EXHIBIT 10.37 |__| Employee's Copy
|__| Partnership's Copy
CAPITAL AUTOMOTIVE L.P.
Employment Agreement
To Xxxxxx X. Xxxxxxxx:
This Agreement establishes the terms of your employment with Capital
Automotive L.P., a Maryland limited partnership (the "Partnership"). It
replaces your prior employment agreement with Capital Automotive REIT, a
Maryland real estate investment trust (the "Company"), under which the Company
assigned your agreement to the Partnership. You remain an employee of the
Company, but your primary responsibility is as an employee of the Partnership.
Employment and Duties You and the Partnership agree to your employment as
Executive Vice President - Business Development on
the terms contained herein. In such position, you
will report directly to the Company's Chief
Operating Officer (the "COO") and to the General
Partner of the Partnership. You agree to perform
whatever duties the Partnership may assign you from
time to time, consistent with your position as a
senior executive. During your employment, you agree
to devote your full business time, attention, and
energies to performing those duties (except as the
Partnership otherwise agrees from time to time).
You agree to faithfully serve the Partnership, to
conform to and comply with the lawful and good
faith directions and instructions given you by the
Partnership, and to use your best efforts to
promote and serve the interests of the Partnership.
You understand and agree that you must travel from
time to time for business reasons. You understand
your primary office will be a regional office to be
located in the San Xxxxxxxx / Corejo Valley area of
Southern California. You agree to comply with the
noncompetition, secrecy, and other provisions of
Exhibit A to this Agreement.
Term of Employment Your employment under this Agreement begins as of
January 1, 1998 (the "Effective Date"). Unless
sooner terminated under this Agreement, your
employment ends at 6:00 p.m. Eastern Time on
June 30, 1998, if the Company has not consummated
its initial public offering ("IPO") by that date,
or
October 26, 2001, if the Company has consummated
its IPO on or before June 30, 1998.
The period running from the Effective Date to the
applicable date in the preceding sentence is the
"Term."
Termination or expiration of this Agreement ends your
employment but does not end your obligation to comply
with Exhibit A.
Compensation
Salary The Partnership (or, in its discretion, the Company)
will pay you an annual salary (the "Salary") from the
Effective Date at the rate of not less than $200,000 in
accordance with its payroll practices. The Partnership
or the Compensation Committee of the General Partner
("Compensation Committee") will review your Salary
annually and consider you for increases.
Standard Bonus The Partnership or the Compensation Committee will
establish annual bonus targets under which you will be
eligible for an annual bonus equal to up to 100% of
your Salary, with a minimum bonus for 1998 (the "1998
Minimum Bonus") of $100,000 if you remain employed by
the Partnership on December 31, 1998.
Incentive Bonus The Partnership will pay you an additional incentive
bonus of $200,000 in the first quarter of 1999 (the
"1998 Special Incentive") if (i) the Company's proforma
assets at the end of 1998 exceed 150% of the greater of
1997 fiscal year proforma assets or $770 million and
(ii) you remain employed by the Partnership on December
31, 1998.
Employee Benefits While you are employed under this Agreement, the
Partnership will provide you with the same benefits,
including medical insurance coverage, as the
Partnership makes generally available
from time to time to the Partnership's employees, as
those benefits are amended or terminated from time to
time, and such other benefits as are commensurate with
your position as a senior executive of a public
company, including either a company automobile or an
allowance for an automobile.
Indemnification The Partnership will indemnify you to the fullest
extent authorized by law if you are made a party to any
action, suit, or proceeding, whether criminal, civil,
administrative, or investigative, because you are or
were a manager, officer, or employee of the Partnership
or serve or served any other entity as a director,
officer, or employee at the Partnership's request;
provided, however, that you must repay the Partnership
-------- -------
for any indemnification if the final determination of
an arbitrator or a court of competent jurisdiction
declares, after the expiration of the time within which
judicial review (if permitted) of such determination
may be perfected, that indemnification by the
Partnership is not permissible under applicable law.
