EXHIBIT 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
_______________________, 1997, by and between FIRST TEAM AUTOMOTIVE CORP., a
Delaware corporation (the "Company"), and XXXXXX X. XXXXXX (the "Executive").
R E C I T A L S:
In entering into this Agreement, the Company desires to provide the
Executive with substantial incentives to serve the Company, without distraction
or concern over minimum compensation, benefits or tenure, to develop and
implement the Company's initial development plan, and thereafter manage the
Company's future growth and development, in order to maximize the returns to the
Company's stockholders.
NOW, THEREFORE, in consideration of the foregoing and the mutual
provisions contained herein, and for other good and valuable consideration, the
parties hereto agree with each other as follows:
1. CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS. As used herein, the following terms have the
meanings assigned to them below:
"ACCRUED BENEFITS" means an amount equal to the sum of (a) the
portion of the Base Salary payable through and including the Termination Date
which has not yet been paid, (b) all compensation previously deferred by the
Executive (together with any accrued interest and earnings thereon) which has
not yet been paid, and (c) any accrued but unpaid expense reimbursements and
vacation pay.
"ACQUIRING PERSON" means any Person who or which, together
with all Affiliates and Associates of such Person, is or are the Beneficial
Owner of twenty percent (20%) or more of the shares of Common Stock then
outstanding; but does not include any Exempt Person.
"ACTIVE STATUS" means the Executive's Employment status from
the Effective Date to and including the Termination Date.
"AFFILIATE" has the meaning ascribed to that term in Exchange
Act Rule 12b-2.
"ANNUAL CASH COMPENSATION" of the Executive for any
Compensation Year means the sum of the salary and bonus earned by the Executive
during that Compensation Year, including all amounts deferred at the election of
the Executive pursuant to Section 4.2.5 hereof, a Compensation
Plan intended to qualify as a plan under Section 401(k) of the Code, or
otherwise. If salary or bonus is paid in whole or in part in property other than
cash (such as Common Stock) the amount so paid shall be the fair market value
thereof on the date of payment.
"ASSOCIATE" means, with reference to any Person, (a) any
corporation, firm, partnership, association, unincorporated organization or
other entity (other than the Company or a subsidiary of the Company) of which
that Person is an officer or general partner (or officer or general partner of a
general partner) or is, directly or indirectly, the Beneficial Owner of 10% or
more of any class of its equity securities, (b) any trust or other estate in
which that Person has a beneficial interest of 10% or more or for or of which
that Person serves as trustee or in a similar fiduciary capacity, and (c) any
relative or spouse of that Person, or any relative of that spouse, who has the
same home as that Person.
"AVERAGE ANNUAL CASH COMPENSATION" of the Executive means, as
of the date of any termination, the average of (a) the Annual Cash Compensation
earned by the Executive in each of the two (2) Compensation Years next preceding
that date or, if less than two (2) Compensation Years have occurred prior to
that date and since the Effective Date, (b) the Annual Cash Compensation in each
whole Compensation Year, if any, and, restated on an annualized basis, the
Annual Cash Compensation in each partial Compensation Year (up to a maximum of
two (2) partial Compensation Years) next preceding the date of any termination.
"BASE SALARY" means the guaranteed minimum annual salary
payable by the Company to the Executive pursuant to Section 4.1.
"BENEFICIAL OWNER" A specified Person is deemed the Beneficial
Owner of, and is deemed to "beneficially own," any securities of which that
Person or any of that Person's Affiliates or Associates, directly or indirectly,
is the "beneficial owner" (as determined pursuant to Exchange Act Rule 13d-3) or
otherwise has the right to vote or dispose of, including pursuant to any
agreement, arrangement or understanding (whether or not in writing).
"BOARD" means the entire Board of Directors of the Company.
"BONUS" means an annual bonus, in an amount, and on terms
determined by the Compensation Committee pursuant to the Company's Incentive
Plans.
"CAUSE" for the Company's termination of the Executive's
Employment means: (a) the Executive's conviction, in a final, non-appealable
ruling, of a felony crime that enriched the Executive at the expense of the
Company; or (b) the Executive's deliberate and intentional continuing failure to
substantially perform his duties and responsibilities hereunder (except by
reason of the Executive's incapacity due to physical or mental illness or
injury) for a period of twenty (20) days after the Required Board Majority has
delivered to the Executive a written demand for substantial performance
hereunder which specifically identifies the bases for the Required Board
Majority's determination that
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the Executive has not substantially performed his duties and responsibilities
hereunder (such period being the "GRACE PERIOD"); provided, that for purposes of
this clause (b), the Company shall not have Cause to terminate the Executive's
Employment unless (1) at a meeting of the Board called and held following the
Grace Period in the city in which the Company's principal executive offices are
located, of which the Executive was given not less than ten (10) days' prior
written notice and at which the Executive was afforded the opportunity to be
represented by counsel, appear and be heard, the Required Board Majority shall
adopt a written resolution which (A) sets forth the Required Board Majority's
determination that the failure of the Executive to substantially perform his
duties and responsibilities hereunder has (except by reason of his incapacity
due to physical or mental illness or injury) continued past the Grace Period,
and (B) specifically identifies the bases for that determination; and (2) the
Company, at the written direction of the Required Board Majority, shall deliver
to the Executive a Notice of Termination for Cause to which a copy of that
resolution, certified as being true and correct by the secretary or any
assistant secretary of the Company, is attached. For purposes of determining
whether Cause has occurred, no act or failure to act on the part of the
Executive shall be considered "deliberate and intentional" unless it is taken or
omitted to be taken by the Executive in bad faith or without a reasonable belief
that the Executive's act or omission was in the best interests of the Company.
