Exhibit 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated December10, 1999, between Sonic
Automotive, Inc. ("Sonic", "Employer" or "Corporation"), and Thomas A. Price
("Executive") becomes effective with the consummation of Sonic's acquisition of
not less than 90% of each class of outstanding capital stock of FirstAmerica
Automotive, Inc. (the "Acquisition"). This Agreement's purpose is to establish
in writing all the terms and conditions of that employment.
SECTION 1. POSITION AND DUTIES.
Executive shall be employed by the Corporation as a Vice-Chairman, Chairman of
the Management Committee and a member of the Board of Directors, reporting to
the Board of Directors and/or O. Bruton Smith. Subject to the supervision and
control of the Board of Directors of the Corporation (the "Board"), Executive
shall use his best efforts to do and perform on a full-time basis all services
and acts necessary or advisable to fulfill the duties and responsibilities of
his position and shall render such services on the terms set forth herein. In
addition, Executive shall have such other executive and managerial powers and
duties with respect to the Corporation as may be assigned to him by the Board,
which include but are not limited to primary executive responsibility for
manufacturer relations, primary executive responsibility for acquisitions review
and generation of western acquisition opportunities and primary operations
executive participant in investor relations. Executive's principal place of
employment shall be San Francisco, California.
SECTION 2. TERM.
The term of this Agreement shall be for a three (3) year period commencing with
the closing of the Acquisition (the "Commencement Date"), unless Executive's
employment and this Agreement are earlier terminated pursuant to Section 5 or
are extended by mutual written agreement.
SECTION 3. BASIC COMPENSATION.
The Employer shall pay compensation to the Executive as set forth herein.
a. Salary. An annual base salary of $600,000 (six hundred thousand
dollars), $50,000 (Fifty thousand dollars) per month gross pay per
month will be paid to Executive, subject to applicable withholding, in
accordance with the Corporation's normal payroll procedures (the "Base
Salary"). Such Base Salary shall be reviewed annually and modified (but
not decreased) as determined by the sole discretion of the
Corporation's Board of Directors.
b. Benefits. The Corporation shall provide the Executive with
employee benefits on the same basis as other executive officers of the
Corporation, including O. Bruton Smith (excluding company automobiles,
which is covered in Section 3.d below). Executive shall have the
opportunity to participate in and to receive benefits under any of the
Corporation's Executive benefit plans, including the major medical,
dental, vision and hospitalization insurance coverage, disability
insurance, life insurance, automobile insurance and similar benefits,
including any retirement plan maintained by the Corporation, for which
he is eligible in accordance with its terms. In addition, Executive
shall be entitled to the benefits afforded to other members of senior
management under the Corporation's vacation, holiday and business
expense reimbursement policies. Executives date of hire for benefit
purposes shall be March 1, 1976, the Executive's original date of hire
with Executive's acquired employer.
c. Additional Salary and Bonus. For each calendar year during the
term of this Agreement, Executive shall earn an annual salary and bonus
which shall raise his entire cash compensation package to a total
aggregate sum which is $50,000 (fifty thousand dollars)less than the
entire cash compensation package of O. Bruton Smith as Chairman and
CEO of Sonic Automotive, Inc. for such calendar year.
d. Corporate Vehicle: Executive will be provided a corporate
vehicle allowance of Twelve Hundred Dollars ($1200.00) per month plus
associated operation expenses.
e. Expense Reimbursement: Upon receipt of proper documentation
establishing the amount of such expenses, the Corporation shall
reimburse Executive for any reasonable business expenses incurred.
SECTION 4. STOCK OPTIONS.
Executive shall be granted (the "Initial Option") an option to purchase 300,000
shares of the Corporation's Common Stock at a strike price per share equal to
the New York Stock Exchange closing price on the date of close of the
Acquisition. Provided Executive remains an employee of the Corporation, this
option shall vest at the rate of 100,000 shares per year on each of the first,
second and third anniversaries of the Commencement Date. In the event that
Employee is terminated Without Cause (as defined in Section 7.c below) during a
year of the term of this Agreement, then Employee shall become immediately
vested pro rata at the rate of 8,333.33 shares per month during such year to the
date of termination.
