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CHARLES K. YANCEY
SUNBELT EXECUTIVE EMPLOYMENT AGREEMENT
This SUNBELT EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is dated
as of December 18, 1997 (the "Effective Date"), and is entered into between
SUNBELT AUTOMOTIVE GROUP, INC., a Georgia corporation (hereinafter the "Company"
or "Sunbelt"), and CHARLES K. YANCEY, a resident of Atlanta, Dekalb County,
Georgia ("Executive").
WHEREAS, Executive has been employed by Boomershine Automotive Group,
Inc. ("Boomershine") as its General Manager, Secretary and Treasurer; and
WHEREAS, the Company intends to reorganize its business structure and
to purchase certain other businesses including Boomershine as a precondition to
engage in an initial public offering of its stock (the "IPO") or other change of
control; and
WHEREAS, the Company wishes to employ Executive as its Chief Executive
Officer ("CEO") through April 30, 1998, and thereafter, as President and Chief
Operating Officer ("COO"), and Executive wishes to perform services for the
Company as a senior level executive officer (hereinafter the positions are
referred to as "Executive Officer"); and
WHEREAS, the Executive and the Company desire to enter into this
Executive Employment Agreement to govern the terms and conditions of Executive's
employment by and with the Company.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements of the parties hereto, the parties hereby covenant and
agree as follows:
ARTICLE I.
EMPLOYMENT, DUTIES AND RESPONSIBILITIES
1.1 EMPLOYMENT. The Company, through its Board of Directors (the
"Board"), hereby agrees to employ Executive as its CEO through April 30, 1998,
and thereafter, as President and COO of the Company, as agreed to by the
parties, for the Term (defined in Section 2.1 below), and Executive hereby
agrees to accept such employment on the terms and conditions set forth herein.
Executive agrees to devote substantially all of his business time and efforts to
the business of the Company. Anything herein to the contrary notwithstanding,
nothing shall preclude Executive from (a) serving on the boards of directors of
a reasonable number of other corporations or trade associations and/or
charitable organizations, (b) engaging in charitable activities and community
affairs, and (c) managing his and his immediate family's personal investments
and affairs, provided that such activities do not materially interfere with
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the proper performance of his duties and responsibilities following the
Effective Date.
1.2 DUTIES AND RESPONSIBILITIES. Commencing as of the 18th day of
December, 1997, Executive shall assume the responsibilities, perform the duties
and exercise the powers as Executive Officer. Executive shall be responsible for
the general management of the operating affairs of the Company (subject to the
day-to-day operating control of certain of the Company's subsidiaries which the
Board or the Executive Committee thereof (the "Executive Committee") may
specifically allocate to other senior officers of the Company or to the extent
required by agreements to which the Company or any of its subsidiaries are
subject (other than agreements with such senior officers), including franchise
agreements with automobile manufacturers or authorized distributors thereof and
shall be required to perform such duties and responsibilities as are consistent
with his position and as the Board or the Executive Committee may from time to
time prescribe.
1.3 BOARD AND EXECUTIVE COMMITTEE MEMBERSHIP. During the Term, the
Company will nominate Executive for election to the Board and will use its best
efforts to secure Executive's election to the Board and his appointment as a
member of the Executive Committee of the Board, if such a committee is
appointed by the Board.
1.4 REPORTING. Executive, in his capacity as Executive Officer, shall
report in the performance of his duties directly to the Board of Directors of
the Company.
1.5 CONSULTING TERM. At the end of the Term or any Renewal Term (as
defined in Section 2.1 hereof) of this Agreement, Executive shall have the right
to resign as Executive Officer of the Company and elect to serve the Company as
a Consultant, in which event the following special rules shall apply:
(i) Any such resignation shall be made on ninety (90) days'
advance written notice, to be effective as of the first day of
the calendar month following such 90th day prior to the end of
the Term or any Renewal Term, and such resignation shall not
be deemed to be a breach of or a termination by Executive of
his employment under this Agreement,
(ii) At the end of the Term or any Renewal Term set forth in
Section 2.1, Executive shall cease being an officer of the
Company, but shall remain a member of the Board of Directors
and shall be a consultant to the Company (the "Consulting
Term"). As such, Executive shall provide services to the
Company on such matters pertaining to the business of the
Company as may, from time to time, be mutually agreed upon by
the Company and Executive. In this regard, Executive shall be
available at such reasonable times, upon reasonable advance
notice, but subject to scheduling conflicts, to meet with the
Board and/or the officers of the Company, or their designees,
for the purpose of providing such services; provided,
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however, that Executive shall only be obligated to perform
services commensurate with his status as a former executive
of the Company and only those services which the Company
believes, in good faith, to be of benefit to the Company.
(iii) The Consulting Term of this Agreement shall be for a period
of five (5) years.
(iv) During the Consulting Term, Executive's annual Base Salary
pursuant to Section 3.l(a) shall be reduced to Fifty
Thousand Dollars ($50,000) per year. Executive's Annual Cas
Bonus under 3.l(b) shall cease to accrue upon commencement
of the Consulting Term.
(v) All of the remaining terms of this Agreement shall remain in
full force and effect, provided that the limitations on
Executive's outside business interests contained in Section
1.1, Section 4.1, and Section 4.2 shall be eliminated, and
the Company's obligations under Section 1.3 shall, likewise,
be eliminated.
ARTICLE II.
TERM
2.1 TERM. The term of Executive's employment as Executive
Officer, or such other acceptable senior level management position, under this
Agreement shall commence on the Effective Date and shall continue until earlier
of (a) June 30, 2003, or (b) the occurrence of a Change in Control (as defined
in Section 6.1 below) or (c) the commencement of the Consulting Term; provided
that the Term shall be renewed for an additional one-year period on the
expiration of the original Term of this Agreement ("Renewal Term") and on each
succeeding anniversary thereof (each, a "Renewal Date"), unless the Company or
Executive gives written notice, at least ninety (90) days prior to a Renewal
Date, of its or his intention not to so renew the Term (the "Term"). Any Term or
Renewal Term may be terminated earlier as provided in Article V hereof.