"CHANGE OF CONTROL" means the occurrence of any of the
following events that occurs after the Closing Date: (a) any Person, other than
an Exempt Person, becomes an Acquiring Person; (b) at any time the then
Continuing Directors cease to constitute a majority of the members of the Board;
or (c) a merger of the Company with or into, or a sale by the Company of all or
substantially all its properties and assets to, another Person occurs and,
immediately after that occurrence, any Person, other than an Exempt Person,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of twenty percent (20%) or more of the total voting power of
the then outstanding Voting Shares of the Person surviving that transaction (in
the case of a merger or consolidation) or the Person acquiring all or
substantially all of those properties and assets.
"CLOSING DATE" means the date the Company consummates the
closing of the first sale of its Common Stock to the public pursuant to an
effective Registration Statement filed under the Securities Act.
"CODE" means the Internal Revenue Code of 1986.
"COMMON STOCK" means the common stock of the Company.
"COMPANY" means (a) First Team Automotive Corp., a Delaware
corporation, and (b) any Person that assumes the obligations of the Company
hereunder, by operation of law, pursuant to Section 8.4(ii) or otherwise.
"COMPENSATION PLAN" means any compensation arrangement, plan,
policy, practice or program established, maintained or sponsored by the Company
or any subsidiary of the Company,
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or to which the Company or any subsidiary of the Company contributes, on behalf
of any Executive Officer or any member of the family of any Executive Officer,
(a) including (i) any "employee pension benefit plan" (as defined in Section
3(2) of ERISA) or other "employee benefit plan" (as defined in Section 3(3) of
ERISA), (ii) any other retirement and savings plan, including any supplemental
benefit arrangement relating to any plan intended to be qualified under Section
401(a) of the Code or whose benefits are limited by the Code or ERISA, (iii) any
"employee welfare plan" (as defined in Section 3(1) of ERISA), (iv) any
arrangement, plan, policy, practice or program providing for severance pay,
deferred compensation or insurance benefit, (v) any Incentive Plan, and (vi) any
arrangement, plan, policy, practice or program (A) authorizing and providing for
the payment or reimbursement of expenses attributable to first-class air travel
and first-class hotel occupancy while on travel or (B) providing for the payment
of business luncheon and country club dues, long-distance charges, mobile phone
monthly air time or other recurring monthly charges or any other fringe benefit,
allowance or accommodation of employment, but (b) excluding any compensation
arrangement, plan, policy, practice or program to the extent it provides for
annual base salary.
"COMPENSATION COMMITTEE" means the committee of the Board to
which the Board has delegated duties respecting the compensation of Executive
Officers and the administration of Incentive Plans, if any, intended to qualify
for the Exchange Act Rule 16b-3 exemption and the Code ss. 162(m)(4)(C)(i)
exemption.
"COMPENSATION YEAR" means any calendar year.
"CONFIDENTIAL INFORMATION" means, with respect to the Company
or any subsidiary of the Company, all trade secrets and other confidential,
nonpublic and/or proprietary information of that Person, including information
derived from reports, investigations, research, work in progress, codes,
marketing and sale programs, customer lists, records of customer service
requirements, capital expenditure projects, cost summaries, pricing formulae,
contract analyses, financial information, projections, confidential filings with
any governmental authority and all other confidential, nonpublic concepts,
methods of doing business, ideas, materials or information prepared or performed
for, by or on behalf of that Person.
"CPI" means for any period the Consumer Price Index for All
Urban Consumers--All Items Index for Orlando, Florida (or any substantially
similar index published for the same area), as published by the United States
Department of Labor, Bureau of Labor Statistics (or its successor) for that
period.
"CONTINUING DIRECTOR" means at any time any individual who
then (a) is a member of the Board and was a member of the Board as of the
Closing Date or whose nomination for his first election, or that first election,
to the Board following that date was recommended or approved by a majority of
the then Continuing Directors (acting separately or as a part of any action
taken by the Board or any committee thereof), and (b) is not an Acquiring
Person, an Affiliate or Associate of an
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Acquiring Person or a nominee or representative of an Acquiring Person or of any
such Affiliate or Associate.
"DISABILITY" of the Executive means the Executive has been
determined (which determination shall be final and binding on all Persons,
absent manifest error), as a result of a physical or mental illness or personal
injury he has incurred, by a Qualified Physician (who may be the doctor treating
or otherwise acting as the Executive's doctor in connection with the illness or
injury in question) selected by the Executive with the consent of the Company,
or by the Company at its expense and with the consent of the Executive (which
consent shall not be unreasonably withheld in either case), to be unable to
perform, at the time of that determination and, in all reasonable medical
likelihood, indefinitely thereafter, the normal duties then most recently
assigned, under and in accordance with the terms hereof, to the Executive while
on Active Status; provided that, if: (1)(A) the Company has reasonably withheld
its consent to the Qualified Physician, if any, selected by the Executive or (B)
the Executive has reasonably withheld his consent to the Qualified Physician, if
any, selected by the Company, and (2) the Qualified Physicians selected by the
Executive and the Company disagree as to whether the Executive has incurred a
Disability, the determination whether the Executive has incurred a Disability
shall be made by a majority of three (3) Qualified Physicians, (a) one (1) of
whom shall be selected by the Executive, (b) one (1) of whom shall be selected
by the Company, and (c) the remaining one (1) of whom shall be selected by the
Qualified Physicians selected by the Executive and the Company pursuant to
clauses (a) and (b) of this proviso and the fees and expenses of whom will be
shared and paid in equal amounts by the Executive and the Company. For purposes
of this definition, if the Executive is unable by reason of illness or injury to
give an informed consent to the performance of the treatment of that illness or
injury, a Qualified Physician selected by any Person who is authorized by
applicable law to give that consent will be deemed to have been selected by the
Executive.