The Initial Grant shall be made pursuant to the Sonic Automotive, Inc. 1997
Stock Option Plan Amended and Restated as of June 8, 1999 (the "Stock Option
Plan") and, except as provided above, shall be subject to all of the provisions
and terms of the Stock Option Plan. Executive shall be eligible for further
grants of options under the Stock Option Plan at times and in amounts which are
consistent with the grants of options for similar employees of Corporation (not
including O. Bruton Smith). Any such further grants of options under the Stock
Option Plan shall be subject to ratification at the discretion of Employer's
Board of Directors. The terms and conditions of any further options granted to
Executive pursuant to the Stock Option Plan shall otherwise be governed by the
provisions of the Stock Option Plan.
SECTION 5. RESTRICTIVE COVENANTS.
For purposes of this Agreement "Restrictive Covenants" mean the provisions of
this Section 5. It is stipulated and agreed that the Corporation is engaged in
the business of owning and operating automobile and/or truck dealerships, which
business includes, without limitation, the marketing and selling of new and used
vehicles, the servicing of automobiles and trucks, collision repair services and
the sale of financing and insurance products to automobile customers (the
"Business"). It is further stipulated and agreed that as a result of Executive's
employment by the Corporation, and as a result of Executive's continued
employment hereunder, Executive has and will have access to valuable, highly
confidential, privileged and proprietary information relating to the
Corporation's Business, including, without limitation, existing and future
inventory information, customer lists, sales methods and techniques, costs and
costing methods, pricing techniques and strategies, sales agreements with
customers, profits and product line profitability information, unpublished
present and future marketing strategies and promotional programs, and other
information regarded by the Corporation as proprietary and confidential (the
"Confidential Information"). Confidential information shall not include
information available in the public domain. It is further acknowledged that
unauthorized use or disclosure by Employee of any of the Confidential
Information would seriously damage the Corporation in its Business.
In consideration of the provisions of this Section 5, the compensation and
benefits referred to in Sections 3 and 4 hereof, which Executive acknowledges
are legally sufficient to support enforceability by the Corporation of the
Restrictive Covenants against Executive, Executive agrees as follows:
(a) During the term of this Agreement and after its termination or
expiration for any reason, Executive will not, without
Corporations' prior written consent, divulge, disclose,
furnish or make accessible to any third person, company or
other entity, any aspect of the Confidential Information
(other than as required in the ordinary discharge of
Executive's duties hereunder).
(b) During the term of this Agreement and, with respect to clauses
(i) and (iii) below only, for a period of one year after the
date of the expiration or termination of this Agreement for
any reason (the "Restrictive Period"), Executive shall not,
directly or indirectly (general media advertising excluded):
(i) Solicit the employment of any person, who at any time
during the twelve (12) calendar months immediately
preceding the termination or expiration of this
Agreement, was employed by the Corporation or any of
its subsidiaries;
(ii) Provide or solicit, except as provided herein, the
provision of products or services, similar to those
provided by Corporation or any of its subsidiaries to
any person or entity who purchase or leased
automobiles, trucks, parts, supplies, inventory or
services at any time during the twelve (12) calendar
months immediately preceding the termination or
expiration of this Agreement for any reason;
(iii) Interfere or attempt to interfere with the terms or
other aspects of the relationship between the
Corporation or any of its subsidiaries and any person
or entity from who the Corporation or any of its
subsidiaries has purchased automobiles, trucks,
parts, supplies, inventory or services at any time
during the twelve (12) calendar months immediately
preceding the termination or expiration of this
Agreement for any reason;
(iv) Provide information to, solicit or sell for,
organize or own any interest in (either directly or
through any parent, affiliate or subsidiary
corporation, partnership, or other entity), or become
employed or engaged by, or act as agent for, any
person, corporation or other entity that is directly
or indirectly engaged in a business which is
substantially similar to the Business or competitive
with the Corporation's business; provided, however,
that nothing herein shall preclude the Executive from
owning (A) a one-third (1/3 rd) interest in Sunnyvale
Acura, Sunnyvale, California with buy-sell provisions
with other partners, (B) having a significant
interest in DSW Associates, Inc., d/b/a AutoTown, a
California Corporation in the automotive computer
software and technology business, (C) having an
interest in Imotors, Inc. an automotive internet
company or (D) acquiring a one hundred percent (100%)
interest in Jaguar Marin, San Rafael, California, so
long as such ownership and activities do not prevent
the Executive from performing his obligations and
duties under this Agreement.
In the event that the term of this Agreement shall be extended, these
Restrictive Covenants shall apply during such extended term and, where
applicable, the one year period thereafter. These Restrictive Covenants shall
survive the termination of this Agreement in accordance with their terms.
SECTION 6. RETURN OF CORPORATION PROPERTY.
