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EXHIBIT 10.1
XXXXXX X. XXXXXXXXXXX, XX.
SUNBELT EXECUTIVE EMPLOYMENT AGREEMENT
This SUNBELT EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is dated
as of December 18, 1997 (the "Effective Date"), and is entered into between
SUNBELT AUTOMOTIVE GROUP, INC., a Georgia corporation (hereinafter the "Company"
or "Sunbelt"), and XXXXXX X. XXXXXXXXXXX, XX., a resident of Gainesville, Hall
County, Georgia ("Executive").
WHEREAS, the Company wishes to employ Executive as its President from
December 18, 1997 through April 30, 1998, and thereafter, as its Senior Vice
President of Dealer Development, and Executive wishes to perform services for
the Company as a senior level executive officer (hereinafter the positions are
referred to as "Executive Officer"); 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, through its Board of Directors (the
"Board"), hereby agrees to employ Executive as its President from December 18,
1997 through April 30, 1998, and thereafter, as Senior Vice President 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 following the Effective
Date.
1.2 DUTIES AND RESPONSIBILITIES. Commencing as of the 18th day of
December, 1997, Executive shall assume the responsibilities, perform the duties
and exercise the powers as Executive Officer and Chairman of the Board and to
perform such duties and responsibilities as are consistent with his position and
as the Board of Directors may from time to time prescribe.
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1.3 BOARD AND EXECUTIVE COMMITTEE MEMBERSHIP. During the Term, the
Company will nominate Executive for election to the Board and will use its best
efforts to secure Executive's election to the Board as Chairman.
1.4 REPORTING. Executive, in his capacity as Executive Officer, shall
report in the performance of his duties directly to the Board of Directors of
the Company.
1.5 CONSULTING TERM. At the end of the Term (as defined in Section 2.1
hereof) of this Agreement, Executive shall cease to serve as Executive Officer
or any other other officer of the Company and shall serve as a consultant
thereafter as provided herein. In addition, the Executive may voluntarily resign
as Chairman of the Board and as Executive Officer of the Company at any time
during the Term and elect to serve the Company as a Consultant. As a Consultant
for the Company, the following special rules shall apply:
(i) Any resignation, as Chairman, shall be made ninety (90) days
in advance of the next scheduled or special Board meeting of
the Company and any voluntary resignation shall be effective
thirty (30) days after the same. Any such resignation shall
not be deemed to be a termination by the Executive of his
employment under this Agreement or a breach of this Agreement.
(ii) At the end of the Term set forth in Section 2.1 or upon
voluntary resignation as Executive Officer and Chairman,
Executive shall cease being an employee and officer of the
Company, but shall remain a member of the Board of Directors
and shall be a consultant to the Company (the "Consulting
Term"). As such, Executive shall provide services to the
Company on such matters pertaining to the business of the
Company as may, from time to time, be mutually agreed upon by
the Company and Executive. In this regard, Executive shall be
available at such reasonable times, upon reasonable advance
notice, but subject to scheduling conflicts, to meet with the
Board and/or the officers of the Company, or their designees,
for the purpose of providing such services; provided, however,
that Executive shall only be obligated to perform services
commensurate with his status as a former executive of the
Company and only those services which the Company believes, in
good faith, to be of benefit to the Company. Such services
shall generally not exceed thirty (30) hours per week during
the first two (2) years of the Consulting Term and shall
generally not exceed fifteen (15) hours per week during the
next eight (8) years of the Consulting Term.
(iii) The Consulting Term of this Agreement shall be for a period
of ten (10) years and shall commence upon the expiration of
the Term, set forth in Section 2.1, or upon the effective date
of the Executive's voluntary resignation.
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(iv) During the Consulting Term, Executive's annual Base Salary
pursuant to Section 3.1(a) shall be Two Hundred Thousand
Dollars ($200,000) per year for the first two (2) years of the
Consulting Term and shall be One Hundred Thousand Dollars
($100,000) per year for each of the next eight (8) years of
the Consulting Term. Executive's Annual Cash Bonus under
3.l(b) shall cease to accrue as of the fiscal year of the
Company following the fiscal year in which the Term in Section
2.1 expires.
(v) All of the remaining terms of this Agreement shall remain in
full force and effect, provided that the limitations on
Executive's outside business interests contained in Section
1.1, Section 4.1, and Section 4.2 shall be eliminated, and the
Company's obligations under Section 1.3 shall, likewise, be
eliminated.
ARTICLE II.