"EFFECTIVE DATE" has the meaning ascribed to that term in
Section 8.15.
"ERISA" means the Executive Retirement Income Security Act of
1974.
"EMPLOYMENT" means the salaried employment of the Executive by
the Company or a subsidiary of the Company hereunder.
"EXCESS AMOUNT" has the meaning ascribed to that term in
Section 4.2.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"EXECUTIVE OFFICER" means any of the chairman of the board,
the chief executive officer, the chief operating officer, the chief financial
officer, the president, any executive or senior vice president or the general
counsel of the Company.
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"EXEMPT PERSON" means (a) (1) the Company, any subsidiary of
the Company, any employee benefit plan of the Company or of any subsidiary of
the Company and (2) any Person organized, appointed or established by the
Company for or pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for employees of the
Company or any subsidiary of the Company and (b) the Executive, any Affiliate or
Associate of the Executive or any group (as that term is used in Exchange Act
Rule 13d-5(b)) of which the Executive or any Affiliate or Associate of the
Executive is a member.
"GOOD REASON" for the Executive's termination of his
Employment means: (a) any violation hereof in any material respect by the
Company; (b) either (1) a failure of the Company to continue in effect any
Compensation Plan in which the Executive was participating, or (2) the taking of
any action by the Company which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under, any such
Compensation Plan; or (c) the assignment to the Executive of duties inconsistent
in any material respect with the Executive's then current positions (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities or any other action by the Company which results in a material
diminution in those positions, authority, duties or responsibilities.
"INCENTIVE PLAN" means any compensation arrangement, plan,
policy, practice or program established, maintained or sponsored by the Company
or any subsidiary of the Company, or to which the Company or any subsidiary of
the Company contributes, on behalf of any Executive Officer and which provides
for incentive, bonus or other performance-based awards of cash, securities or
the phantom equivalent of securities, including any stock option, stock
appreciation right and restricted stock plan, but excluding any plan intended to
qualify as a plan under any one or more of Sections 401(a), 401(k) or 423 of the
Code.
"NONTERMINATING PARTY" means the Executive or the Company, as
the case may be, to which the Terminating Party delivers a Notice of
Termination.
"NOTICE OF TERMINATION" to or from the Executive means a
written notice that: (a) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's Employment, and (b) if the Termination Date is other than the
date of receipt of the notice, sets forth that Termination Date.
"OUTSIDE DIRECTOR" means at any time a member of the Board at
that time who is not then an employee of the Company or any subsidiary of the
Company.
"PERFORMANCE GOAL" has the meaning ascribed to that term in
Section 4.2.
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"PERSON" means any natural person, sole proprietorship,
corporation, partnership of any kind having a separate legal status, limited
liability company, business trust, unincorporated organization or association,
mutual company, joint stock company, joint venture, estate, trust, union or
employee organization or governmental authority.
"PRIME RATE" has the meaning ascribed to that term in Section
4.2.
"QUALIFIED PHYSICIAN" means, in the case of any determination
whether the Executive has sustained a Disability, a physician (a) holding an
M.D. degree from a medical school located in the United States, (b) specializing
and board certified in the treatment of the injury or illness that has or may
have caused that Disability, and (c) having admission privileges to one or more
hospitals located in Florida or in the state in which the Executive then is
domiciled.
"REQUIRED BOARD MAJORITY" means at any time a majority of the
members of the entire Board then in office which shall include at least a
majority of the Outside Directors then in office.
"SECURITIES ACT" means the Securities Act of 1933.
"SEVERANCE PAYMENT" means at any time an amount equal to three
(3) times the Executive's Average Annual Compensation during the term of this
Agreement.
"TERMINATING PARTY" means the Executive or the Company, as the
case may be, who or which terminates the Executive's Employment by means of a
Notice of Termination.
"TERMINATION DATE" means: (a) if the Executive's Employment is
terminated by reason of the Executive's death, the date of that death; (b) if
the Executive's Employment is terminated by Executive for Good Reason, or based
on a Change of Control pursuant to Section 5.2(b), the date specified in the
Executive's Notice of Termination; (c) if the Executive's Employment is
terminated by Executive without Good Reason and other than for Disability
pursuant to Section 5.2(d), the ninetieth (90th) day after the Company receives
Executive's Notice of Termination; and (d) if the Executive's Employment is
terminated by the Company at any time for Cause, the date the Executive receives
the Company's Notice of Termination for Cause.
"TERMINATION PAYMENT" means at any time an amount equal to one
and one-half (1.5) times the Executive's Average Annual Compensation during the
term of this Agreement.
"TRADE AREA" means any area within a fifty (50) mile radius
from a Dealership owned or operated by the Company.
"VOTING SHARES" means: (a) in the case of any corporation,
stock of that corporation of the class or classes having general voting power
under ordinary circumstances to elect a majority of that corporation's board of
directors; and (b) in the case of any other entity, equity interests of the
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class or classes having general voting power under ordinary circumstances
equivalent to the Voting Shares of a corporation.
