EXHIBIT 10.20
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EMPLOYMENT AGREEMENT
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This Employment Agreement ("Agreement") made this 25th day of October, 2000
between SONIC AUTOMOTIVE, INC., a Delaware corporation, its successors or
assigns, subsidiary corporations or affiliates (collectively, the "Employer")
and THEODORE M. WRIGHT ("Employee").
RECITALS
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WHEREAS, Employer desires to retain the services of Employee; and
WHEREAS, Employee is prepared to perform those duties as set forth in
this Agreement.
NOW, THEREFORE, the parties intending to be legally bound agree as
follows:
1. Term of Employment. Employer hereby employs Employee, and Employee
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hereby accepts employment from Employer for the period commencing November 10,
2000 (the "Commencement Date") and ending five (5) years thereafter, unless
sooner terminated pursuant to the provisions of paragraphs 5 or 7 hereof (the
"Employment Period").
2. Duties of Employee. Employee shall be employed by Employer as Chief
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Financial Officer and Vice President of Sonic Automotive, Inc. Employee's duties
shall include, but not be limited to, the duties customarily performed by a
chief financial officer of a corporation of similar size and scope and such
additional duties as may from time to time be assigned by the Employer's Board
of Directors. Employee shall serve Employer faithfully in the performance of
Employee's duties and shall devote his full time and best efforts to his
employment, including the regularly established working hours and such
additional time as the requirements of Employer and the performance of the
Employee's duties require. Employee
agrees to observe and comply with all the rules and regulations of Employer as
adopted and furnished to Employee by Employer's Board of Directors from time to
time.
3. Compensation. For all services rendered by Employee under this
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Agreement, he shall be entitled to compensation in accordance with the
following:
(a) Base Salary. During the Employment Period, the Employee shall
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receive an annual base salary ("Annual Base Salary") of FOUR HUNDRED FIFTY
THOUSAND AND NO/100 DOLLARS ($450,000.00) which shall be paid in equal
monthly installments in the amount of THIRTY-SEVEN THOUSAND, FIVE HUNDRED
AND NO/100 DOLLARS ($37,500.00).
(b) Additional Salary and Bonus. In addition to the Annual Base Salary
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as hereinabove provided, Employer shall pay to the Employee such additional
amounts as may be determined and ratified from time to time by the
Compensation Committee of Employer's Board of Directors. In determining
such additional amounts, the Compensation Committee and Employer shall seek
to provide Employee with total compensation in keeping with the market
rates for employees in similar positions, with similar businesses with
similar profitability and performance.
4. Fringe Benefits. During the Employment Period, Employee shall receive
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with other similarly situated employees of the Employer, all the fringe benefits
of Employer, together with the following additional fringe benefits:
(a) The use of one luxury demonstrator vehicle annually of Employee's
choice and one additional non-luxury demonstrator vehicle annually of
Employee's choice from
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a Charlotte-area dealership of Employer, including all reasonable related
expenses such as insurance, maintenance and gasoline.
(b) Medical insurance coverage for Employee and his dependents and
reimbursement of the Employee for the reasonable costs of disability
insurance with a reasonable monthly benefit for life and with a waiting
period of no more than ninety (90) days. This disability insurance shall
contain other provisions so that it will replace to the extent reasonably
possible Employee's Base Salary in case Employer terminates this Agreement
upon Employee's disability as set forth herein.
(c) Prompt reimbursement for all reasonable employment, travel,
entertainment and other business related expenses incurred by the Employee
in accordance with the most favorable policies, practices and procedures of
the Employer and its affiliated companies in effect for the Employee at any
time during the ninety (90) day period immediately preceding the
Commencement Date or, if more favorable to the Employee, as in effect
generally at any time thereafter with respect to other peer executives of
the Employer and its affiliated companies.
(d) An office of a size and with furnishings and other appointments,
and secretarial services at least equal to the most favorable policies,
practices and procedures of the Employer and its affiliated companies in
effect for the Employee at any time during the ninety (90) day period
immediately preceding the Commencement Date or, if more favorable to the
Employee, as provided generally at any time thereafter with respect to
other peer executives of the Employer and its affiliated companies.
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(e) An annual paid vacation in accordance with the most favorable
policies, practices and procedures of the Employer and its affiliated
companies as in effect for the Employee at any time during the ninety (90)
day period immediately preceding the Commencement Date or, if more
favorable to the Employee, as in effect generally at any time thereafter
with respect to other peer executives of the Employer and its affiliated
companies.
