executive
complies with the terms of Sections 10 and 11.
(c) In the event a Change in Control is consummated for cash or
other property other than the securities of the acquiring company (or its
parent), the Company and Executive shall cooperate in good faith to structure a
payout of any unvested Options over the time period such Options would have
vested under Section 13(b), above.
(d) "Change in Control" means (I) Ripplewood Holdings, L.L.C. and
Xxxxxxx Xxxxxx & Co. Incorporated (or their affiliates) (the "Major Investors")
cease to have the right and power to designate the directors constituting a
majority of the Board of Directors, (II) any person or "group" (within the
meaning of Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as
in effect on the date hereof), other than the Major Investors or any group
including either of the Major Investors, shall have acquired directly or
indirectly a greater beneficial ownership of the membership interests of the
Company than that beneficially owned by the Major Investors or (III) the Company
disposes of all or substantially all its assets to any entity other than an
entity with respect to which (A) the Major Investors have the right and power to
designate a majority of the board of directors thereof (or similar body if the
entity is not a corporation) or (B) the Major Investors beneficially own
(directly or indirectly) a greater percentage of the voting securities of such
entity that is owned by any other person or group (as defined in (II), above).
SECTION 14. OPTIONS TO PURCHASE AND SELL THE LLC INTERESTS. (a) If,
prior to the IPO, Executive's employment is terminated for any reason, the
Company shall have an option to purchase from Executive all or any portion of
Executive's Membership Interest and/or vested LLC Options at a purchase price
equal to the Fair Market Value, determined in accordance with Section 14(d) as
of the date of such termination. The Company shall, within 90 days of such date
of termination, give notice in writing to Executive of its election to exercise
or not to exercise such option, which notice shall set forth the portion, if
any, of Executive's Membership Interest or vested LLC Options that the Company
elects to purchase. The Company may assign its rights under this Section 14 to
any person.
(b) If the Company has failed to exercise its option to purchase the
Executive's Membership Interest or vested LLC Options pursuant to Section 14(a)
or has exercised such option with respect to less than all of Executive's
Membership Interest or vested LLC Options, Executive shall have the right to
sell to the Company (the "Put Right") all, but not less than all, of Executive's
Membership Interest and vested LLC Options, at a purchase price equal to the
Fair Market Value, determined in accordance with Section 13(d)
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as of the date of such termination. Executive shall within 15 days after the
expiration of the Company's option give notice in writing to the Company of his
election to exercise or not to exercise the Put Right.
(d) The purchase of Executive's Membership Interest and/or vested
LLC Options or any portion thereof shall take place at the principal office of
Ripplewood Holdings, L.L.C., currently located at One Rockefeller Plaza, New
York, New York, on the date specified by the Company (not later than the later
of the twentieth business day following the receipt by Executive or the Company,
as the case may be, of the required notice from the Company or Executive, as the
case may be, and the satisfaction of any legal requirements to the purchase of
Executive's Membership Interest or vested LLC Options). The consideration for
the purchase of Executive's Membership Interest or vested LLC Options or any
portion thereof shall be paid by delivery to Executive of a certified or bank
check made payable to Executive or by wire transfer of immediately available
funds to a bank account designated by Executive, against delivery of
certificates or other instruments representing any portion of Executive's
Membership Interest or vested LLC Options so purchased, appropriately endorsed
by Executive, free and clear of all security interests, liens, claims,
encumbrances, charges, options, restrictions on transfer, proxies and voting and
other agreements of whatever nature.
(e) For purposes of this Agreement, "Fair Market Value" shall be the
fair market value of Executive's Membership Interest as of the applicable date
specified in this Section 14 as determined in good faith by the Board of
Directors (without any minority in interest discount or discount for transfer
restrictions on Executive's Membership Interest). In making a determination of
such Fair Market Value, the Board of Directors shall give due consideration to
such factors as it deems appropriate, including, without limitation, the
earnings and certain other financial and operating information of the Company
and its affiliates in recent periods, potential value of the Company and its
affiliates as a whole, the future prospects of the Company and its affiliates
and of the industries in which they compete, the history and management of the
Company and its affiliates, the general condition of the securities markets and
the fair market value of securities of privately owned companies engaged in
businesses similar to those of the Company and its affiliates, if any. The Fair
Market Value of vested LLC Options shall be equal to the Fair Market Value of
the underlying Membership Interests (as determined above) minus the applicable
exercise price. The Fair Market Value as determined in good faith by the Board
of Directors shall be binding and conclusive upon Executive. The Board of
Directors shall deliver to Executive a written statement of assumptions and
calculations used to determine Fair Market Value hereunder.