1.2 OTHER DEFINITIONAL PROVISIONS.
(i) Except as otherwise specified herein, all references
herein to any statute defined or referred to herein, including the Code, ERISA
and the Exchange Act, shall be deemed references to that statute or any
successor statute, as the same may have been or may be amended or supplemented
from time to time, and any rules or regulations promulgated thereunder.
(ii) When used in this Agreement, the words "herein," "hereof"
and "hereunder" and words of similar import shall refer to this Agreement as a
whole and not to any provision of this Agreement, and the word "Section" refers
to a Section of this Agreement unless otherwise specified.
(iii) Whenever the context so requires, the singular number
includes the plural and vice versa, and a reference to one gender includes each
other gender and the neuter.
(iv) The word "including" (and, with correlative meaning, the
word "include") means including, without limiting the generality of any
description preceding such word, and the words "shall" and "will" are used
interchangeably and have the same meaning.
2. EMPLOYMENT
2.1 DUTIES. On the terms and subject to the conditions hereinafter set
forth, and beginning as of the Effective Date, the Company will employ the
Executive as Chairman of the Board, Chief Executive Officer and President of the
Company and the Executive will serve in the Company's employ in that position.
The Executive shall perform such duties, and have such powers, authority,
functions, duties and responsibilities for the Company and corporations
affiliated with the Company as are commensurate and consistent with his
employment as Chairman of the Board and Chief Executive Officer of the Company.
The Executive also shall have such additional powers, authority, functions,
duties and responsibilities as may be assigned to him by the Board; provided
that, without the Executive's written consent, such additional powers,
authority, functions, duties and responsibilities shall not be inconsistent or
interfere with, or detract from, those herein vested in, or otherwise then being
performed for the Company by, the Executive.
2.2 OTHER ACTIVITIES. The Executive shall not, at any time during his
Employment, engage in any other activities unless those activities do not
interfere materially with the Executive's duties and responsibilities for the
Company at that time, except that the Executive shall be entitled, subject to
the provisions of Section 8, (a) to continue with such activities as the
Executive has carried on prior to the Effective Date, including making and
managing his personal investments and participating in other business or civic
activities; and (b) to serve on corporate or other business, civic or charitable
boards or committees and trade association or similar boards or committees.
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3. TERM OF EMPLOYMENT
3.1 TERM. Subject to the provisions of Section 5, the term of the
Executive's Employment shall be for an initial term expiring on December 31,
2000, and shall automatically renew for consecutive three (3) year terms
thereafter, without any further action by either the Company or the Executive,
unless either the Company or the Executive shall, no less than one hundred
eighty (180) days prior to the expiration of the original term hereof, or any
renewal term, provide written notice to the other party of his or its election
not to renew Executive's Employment. The Executive's Employment shall terminate
when the Termination Date shall have occurred; provided no such termination
shall release the Company from its obligations to pay the Executive all the
applicable amounts Section 5 provides the Company shall pay as a result of the
termination of the Executive's Employment.
4. COMPENSATION
4.1 BASE SALARY. A Base Salary shall be payable to the Executive by the
Company as a guaranteed minimum annual amount hereunder for each Compensation
Year during the period from the Effective Date to the Termination Date. That
Base Salary shall be payable in accordance with the Company's normal payroll
schedules (but in no event less frequently than semi-monthly), shall be payable
initially at the annual rate of $500,000.00 and shall be increased (but not
decreased or adjusted other than as provided in Section 5) as follows:
(i) on the first and each subsequent anniversary of the
Effective Date, by the same percentage increase (if any) in the CPI for the
twelve (12) month period immediately preceding such anniversary; and
(ii) on the first and each subsequent anniversary of the
Effective Date, by such additional amount as shall be determined in the sole
discretion of the Compensation Committee, as evidenced by the written minutes or
records of the Compensation Committee and its written notices of such
determinations or approvals to the Executive.
4.2 BONUS. Executive shall be eligible for an annual Bonus based on
satisfaction of annual performance goals for the Company to be established from
time to time by the Compensation Committee, in accordance with the Company's
Incentive Plans.
4.2.1 The performance goals for the Company established by the
Compensation Committee pursuant to this Section 4.2 (the "PERFORMANCE GOAL") are
intended as "performance goals" for Executive, as that term is used in Section
162(m)(4)(C) of the Code and regulations promulgated thereunder. Such
Performance Goals will be determined and approved by the Compensation Committee,
consisting solely of two (2) or more outside directors, as required by Code ss.
162(m)(4)(C)(i) and regulations promulgated thereunder.
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4.2.2 Notwithstanding anything to the contrary contained
herein, in no event shall Executive receive any portion of his Bonus if the
Company could not reasonably deduct such portion solely by operation of Code ss.
162(m). For purposes of this limitation: (i) no portion of the Executive's
compensation or benefits, the receipt or enjoyment of which Executive shall have
effectively waived in writing prior to the date of payment, shall be taken into
account; (ii) no portion of any compensation or benefits shall be taken into
account which, in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to Executive, does not constitute
"applicable employee remuneration" within the meaning of Code ss.162(m) and
regulations promulgated thereunder; and (iii) the value of any non-cash benefit
or any deferred payment or benefit included in the Executive's remuneration
shall be determined by the Company's independent auditors in accordance with the
Code. This subsection 4.2.2 shall not prohibit the accrual or payment of any
Bonus (or portion thereof) which is deferred in accordance with subsection 4.2.5
below.
