Exhibit 10.5
[LETTERHEAD OF XXXXXX AUTOMOTIVE GROUP]
This agreement is entered into as of February 8, 2002 between Xxxxxx Automotive
Group L.L.C. ("Xxxxxx") and Xxxxxx Xxxxxx ("Executive"), a key employee of
Xxxxxx, in order to provide for an agreed-upon compensation in the event that
the Executive's employment is terminated as defined in this agreement. This
agreement will become effective upon the completion of an initial public
offering of shares of stock of Xxxxxx (or its successor) (the "Effective Date").
1. SEVERANCE PAY ARRANGEMENT
If a Termination (as defined below) of Executive's employment occurs at
any time on or after the Effective Date, Xxxxxx will pay Executive 12
months of Executive's base salary, but no less than $250,000 as of the
date of Termination as Severance Pay. Payment (subject to required
withholding) will be made by Xxxxxx to Executive monthly on the regular
payroll dates of Xxxxxx starting with the date of Termination.
If Executive participates in a bonus compensation plan at the date of
Termination, Severance Pay will also include a portion of the target
bonus for the year of Termination in an amount equal to the target
bonus multiplied by the percentage of such year that has expired
through the date of Termination.
In addition, Executive shall be entitled for up to 12 months following
the date of Termination to continue to participate at the same level of
coverage and Executive contribution in any health, dental, disability
and life insurance plans, as may be amended from time to time, in which
Executive was participating immediately prior to the date of
Termination. Such participation will terminate 30 days after Executive
has obtained other employment under which Executive is covered by equal
benefits. The Executive agrees to notify Xxxxxx promptly upon obtaining
such other employment. At the option of the executive, COBRA coverage
will be available, as provided by company policy, at the termination of
extended benefits as provided in this section.
2. DEFINITION OF TERMINATION TRIGGERING SEVERANCE PAY
A "Termination" triggering the Severance Pay set forth above in Section
1 is defined as (1) termination of Executive's employment by Xxxxxx for
any reason, except death, disability or "cause", or (2) voluntary
termination by Executive because of (A) mandatory relocation of
Executive's current principal place of business to a location more than
50 miles away, or (B) Xxxxxx'x reduction of Executive's base salary, or
(C) any material diminution of Executive's duties or job title, except
in a termination for "cause", death, disability, retirement or
voluntary resignation. The definition of "cause" is: (1) Executive's
gross negligence or gross misconduct in carrying out Executive's duties
resulting in either case in material harm to Xxxxxx; or (2) Executive
being convicted of a felony; or (3) Executive's breach of Sections 3, 4
or 5 below or (4) Executive's willful and continued failure to perform
substantially the executive's duties with the company.
3. CONFIDENTIAL INFORMATION NONDISCLOSURE PROVISION
During and after employment with Xxxxxx, Executive agrees not to
disclose to any person (other to an employee or director of Xxxxxx or
any affiliate and except as may be required by law) and not to use to
compete with Xxxxxx or any affiliate any confidential or proprietary
information, knowledge or data that is not in the public domain that
was obtained by Executive while employed by Xxxxxx with respect to
Xxxxxx or any affiliate or with respect to any products, improvements,
customers, methods of distribution, sales, prices, profits, costs,
contracts, suppliers, business prospects, business methods, techniques,
research, trade secrets or know-how of Xxxxxx or any affiliate
(collectively, "Confidential Information"). In the event that
Executive's employment ends for any reason, Executive will deliver to
Xxxxxx all documents and data of any nature pertaining to Executive's
work with Xxxxxx and will not take any documents or data or any
reproduction, or any documents containing or pertaining to any
Confidential Information. Executive agrees that in the event of a
breach by Executive of this provision, Xxxxxx shall be entitled to
inform all potential or new employers of this provision and obtain
injunctive relief and damages which may include recovery of amounts
paid to Executive under this agreement.
4. NON-SOLICITATION OF EMPLOYEES
Executive agrees that for a period of one year from Executive's last
day of employment with Xxxxxx, Executive shall not directly or
indirectly solicit for employment or employ any person who, at any time
during the preceding 12 months, is or was employed by Xxxxxx or any
affiliate or induce or attempt to persuade any employee of Xxxxxx or
any affiliate to terminate their employment relationship. Executive
agrees that in the event of a breach by Executive of this provision,
Xxxxxx shall be entitled to inform all potential or new employers of
this provision and obtain injunctive relief and damages which may
include recovery of amounts paid to Executive under this agreement.
5. COVENANT NOT TO COMPETE
While Executive is employed by Xxxxxx, Executive shall not directly or
indirectly engage in, participate in, represent or be connected with in
any way, as an officer, director, partner, owner, employee, agent,
independent contractor, consultant, proprietor or stockholder (except
for the ownership of a less than 5% stock interest in a publicly-traded
corporation) or otherwise, any business or activity which competes with
the business of Xxxxxx or any affiliate unless expressly consented to
in writing by the Chief Executive Officer of Xxxxxx (collectively,
"Covenant Not To Compete").
In the event that Executive's employment ends for any reason, the
provisions of the Covenant Not To Compete shall remain in effect for
one year following the date of Termination except that the prohibition
above on "any business or activity which competes with the business of
Xxxxxx or any affiliate" shall be limited to Autonation, Sonic, Lithia,
United Auto Group and other competitive groups of similar size.
Executive shall disclose in writing to Xxxxxx the name, address and
type of business conducted by any proposed new employer of Executive if
requested in writing by Xxxxxx. Executive agrees that in the event of a
breach by Executive of this Covenant Not To Compete, Xxxxxx shall be
entitled to inform all potential or new employers of this Covenant and
to obtain injunctive relief and damages which may include recovery of
amounts paid to Executive under this agreement.
GENERAL PROVISIONS
A. EMPLOYMENT IS AT WILL
The Executive and Xxxxxx acknowledge and agree that Executive
is an "at will" employee, which means that either the
Executive or Xxxxxx may terminate the employment relationship
at any time, for any reason, with or without cause or notice,
and that nothing in this agreement shall be construed as an
express or implied contract of employment.
B. EXECUTION OF RELEASE
As a condition to the receipt of the Severance Pay payments
and benefits described in section 1 above, Executive agrees to
execute a release of all claims arising out of the Executive's
employment or its termination, including but not limited to
any claim of discrimination, harassment or wrongful discharge
under local, state or federal law.
C. OTHER PROVISIONS
This agreement shall be binding upon the heirs, executors,
administrators, successors and assigns of Executive and
Xxxxxx, including any successor to Xxxxxx.
The headings and captions are provided for reference and
convenience only and shall not be considered part of this
agreement.
If any provision of this agreement shall be held invalid or
unenforceable, such holding shall not affect any other
provisions, and this agreement shall be construed and enforced
as if such provisions had not been included.
This agreement supersedes any and all agreements between
Xxxxxx and Executive relating to payments upon termination of
employment or severance pay and may only be modified in
writing signed by Xxxxxx and Executive.
On the Effective Date, this Agreement shall supersede,
terminate and replace any other agreement (whether written or
oral) as related to the subject matter contained herein
(including, without limitation, the contract dated January 1,
2001 between Executive and Xxxxxx) that was entered into prior
to the date first written above. Other than the benefits set
forth herein, Executive shall not be entitled to any other
compensation or benefit in the event of employment
termination.
This agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
AGREED TO AS OF THE DATE FIRST WRITTEN ABOVE:
BY EXECUTIVE BY XXXXXX AUTOMOTIVE
GROUP L.L.C.
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxxxx Xxxxxx
-------------------- -------------------------
PRINT NAME: PRINT NAME AND TITLE:
Xxxxxx X. Xxxxxx Xxxxxxx Xxxxxx
-------------------- -------------------------