(f) On the Commencement Date, Employer will advance to the Employee
the sum of SEVEN HUNDRED THOUSAND AND NO/100 DOLLARS ($700,000.00) (the
"Advance") via check or wire transfer of immediately available funds. The
Advance shall be non-interest bearing and, upon termination of the
Employee's employment with Employer, shall either be repaid by Employee to
Employer or retained by Employee as severance pay as provided in Section 6
of this Agreement.
5. Termination of Employment. This Agreement shall terminate as follows:
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(a) Death or Disability. The Employee's employment shall terminate
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automatically upon the Employee's death during the Employment Period. If
the Employer determines in good faith that the Employee becomes unable to
perform the essential functions of his position, with or without reasonable
accommodation, then Employer shall give to the Employee written notice of
its intention to terminate the Employee's employment. In such event, the
Employee's employment with the Employer shall terminate effective on the
thirtieth (30th) day after receipt of such notice by the Employee (the
"Disability Effective Date") provided that, within the thirty (30) days
after such receipt, the Employee shall not have returned to full time
performance of the Employee's duties.
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(b) Cause. The Employer may terminate the Employee's employment at any
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time, without notice and with immediate effect for Cause. For purposes of this
Agreement "Cause" shall mean
(i) a material breach by the Employee of the Employee's
obligations as set forth herein (other than due to disability) which material
breach is not remedied within five (5) business days after receipt of written
notice from the Employer specifying such a breach;
(ii) the conviction of the Employee of a felony;
(iii) actions by Employee involving moral turpitude;
(iv) willful failure of Employee to comply with reasonable
directives of Employer's Board of Directors;
(v) chronic absenteeism of Employee;
(vi) willful misconduct of Employee resulting in damage to
Employer; or
(vii) Employee's illegal use of controlled substances.
(c) Without Cause. Either Employee or Employer may terminate this
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Agreement at any time, for any reason or without any reason. Such a termination
shall be deemed a termination "without cause."
6. Obligations of the Employer Upon Termination. The parties agree as
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follows:
(a) Death or Disability. If the Employee's employment is terminated by
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reason of the Employee's death or disability during the Employment Period,
Employee or
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Employee's estate (i) shall be paid Employee's Annual Base Salary together
with those fringe benefits described in paragraphs 4(a) and 4(b) hereof
through the end of the month during which Employee's death occurs or during
which the Disability Effective Date falls, and (ii) shall be entitled to
retain the full amount of the Advance as severance pay. Payment of the
Annual Base Salary and benefits described in clause (i) above to Employee
or Employee's estate, and retention of the Advance by Employee or
Employee's estate as provided in clause (ii) above, shall be in lieu of all
other severance benefits to which Employee or Employee's estate would
otherwise be entitled.
(b) Cause. If the Employee's employment shall be terminated for Cause
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during the Employment Period, such termination for Cause shall constitute
an immediate termination of Employer's obligations pursuant to paragraphs 3
and 4 hereof. Employee shall (i) not be entitled to any compensation or
benefits beyond the effective date of such termination for Cause, and (ii)
repay the full amount of the Advance to the Employer via wire transfer of
immediately available funds within thirty (30) days following the effective
date of such termination for Cause.
(c) Without Cause. If Employee's employment is terminated by Employer
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without cause, then (i) Employer shall pay Employee his Annual Base Salary
together with those fringe benefits described in paragraphs 4(a) and 4(b)
through the effective date of such termination, (ii) all un-vested options
to purchase shares of Class A Common Stock of the Employer granted to the
Employee prior to the effective date of such termination shall become fully
vested and exercisable on the effective date of such termination, and such
options shall be exercisable by the Employee for the period provided by,
and shall expire in accordance with, the
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provisions of the Sonic Automotive, Inc. 1997 Stock Option Plan, as
amended, for an "Involuntary Termination Without Cause", and (iii) the
Employee shall be entitled to retain the full amount of the Advance as
severance pay. The benefits provided in clauses (ii) and (iii) above,
including but not limited to the Employee's retention of the Advance, shall
be in lieu of all other severance benefits to which the Employee would
otherwise be entitled.
(d) Resignation. If the Employee voluntarily resigns from his
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employment with the Employer hereunder, the Employee shall repay the full
amount of the Advance to the Employer via wire transfer of immediately
available funds within ten (10) days following the effective date of such
resignation.
(e) Expiration of Employment Period. If the Employee remains employed
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by the Employer on November 10, 2005, the Employee shall repay the full
amount of the Advance to the Employer via wire transfer of immediately
available funds on such date.
7. Change of Control.
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(a) Upon a Change of Control (as defined below), the Employee may
elect to resign from his employment with the Employer hereunder by
providing written notice of such resignation to the Board of Directors of
the Employer within thirty (30) days following the date of consummation of
such Change of Control (failure to timely give such notice shall constitute
a waiver of the Employee's rights under this Section 7).