4.2.3 At any time during the term of Employment, upon written
request of Executive, the Company shall submit the Performance Goal and other
material compensation terms provided herein for approval by the Company's
shareholders if necessary to comply with Code ss. 162(m)(4)(C)(ii) and
regulations promulgated thereunder, and the Company shall use reasonable efforts
to secure such shareholder approval; provided, (i) the Company shall not be
required to call a special shareholders meeting for the sole purpose of
complying with this section; and (ii) in order to have such approval sought at
the Company's annual shareholders meeting, Executive shall provide written
notice thereof to the Company no less than ninety (90) days prior to the
scheduled date of the annual meeting. If any executive officer of the Company
requests that his Performance Goal and compensation terms be submitted for
shareholder approval pursuant to this Agreement, the Company shall have the
right to submit the Performance Goals and compensation arrangements of all
executive officers for shareholder approval at the same meeting.
4.2.4 If required to comply with Code ss.162(m)(4)(C)(iii),
the Company's Compensation Committee shall, before the payment of any Bonus,
certify in writing, if applicable, that the Performance Goal and any other
material terms hereof were satisfied, as necessary to comply with Code ss.
162(m)(4)(C)(iii).
4.2.5 If for any reason the Performance Goal and Bonus
provided to Executive do not qualify for the Code ss. 162(m)(4)(C) exemption,
the payment of any portion of the Bonus causing Executive's compensation to
exceed $1,000,000 during any fiscal year of the Company (the "EXCESS AMOUNT")
will be deferred until a fiscal year during the term of employment in which
Executive earns less than $1,000,000; PROVIDED, HOWEVER, that in the event of
Executive's death, the termination of Executive's employment for any reason
(including without limitation termination by the Company for Cause or by
Executive for Good Reason), or the expiration of this Agreement, any Excess
Amount, including any interest earned thereon, shall be paid to Executive within
ten (10) days of such death, termination, or expiration. Any Excess Amount shall
earn interest at a variable rate of interest equal to the prime rate, as
published in THE WALL STREET JOURNAL from time to time (the "PRIME RATE"), until
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such amount is paid to the Executive. The Company shall hold any Excess Amount,
including any interest earned thereon, in trust for Executive until such amount
is paid to Executive in accordance with the terms hereof; provided, that all
amounts held in trust for Executive shall be subject to the claims of the
creditors of the Company.
4.2.6 The provisions of this Section 4.2 are intended, and
shall be interpreted, to comply with the requirements of Code ss. 162(m) so as
to permit the Company to deduct all payments of applicable employee remuneration
made to Executive pursuant to this Agreement.
4.3 OTHER COMPENSATION. Subject to subsection 4.2 above, the Executive
shall be entitled to participate in all Compensation Plans from time to time in
effect during the term of this Agreement, regardless of whether the Executive is
an Executive Officer. All awards to the Executive under all Incentive Plans
shall take into account the Executive's positions with and duties and
responsibilities to the Company and its subsidiaries.
4.4 EMPLOYEE BENEFIT PLANS AND PROGRAMS. The Executive shall also be
entitled to participate in all other group life insurance, pension, medical
insurance, hospitalization, disability and other similar employee benefit plans
and programs which at any time during the term of this Agreement may be offered
by the Company to its executive officers generally; provided that in the case of
medical, hospitalization and similar benefits, coverage shall also be provided,
at the Company's cost, to the Executive's spouse and minor children.
4.5 TAX INDEMNITY. Should any of the payments of Base Salary, Severance
Payments, Termination Payments, other incentive or supplemental compensation,
benefits, allowances, awards, payments, reimbursements or other perquisites, or
any other payment in the nature of compensation, singly, in any combination or
in the aggregate, that are provided for hereunder to be paid to or for the
benefit of the Executive be determined or alleged to be subject to an excise or
similar purpose tax pursuant to Section 4999 of the Code, or any successor or
other comparable federal, state or local tax law by reason of being an "excess
parachute payment" (within the meaning of Section 280G of the Code), the Company
shall pay to the Executive such additional compensation as is necessary (after
taking into account all federal, state and local taxes payable by the Executive
as a result of the receipt of such additional compensation) to place the
Executive in the same after-tax position (including federal, state and local
taxes) he would have been in had no such excise or similar purpose tax (or
interest or penalties thereon) been paid or incurred. The Company hereby agrees
to pay such additional compensation within the earlier to occur of five (5)
business days after (i) the Executive notifies the Company that the Executive
intends to file a tax return taking the position that such excise or similar
purpose tax is due and payable in reliance on a written opinion of the
Executive's tax counsel (such tax counsel to be chosen solely by the Executive)
that it is more likely than not that such excise tax is due and payable; or (ii)
the date of any notice or action by the Company that it intends to take the
position that such excise tax is due and payable. The costs of obtaining the tax
counsel opinion referred to in clause (i) of the preceding sentence shall be
borne by the Company, and as long as such tax counsel was chosen by the
Executive in good faith, the conclusions reached in
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such opinion shall not be challenged or disputed by the Company. If the
Executive intends to make any payment with respect to any such excise or similar
purpose tax as a result of an adjustment to the Executive's tax liability by any
federal, state or local tax authority, the Company will pay such additional
compensation by delivering its cashier's check payable in such amount to the
Executive within five (5) business days after the Executive notifies the Company
of his intention to make such payment. Without limiting the obligation of the
Company hereunder, the Executive agrees, in the event the Executive makes any
payment pursuant to the preceding sentence, to negotiate with the Company in
good faith with respect to procedures reasonably requested by the Company which
would afford the Company the ability to contest the imposition of such excise or
similar purpose tax; provided, however, that the Executive will not be required
to afford the Company any right to contest the applicability of any such excise
or similar purpose tax to the extent that the Executive reasonably determines
(based upon the opinion of his tax counsel) that such contest is inconsistent
with the overall tax interests of the Executive.