TERM
2.1 TERM. The term (the "Term") of Executive's employment as Executive
Officer, or such other acceptable senior level management position, under this
Agreement shall commence on the Effective Date and shall continue until earlier
of (a) December 31, 2000, or (b) the occurrence of a Change in Control (as
defined in Section 6.1 below) followed by Executive's notice of termination for
Good Reason (as defined in Section 5.2) or (c) the commencement of the
Consulting Term. Any Term or Consulting 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 January 2, 1998, the Company shall
pay Executive an annual Base Salary (the "Base Salary") during the Term of TWO
HUNDRED THOUSAND DOLLARS ($200,000.00). 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
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1, 1998 and for each fiscal year of the Company during the 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. 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 OPTIONS. The Company shall grant to the Executive,
under the Company's Incentive Stock Plan and the Option Grant attached
hereto as Exhibit "A", an option (the "Option") to purchase up to
25,000 SHARES of the Company's Common Stock at an exercise price equal
to the price per share to the public set forth on the cover of the
Company's IPO prospectus. The Option will vest and become exercisable
in two (2) equal installments as follows: One-half (1/2) of the number
of shares covered under the Option on each of the first and second
anniversaries of the Option Grant. The Option shall terminate on the
tenth anniversary of the Option Grant, subject to earlier termination
as may be set forth in this Agreement, the Incentive Stock Plan or the
Option Grant. The Option is in addition to any other option award or
grant which may be made to the Executive during his employment.
(d) 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, state income and social security
and Medicare taxes on the entire reimbursement amount (including the
tax on such taxes) so that Executive will not have incurred any cost in
obtaining such
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coverage or benefit except as otherwise may be specifically set forth herein.
(e) 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.
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.
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 Subsidiaries, except as permitted in Section 1.1 above and 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, 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 Subsidiaries. Notwithstanding the
foregoing or anything contained in Section 4.1 hereof, Executive may own,
directly or indirectly, up to two per cent (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 the Term or the Consulting Term, and for a period of
three (3) years following the termination of his employment consulting
hereunder, directly or indirectly, use 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 "Affiliates" is defined in Section
6.2), except (i) as such disclosure or use may be required or appropriate in
connection with his work as an employee or consultant 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
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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, that is or has been disclosed or
otherwise becomes or has become known to the Executive as a result of his
employment with the Company, 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 further agrees that upon termination of his
employment, he will not take with him, or retain without written authorization
from the Company, and will promptly deliver to the Company, all confidential
information of the Company and any copies thereof, together with all notes,
extracts, compilations, and other documents, records, and media that contain or
are based upon a trade or business secret, process, method or means, or any
other confidential information. Upon termination of his employment and
consulting, Executive also shall deliver to the Company all other files,
correspondence, and other communications received, maintained, and/or originated
by Executive during the course of his employment and any copies thereof.
(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 and consulting 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
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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
and consulting 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.
(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.
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
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vehicles involved in accidents);
(ii) Executive engages in conduct that constitutes
gross neglect or willful misconduct in carrying out his duties under this
Agreement, resulting, in either case, in material harm to the Company;
(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 a 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 of
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, provided that in the event any such cure or
correction is incapable upon reasonable diligence of being completed within such
fifteen (15) day period, Executive shall be entitled to commence a cure or
correction within said fifteen (15) day period and thereafter diligently and
continuously pursue such cure or correction to completion. 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 Executive's 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 or the circumstances described in the
Notice of Cause have not been cured 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
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without Cause upon sixty (60) days advance written notice to Executive and such
termination shall not constitute a breach of this Agreement.
(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. Furthermore, as a part of the
contemplated IPO, should the Company fail to complete its merger with
Xxxxxxxxxxx Automotive Group, Inc. (the "Merger"), this Agreement shall
automatically terminate and the Company shall have no past, present or future
obligations to the Executive for Base Salary, Bonus, benefits or any other
covenants or agreements set forth herein for the Term or Consulting Term.
5.2 TERMINATION BY EXECUTIVE.
(a) 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) Any relocation by the Company of the Executive's primary
working office outside of the metropolitan Atlanta, Georgia area or outside of
Gainesville, Georgia, without Executive's written consent;
(ii) The failure to elect or re-elect Executive to the Board,
or his removal prior to the expiration of the Term, as Executive Officer of the
Company or such other senior level executive management position acceptable to
Executive or his removal as a full voting member of the Board of Directors,
without the Executive's consent except as otherwise contemplated by Executive's
election pursuant to Section 1.5;
(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 Executive Officer of the Company;
(iv) As a result of a material breach by the Company or the
Executive Committee, Executive determines that he cannot carry out his duties
and responsibilities as Executive Officer 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 absolute and
unqualified
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assumption in writing of its obligation to perform this Agreement by any
successor to all or substantially all of the assets or stock of the Company
within 15 days after a merger, consolidation, sale or similar transaction.
(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) day cure period,
Executive's employment shall be terminated for Good Reason as of the expiration
of the fifteen (15) day cure period.
(b) 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 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.
5.3 DEATH. In the event Executive dies during the Term, Executive's
employment under 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
as defined below, 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
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"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 the Executive to submit to the examination as required by this Section shall
constitute a conclusive admission by the Executive that the 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. In the event of termination of
Executive's employment (i) by the Company for Cause, or (ii) by Executive other
than for Good Reason or as provided in Section 1.5, the Company shall pay to
Executive any annual Base Salary and any Annual Cash 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 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
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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 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(e).