Immediately upon the termination of Executive's employment, Executive shall
return to the Corporation all of its property, equipment, documents, records,
lists, files and any and all other Corporation materials including, without
limitation, computerized or electronic information, that is in Executive's
possession (the "Corporation Property") by delivering the Corporation Property
to the Corporation's principal executive offices on or before the date of such
term. It is specifically acknowledged that all art work located at 601 Brannan
St., San Francisco, California at date of this agreement is owned exclusively by
Executive. Unless otherwise agreed by the Corporation in writing, Executive
shall not retain any Corporation Property or any copies thereof.
SECTION 7. TERMINATION OF EMPLOYMENT. This Agreement shall terminate as
follows:
a. Death or Disability. The Executive's employment shall
terminate automatically upon theExecutive's death during the
Employment Period. If the Corporation determines in good faith
that the Executive becomes unable to perform the essential
functions of his position, with or without reasonable
accommodation, and that such inability is likely to continue
for a period of more than six (6) months, then the Corporation
shall give to the Executive written notice of its intention
to terminate the Executive's employment. In such event, the
Executive's employment with the Corporation shall terminate
effective on the thirtieth (30th) day after receipt of such
notice by the Executive provided that, within the thirty (30)
days after such receipt, the Executive shall not have returned
to full time performance of the Executive's duties.
b. Cause. The Corporation may terminate the Executive's
employment at any time, without notice and with immediate
effect for Cause. For purposes of this Agreement "Cause"
shall mean
(i) A material breach by the Executive of the
Executive's obligations as set forth herein
(other than due to disability) which material
breach is not remedied within fourteen (14)
business days after receipt of written notice
from the Corporation specifying such a
breach;
(ii) The conviction of the Executive of a felony;
(iii) Willful failure of Executive to comply with
reasonable directives of the Corporation's
Board of Directors;
(iv) Chronic absenteeism of the Executive which
continues for a 30 day period after written
notice by the Corporation; or
(v) Willful misconduct of Executive resulting in
damage to the Corporation.
c. Without Cause. Corporation may terminate this Agreement at any
time, for any reason other than for Cause or the Executive's
death or disability, or without any reason. Any such
termination for the Corporation pursuant to this Section 7.c
shall be deemed a termination "Without Cause". Executive may
also terminate this Agreement at any time for any reason, or
without any reason.
d. Payment Upon Termination Without Cause. If Executive's
employment is terminated by the Corporation Without Cause,
Executive shall be entitled to the following separation
benefits:
(i) Continuation of Executive's Base Salary at the
rate in effect on the date of termination for a
period of one year, such salary continuation
payments to be made in twelve equal monthly
installments, commencing with the first month
after such termination occurs, in accordance
with the Corporation's ordinary payroll
procedures without regard to whether Executive
obtains alternative employment in the interim;
and
(ii) Payment of a bonus for the year in which the
termination occurs in an amount not less than
fifty percent (50%) of the then current rate of
Base Salary, with such bonus to be made in
twelve equal monthly installments, commencing
with the first month after such termination
occurs.
It shall be a condition to the Corporation's obligation to pay the Base Salary
and bonus contemplated above that Executive continue to observe the Restrictive
Covenants in clauses (i) and (iii) of Section 5.b during such twelve month
period. Payment of such Base Salary and bonus contemplated above shall be in
lieu of all other severance benefits to which Executive would otherwise be
entitled.
e. Resignation for Good Reason. For purposes of this Agreement,
Executive's resignation for Good Reason shall constitute a
termination Without Cause. For purposes of this Agreement,
"Good Reason" means any of the following conditions, which
notice must be given by the Executive within 30 days after the
occurrence of any such condition (failure to timely give such
notice to constitute a waiver of Executive's right to
terminate for Good Reason):
(i) a decrease in Executive's base salary and/or
a material decrease in Executive's bonus
plan or Executive benefits;
(ii) a material, adverse change in Executive's
title, authority, responsibilities or
duties;
(iii) any material breach by the Corporation of any
provision of this Agreement, which breach is
not cured within fourteen (14) days following
written notice of such breach from Executive;
or,
(iv) if there is a Change in Control of Employer
during the term of this Agreement. As used
herein, a "Change of Control" shall mean:
(A) a sale of all or substantially all
of the assets of the Corporation to
a person who is not an Affiliate (as
used herein the term "Affiliate"
means a person or entity which
controls, is controlled by or is
under common control with the
Corporation and the concept of
control means the ownership of
voting securities representing more
than 50% of the voting power of the
entity in question);
(B) a merger, consolidation or
reorganization of the Corporation as
a result of which stockholders of
the Corporation holding more than
50% of the voting power of all
voting securities of the Corporation
immediately before the merger,
consolidation or reorganization do
not hold more than 50% of the voting
power
of all voting securities of the
Corporation after the merger,
consolidation or reorganization;
(C) the acquisition by a person or group
of persons who are not Affiliates of
the Corporation in one transaction
or a series of related transactions
of voting securities which have more
than 50% of the voting power of all
voting securities of the
Corporation;
(D) if the Chairman in place at the time
of the execution of this Agreement
either resigns or is removed from
office as Chairman of the Board of
Directors;
f. Upon termination of this Agreement for any reason or upon
termination of Executive's employment with Corporation for any
reason, Executive will resign all directorships he may then
hold with Corporation or any of its subsidiaries.