ARTICLE III.
COMPENSATION AND EXPENSES
3.1 SALARY, BONUSES AND BENEFITS. As compensation and consideration for
the services to be rendered hereunder during the Term and any Renewal Term by
Executive, the Company shall pay, and Executive shall accept, the following
(subject, in each case, to the provisions of Article V hereof):
(a) BASE SALARY. Commencing January 2, 1998, and through June 30, 1999,
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the Company shall pay Executive an annual Base Salary, on an annualized basis,
(the "First Year Base Salary") of TWO HUNDRED FIFTY THOUSAND DOLLARS
($250,000.00). Commencing July 1, 1999 and through June 30, 2000, the Company
shall pay Executive an annual Base Salary (the "Second Year Base Salary") of
THREE HUNDRED TWENTY-FIVE DOLLARS ($325,000.00). Commencing July 1, 2000 and
through June 30, 2001, the Company shall pay Executive an annual Base Salary
(the "Third Year Base Salary") of FOUR HUNDRED THOUSAND DOLLARS ($400,000.00).
After the Third Year Base Salary, the Executive shall be paid an annual Base
Salary commensurate with competitive industry data on comparable companies and
as shall be set forth by the Compensation Committee; provided, however, the
annual Base Salary shall in no event be less than the Third Year Base Salary.
All annual Base Salary shall be payable in accordance with the normal payment
procedures of the Company.
(b) ANNUAL CASH BONUS. Commencing with the fiscal year beginning July
1, 1998 and for each fiscal year of the Company during the Term, the Company
shall pay Executive an annual cash bonus (the "Annual Cash Bonus") as determined
by the Compensation Committee (or in the absence of such a committee, by either
the Executive Committee or the Board), based on satisfaction of certain
performance criteria to be established by agreement between the Compensation
Committee (or in the absence of such a committee, by either the Executive
Committee or the Board) and Executive. If the Company meets certain financial
and other performance targets to be agreed upon by the Compensation Committee
(or in the absence of such committee, by the Executive Committee or the Board)
and Executive, the Annual Cash Bonus shall be targeted at an amount at least
equal to fifty percent (50%) of Executive's annual Base Salary as of the year in
question, but in no event shall the Annual Cash Bonus exceed the Executive's
annual Base Salary. However, nothing herein shall be construed as a guarantee of
any amount of an Annual Cash Bonus. The Annual Cash Bonus shall be determined
(prorated for the final year of employment) and paid within ninety (90) days
after the end of each fiscal year of the Company during the Term.
(c) STOCK GRANT. As compensation for services rendered by the Executive
to and through May 1, 1998 and for his part in helping the Company in its IPO
process, and coming to work full-time for the Company, the Company agrees to
award to the Executive the right to purchase 111,081 shares of the Company's
voting common stock (the "IPO Award") at a price of $6.18 per share. These
shares shall be granted pursuant to the Company's 1997 and 1998 Incentive Stock
Plan (the "Incentive Stock Plan") and shall be granted so as to minimize the
cash expenditure and tax consequences to the Executive.
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(d) STOCK OPTIONS.
1. FIRST OPTION. In addition to the IPO Award above, the
Company shall grant to the Executive, under the Incentive Stock Plan, an option
("First Option") to purchase up to 200,000 SHARES of the Company's voting common
stock at the exercise price adopted under the Incentive Stock Plan and as set
forth in the Option Grant, attached hereto as Exhibit "A" and incorporated
herein. The First Option shall terminate on the tenth anniversary of the Option
Grant, subject to earlier termination as may be set forth in this Agreement, the
Incentive Stock Plan or in the Option Grant. The First Option is in addition to
any other option award or grant which may be made to the Executive during his
employment.
2. Second Option. In addition to the IPO Award and the First
Option above, the Company shall grant to the Executive, under the Incentive
Stock Plan, an option (the "Second Option") to purchase up to 240,000 shares of
the Company's voting common stock at the exercise price adopted under the
Company's Incentive Stock Plan and as set forth on the Option Grant, attached
hereto as Exhibit "B" and incorporated herein. The Second Option shall terminate
on the tenth anniversary of the grant of the Second Option, subject to earlier
termination as may be set forth in this Agreement, the Incentive Stock Plan or
the Option Grant. The Second Option is in addition to any other option award or
grant which may be made to the Executive during his employment.
2. THIRD OPTION. In addition to the IPO Award, the First
Option and the Second Option above, the Company shall grant to the Executive,
under the Company's Incentive Stock Plan and the Option Grant attached hereto as
Exhibit "C", an option ("Third Option") to purchase up to 100,000 SHARES of the
Company's voting common stock at an exercise price equal to the price per share
to the public set forth on the cover of the Company's IPO prospectus. The Third
Option shall terminate on the tenth anniversary of the Option Grant, subject to
earlier termination as may be set forth in this Agreement, the Incentive Stock
Plan or the Option Grant. The Third Option is in addition to any other option
award or grant which may be made to the Executive during his employment.
