EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") made this _____day of
_______________, 1997 between SONIC AUTOMOTIVE, INC. its successors or assigns,
subsidiary corporations or affiliates (collectively, the "Employer") and
XXXXXXXX X. XXXXXX ("Employee").
R E C I T A L S
WHEREAS, Employer desires to retain the services of Employee; and
WHEREAS, Employee is prepared to perform those duties as set forth in
this Agreement.
NOW, THEREFORE, the parties intending to be legally bound agree as
follows:
1. Term of Employment. Employer hereby employs Employee, and
Employee hereby accepts employment from Employer for the period commencing
effective upon consummation of the initial public offering of Employer (the
"Commencement Date") and ending three (3) years thereafter, unless sooner
terminated pursuant to the provisions of paragraph 5 hereof (the "Employment
Period").
2. Duties of Employee. Employee shall be employed by Employer
as Chief Financial Officer and Vice President-Finance of Sonic Auto World, Inc.
Employee's duties shall include, but not be limited to, the duties customarily
performed by a chief financial officer of a corporation of similar size and
scope and such additional duties as may from time to time be assigned by the
Employer's Board of Directors. Employee shall serve Employer faithfully in the
performance of Employee's duties and shall devote his full time and best efforts
to his employment, including the regularly established working hours and such
additional time as the requirements of Employer and the performance of the
Employee's duties require. Employee
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agrees to observe and comply with all the rules and regulations of Employer as
adopted and furnished to Employee by Employer's Board of Directors from time to
time.
3. Compensation. For all services rendered by Employee under
this Agreement, he shall be entitled to compensation in accordance with the
following:
(a) Base Salary. During the Employment Period, the
Employee shall receive an annual base salary ("Annual Base Salary") of ONE
HUNDRED EIGHTY THOUSAND AND NO/100 DOLLARS ($180,000.00) which shall be paid in
equal monthly installments in the amount of FIFTEEN THOUSAND AND NO/100 DOLLARS
($15,000.00).
(b) Additional Salary and Bonus. In addition to the
Annual Base Salary as hereinabove provided, Employer shall pay to the Employee
such additional amounts as may be determined and ratified from time to time by
the Compensation Committee of Employer's Board of Directors. In determining such
additional amounts, the Compensation Committee and Employer shall seek to
provide Employee with total compensation in keeping with the market rates for
employees in similar positions, with similar businesses with similar
profitability and performance.
4. Fringe Benefits. During the Employment Period, Employee
shall receive with other similarly situated employees of the Employer, all the
fringe benefits of Employer, together with the following additional fringe
benefits:
(a) The use of one luxury demonstrator vehicle
annually of Employee's choice, including all reasonable related expenses such as
insurance, maintenance and gasoline.
(b) Medical insurance coverage for Employee and his
dependents and reimbursement of the Employee for the reasonable costs of
disability insurance with a reasonable
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monthly benefit for life and with a waiting period of no more than ninety (90)
days. This disability insurance shall contain other provisions so that it will
replace to the extent reasonably possible Employee's Base Salary in case
Employer terminates this Agreement upon Employee's disability as set forth
herein.
(c) Prompt reimbursement for all reasonable
employment, travel, entertainment and other business related expenses incurred
by the Employee in accordance with the most favorable policies, practices and
procedures of the Employer and its affiliated companies in effect for the
Employee at any time during the ninety (90) day period immediately preceding the
Commencement Date or, if more favorable to the Employee, as in effect generally
at any time thereafter with respect to other peer executives of the Employer and
its affiliated companies.
(d) An office of a size and with furnishings and
other appointments, and secretarial services at least equal to the most
favorable policies, practices and procedures of the Employer and its affiliated
companies in effect for the Employee at any time during the ninety (90) day
period immediately preceding the Commencement Date or, if more favorable to the
Employee, as provided generally at any time thereafter with respect to other
peer executives of the Employer and its affiliated companies.
(e) An annual paid vacation in accordance with the
most favorable policies, practices and procedures of the Employer and its
affiliated companies as in effect for the Employee at any time during the ninety
(90) day period immediately preceding the Commencement Date or, if more
favorable to the Employee, as in effect generally at any time thereafter with
respect to other peer executives of the Employer and its affiliated companies.
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5. Termination of Employment. This Agreement shall terminate
as follows:
(a) Death or Disability. The Employee's employment
shall terminate automatically upon the Employee's death during the Employment
Period. If the Employer determines in good faith that the Employee becomes
unable to perform the essential functions of his position, with or without
reasonable accommodation, then Employer shall give to the Employee written
notice of its intention to terminate the Employee's employment. In such event,
the Employee's employment with the Employer shall terminate effective on the
thirtieth (30th) day after receipt of such notice by the Employee (the
"Disability Effective Date") provided that, within the thirty (30) days after
such receipt, the Employee shall not have returned to full time performance of
the Employee's duties.
(b) Cause. The Employer may terminate the Employee's
employment at any time, without notice and with immediate effect for Cause. For
purposes of this Agreement "Cause" shall mean
(i) a material breach by the Employee of the
Employee's obligations as set forth herein (other
than due to disability) which material breach is not
remedied within five (5) business days after receipt
of written notice from the Employer specifying such a
breach;
(ii) the conviction of the Employee of a
felony;
(iii) actions by Employee involving moral
turpitude;
(iv) willful failure of Employee to comply
with reasonable directives of Employer's Board of
Directors;
(v) chronic absenteeism of Employee;
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(vi) willful misconduct of Employee
resulting in damage to Employer;
(vii) Employee's illegal use of controlled
substances.
(c) Without Cause. Either Employee or Employer may
terminate this Agreement at any time, for any reason or without any reason. Such
a termination shall be deemed a termination "without cause."
6. Obligations of the Employer Upon Termination. The
parties agree as follows:
(a) Death or Disability. If the Employee's employment
is terminated by reason of the Employee's death or disability during the
Employment Period, Employee or Employee's estate shall be paid Employee's Annual
Base Salary together with those fringe benefits described in paragraphs 4(a) and
4(b) hereof through the end of the month during which Employee's death occurs or
during which the Disability Effective Date falls.
(b) Cause. If the Employee's employment shall be
terminated for Cause during the Employment Period, such termination for Cause
shall constitute an immediate termination of Employer's obligations pursuant to
paragraphs 3 and 4 hereof. Employee shall not be entitled to any compensation or
benefits beyond the effective date of such termination for Cause.
(c) Without Cause. If Employee's employment is
terminated by Employer without cause, then Employer shall continue to pay
Employee his Annual Base Salary together with those fringe benefits described in
paragraphs 4(a) and 4(b) hereof throughout the remaining term of this Agreement.
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7. Stock Option. If and when Employer completes an initial
public offering of its common stock pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "IPO"), Employee
shall be eligible to participate in a stock option plan to be developed and
adopted by Employer for its employees at such time (the "Stock Option Plan").
The exercise price of Employer's initial round of grants under the Stock Option
Plan shall be the fair market value of the shares of the common stock on the
date of such initial grant, it being the intention of Employer to set such
initial exercise price at the same price per share of Employer's common stock
sold in the IPO. Any grants of options thereafter under the Stock Option Plan
shall be at the discretion of Employer's Board of Directors. The terms and
conditions of any options granted to Employee pursuant to the Stock Option Plan
shall otherwise be governed by the provisions of the Stock Option Plan.
8. Restrictive Covenants. For purposes of this Agreement,
"Restrictive Covenants" mean the provisions of this paragraph 8. It is
stipulated and agreed that Employer is engaged in the business of owning and
operating automobile and/or truck dealerships, which business includes, without
limitation, the marketing, selling and leasing of new and used vehicles and the
servicing of automobiles and trucks (the "Business"). It is further stipulated
and agreed that as a result of Employee's employment by Employer, and as a
result of Employee's continued employment hereunder, Employee has and will have
access to valuable, highly confidential, privileged and proprietary information
relating to Employer's Business, including, without limitation, existing and
future inventory information, customer lists, sales methods and techniques,
costs and costing methods, pricing techniques and strategies, sales agreements
with customers, profits and product line profitability information, unpublished
present and future
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marketing strategies and promotional programs, and other information regarded by
Employer as proprietary and confidential (the "Confidential Information"). It is
further acknowledged that the unauthorized use or disclosure by Employee of any
of the Confidential Information would seriously damage Employer in its Business.
In consideration of the provisions of this paragraph 8, the
compensation and benefits referred to in paragraphs 3 and 4 hereof, which
Employee acknowledges are legally sufficient to support enforceability by the
Employer of the Restrictive Covenants against Employee, Employee agrees as
follows:
(a) During the term of this Agreement and after its
termination or expiration for any reason, Employee will not, without Employer's
prior written consent, use, divulge, disclose, furnish or make accessible to any
third person, company or other entity, any aspect of the Confidential
Information (other than as required in the ordinary discharge of Employee's
duties hereunder).
(b) During the term of this Agreement and for a
period of two years after the date of the expiration or termination of this
Agreement for any reason (the "Restrictive Period"), Employee shall not,
directly or indirectly:
(i) Employ or solicit the employment of any
person who at any time during the twelve (12)
calendar months immediately preceding the termination
or expiration of this Agreement for any reason was
employed by Employer;
(ii) Provide or solicit the provision of
products or services, similar to those provided by
Employer to any person or entity within the
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"Restricted Territory", as hereinafter defined, who
purchased or leased automobiles, trucks or services
from Employer at any time during the twelve (12)
calendar months immediately preceding the termination
or expiration of this Agreement for any reason;
(iii) Interfere or attempt to interfere with
the terms or other aspects of the relationship
between Employer and any person or entity from whom
Employer has purchased automobiles, trucks, parts,
supplies, inventory or services at any time during
the twelve (12) calendar months immediately preceding
the termination or expiration of this Agreement for
any reason;
(iv) Engage in competition with Employer or
its respective successors and assigns by engaging,
directly or indirectly, in a business involving the
sale or leasing of automobiles or trucks or which is
otherwise substantially similar to the Business,
within the "Restricted Territory", as hereinafter
defined; or
(v) Provide information to, solicit or sell
for, organize or own any interest in (either directly
or thorough any parent, affiliate or subsidiary
corporation, partnership, or other entity), or become
employed or engaged by, or act as agent for, any
person, corporation or other entity that is directly
or indirectly engaged in a business in the
"Restricted Territory", as hereinafter defined, which
is substantially similar to the Business or
competitive with Employer's business; provided,
however, that nothing herein shall preclude the
Employee from holding not more than three
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percent (3%) of the outstanding shares of any
publicly held company which may be so engaged in a
trade or business identical or similar to the
Business of the Employer. As used herein, "Restricted
Territory" means:
(1) all Standard Metropolitan Statistical Areas,
as determined by the United States Office of
Management and Budget, in which Employer has
an office, store or other place of business
on the date of the expiration or termination
of this Agreement for any reason.
(2) all counties in which Employer has an
office, store or other place of business on
the date of the expiration or termination of
this Agreement for any reason.
9. Remedies. It is stipulated that a breach by Employee of the
Restrictive Covenants would cause irreparable damage to Employer. Employer, in
addition to any other rights or remedies which Employer may have, shall be
entitled to an injunction restraining Employee from violating or continuing any
violation of such Restrictive Covenants. Such right to obtain injunctive relief
may be exercised at the option of Employer, concurrently with, prior to, after
or in lieu of, the exercise of any other rights or remedies which Employer may
have as a result of any such breach or threatened breach. Employee agrees that
upon breach of any of the Restrictive Covenants, Employer shall be entitled to
an accounting and repayment of all profits, royalties, compensation, and/or
other benefits that Employee directly or indirectly has realized or may realize
as a result of, or in connection with, any such breach. Employee further agrees
that the Restrictive Period shall be extended by a period of time equal to any
period of time in which any Employee is in violation of the Restrictive
Covenants.
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10. Acknowledgment of Reasonableness. Employee has carefully
read and considered the provisions of this Agreement and has had the opportunity
for consultation with an attorney of Employee's choice and agrees that the
restrictions set forth herein are fair and reasonably required for the
protection of Employer. In the event that any provision relating to the
Restrictive Period, the Restricted Territory or the scope of the restrictions
shall be declared by a court of competent jurisdiction to exceed the maximum
period of time, geographical area or scope that such court deems reasonable and
enforceable under applicable law, such time period, geographical area or scope
of restriction held reasonable and enforceable by the court shall thereafter be
the Restricted Period, Restricted Territory and/or scope under this Agreement.
11. Surrender of Books and Records. Employee acknowledges that
all files, records, lists, designs, specifications, books, products, plans and
other materials owned or used by Employer in connection with conduct of its
business shall at all times remain the property of Employer, and that upon
termination or expiration of this Agreement for any reason, Employee will
immediately surrender to Employer all such materials.
12. Entire Agreement. This Agreement contains the entire
agreement of the parties hereto, and shall not be modified or changed in any
respect except by a writing executed by the parties hereto.
13. Successors and Assigns. The rights and obligations of
Employee under this Agreement shall inure to the benefit of Employer, its
successors and assigns, and shall be binding upon Employee and his respective
successors, heirs and assigns. Employer shall have the right to assign,
transfer, or convey this Agreement to its affiliated companies, successor
entities, or assignees or transferees of substantially all of Employer's
business activities. This
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Agreement, being personal in nature to the Employee, may not be assigned by
Employee without Employer's prior written consent.
14. Notice. All notices required and permitted to be give
hereunder shall be in writing and shall be deemed to have been given when mailed
by certified or registered mail, return receipt requested, addressed to the
intended recipient as follows or at such other address as is provided by either
party to the other:
If to Employer: With a copy to:
Sonic Auto World, Inc. Xxxxxx X. Xxxxxxx, Xx.
Attention:_____________________ Parker, Poe, Xxxxx & Xxxxxxxxx, L.L.P.
P.O. Box 18747 0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000 000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
If to Employee: With a copy to:
Xxxxxxxx X. Xxxxxx --------------------------------
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-------------------------------- --------------------------------
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15. Governing Law; Forum. This Agreement shall, in all
respects, be governed by and construed according to the laws of the State of
North Carolina. Any dispute or controversy arising out of or relating to this
Agreement shall also be governed by the laws of the State of North Carolina. Any
suit or other proceeding arising out of or relating to this Agreement shall be
instituted and maintained in the state courts of Mecklenburg County, North
Carolina, and the parties hereby waive any objection to such jurisdiction and
venue and irrevocably submit to the jurisdiction of such court in any such
action or proceeding. Each party
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shall bear its own costs and expenses, including without limitation, attorneys'
fees, in connection with any such suit or proceeding.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first above written.
EMPLOYEE:
/s/ (SEAL)
Xxxxxxxx X. Xxxxxx
EMPLOYER:
SONIC AUTOMOTIVE, INC.
By: ____________________________________
Title: ____________________________________
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