Expenses The Partnership will reimburse you for reasonable and
necessary travel and other business-related expenses
you incur for the Partnership in performing your duties
under this Agreement. You must itemize and substantiate
all requests for reimbursements. You must submit
requests for reimbursement in accordance with the
policies and practices of the Partnership and within 60
days after incurring the expense.
No Other Employment For so long as you are employed by the Partnership, you
agree that you will not, directly or indirectly,
provide services to any person or organization for
which you receive compensation or otherwise engage in
activities that would conflict or interfere
significantly with the faithful performance of your
duties to the Partnership without the Partnership's
prior written consent. (This prohibition excludes any
work performed at the Partnership's direction including
any work for the Company.) You may manage your personal
investments, as long as the management takes only
minimal amounts of time and is consistent with the
provisions of
the No Competition Section in Exhibit A and is
otherwise consistent with the policies and practices of
the Partnership.
You represent to the Partnership that you are not
subject to any agreement, commitment, or policy of any
third party that would prevent you from entering into
or performing your duties under this Agreement, and you
agree that you will not enter into any agreement or
commitment or agree to any policy that would prevent or
hinder your performance of duties and obligations under
this Agreement, including Exhibit A.
No Conflicts of Interest You confirm that you have fully disclosed to the
Partnership and the Company, to the best of your
knowledge, all circumstances under which you, your
spouse, and your relatives (including their spouses,
children, and relatives) have or may have a conflict of
interest with the Partnership or the Company. You
further agree to fully disclose to the Partnership any
such circumstances that might arise during the Term.
You agree to fully comply with the Partnership's policy
and practices relating to conflicts of interest.
No Payments to You will neither pay nor permit payment of any
Governmental Officials remuneration to or on behalf of any governmental
official other than payments required or permitted by
applicable law.
Termination Subject to the provisions of this section, the
Partnership may terminate your employment, or you may
resign, except that, if you voluntarily resign, you
must provide the Partnership with 90 days' prior
written notice (unless the Partnership has previously
waived such notice in writing or authorized a shorter
notice period).
For Cause The Partnership may terminate your employment for
"Cause" if you:
(i) engage in dishonesty that relates materially
to the performance of services or any obligations
under this Agreement, including Exhibit A;
(ii) are convicted of any misdemeanor (other than
for minor infractions) involving fraud, breach of
trust, misappropriation, or other similar
activity or any felony;
(iii) perform your duties under this Agreement in
a grossly negligent manner; or
(iv) willfully breach this Agreement, including
Exhibit A, in a manner materially injurious to
the Partnership. An act or omission is only
"willful" if you acted in bad faith or without
any reasonable belief that the action or omission
was in the interests of the Partnership and
consistent with your duties and obligations under
this Agreement.
Your termination for Cause under (i) and (ii) will be
effective immediately upon the Partnership's mailing or
transmission of such notice. Before terminating your
employment for Cause under (iii) or (iv), the
Partnership will specify in writing to you the nature
of the act, omission, refusal, or failure that it deems
to constitute Cause. The Partnership will give you the
opportunity to correct the situation (and thus avoid
termination for Cause under (iii) or (iv)). You must
complete the correction within a reasonable period of
time after the written notice to you, and the
Partnership agrees to provide you no less than 15 days
for such correction.
Without Cause Subject to the provisions below under Payments on
Termination, the Partnership may terminate your
employment under this Agreement before the end of the
Term without Cause.