(e) BENEFIT PROGRAMS. Executive shall be eligible to participate in or
receive benefits under all of the Company's employee and executive benefit plans
or arrangements including, without limitation, plans or arrangements providing
for health and disability insurance coverage, life insurance for the benefit of
Executive's beneficiaries, deferred compensation and pension benefits, and
personal financial, investment, legal or tax advice, all at the highest level
that is available through the Company and/or any of its Subsidiaries to their
senior executive management (the "Benefit Programs"). In addition, Executive
shall be entitled to such perquisites of employment, including, but not limited
to, two (2) demo automobiles, insurance, etc., as are made available to the
senior executive management of the Company and/or its Subsidiaries. If this
Agreement is assigned to any Subsidiaries of the Company or any other party,
Executive shall be granted credit for all service with the Company and/or its
Subsidiaries
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prior to the date of such assignment for all purposes of the Benefit Programs,
including, but not limited to, eligibility, vesting and benefits. To the extent
there is a period of employment required as a condition for full benefit
coverage under any Benefit Programs, and Executive would not otherwise meet the
requirements taking into consideration past service granted for service with the
Company and/or its Subsidiaries, to the extent permissible under applicable law,
the Company agrees to take or to cause to be taken all actions necessary so that
Executive will be deemed to have met such requirement. The Company agrees that
whenever Executive is required to pay for coverage or benefits under a Benefit
Program from his own wages, the Company shall reimburse him for the sum of the
amount of such payments plus federal, state income and social security and
Medicare taxes on the entire reimbursement amount (including the tax on such
taxes) so that Executive will not have incurred any cost in obtaining such
coverage or benefit except as otherwise may be specifically set forth herein.
(f) Vacation. Executive shall be entitled to paid vacation during each
year of the Term in an amount equal to four (4) weeks per year. Executive shall
have the right to determine the time and duration of any vacation so taken, in
his sole discretion. Unused vacation days may be accumulated from year to year,
up to a maximum carryover of eight (8) weeks.
3.2 EXPENSES. The Company shall reimburse Executive for reasonable
business-related expenses incurred by him in connection with the performance of
services hereunder during the Term, subject to the Company's policies relating
to business-related expenses as in effect from time to time during the Term.
ARTICLE IV.
EXCLUSIVITY, ETC.
4.1 EXCLUSIVITY. Executive agrees that during the Term or any Renewal
Term, he will not engage in any other business activities, pursued for gain,
profit or other pecuniary advantage, that are competitive with the activities of
the Company or any of its Subsidiaries, except as permitted in Section 1.1 above
and Section 4.2 below. Executive agrees that all of his activities as an
employee of the Company shall be in conformity in all material respects with all
policies, rules and regulations and directions of the Company not inconsistent
with this Agreement and which have been expressly communicated to him, whether
orally or in writing.
4.2 OTHER BUSINESS VENTURES. Executive agrees that, so long as he is
employed by the Company, he will not have any financial or other beneficial
interest in any business enterprise which is competitive with any business
engaged in by the Company or any of its Subsidiaries. Notwithstanding the
foregoing or anything contained in Section 4.1 hereof, Executive may own,
directly or indirectly, up to two per cent (2%) of the outstanding capital stock
of any such business having a class of capital stock which is traded on any U.S.
or foreign
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stock exchange or in the over-the-counter market.
4.3 CONFIDENTIALITY; NON-COMPETITION. (a) Executive agrees that he will
not, at any time during the Term or any Renewal Term, and for a period of three
(3) years following the termination of his employment, any Renewal Term and
Consulting Term, directly or indirectly, use or divulge to any other person,
firm or corporation any trade or business secret, process, method or means, or
any other confidential information concerning the business or policies of the
Company or any of its Subsidiaries or Affiliates (as "Affiliates" is defined in
Section 6.2), except (i) as such disclosure or use may be required or
appropriate in connection with his work as an employee or consultant of the
Company or (ii) when required to do so by a court of law, by any governmental
agency having supervisory authority over the business of the Company or by any
administrative or legislative body (including a committee thereof) with apparent
jurisdiction to order him to divulge, disclose or make accessible such
information. For purposes of this Agreement, a "trade or business secret,
process, method or means, or any other confidential information" shall mean and
include information treated as confidential or as a trade secret by the Company
or any of its Subsidiaries or Affiliates, that is or has been disclosed or
otherwise becomes or has become known to the Executive as a result of his
employment with the Company, including but not limited to, information regarding
contemplated products, models, compilations, business and financial methods or
practices, marketing, merchandising and selling techniques, customers, vendors,
suppliers, trade secrets, training programs, manuals or materials, technical
information, contracts, systems, procedures, mailing lists, know-how, trade
names, improvements, pricing, price lists, financial or other data (including
the revenues, costs or profits associated with any of the Company's products or
services), business plans, strategy, code books, invoices and other financial
statements, computer programs, software systems, databases, discs and printouts,
other plans (technical or otherwise), customer and industry lists, supplier
lists, correspondence, internal reports, personnel files, sales and advertising
material, telephone numbers, names, addresses or any other compilation of
information, written or unwritten, which is or was used in the business of the
Company or any of its Subsidiaries or Affiliates. Executive's obligation under
this Section 4.3 (a) shall not apply to any information which is generally known
to the public or hereafter becomes generally known to the public without the
fault of Executive. Executive further agrees that upon termination of his
employment, he will not take with him, or retain without written authorization
from the Company, and will promptly deliver to the Company, all confidential
information of the Company and any copies thereof, together with all notes,
extracts, compilations, and other documents, records, and media that contain or
are based upon a trade or business secret, process, method or means, or any
other confidential information. Upon termination of his employment and
consulting, Executive also shall deliver to the Company all other files,
correspondence, and other communications received, maintained, and/or originated
by Executive during the course of his employment and any copies thereof.