(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
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described in (iv) above. Benefits such plans shall be determined as if
Executive had remained employed and received such payments over a
period of thirty-six (36) months.
(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, Executive shall be entitled
to receive any Annual Cash Bonus then earned. Further, in the event of
termination of Executive's employment for Disability as described in Section 5.4
hereof, Executive shall be entitled to receive Executive's annual Base Salary
for the remainder of the Term. Executive and his spouse shall be entitled to
continued participation in medical, dental and hospitalization coverage as set
forth in Section 5.5(e) hereof 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 date, or
dates, Executive and his spouse 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).
(d) DEATH. In the event of termination of Executive's employment during
the Term or the Consulting Term 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 total sum of Two Hundred Thousand
Dollars ($200,000).
(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 of the Company's medical, dental and hospitalization
insurance plans at the Company's expense until the date on which Executive
is employed by any Person other than the Company, or any Affiliate or Subsidiary
of the Company, and Executive becomes covered by the for 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
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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 (f) 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 and social
security/Medicare taxes (including interest and penalties) 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 and social security/Medicare taxes (including interest and
penalties) payable upon amounts paid to Executive under this Subsection (f).
5.6 TREATMENT OF OPTIONS UPON TERMINATION
(a) FOR CAUSE/VOLUNTARY TERMINATION/FAILURE OF IPO/MERGER. In the event
of termination of Executive's employment (i) by the Company for Cause, (ii)
voluntarily by Executive other than for Good Reason, or (iii) by reason of the
failure of the IPO or the Merger, any Options granted to the Executive, to the
extent not then vested and exercisable on the date of such termination, shall be
immediately canceled. 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 restricted stock and all stock
options granted to Executive pursuant to the Company's Incentive Stock Option
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
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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 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 consummation of (i) a merger, consolidation or other business
combination of the Company with any other "person" (as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) or
Affiliate thereof, other than a merger, consolidation or business combination
which would result in the outstanding Common Stock of the Company immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into common stock of the surviving entity or a parent or
Affiliate thereof) (at least fifty percent (50%) of the outstanding Common Stock
of the Company or such surviving entity or parent or Affiliate thereof
outstanding immediately after such merger, consolidation or
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business combination, or (ii) a plan of complete liquidation of the Company; or
(f) The occurrence of any other event or circumstances which is not
covered by (a) through (e), above, which the Board determines affects control of
the Company and, in order to implement the purposes of this Agreement as set
forth above, the Board adopts a resolution that such event or circumstance
constitutes a Change in Control for the purposes of this Agreement.
6.2 OTHER TERMS. For the purposes of this Agreement, (i) "Affiliate" of
a specified person or other entity shall mean a 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, trustee 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, trustee, 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 in the event he has ceased to be a director, officer,
member, employee, trustee, 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
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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 in the proceeding that he has
acted willfully and was grossly negligent in conduct giving 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 7.1(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.
(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, director or officer 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 liabilities, 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 the
Company's obligations 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, distributes, 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
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or certified 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 0000 XXXXXXXXX
XXXX, XXXXXXXXXXX, 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.
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 INVALIDITY AND SEVERABILITY. The invalidity or unenforceability of
any one or more of the particular provisions of this Agreement shall not affect
the enforceability of the other provisions hereof, all of which are inserted
conditionally on their being valid in law, and in the event one or more
provisions contained herein shall be invalid, this Agreement shall be construed
as if such invalid provision had not been inserted, and if such invalidity shall
be caused by any value, any price, the length of any period of time, the size of
any area, or the scope of activities set forth in any provision hereof, such
value, price, period of time, area, or scope shall be considered to be adjusted
to a value, price, period of time, area or scope which
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would cure such invalidity. The parties hereto agree that the covenants and
obligations contained in this Agreement are severable and divisible, that none
of such covenants or obligations depends on any other covenant or obligation for
its enforceability, that each such covenant and obligation constitutes an
enforceable obligation between the Company and Executive, that each such
covenant and obligation shall be construed as an agreement independent of any
other provision of this Agreement, and that the existence of any claim or cause
of action by one party to this Agreement against another party to this
Agreement, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by any party to this Agreement of any
such covenants or obligations.
7.11 ENTIRE AGREEMENT. This Agreement, and the Agreements and documents
referred to herein, contain 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, provided, however, in the event
the Executive incurs legal fees and other expenses in seeking to obtain any
benefits provided by this Agreement or to enforce any rights or provisions of
this Agreement and is successful, in whole or in part, in obtaining or enforcing
any such rights or benefits through settlement, arbitration or otherwise, the
Company shall promptly pay the Executive's reasonable legal fees and expenses
incurred in obtaining such benefits or enforcing this Agreement. 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 one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement effective as of the date first above written.
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EXECUTIVE: /s/ Xxxxxx X. Xxxxxxxxxxx, Xx.
----------------------------------
Xxxxxx X. Xxxxxxxxxxx, Xx.
SUNBELT AUTOMOTIVE GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Title: CEO
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