Good Reason You may resign for Good Reason with 45 days' advance
written notice as provided below. "Good Reason" means
the occurrence, without your written consent, of any of
the following circumstances:
the Partnership's failure to perform or observe
any of the material terms or provisions of this
Agreement,
the assignment to you of any duties inconsistent with,
or any substantial diminution in, your employment
status or responsibilities as in effect on the date of
this Agreement,
the Partnership's relocation of the regional office to
a location that would increase your commuting distance
by more than 50 miles, based on your residence when
this Agreement is executed, or
a Change of Control after consummation of an IPO,
consisting of any one or more of the following events:
a person, entity, or group (other than the
Partnership, the Company, any subsidiary of
either, any Company Group benefit plan, or any
underwriter temporarily holding securities for an
offering of such securities) acquires ownership
of more than 40% of the undiluted total voting
power of the Company's then-outstanding
securities eligible to vote to elect members of
the Board ("Company Voting Securities");
consummation of a merger or consolidation of the
Company into any other entity -- unless the
holders of the Company Voting Securities
outstanding immediately before such consummation,
together with any trustee or other fiduciary
holding securities under a Company Group benefit
plan, hold securities that represent immediately
after such merger or consolidation more than 60%
of the combined voting power of the then
outstanding voting securities of either the
Company or the other surviving entity or its
parent; or
the stockholders of the Company approve (i) a
plan of complete liquidation or dissolution of
the Company or (ii) an agreement for the
Company's sale or disposition of all or
substantially all the
Company's assets, and such liquidation,
dissolution, sale, or disposition is consummated.
Even if other tests are met, a Change of Control has not
occurred under any circumstance in which the Company files
for bankruptcy protection or is reorganized following a
bankruptcy filing.
You must give notice to the Partnership of your intention to
resign for Good Reason within 30 days after the occurrence
of the event that you assert entitles you to resign for Good
Reason. In that notice, you must specify the condition that
you consider provides you with Good Reason and must give the
Partnership an opportunity to cure the condition within 30
days after your notice. If the Partnership fails to cure the
condition, your resignation will be effective on the 45th
day after your notice (unless the Partnership has previously
waived such notice period in writing or agreed to a shorter
notice period).
You will not be treated as resigning for Good Reason if the
Partnership had Cause to terminate your employment as of the
date of your notice of resignation.
Disability If you become "disabled" (as defined below), the Partnership
may terminate your employment after you have exhausted your
rights, if any, to retention and reemployment under
applicable federal or state laws. You are "disabled" if you
are unable, despite whatever reasonable accommodations the
law requires, to render services to the Partnership for more
than 90 consecutive days because of physical or mental
disability, incapacity, or illness. You are also disabled if
you are deemed to be disabled within the meaning of the
Partnership's long-term disability policy as then in effect.
Death If you die during the Term, the Term will end as of the date
of your death.
Payments on If the Partnership terminates your employment for or without
Termination Cause or because of disability or death or because the
Company does not consummate its IPO or you resign, the
Partnership will
pay you any unpaid portion of your Salary pro-rated through
the date of actual termination and any annual bonuses
already determined by such date but not yet paid, reimburse
any substantiated but unreimbursed business expenses, pay
any accrued and unused vacation time (to the extent
consistent with the Partnership's policies), and provide
such other benefits as applicable laws or the terms of the
benefits require. Except to the extent the law requires
otherwise or as provided in the Severance paragraph, neither
you nor your beneficiary or estate will have any rights or
claims under this Agreement or otherwise to receive
severance or any other compensation, or to participate in
any other plan, arrangement, or benefit, after such
termination.