(b)(i) Executive acknowledges that the agreements and covenants
contained in this section 4.3(b) are essential to protect the value of the
Company's business and assets and by
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virtue of his employment with the Company, Executive has obtained and will
obtain knowledge, contacts, know-how, training, experience and other information
relating to the Company's business operations, and there is a substantial
probability that such knowledge, know-how, contacts, training, experience and
information could be used to the substantial advantage of a competitor of the
Company and to the Company's substantial detriment. Accordingly, for a period
commencing on the date of termination of Executive's employment with the Company
and ending one (1) year from and after such date (the "Non-Compete Period"),
Executive shall not, directly or indirectly, for himself or on behalf of or in
conjunction with any person, partnership, corporation or other entity, compete,
own, operate, control, or participate or engage in the ownership, management,
operation or control of, or be connected with as an officer, employee, partner,
director, shareholder, representative, consultant, independent contractor,
guarantor, advisor or in any other manner or otherwise have a financial interest
in, a proprietorship, partnership, joint venture, association, firm, corporation
or other business organization or enterprise that competes with the Company
(which for this purpose shall mean any business or enterprise that operates
dealerships for the retail sales of new and used automobiles or trucks and
businesses ancillary thereto), provided that such business or enterprise (A) is
or becomes located or otherwise engaged within a 100 mile radius of the City of
Atlanta, Georgia or within a 100 mile radius of any automobile or Buck
dealership or ancillary business in which the Company, directly or indirectly,
has a 50% or greater economic or voting or otherwise controlling ownership
interest at any time during the Non-Compete Period or (B) is an automobile or
truck dealership or group of affiliated automobile or Buck dealerships (and all
businesses ancillary thereto) whose aggregate gross sales during the 12-month
period immediately preceding the date of Executive's termination exceeded
$50,000,000, and provided further that it shall not be a violation of this
Section 4.3 (b) if (x) Executive owns up to one percent (1%) of the outstanding
capital stock of any such business having a class of capital stock which is
traded on any U.S. or foreign stock exchange or in the over-the-counter market,
(y) Executive owns, operates, is employed by or is otherwise connected with an
advertising agency that serves automobile dealerships, provided Executive does
not personally perform any work for, or otherwise provide any advice with
respect to, any account that is engaged in competitive activity with the
Company, or (z) Executive is employed by or is a consultant or independent
contractor for an entity that competes with the Company but Executive is
employed by or is a consultant or independent contractor for a division or
subsidiary of such entity that does not engage in such competitive activity.
During the Non-Compete Period, Executive shall not interfere with or disrupt, or
attempt to interfere with or disrupt, the relationship, contractual or
otherwise, between the Company and any customer, client, supplier, manufacturer,
distributor, consultant, independent contractor or employee of the Company.
(c) Executive agrees that, at any time and from time to time during and
after the Term, he will execute any and all documents which the Company may
reasonably request to effectuate the provisions of this Section 4.3.
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ARTICLE V.
TERMINATION
5.1 TERMINATION BY THE COMPANY. The Company shall have the right to
terminate Executive's employment at any time, with or without "Cause."
(a) TERMINATION FOR CAUSE. For purposes of this Agreement, "Cause"
shall mean:
(i) Executive is convicted of or enters a plea of guilty to
any felony under federal or state law (except under any state's laws
regulating the enforcement of motor vehicles involved in accidents);
(ii) Executive engages in conduct that constitutes gross
neglect or willful misconduct in carrying out his duties under this
Agreement, resulting, in either case, in material harm to the Company;
(iii) Executive refuses to follow the instructions, orders or
directives of the Board or the Executive Committee with respect to his
duties and responsibilities hereunder, provided that such refusal shall
constitute Cause only if the instruction, order or directive in
question has been furnished to Executive in writing and provided
further that such refusal shall not constitute Cause if Executive has a
good faith and reasonable belief, based on advice of counsel, that to
follow such instruction, order or directive would be unlawful;
(iv) Executive engages in any of the following acts which have
a material adverse impact on the financial condition of the Company:
(A) actual fraud or other material acts of dishonesty
in fulfilling his assigned responsibilities hereunder; or
(B) the willful or grossly negligent destruction of
any material amount of the Company's tangible property.
The Board shall notify Executive of its intent to terminate him for
Cause by providing written notice ("Notice of Cause") stating in as much detail
as possible the particular event, act or acts, or failure or failures to act,
that constitute the grounds on which the proposed termination for Cause is
based; such Notice of Cause must be given within fifteen (15) days of the date
any of the members of the Board (exclusive of Executive) learns of the
circumstances giving rise to the Notice of Cause. Executive shall have fifteen
(15) days after receipt of the Notice of Cause in which to cure or otherwise
correct the circumstances detailed, provided that in the event any such cure or
correction is incapable upon reasonable diligence of being completed within such
fifteen (15) day period, Executive shall be entitled to commence a cure or
correction within said fifteen (15) day period and thereafter diligently and
continuously pursue
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such cure or correction to completion. Executive may also, within such fifteen
(15) day period, request by written notice that the Board hold a hearing at
which Executive may contest the proposed termination with Cause. The hearing
shall be held on a date set by the Board within fifteen (15) days of the date
the Board receives Executive's notice of the hearing whether Executive has been
terminated for Cause as set forth in the Notice of Cause. If Executive does not
request a hearing and the circumstances described in the Notice of Cause have
not been cured within the fifteen (15) day period following the date of the
Notice of Cause, Executive shall be deemed terminated for Cause, effective as of
the day the Notice of Cause was given by the Company.
(b) TERMINATION WITHOUT CAUSE. The Company may terminate Executive
without Cause upon sixty (60) days advance written notice to Executive and such
termination shall not constitute a breach of this Agreement.
(c) IPO TERMINATION. This Agreement shall automatically terminate with
no further obligations by either party if the IPO has not been completed and
become effective on or before August 1, 1998.
5.2 TERMINATION BY EXECUTIVE.
(a) TERMINATION FOR GOOD REASON. Termination for "Good Reason" shall
mean a termination of Executive's employment during the Term or any Renewal Term
at the Executive's initiative following the occurrence, without Executive's
written consent, of one or more of the following events:
(i) A reduction in Executive's then current annual Base Salary
or his Annual Cash Bonus;
(ii) The failure to elect or reselect Executive to the Board,
or his removal, as Executive Officer of the Company or such other
senior level executive management position acceptable to Executive or
his removal as a full voting member of the Board of Directors, without
the Executive's consent except as otherwise contemplated by Executive's
election pursuant to Section 1.5;
(iii) Any (1) diminution in Executive's duties other than
changes which neither individually nor in the aggregate will or will
likely cause any actual or perceived material reduction in his powers,
duties and responsibilities as enumerated in this Agreement, or (2)
assignment to Executive of duties which are either fundamentally or
materially inconsistent with his position as Executive Officer of the
Company;
(iv) As a result of a breach by the Company or the Chairman of
the Board or the Chairman of the Executive Committee, Executive
determines that he cannot carry
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out his duties and responsibilities as Executive Officer or such other senior
level management position in the manner contemplated by this Agreement;
(v) The occurrence of a Change in Control (as defined in Section 6.1
hereof);
(vi) The failure of the Company to obtain the absolute and unqualified
assumption in writing of its obligation to perform this Agreement by any
successor to all or substantially all of the assets or stock of the Company
within 15 days after a merger, consolidation, sale or similar transaction.
(vii) The modification of any of the responsibilities, duties and
authority of the Company's senior executive management without Executive's prior
written consent.
(viii) The Company fails to make any payments due to the Executive
hereunder or otherwise materially breaches its obligations under this Agreement.
Prior to his termination for Good Reason, Executive shall give written
notice ("Notice of Good Reason") to the Board of his intention to terminate this
Agreement for Good Reason, such Notice of Good Reason (A) to state in detail the
particular event, act or acts or failure or failures to act that constitute the
grounds on which the proposed termination for Good Reason is based, and (B) to
be given within fifteen (15) days of his learning of such event, act or acts or
failures to act. The Company shall have fifteen (15) days after the date that
the Notice of Good Reason has been received by the Board in which to cure or
correct the circumstances giving rise to the Notice of Good Reason. If the
Company fails to cure such conduct within such fifteen (15) day cure period,
Executive's employment shall be terminated for Good Reason as of the expiration
of the fifteen (15) day cure period.
(b) VOLUNTARY TERMINATION. Executive shall have the right to terminate
his employment at any time without cause (a "Voluntary Termination"). A
Voluntary Termination is not a termination for Good Reason or a termination as
the result of Disability (as hereafter defined) or death. A Voluntary
Termination, excepting death, shall be effective upon sixty (60) days' advance
written notice to the Company and shall not constitute a breach of this
Agreement.
5.3 DEATH. In the event Executive dies during the Term, Executive's
employment under this Agreement shall automatically terminate effective upon the
date of Executive's death.
5.4 DISABILITY. In the event that Executive shall suffer a Disability
as deemed below, the Company shall have the right to terminate the Agreement,
which shall be effective upon written notice to Executive. "Disability" means a
physical or mental condition which
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renders Executive incapable of performing Executive's regular duties hereunder
for a period of one hundred twenty (120) consecutive days. In the event of any
disagreement between Executive and the Company as to whether Executive is
suffering from a Disability, the determination of Executive's Disability shall
be made by one or more board certified licensed physicians practicing the
specialty of medicine applicable to Executive's disorder in the Atlanta
metropolitan area in accordance with the provisions of this Section. If either
the Company or Executive desires to initiate the procedure provided in this
Section, such party (the "Initiating Party") shall deliver written notice to the
other party (the "Responding Party") in accordance with the provisions of this
Agreement specifying that the Initiating Party desires to proceed with a medical
examination and the procedures specified in this Section. Such notice shall
include the name, address and telephone number of the physician selected by the
Initiating Party (the "Disability Examination Notice"). If the Responding Party
fails within ten (10) days after the receipt of the Disability Examination
Notice to designate a physician meeting the standards specified herein, the
physician designated by the Initiating Party in the Disability Examination
Notice shall make the determination of Disability as provided in this Section.
If the Responding Party by written notice notifies the Initiating Party within
ten (10) days of the receipt by the Responding Party of the Disability
Examination Notice by notice specifying the physician selected by the Responding
Party for purposes of this Section, then each of the two physicians as so
designated by the respective parties shall each examine Executive. Examinations
shall be made by each such physician within ten (10) days of such physician's
respective designation. Each physician shall render a written report as to
whether in such physician's opinion Executive is suffering a Disability. If the
two physicians agree on the status of Executive for purposes of this Section,
such determination shall be conclusive and dispositive for all purposes of this
Section. If the two physicians cannot so agree, the two physicians shall jointly
select a third physician meeting the standards specified in this Section within
ten (10) days after the later report of the two physicians is submitted. The
third physician shall render a written report on the status of Executive within
ten (10) days of selection and such report shall be dispositive for purposes of
this Section. For purposes of this Section, Executive agrees that he shall
promptly submit to such examinations and tests as such physicians shall
reasonably request for purposes of making a determination of Disability as
provided herein. Failure or refusal of the Executive to submit to the
examination as required by this Section shall constitute a conclusive admission
by the Executive that the Executive is suffering from a Disability as provided
herein.
5.5 SEVERANCE PAY UPON TERMINATION. Amounts due under this Section 5.5
are in the nature of severance payments considered to be reasonable by the
Company and are not in the nature of a penalty, provided that such payments
shall be Executive's exclusive remedy relating to the termination of his
employment hereunder.
(a) FOR CAUSE/VOLUNTARY TERMINATION/END OF TERM. In the event of
termination of Executive's employment (i) by the Company for Cause, (ii) by
Executive other than for Good Reason or as provided in Section 1.5, or (iii) by
reason of either party's election not to extend the Term or any Renewal Term as
provided in Section 2.1 hereof, the Company
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shall pay to Executive, any annual Base Salary and any Annual Cash Bonus earned
(for a full fiscal year or prorated for a partial fiscal year) but not paid to
Executive prior to the effective date of such termination, and Executive shall
be entitled to other additional benefits in accordance with the benefit plans of
the Company. In addition, Executive and his spouse shall be entitled to
continued participation in all medical, dental and hospitalization coverage as
set forth in Section 5.5(e) hereof.
(b) GOOD REASON/WITHOUT CAUSE. In the event of termination of
Executive's employment (i) by the Company other than for Cause, or (ii) by
Executive for Good Reason, then the Executive shall receive the following:
(i) Salary. The Executive shall be paid all earned but unpaid
annual Base Salary and will continue to receive his current annual Base
Salary (subject to withholding of all applicable taxes) for the
remainder of the Term of this Agreement plus the amounts to be paid
under Section 1.5 for the Consulting Term. For purposes hereof, the
Executive's "current annual Base Salary" shall be the highest rate in
effect during the six-month period prior to the termination of
Executive's employment. The amounts due hereunder for the annual Base
Salary shall be paid in single lump payment which shall be paid within
ninety (90) days of termination. The amounts due for the Consulting
Term Payments shall be payable monthly commencing on the first month
(1st) after termination and continuing each month thereafter.
(ii) Bonuses and Incentives. The Executive shall receive any
Annual Cash Bonus then earned (for a full fiscal year or prorated for a
partial fiscal year) plus bonus payments from the Company for the
thirty-six (36) months following the month in which his employment is
terminated in an amount for each such month equal to one-twelfth of the
average of the Annual Cash Bonuses paid to him for the two calendar
years immediately preceding the calendar year in which such termination
occurs (provided that calendar years prior to 1998 shall not be
considered). Any Annual Cash Bonus that the Executive had previously
earned but which may not yet have been paid as of the date of
termination shall be due and payable. All such bonus amounts shall be
paid in a single lump sum payment which shall be paid not later than
ninety days after his termination.
(iii) Health and Life Insurance Coverage. The Executive shall
receive post-termination medical, dental, and hospitalization insurance
coverage as provided in Section 5.5(e).
(iv) Employee Retirement Plans. In addition to the benefits
provided herein, to the extent permitted by the applicable plan, the
Executive will be entitled to continue to participate, consistent with
past practices, in all employee retirement plans maintained by the
Company in effect as of the date of the termination of his employment.
The Executive's participation in such retirement plans shall continue
for a period of thirty-six (36) months from the date of the termination
of his employment (at which point he will be considered to have
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terminated employment within the meaning of the plans) and the
compensation payable to the Executive under (i) and (ii) above shall be
treated (unless otherwise excluded) as compensation under such plans.
If continued participation if any plan is not permitted or if any such
plan da not continue to exist, the Company shall pay to the Executive
and, if applicable, his designated beneficiary, a supplemental benefit
equal to the present value on the date of termination employment
(calculated as provided in the plan) of the excess of (i) the benefit
the Executive would have been paid under such plan if he had continued
to be covered for the 36-month period (less any amounts he would have
been required to contribute) with assumed earnings calculated at eight
percent (8%) per annum, over (ii) the benefit actually payable under
such plan. The Company shall pay such additional benefits (if any) in a
lump sum.
(v) Effect of Lump Sum Payment. The lump sum payments under
(i) or (ii) above shall not alter the amounts Executive is entitled to
receive under the benefit plans described in (iv) above. Benefits under
such plans shall be determined as if Executive had remained employed
and received such payments over a period of thirty-six (36) months.
(vi) Effect of Death. The benefit payable or to be provided
under the Agreement shall not cease in the event of the Executive's
death and such benefits shall payable to his designated beneficiary (in
accordance with Section 7.2 hereof) or, if none, legal representative
of Executive's estate.
(vii) Options. Any options awarded to and granted to the
Executive 1 not yet vested shall immediately vest and become
exercisable by the Executive as provided Section 5.6(b).
(c) DISABILITY. In the event of termination of Executive's employment
Disability as described in Section 5.4 hereof, Executive shall be entitled to
receive any Annual Cash Bonus then earned. Further, in the event of termination
of Executive's employment for Disability as described in Section 5.4 hereof,
Executive shall be entitled to receive Executive's annual Base Salary for the
remainder of the Term. Executive and his spouse shall be entitled to continued
participation in medical, dental and hospitalization coverage as set forth in
Section 5.5(e) hereof and, if not prohibited by law, in all other employee plans
and programs in which they were participating on the date of termination of
Executive's employment due to Disability until the date, or dates, Executive and
his spouse receive similar coverage and benefits under the plans and programs of
a subsequent employer (such coverages and benefits to be determine on a
coverage-by-coverage, or benefit-by-benefit, basis).
(d) DEATH. In the event of termination of Executive's employment due to
death during the Term, any Renewal Term or the Consulting Term, then, in
addition to the amounts and other benefits described in this Agreement, the
Company shall pay to the legal representative of Executive's estate the greater
of $200,000 or his annual Base Salary plus his average Annual Cash Bonus for a
period of one (1) year following the death of the Executive.
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(e) POST-TERMINATION MEDICAL, DENTAL AND HOSPITALIZATION INSURANCE
COVERAGE. In the event of termination of Executive's employment for any reason
whatsoever, Executive and his spouse shall be entitled to continued
participation in all of the Company's medical, dental and hospitalization
insurance plans at the Company's expense until the date on which Executive is
employed by any Person other than the Company, or any Affiliate or Subsidiary of
the Company, and Executive becomes covered by the medical, dental and
hospitalization insurance coverage through such other Person's plan.
(f) GOLDEN PARACHUTE PAYMENTS. If the aggregate present value
(determined as of the date of termination of employment of Executive in
accordance with the provisions of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") (or any successor section thereof) and the
regulations and rulings thereunder ("Section 280G")) of the sum of (i) severance
payments made to Executive due to his termination for Good Reason as a result of
a Change in Control under this Section, and (ii) all other payments to Executive
in the nature of compensation which are contingent on a change in ownership or
effective control of the Company or in the ownership of a substantial portion of
the assets of the Company would result in an excess parachute payment (as
determined under Section 280G), then the Company shall pay to Executive an
additional severance amount under this Subsection (f) equal to the sum of (A)
the amount of tax imposed by Code Section 4999 upon excess parachute payments
received by Executive, and (B) federal and state income and social
security/Medicare taxes (including interest and penalties) payable on both the
tax amount in (A) and the entire amount paid under (B), such that Executive is
reimbursed for, and has no out-of-pocket expenses with respect to, the cost of
all income taxes and social security/Medicare taxes (including interest and
penalties) payable upon amounts paid to Executive under this Subsection (f).
5.6 TREATMENT OF OPTIONS UPON TERMINATION
(a) FOR CAUSE/VOLUNTARY TERMINATION. In the event of termination of
Executive's employment (i) by the Company for Cause, or (ii) voluntarily by
Executive other than for Good Reason, the Options, to the extent not then vested
and exercisable on the date of such termination, shall be immediately canceled.
To the extent the Options are then vested and exercisable on the date of such
termination, they may be exercised (A) in the event of termination by the
Company for Cause, for a period of ninety (90) days after the date of such
termination, or (B) in the event of Voluntary Termination by Executive for a
period of one (1) year after the date of such termination.
(b) WITHOUT CAUSE OR FOR GOOD REASON OR DUE TO RETIREMENT, DEATH, OR
DISABILITY. In the event of the termination of Executive's employment by the
Company without Cause or by Executive for Good Reason or due to the Retirement,
Death, or Disability of Executive, all grants of restricted stock and all stock
options granted to Executive pursuant to
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the Company's Incentive Stock Plan shall, to the extent not then vested and
exercisable on the date of such termination, become immediately vested and
exercisable for a period of ninety (90) days after the date of such termination,
or such longer period of time as is permitted under the applicable plan or
grant.
5.7 NO MITIGATION; NO OFFSET. In the event of any termination of
employment under this Article V, Executive shall be under no obligation to seek
other employment and there shall be no offset against amounts due Executive
under this Agreement on account of any remuneration attributable to any
subsequent employment that he may obtain, except as specifically provided for
fringe benefits in this Article V.
ARTICLE VI
CHANGE IN CONTROL
6.1 CHANGE IN CONTROL. A "Change in Control" shall mean the occurrence
of any one of the following events:
(a) Prior to an IPO, the shareholders of the Company or any of its
Affiliates (as defined in Section 6.2 below, individually or collectively, sell
or otherwise transfer to persons or entities who are not Affiliates of the
Company, in one transaction or a series of related transactions, 75 % or more of
the Voting Stock (as defined below) of the Company or any of its Affiliates;
(b) Any "person," as such term is used in Sections 3(a)(9) and 13(d) of
the Securities Exchange Act of 1934, becomes a "beneficial owner," as such term
is used in Rule 13s-3 promulgated under that act (other than an Affiliate of the
Company or any "person" who was a "beneficial owner" of 10% or more of the
Voting Stock of the Company on the date hereof or who has received Voting Stock
from Executive), of 50% or more of the Voting Stock of the Company or any of its
Affiliates prior to any IPO and 40% or more of the Voting Stock of the Company
or any of its Affiliates after an IPO;
(c) The majority of the Board consists of individuals other than
"Incumbent Directors," which term means the members of the Board on the date of
this Agreement (excluding Executive) or otherwise designated pursuant to various
agreements among the Company's stockholders in effect on the date hereof;
provided, that any person becoming a director subsequent to such date whose
election or nomination for election was supported by a majority of the directors
who then comprised the Incumbent Directors shall be considered to be an
Incumbent Director;
(d) All or substantially all of the assets or business of the Company
or any of its Affiliates is disposed of pursuant to a merger, consolidation or
other transaction other than to
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an Affiliate of the Company (unless the shareholders of the Company immediately
prior to such merger, consolidation or other transaction beneficially own,
directly or indirectly, 50% or more of the Voting Stock or other ownership
interests of the entity or entities, if any, that succeed to the business of the
Company); or
(e) The consummation of (i) a merger, consolidation or other business
combination of the Company with any other "person" (as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) or
Affiliate thereof, other than a merger, consolidation or business combination
which would result in the outstanding Common Stock of the Company immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into common stock of the surviving entity or a parent or
Affiliate thereof) (at least fifty percent (50%) of the outstanding Common Stock
of the Company or such surviving entity or parent or Affiliate thereof
outstanding immediately after such merger, consolidation or business
combination, or (ii) a plan of complete liquidation of the Company; or
(f) The occurrence of any other event or circumstances which is not
covered by (a) through (e), above, which the Board determines affects control of
the Company and, in order to implement the purposes of this Agreement as set
forth above, the Board adopts a resolution that such event or circumstance
constitutes a Change in Control for the purposes of this Agreement.
6.2 OTHER TERMS. For the purposes of this Agreement, (i) "Affiliate" of
a specified person or other entity shall mean a person or other entity that
directly or indirectly controls, is controlled by, or is under common control
with the person or other entity specified, and in the case of a specified person
who is a natural person, his spouse, his issue, his parents, his estate and any
trust entirely for the benefit of his spouse and/or issue; (ii) "Voting Stock"
shall mean capital stock of any class or classes having voting power under
ordinary circumstances, in the absence of contingencies, to elect the directors
of a corporation; and iii) "IPO" shall mean the completion of an underwritten
sale of Common Stock or securities convertible into Common Stock of the Company
(or an entity formed by the Company for the purpose of issuing Common Stock (or
securities convertible into Common Stock) in connection with the IPO) pursuant
to a registration statement which has become effective under the Securities Act
of 1933, as amended.