5. TERMINATION, DISABILITY AND DEATH
5.1 TERMINATION OF EMPLOYMENT BY THE COMPANY. The Company shall be
entitled, if acting at the direction of the Required Board Majority, to
terminate the Executive's Employment at any time with or without Cause. The
Company's termination of the Executive's Employment will be effective on the
date the Company delivers a Notice of Termination to the Executive pursuant to
this Section 5.1 (together with any required certified Board resolution). If the
Company terminates the Executive's Employment for Cause, the Company shall,
within five (5) business days thereafter, pay the Executive an amount equal to
the Accrued Benefits and, when that payment is made, the Company shall have no
further obligation hereunder to compensate the Executive. If the Company
terminates the Executive's Employment without Cause, or elects not to renew
Executive's Employment upon expiration of the original term or any renewal term,
the Company shall, within five (5) business days thereafter, pay the Executive
an amount equal to the sum of Accrued Benefits, plus the Severance Payment, and
shall continue to provide health insurance benefits for the Executive, his
spouse and minor children (on the same terms in effect on the Termination Date)
for a period of three (3) years after the Termination Date.
5.2 TERMINATION OF EMPLOYMENT BY THE EXECUTIVE. The Executive shall be
entitled to terminate his Employment, by delivery of a Notice of Termination to
the Company: (a) for Good Reason at any time within one hundred eighty (180)
days after the facts or circumstances constituting that Good Reason first exist
and are known to the Executive, (b) by reason of a Change of Control at any time
within three hundred sixty-five (365) days after that Change of Control occurs;
(c) in the event of his Disability, as provided in Section 5.3, or (d) without
Good Reason and other than for Disability at any time. If the Executive
terminates his Employment for Good Reason or as a result of a Change of Control,
the Company shall pay to the Executive in a cash lump sum within five (5)
business days after the date the Company receives the Executive's Notice of
Termination, an amount equal to the sum of Accrued Benefits plus the Severance
Payment, and shall continue to provide health insurance benefits for the
Executive, his spouse and minor children (on the same terms in effect
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on the Termination Date) for a period of three (3) years after the Termination
Date. If the Executive terminates his Employment without Good Reason and other
than for Disability, the Company shall pay to the Executive, in a cash lump sum
within five (5) business days after the Termination Date, the Accrued Benefits.
5.3 TERMINATION BY REASON OF DISABILITY. If the Executive incurs any
Disability while on Active Status, either the Executive or the Company may
terminate the Executive's Employment effective on the date the Nonterminating
Party receives a Notice of Termination from the Terminating Party pursuant to
this Section 5.3; provided, however that the Company shall, within five (5)
business days thereafter, pay the Executive an amount equal to the sum of
Accrued Benefits plus the Termination Payment, and the Company shall continue to
provide health insurance benefits for the Executive, his spouse and minor
children (on the same terms in effect on the Termination Date) for a period of
three (3) years after the Termination Date.
5.4 TERMINATION OF EMPLOYMENT BY DEATH. The Executive's Employment
shall terminate automatically at the time of his death. If the Executive's
Employment is terminated by reason of the Executive's death, the Company shall
pay to the Executive's estate, in a cash lump sum within thirty (30) days after
the Termination Date, an amount equal to the sum of the Accrued Benefits plus
the Termination Payment, and shall continue to provide health insurance benefits
for the Executive's spouse and minor children (on the same terms in effect on
the Termination Date) for a period of three (3) years after the Termination
Date.
5.5 RETURN OF PROPERTY. On termination of the Executive's Employment,
however brought about, the Executive (or his representatives) shall promptly
deliver and return to the Company all the Company's property that is in the
possession or under the control of the Executive.
5.6 STOCK OPTIONS. Notwithstanding any provision of this Agreement to
the contrary: (i) except in the case of a termination of the Executive's
Employment for Cause, all stock options previously granted to the Executive
under Incentive Plans that have not been exercised and are outstanding as of the
time immediately prior to the Termination Date shall, notwithstanding any
contrary provision of any applicable Incentive Plan, automatically become vested
and immediately exercisable, and remain outstanding until exercised or the
expiration of their term, whichever is earlier; and (ii) in the case of a
termination of the Executive's Employment for Cause, all stock options
previously granted to Executive under Incentive Plans that have not been
exercised and are outstanding as of the Termination Date shall automatically be
terminated, unless the Compensation Committee determines otherwise in its
discretion, notwithstanding any contrary provision of any applicable Incentive
Plan.
6. OTHER EXECUTIVE RIGHTS
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6.1 PAID VACATION; HOLIDAYS. The Executive shall be entitled to not
less than six (6) weeks of annual vacation and all legal holidays during which
times his applicable compensation shall be paid in full.