SECTION 15. TERMINATION; SURVIVAL. This Agreement may be terminated
(a) by the Company (i) upon the death or Total Disability (as defined in Section
12) of the Executive, (ii) for Good Cause or (iii) for any other reason upon 30
days notice to the Executive or (b) by the Executive (i) for Good Reason or (ii)
for any reason upon 30 days written notice to the Company. Notwithstanding the
foregoing, Sections 10, 11, 14 and 17 and, if Executive's employment terminates
in a manner giving rise to a payment under Section 12, Section 12 shall survive
the termination of this Agreement.
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SECTION 16. VALIDITY. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
SECTION 17. RESOLUTION OF DISPUTES. Any disputes arising under or in
connection with this Agreement shall be resolved by third party mediation of the
dispute and, if such dispute is not resolved within 30 days, by binding
arbitration, to be held in New York City, New York, 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 mediation,
arbitration or litigation.
SECTION 18. 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 one and the same instrument.
SECTION 19. WITHHOLDING. All payments hereunder shall be subject to
any required withholding of Federal, state and local taxes pursuant to any
applicable law or regulation.
SECTION 20. SECTION HEADINGS. The section headings in this Agreement
are for convenience of reference only, and they form no part of this Agreement
and shall not affect its interpretation.
SECTION 21. MISCELLANEOUS. (a) This Agreement shall inure to the
benefit of and shall be binding upon Executive and his executor, administrator,
heirs, personal representative and permitted assigns, and the Company and its
successors and permitted assigns. Neither this Agreement nor any rights or
obligations hereunder may be assigned by one party without the consent of the
others, except that this Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company whether by merger,
consolidation, sale of assets or otherwise and reference herein to the Company
shall be deemed to include any such successor or successors.
(b) Executive represents and warrants that (i) he is not subject to
any agreement, understanding or limitation that could hinder or impair
Executive's ability to perform his duties hereunder and (ii) Executive's entry
into, and performance of his obligations under, this Agreement will not
interfere or otherwise violate any other agreement to which Executive is a party
or is bound, including, without limitation, the Limited Agreement.
(c) This Agreement shall be deemed to be made in, and in all
respects shall be interpreted, construed and governed by and in accordance with,
the laws of the State of New York, without regard to the conflicts of law
principles of such State. No provision of this Agreement or any related document
shall be construed against or interpreted to the disadvantage of any party
hereto by any court or other governmental or judicial authority by reason of
such party having or being deemed to have structured or drafted such provision.
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(d) This Agreement constitutes the entire agreement between the
Company and Executive with respect to Executive's employment by the Company and
supersedes all prior agreements, if any, whether written or oral, between them,
relating to Executive's employment by the Company. This Agreement may not be
changed, waived, discharged or terminated orally, but only by an instrument in
writing, signed by the party against which enforcement of such change, waiver,
discharge or termination is sought. In the event of any conflict between the
terms of this Agreement and the terms of the LLC Agreement, this Agreement will
control.
(e) All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed given when (a) delivered
personally, (b) sent by certified or registered mail, postage prepaid, return
receipt requested or delivered by overnight courier (provided that a written
acknowledgment of receipt is obtained by the overnight courier) to the party
concerned at the address indicated below or to such changed address as such
party may subsequently give such notice of:
If to the Company: Xxxxxx Automotive Group, L.L.C.
c/o Ripplewood Holdings L.L.C.
Xxx Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxx Xxxx
If to Executive: 000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
With a copy to: Xxxxx Xxxxx, Esq.
Xxxxxxx, Xxxxxxxxx LLP
0 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
XXXXXX AUTOMOTIVE GROUP L.L.C.
by /s/ Xxx Xxxx
---------------------------------
Name: Xxx Xxxx
Title: Director
/s/ Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx