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ARTICLE VII.
MISCELLANEOUS
7.1 INDEMNIFICATION.
(a) The Company agrees that if Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that he is or was a director, officer or employee of the Company or is or
was serving at the written request of the Company as a director, officer,
member, employee, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether or not the basis of such Proceeding is Executive's
alleged action in an official capacity while serving as a director, officer,
member, employee, trustee, or agent, Executive shall be indemnified and held
harmless by the Company to the fullest extent legally permitted or authorized by
the Company's Articles of Incorporation or bylaws or resolutions of the
Company's Board of Directors against all cost, expense, liability and loss
(including, without limitation, reasonable attorney's fees, judgments, fines or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by Executive in connection therewith, and such indemnification shall
continue as to Executive in the event he has ceased to be a director, officer,
member, employee, trustee, or agent of the Company or other entity and shall
inure to the benefit of Executive's heirs, executors and administrators. The
Company shall advance to Executive all reasonable costs and expenses incurred by
him in connection with a Proceeding within twenty (20) days after receipt by the
Company of a written request for such advance. Executive shall not be required
to repay the amount of such advance unless it shall ultimately be determined in
the proceeding that he has acted willfully and was grossly negligent in conduct
giving rise to the Proceeding.
(b) The failure of the Company (including the Board, independent legal
counsel or stockholders) to have made a determination prior to the commencement
of any Proceeding concerning payments of amounts claimed by Executive under
Section 7.1(a) above that indemnification of Executive is proper because he has
met the applicable standard of conduct, shall create a presumption that
Executive has met the applicable standard of conduct.
(c) The Company agrees to maintain appropriate insurance coverage for
directors' and officers' liability, errors and omissions and/or blanket
liability protecting against any costs arising from a Proceeding which may be
assessed against Executive. Such coverage shall be provided at the highest level
provided for any employee, director or officer of the Company.
7.2 BENEFIT OF AGREEMENT; ASSIGNMENT; BENEFICIARY. This Agreement shall
inure to the benefit of and be binding upon the Company and its successors and
assigns. No rights or obligations of the Company under this Agreement may be
assigned or
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transferred by the Company except that such rights or obligations may be
assigned or transferred pursuant to a merger or consolidation in which the
Company is not the continuing entity, or sale of all or substantially all of the
assets of the Company, provided that the assignee or transferee is the successor
to all or substantially all of the assets of the Company and such assignee or
transferee assumes the liabilities, obligations and duties of the Company, as
contained in this Agreement, either contractually or as a matter of law. It is
contemplated that Sunbelt Automotive Group, Inc. will assume the Company's
obligations hereunder in contemplation of an initial public offering. This
Agreement shall also inure to the benefit of, and be enforceable by, Executive
and his personal or legal representatives, executors, administrators,
successors, heirs, distributes, devisees and legatees. If Executive should die
while any amount would still be payable to the Executive hereunder if he had
continued to live, all such amounts shall be paid in accordance with the terms
of this Agreement to Executive's beneficiary, devisee, legatee or other
designee, or if there is no such designee, to Executive's estate. Without
limiting the foregoing, Executive shall be entitled, to the extent permitted
under any applicable law, to select and change a beneficiary or beneficiaries to
receive any compensation or benefit payable hereunder following Executive's
death by giving the Company written notice thereof. In the event of Executive's
death or a judicial determination of his incompetence, reference in this
Agreement to Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
7.3 NOTICES. Any notice required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered or if sent by
telephone or telex or by registered or certified mail, postage prepaid, with
return receipt requested, addressed: (a) in the case of the Company of 5901
Peachtree Dunwoody Road, Building B, Suite 250, Atlanta, Georgia 30328,
Attention: General Counsel, or to such other address and/or to the attention of
such other person as the Company shall designate by written notice to Executive;
and (b) in the case of Executive, to 20 LULLWATER COURT, ATLANTA, GEORGIA 30307
or to such other address as Executive shall designate by written notice to the
Company. Any notice given hereunder shall be deemed to have been given at the
time of receipt thereof by the person to whom such notice is given.
7.4 AMENDMENT. This Agreement may not be changed or modified except by
an instrument in writing signed by both of the parties hereto.
7.5 WAIVER. The waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a continuing waiver or as a
consent to or waiver of any subsequent breach hereof. Any waiver must be in
writing and signed by Executive or an authorized officer of the Company, as the
case may be.
7.6 HEADINGS. The Article and Section headings herein are for
convenience of reference only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions hereof.
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may be entered in any court having jurisdiction thereof. Each party shall bear
his or its own costs of the arbitration or litigation, provided, however, in the
event the Executive incurs legal fees and other expenses in seeking to obtain
any benefits provided by this Agreement or to enforce any rights or provisions
of this Agreement and is successful, in whole or in part, in obtaining or
enforcing any such rights or benefits through settlement, arbitration or
otherwise, the Company shall promptly pay the Executive's reasonable legal fees
and expenses incurred in obtaining such benefits or enforcing this Agreement.
Pending the resolution of any arbitration or court proceeding, the Company shall
continue payment of all amounts due Executive under this Agreement and all
benefits to which Executive is entitled at the time the dispute arises.
7.13 REPRESENTATIONS. The Company represents that it is fully
authorized and empowered to enter into this Agreement and that the performance
of its obligations under this Agreement will not violate any agreement to which
it is a party or by which it is bound. Executive represents that there is no
agreement to which he is a party or by which he is bound that would be violated
by the performance of his obligations under this Agreement.
7.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement effective as of the date first above written.
EXECUTIVE:
Charles K. Yancey
/s/ Charles K. Yancey
SUNBELT AUTOMOTIVE
GROUP, INC.
By: /s/
Title:
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