Severance In addition to the foregoing payments, if the Partnership
terminates your employment without Cause or you resign for
Good Reason before the end of the Term, the Partnership will
pay you severance equal to your Salary, as then in
effect, for 24 months in a single lump sum as soon as
practicable but in any event no more than 90 days after
termination;
use its reasonable best efforts to provide you with
continued benefits for 24 months under either the
Partnership's welfare benefit plans or other comparable
coverage and will, to the extent that it is impractical
to obtain or extend such coverage or the expense to the
Partnership would exceed 200% of the premium expenses
the Partnership paid for you during your final year of
employment, the Partnership will pay you an amount
equal to twice the premiums it paid on your behalf for
such coverage in your last 12 months of employment,
with such amount paid to you net of any taxes that
might apply; provided, however, that any obligations
-------- -------
for continued benefits will cease if you become covered
under another employer's or your
own policies that provide the same category of
coverage; and
will, at the time the Partnership would otherwise
pay your annual bonus, pay you your pro rata share
of the standard bonus for the year of your
termination, where the pro rata factor is based on
days elapsed in your year of termination till date
of termination over 365, less any portion of the
standard bonus for the year of your termination
already paid; provided, however, that for 1998 the
-------- -------
foregoing obligation refers to the pro rata share
of (i) the greater of the 1998 Minimum Bonus and
your actual bonus for 1998 and (ii) if the
Partnership meets the proforma asset goals of the
1998 Special Incentive Bonus, that bonus.
You are not required to mitigate amounts payable under
the Severance paragraph by seeking other employment or
otherwise; however, you agree to return any payments
under this Severance paragraph if you fail to comply
with Exhibit A. Expiration of this Agreement, whether
because of notice of non-renewal or otherwise, does not
constitute termination without Cause nor is it grounds
for resignation with Good Reason.
Assignment The Partnership may assign or otherwise transfer this
Agreement and any and all of its rights, duties,
obligations, or interests under it to
the Company or any of the affiliates or subsidiaries of
the Partnership or the Company or
to any business entity that at any time by merger,
consolidation, or otherwise acquires all or
substantially all of the Company's stock or assets or
the partnership units or assets of the Company or to
which the Partnership or the Company transfers all or
substantially all of its assets.
Upon such assignment or transfer, any such business entity
will be deemed to be substituted for the Partnership for all
purposes. Assignment or transfer does not constitute
termination without Cause nor is it grounds for resignation
with Good Reason. This Agreement binds the Partnership, its
successors or assigns, and your heirs and the personal
representatives of your estate. Without the Partnership's
prior written consent, you may not assign or delegate this
Agreement or any or all rights, duties, obligations, or
interests under it.
Severability If the final determination of an arbitrator or a court of
competent jurisdiction declares, after the expiration of the
time within which judicial review (if permitted) of such
determination may be perfected, that any term or provision
of this Agreement, including any provision of Exhibit A, is
invalid or unenforceable, the remaining terms and provisions
will be unimpaired, and the invalid or unenforceable term or
provision will be deemed replaced by a term or provision
that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable
term or provision.
Amendment; Waiver Neither you nor the Partnership may modify, amend, or waive
the terms of this Agreement other than by a written
instrument signed by you and a duly authorized
representative of the General Partner of the Partnership.
Either party's waiver of the other party's compliance with
any provision of this Agreement is not a waiver of any other
provision of this Agreement or of any subsequent breach by
such party of a provision of this Agreement.
Withholding The Partnership will reduce its compensatory payments to you
for withholding and FICA taxes and any other withholdings
and contributions required by law.
Third Party You understand and agree that the Company is a third party
Beneficiary beneficiary of this Agreement.
Governing Law The laws of the Commonwealth of Virginia (other than its
conflict of laws provisions) govern this Agreement.
Notices Notices must be given in writing by personal delivery, by
certified mail, return receipt requested, by telecopy, or by
overnight delivery. You should send or deliver your notices
to the Partnership's headquarters. The Partnership will send
or deliver any notice given to you at your address as
reflected on the Partnership's personnel records. You and
the Partnership may change the address for notice by like
notice to the others. You and the Partnership agree that
notice is received on the date it is personally delivered,
the date it is received by certified mail, the date of
guaranteed delivery by the overnight service, or the date
the fax machine confirms receipt.
Legal Fees If a claim is asserted for breach of any provision of this
Agreement, you will be entitled to recover your reasonable
attorney's fees and expenses if you prevail.
Superseding Effect This Agreement supersedes any prior oral or written
employment, severance, option, or fringe benefit agreements
between you and the Company or the Partnership. This
Agreement supersedes all prior or contemporaneous
negotiations, commitments, agreements, and writings with
respect to the subject matter of this Agreement. All such
other negotiations, commitments, agreements, and writings
will have no further force or effect; and the parties to any
such other negotiation, commitment, agreement, or writing
will have no further rights or obligations thereunder.
If you accept the terms of this Agreement, please sign in the space indicated
below. We encourage you to consult with any advisors of your choosing.
CAPITAL AUTOMOTIVE L.P.
General Partner:
CAPITAL AUTOMOTIVE REIT, a Maryland real
estate investment trust
By:
----------------------------
Its:
-----------------------------
I accept and agree to the terms of employment set forth in this Agreement:
--------------------------- ---------------
Xxxxxx X. Xxxxxxxx Date
Exhibit A
---------
No Competition In consideration of your employment by the Partnership
and salary and benefits under this Agreement, during
the term of your employment and, except as set forth
below, until the date one year after your employment
with the Partnership, the Company, or their successors,
assigns, affiliates, or subsidiaries (collectively, the
"Company Group") ends for any reason (the "Restricted
Period"), you agree as follows:
The Partnership is a real estate investment trust
formed to acquire real properties owned by automobile
dealerships and other automotive-related businesses and
lease the properties to such businesses. You will not,
directly or indirectly, promote, be employed by, lend
money to, invest in, or engage in any Competing
Business within the Market Area. That prohibition
includes, but is not limited to, acting, either singly
or jointly or as agent for, or as an employee of or
consultant to, any one or more persons, firms,
entities, or corporations directly or indirectly (as a
director, independent contractor, representative,
consultant, member, or otherwise) that constitutes such
a Competing Business. You may own up to 3% of the
outstanding capital stock of any corporation that is
actively publicly traded without violating this No
Competition covenant. This covenant does not preclude
you from being employed by any automobile dealership or
dealership group or other automotive-related business
that is a lessee or prospective lessee of properties
the Partnership or the Company holds or is actively
considering acquiring.
You understand and agree that the rights and
obligations set forth in this No Competition Section
will continue for one year from the date of termination
of this Agreement and your employment with the
Partnership or the Company Group, unless the Company
does not consummate its IPO by June 30, 1998, in which
event your
obligations under this No Competition Section end when
your employment ends.
Definitions
Competing Competing Business means any service or financial
Business product of any person or organization other than the
Company Group, in existence or then under development,
that competes or could potentially compete, directly or
indirectly, with any service or financial product of
the Company Group upon which or with which you have
worked for the Partnership or the Company Group or
about which you acquire knowledge while working for the
Partnership or the Company Group. Competing Business
includes any enterprise engaged in the formation or
operation of real estate investment trusts or other
entities that invest primarily in automobile dealership
or automotive-related properties or provide real estate
financing to automobile dealerships or automotive-
related businesses. Competing Business excludes real
estate investment trusts and similar entities that do
not engage in activities related to automotive
dealerships or automotive-related businesses, and the
Partnership recognizes and agrees that you may engage
in any business whose primary focus in the auto
industry is other than real estate.
Market Area The Market Area consists of the United States.
No Interference; During the Restricted Period, you agree that you will
No Solicitation not, directly or indirectly, whether for yourself or
for any other individual or entity (other than the
Partnership or its affiliates or subsidiaries),
intentionally solicit or endeavor to entice away from
the Company Group:
any person whom the Company Group employs (other
than as your personal secretary) or otherwise
engages to perform services as a consultant or
sales representatives; or
any person or entity who is, or was, within the
Restricted Period, a contractor or subcontractor
of the Company
Group known to you or a lessee or prospective
lessee of properties the Company Group holds or is
actively considering acquiring.
Secrecy
Preserving Your employment with the Partnership under and, if
Partnership applicable, before this Agreement has given and
Confidences will give you Confidential Information (as defined
below). You acknowledge and agree that using,
disclosing, or publishing any Confidential
Information in an unauthorized or improper manner
could cause the Partnership or Company Group
substantial loss and damages that could not be
readily calculated and for which no remedy at law
would be adequate. Accordingly, you agree with the
Partnership that you will not at any time, except
in performing your employment duties to the
Partnership or the Company Group under this
Agreement (or with the Partnership's prior written
consent), directly or indirectly, use, disclose,
or publish, or permit others not so authorized to
use, disclose, or publish any Confidential
Information that you may learn or become aware of,
or may have learned or become aware of, because of
your prior or continuing employment, ownership, or
association with the Partnership or the Company
Group or any of their predecessors, or use any
such information in a manner detrimental to the
interests of the Partnership or the Company Group.
Preserving You agree not to use in working for the Company
Others' Group and not to disclose to the Company Group
Confidences any trade secrets or other information you do not
have the right to use or disclose and that the
Company Group is not free to use without liability
of any kind. You agree to promptly inform the
Partnership in writing of any patents, copyrights,
trademarks, or other proprietary rights known to
you that the Partnership or the Company Group
might violate because of information you provide.
Confidential "Confidential Information" includes, without
Information limitation, information the Partnership or the
Company Group has not previously disclosed to the
public or to the trade with respect to the
Partnership's or the Company Group's present or
future business, operations, services, products,
research, inventions, discoveries, drawings,
designs, plans, processes, models, technical
information, facilities, methods, trade secrets,
copyrights, software, source code,
systems, patents, procedures, manuals,
specifications, any other intellectual property,
confidential reports, price lists, pricing
formulas, customer lists, financial information
(including the revenues, costs, or profits
associated with any of the Partnership's or the
Company Group's products or services), business
plans, lease structure, projections, prospects, or
opportunities, any other confidential and
proprietary information, and any other information
not generally known outside the Partnership or the
Company Group that may be of value to the
Partnership or the Company Group but excludes any
information already properly in the public domain.
"Confidential Information" also includes
confidential and proprietary information and trade
secrets that third parties entrust to the
Partnership or the Company Group in confidence.
You understand and agree that the rights and
obligations set forth in this Secrecy Section will
continue indefinitely and will survive termination
of this Agreement and your employment with the
Partnership or the Company Group.
Exclusive Property You confirm that all Confidential Information is
and must remain the exclusive property of the
Partnership or the relevant member of the Company
Group. All business records, business papers, and
business documents you keep or make in the course
of your employment by the Partnership relating to
the Partnership or any member of the Company Group
must be and remain the property of the Partnership
or the relevant member of the Company Group. Upon
the termination of this Agreement with the
Partnership or upon the Partnership's request at
any time, you must promptly deliver to the
Partnership or to the relevant member of the
Company Group any Confidential Information or
other materials (written or otherwise) not
available to the public or made available to the
public in a manner you know the Partnership did
not authorize, and any copies, excerpts,
summaries, compilations, records and documents you
made or that came into your possession during your
employment. You agree that you will not, without
the Partnership's consent, retain copies,
excerpts, summaries or compilations of the
foregoing information and materials. You
understand and agree that the rights and
obligations set forth in this Exclusive Property
Section will continue indefinitely and will
survive termination of this Agreement and your
employment with the Company Group.
Injunctive Relief Without limiting the remedies available to the
Partnership, you acknowledge
that a breach of any of the covenants in this
Exhibit A may result in material irreparable
injury to the Partnership and Company Group
for which there is no adequate remedy at law,
and
that it will not be possible to measure
damages for such injuries precisely.
You agree that, if there is a breach or threatened
breach, the Partnership or any member of the
Company Group will be entitled to obtain a
temporary restraining order and/or a preliminary
or permanent injunction restraining you from
engaging in activities prohibited by any
provisions of this Exhibit A or such other relief
as may be required to specifically enforce any of
the covenants in this Exhibit A.
