EXHIBIT 10.36 [_] Employee's Copy
[_] Partnership's Copy
CAPITAL AUTOMOTIVE L.P.
Employment Agreement
To Xxxxx X. Xxxxx:
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 - Acquisitions on the terms
contained herein. In such position, you will report
directly to the Company's Chief Executive Officer (the
"CEO") 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
CEO 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 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 19, 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 $225,000 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.
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.
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.
Your participation in the Partnership's benefit plans
will be subject to the terms of the applicable plan
documents and the Partnership's generally applied
policies, and the Partnership in its sole discretion
may from time to time adopt, modify, interpret, or
discontinue such plans or policies.
Place of Employment Your principal place of employment will be at the
Partnership's headquarters in the Washington
metropolitan area (or such other offices as the
Partnership may establish from time to time and to
which it assigns you in its sole discretion). You
understand and agree that you must travel from time to
time for business reasons.
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
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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 Partnership.) 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 its corporate
headquarters 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
Company, the Partnership, 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. 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;
pay the premium cost for you to receive any group
health coverage the Partnership must offer you under
Section 4980B of the Internal Revenue Code of 1986
("COBRA Coverage") for the period of such coverage; and
pay you, at the time the Partnership would otherwise
pay your annual bonus, your pro rata share of the 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 bonus for the year of your termination
already paid.
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 Company or the Partnership 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 Partnership or
to which the Company or the Partnership 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 absent the occurrence of a Change of
Control. 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.
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 Beneficiary You understand and agree that the Partnership is a
third party 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:
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Its:
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I accept and agree to the terms of employment set
forth in this Agreement:
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Xxxxx X. Xxxxx
Dated:
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Exhibit A
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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 Company, the
Partnership, or their successors, assigns, affiliates, or
subsidiaries (collectively, the "Company Group") ends for
any reason (the "Restricted Period"), you agree as follows:
The Company 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 Company or the Partnership holds or is
actively considering acquiring.
If, during the Restricted Period, you are offered and want
to accept employment with a business that engages in
activities similar to the Company's or the Partnership's,
you will inform the Partnership in writing of the identity
of the business, your proposed duties with that business,
and the proposed starting date of that employment. You will
also inform that business of the terms of this Exhibit A.
The Partnership will analyze the proposed employment and
make
a good faith determination as to whether it would threaten
the Partnership's legitimate competitive interests. If the
Partnership determines that the proposed employment would
not pose an unacceptable threat to its interests, the
Partnership will notify you that it does not object to the
employment.
You acknowledge that, during the portion of the Restricted
Period that follows your employment, you may engage in any
business activity or gainful employment of any type and in
any place except as described above. You acknowledge that
you will be reasonably able to earn a livelihood without
violating the terms of this Agreement.
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 product of
Business 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.
Market Area The Market Area consists of the United States.
No Interference; During the Restricted Period, you agree that you will not,
No Solicitation 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 will give
Confidences 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 Group and
Others' not to disclose to the Company Group any trade secrets or
Confidences 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 limitation,
Information 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, opportunities or strategies,
acquisitions or mergers, advertising or promotions,
personnel matters, legal matters, 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 or reasonably should
recognize 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.
Maximum Limits If any of the provisions of Exhibit A are ever deemed to
exceed the time, geographic area, or activity limitations
the law permits, you and the Partnership agree to reduce the
limitations to the maximum permissible limitation, and you
and the Partnership authorize a court or arbitrator having
jurisdiction to reform the provisions to the maximum time,
geographic area, and activity limitations the law permits.
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.