6.2 BUSINESS EXPENSES. The Executive is authorized to incur, and will
be entitled to receive prompt reimbursement for, all reasonable expenses
incurred by the Executive in performing his duties and carrying out his
responsibilities hereunder, including business meal, entertainment and travel
expenses, provided that the Executive complies with the applicable policies,
practices and procedures of the Company relating to the submission of expense
reports, receipts or similar documentation of those expenses. The Company shall
either pay directly or promptly reimburse the Executive for such expenses not
more than twenty (20) days after the submission to the Company by the Executive
from time to time of an itemized accounting of such expenditures for which
direct payment or reimbursement is sought. Unpaid reimbursements after such
20-day period shall accrue interest in accordance with Section 8.11.
6.3 SUPPORT. While on Active Status, the Executive shall be provided by
the Company with office space, furnishings and facilities, reserved parking,
secretarial and administrative assistance, supplies and other support equipment
(including a computer, facsimile machine and photocopier).
6.4 OTHER BENEFITS. The Executive and his family shall be entitled to
use two new automobiles from the Company's inventory and the Company shall pay
all operating, maintenance and repair costs thereof. The Executive shall be
entitled to reimbursement for all dues, assessments and dining or other minimum
spending requirements at one country club to be selected by Executive.
6.5 NO FORCED RELOCATION. The Executive shall not be required to move
his principal place of residence from the greater Orlando area or to perform
regular duties that could reasonably be expected to require either such move
against his wish or to spend amounts of time each week outside the greater
Orlando area which are unreasonable in relation to the duties and
responsibilities of the Executive hereunder, and the Company agrees that, if it
requests the Executive to make such a move and the Executive declines that
request, (i) that declination shall not constitute any basis for a determination
that Cause exists, and (ii) no animosity or prejudice will be held against
Executive.
7. COVENANT AGAINST UNFAIR COMPETITION
7.1 Executive will not, for as long as he is employed hereunder and for
a period of three years following any termination of his employment, for any
reason, for his own account or jointly with another, directly or indirectly, for
or on behalf of any individual, partnership, corporation or other legal entity,
as principal, agent or otherwise:
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(i) own, control, manage, be employed by, consult with, or
otherwise participate in any business or activity (other than that of the
Company) involved within the Trade Area in the retail sales or service of new or
used vehicles;
(ii) solicit or induce, or in any manner attempt to solicit,
any person employed by the Company or its affiliates to leave such employment,
whether or not such employment is pursuant to a written contract and whether or
not such employment is at will, or hire any person who has been employed by the
Company or an affiliate thereof at any time during the six (6) month period
preceding such hiring; or
(iii) disclose to any third party or use any Confidential
Information concerning the Company.
7.2 Executive recognizes the importance of the covenant contained in
this Section 7 and acknowledges that, based on his past experience and training
as an executive of the Company, the projected expansion of the Company's
business, and the nature of his services to be provided under this Agreement,
the restrictions imposed herein are: (i) reasonable as to scope, time and area;
(ii) necessary for the protection of the Company's legitimate business
interests, including without limitation, the Company's and its affiliates' trade
secrets, goodwill, and its relationship with customers and suppliers; and (iii)
not unduly restrictive of Executive's rights as an individual. Executive
acknowledges and agrees that the covenants contained in this Section 7 are
essential elements of this Agreement and that but for these covenants, the
Company would not have entered into this Agreement. Such covenants shall be
construed as agreements independent of any other provision of this Agreement.
The existence of any claim or cause of action against the Company by the
Executive, whether predicated on the Company's breach of this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
the covenants contained in this Section 7.
7.3 If Executive commits a breach or threatens to commit a breach of
any of the provisions of this Section 7, the Company shall have the right and
remedy, in addition to any others that may be available, at law or in equity, to
have the provisions of this Section 7 specifically enforced by any court having
equity jurisdiction, through injunctive or other relief (without being required
to post any bond or other security), it being acknowledged that any such breach
or threatened breach will cause irreparable injury to the Company, the amount of
which will be difficult to determine, and that money damages will not provide an
adequate remedy to the Company.
7.4 The provisions of this Section 7 shall survive the expiration and
termination of this Agreement, and the termination of Executive's employment
hereunder, for any reason.
8. GENERAL PROVISIONS
8.1 SEVERABILITY. If any one or more of the provisions of this
Agreement shall, for any reason, be held or found by final judgment of a court
of competent jurisdiction to be invalid, illegal
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or unenforceable in any respect, (i) such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, (ii)
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein (except that this clause (ii) shall
not prohibit any modification allowed under subsection (iii) of this Section);
and (iii) if the effect of a holding or finding that any such provision is
invalid, illegal or unenforceable is to modify to the Executive's detriment,
reduce or eliminate any compensation, reimbursement, payment, allowance or other
benefit to the Executive intended by the Company and Executive in entering into
this Agreement, the Company shall, within thirty (30) days after the date of
such finding or holding, negotiate and expeditiously enter into an agreement
with the Executive which contains alternative provisions (reasonably acceptable
to the Executive) that will restore to the Executive (to the extent lawfully
permissible) substantially the same economic, substantive and income tax
benefits and legal rights the Executive would have enjoyed had such provision
been upheld as legal, valid and enforceable. Without limiting the foregoing, if
any covenant contained in Section 7, or any part thereof, is hereafter construed
to be invalid or unenforceable, the same shall not affect the remainder of the
covenants, which shall be given full effect, without regard to the invalid
portions, and any court having jurisdiction shall have the power to reduce the
duration, scope and/or area of such covenant and, in its reduced form, said
covenant shall then be enforceable.
8.2 NONEXCLUSIVITY OF RIGHTS. Nothing herein shall prevent or limit the
Executive's continuing or future participation in any Compensation Plan or,
subject to Section 8.14, limit or otherwise affect such rights as the Executive
may have under any other contract or agreement with the Company. Vested benefits
and other amounts to which the Executive is or becomes entitled to receive under
any Compensation Plan on or after the Termination Date shall be payable in
accordance with that Compensation Plan, except as expressly modified hereby.
8.3 FULL SETTLEMENT. The Company's obligations to make the payments
provided for in, and otherwise to perform its undertakings in, this Agreement
shall not be affected by any right of set-off, counterclaim, recoupment, defense
or other action, claim or right the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any provision hereof, and those amounts shall not be reduced,
regardless of whether the Executive obtains other employment or becomes
self-employed.
8.4 SUCCESSORS.
(i) This Agreement is personal to the Executive and, without
the prior written consent of the Company, is not assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit and be enforceable by the Executive's legal
representatives acting in their capacities as such pursuant to applicable law.
This Agreement is not assignable by the Company. Except as limited by the
preceding sentence, this Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
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(ii) The Company shall require any successor (direct or
indirect and whether by purchase, merger, consolidation, share exchange or
otherwise) to the business, properties and assets of the Company substantially
as an entirety expressly to assume and agree to perform this Agreement in the
same manner and to the same extent the Company would have been required to
perform it had no such succession taken place.
8.5 AMENDMENTS; WAIVERS. This Agreement may not be amended or modified
except by a written agreement executed and delivered by the parties hereto or
their respective successors or legal representatives acting in their capacities
as such pursuant to applicable law.
8.6 NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery or by registered or
certified mail, return receipt requested, postage prepaid, addressed to the
appropriate Person at the address of such Person set forth below (or at such
other address as such Person may designate by written notice to each other party
in accordance herewith):
(a) if to the Executive, addressed as follows:
Xxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
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(b) if to the Company, addressed as follows:
First Team Automotive Group, Inc.
000 Xxxxx Xxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Board of Directors
8.7 NO WAIVER. The failure of the Company or the Executive to insist on
strict compliance with any provision of, or to assert any right under, this
Agreement (including the right of the Executive to terminate his Employment for
Good Reason or by reason of a Change of Control pursuant to Section 5.2) shall
not be deemed a waiver of that provision or of any other provision of or right
under this Agreement.
8.8 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Florida.
8.9 JURISDICTION AND VENUE. The parties irrevocably consent with
respect to any action, suit or other legal proceeding pertaining directly to
this Agreement or to the interpretation or enforcement of any of Executive's
rights hereunder to service of process in the State of Florida and hereby waive
any right to contest or oppose receipt of such service of process. The parties
irrevocably (i) agree that any such action, suit or other legal proceeding shall
be brought in the courts of such state or in the courts of the United States
sitting in Orlando, Florida, (ii) consent to the jurisdiction of each such court
in any such action, suit or other legal proceeding, and (iii) waive any
objection they may have to the laying of venue of any such action, suit or other
legal proceeding in any of such courts.
8.10 HEADINGS. The headings of Sections and subsections hereof are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
8.11 INTEREST. If any amounts required to be paid or reimbursed to the
Executive hereunder are not so paid or reimbursed at the times provided herein
(including amounts required to be paid by the Company pursuant to Sections 4 and
5), those amounts shall accrue interest compounded daily at a variable rate
which is three percentage points (3%) above the Prime Rate, from the date those
amounts were required to have been paid or reimbursed to the Executive until
those amounts are finally and fully paid or reimbursed; provided, however, that
in no event shall the amount of interest contracted for, charged or received
hereunder exceed the maximum non-usurious amount of interest allowed by
applicable law.
8.12 PUBLICITY. The Company agrees with the Executive that, except to
the extent required by law or legal process (including the Exchange Act and the
Securities Act), it will not make or
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publish, without the prior written consent of the Executive, any written or oral
statement concerning the terms of the Executive's employment relationship with
the Company and will not, if a Notice of Termination is given by either the
Company or the Executive for any reason, publish or cause to be published any
statement concerning the Executive, including his work-related performance or
the reasons or basis for the giving of that Notice of Termination.
8.13 TAX WITHHOLDING. Notwithstanding any other provision hereof, the
Company may withhold from amounts payable hereunder all Federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.
8.14 ENTIRE AGREEMENT. The Company and the Executive agree that this
Agreement supersedes all prior written and oral agreements between them with
respect to the employment of the Executive by the Company, but has no effect on
any Compensation Plan in which the Executive was participating prior to the
Effective Date.
8.15 EFFECTIVE DATE. This Agreement shall be effective upon the
closing of the Company's sale of its common stock to the public pursuant to an
effective Registration Statement filed under the Securities Act.
8.16 INDEMNIFICATION. The Executive shall be indemnified by the Company
to the maximum extent permitted by the law of Delaware, the state of the
Company's incorporation, and the law of the state of incorporation of any
subsidiary of the Company of which the Executive is a director or an officer or
executive, as the same may be in effect from time to time.
8.17 ATTORNEYS FEES. In the event of any litigation arising under the
terms of this Agreement, the prevailing party or parties shall be entitled to
recover its or their reasonable attorneys fees and court costs from the other
party or parties.
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8.18 WAIVER OF JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year indicated above.
FIRST TEAM AUTOMOTIVE CORP.
By: /s/ XXXX X. XXXXX
--------------------------------
Xxxx X. Xxxxx, Vice Chairman
EXECUTIVE
------------------------------------
Xxxxxx X. Xxxxxx
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