SECTION 8. BENEFITS UPON TERMINATION OTHER THAN A TERMINATION WITHOUT CAUSE.
In the event Executive terminates this Agreement under Section 7.c above or
voluntarily resigns from his employment with the Corporation, or in the event
that Executive's employment terminates for Cause or as a result of his death or
disability or as a result of the expiration of the term of this Agreement,
Executive shall be entitled to no compensation or benefits from the Corporation
other than his Base Salary under Section 3.a and his benefits under Section 3.b
above until the date of termination.
SECTION 9. REMEDY FOR BREACH.
The Executive acknowledges that a violation of any of the provisions of this
Agreement, including its restrictive covenants, will cause irreparable damage to
the Employer, its successors and assigns. The Executive consents that any
violation shall entitle the Employer or its successors and assigns, in addition
to any other rights or remedies it, or they, may have, to an immediate
injunction restraining any violation.
SECTION 10. NOTICES.
All notices, requests, demands, and other communications that are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given if delivered personally or sent by registered or certified
mail, return receipt requested, postage prepaid addressed to the intended
recipient as follows or at such other address as is provided by either party to
the other:
If to the Corporation: With a copy to:
Sonic Automotive, Inc. Parker, Poe, Adams & Bernstein L.L.P.
5401 East Independence Boulevard 2500 Charlotte Plaza
P.O. Box 18747 Charlotte, NC 28244
Charlotte, NC 28218 Telecopier No.: (704) 334-4706
Telecopier No.: (704) 532-3323 Attn: Edward W. Wellman, Jr.
Attention: Chief Financial Officer
If to Executive: With a copy to:
Mr. Thomas A. Price Gray, Cary, Ware & Friedenrich LLP
55 Peninsula Drive 400 Hamilton Avenue
Belvedere, CA 94920 Palo Alto, CA 94301-1825
Telecopier No. (415) 435-2133 Telecopier No.: (650) 327-3699
Attn: Andrew Zeif
SECTION 11. GOVERNING LAWS.
This Agreement shall be construed and enforced in accordance with the laws of
the State of California excluding its conflict of law provisions.
SECTION 12. ENTIRE AGREEMENT.
This Agreement contains the entire agreement among the parties regarding
Executive's pay plan and the employment relationship. All prior negotiations,
agreements, and understandings are superseded. This Agreement may not be amended
or revised except by a writing signed by all the parties.
SECTION 13. BINDING EFFECT; ASSIGNMENT.
This Agreement shall be binding upon and inure to the benefit of the heirs,
legal representatives, and successors of the respective parties; provided
however, that this Agreement and all its rights may not be assigned by any party
except by or with the written consent of the other parties, except that the
Corporation shall have the right to assign this Agreement to an assignee who
acquires all or substantially all of the business and assets of the Corporation.
SECTION 14. SURVIVAL.
In the event of termination of Executive's employment and this Agreement for any
reason by Executive or the Corporation, Executive and/or the Corporation, as the
case may be, nevertheless shall continue to be bound by the terms and conditions
set forth in Section 13 herein.
SECTION 15. ATTORNEYS' FEES.
The prevailing party shall be entitled to recover from the losing party its
attorneys' fees and costs incurred in any action brought to enforce any right
arising out of this Agreement.
IT IS SO UNDERSTOOD AND AGREED:
EXECUTIVE:
Signature: /s/ Thomas A. Price
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Thomas A. Price
EMPLOYER:
Sonic Automotive, Inc.
By: /s/ O. Bruton Smith
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Its: Chairman and Chief
Executive Officer