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(b) If the Employee provides timely written notice of his election to
resign his employment with the Employer pursuant to Section 7(a) above, the
Employer shall pay to the Employee via check or wire transfer of
immediately available funds within thirty (30) days following the effective
date of such resignation the following lump sum amount (the "Change of
Control Severance Payment"): (i) the Annual Base Salary payable to the
Employee by the Employer hereunder from the effective date of such
resignation to November 10, 2005; plus (ii) an amount equal to (A) the most
recent annual cash bonus paid to the Employee by the Employer, multiplied
by (B) the number of years remaining from the effective date of such
resignation until November 10, 2005 (rounded upwards to the nearest year).
The Employer and the Employee acknowledge and agree that, should the
Employee elect to exercise his rights pursuant to this Section 7, the
Employee shall remain obligated to repay the full amount of the Advance to
the Employer pursuant to the provisions of Section 6(d) above. Payment of
the Change of Control Severance Payment by the Employer to the Employee
shall be in lieu of all other severance benefits to which the Employee
would otherwise be entitled.
(c) As used in this Section 7, a "Change of Control" shall mean any of
the following:
(i) a sale of all or substantially all of the assets of the
Employer 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 Employer, and the concept of
control means the ownership of voting securities representing more
than 50% of the voting power of the entity in question);
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(ii) a merger, consolidation or reorganization of the Employer
as a result of which stockholders of the Employer holding more than
50% of the voting power of all outstanding voting securities of the
Employer immediately before the merger, consolidation or
reorganization do not hold more than 50% of the voting power of all
outstanding voting securities of the Employer after the merger,
consolidation or reorganization;
(iii) the acquisition by a person or group of related persons who
are not Affiliates of the Employer in one transaction or a series of
related transactions of voting securities which have more than 50% of
the voting power of all outstanding voting securities of the Employer;
or
(iv) if at any time during the Employment Period, the members of
the Smith Group (as that term is defined in the Employer's Amended and
Restated Certificate of Incorporation, as amended) do not hold voting
securities of the Employer having a majority of the voting power of
all outstanding voting securities of the Employer.
8. Restrictive Covenants. For purposes of this Agreement, "Restrictive
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Covenants" mean the provisions of this paragraph 8. It is stipulated and agreed
that Employer is engaged in the business of owning and operating automobile
and/or truck dealerships, which business includes, without limitation, the
marketing, selling and leasing of new and used vehicles and the servicing of
automobiles and trucks (the "Business"). It is further stipulated and agreed
that as a result of Employee's employment by Employer, and as a result of
Employee's continued employment hereunder, Employee has and will have access to
valuable, highly confidential, privileged and proprietary information relating
to Employer's Business, including, without
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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 Employer as
proprietary and confidential (the "Confidential Information"). It is further
acknowledged that the unauthorized use or disclosure by Employee of any of the
Confidential Information would seriously damage Employer in its Business.
In consideration of the provisions of this paragraph 8, the compensation
and benefits referred to in paragraphs 3 and 4 hereof, which Employee
acknowledges are legally sufficient to support enforceability by the Employer of
the Restrictive Covenants against Employee, Employee agrees as follows:
(a) During the term of this Agreement and after its termination or
expiration for any reason, Employee will not, without Employer's prior
written consent, use, 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 Employee's
duties hereunder).
(b) During the term of this Agreement and for a period of two years
after the date of the expiration or termination of this Agreement for any
reason (the "Restrictive Period"), Employee shall not, directly or
indirectly:
(i) Employ or 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 for any
reason was employed by Employer;
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(ii) Provide or solicit the provision of products or
services, similar to those provided by Employer to any person or
entity within the "Restricted Territory", as hereinafter defined,
who purchased or leased automobiles, trucks or services from
Employer 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 Employer and any person
or entity from whom Employer 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) Engage in competition with Employer or its respective
successors and assigns by engaging, directly or indirectly, in a
business involving the sale or leasing of automobiles or trucks
or which is otherwise substantially similar to the Business,
within the "Restricted Territory", as hereinafter defined; or
(v) Provide information to, solicit or sell for, organize
or own any interest in (either directly or thorough 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 in the "Restricted Territory",
as hereinafter defined, which is substantially similar to the
Business or competitive with Employer's business; provided,
however, that nothing herein shall preclude the Employee from
holding not more than three percent (3%) of the outstanding
shares of any publicly held
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company which may be so engaged in a trade or business identical
or similar to the Business of the Employer. As used herein,
"Restricted Territory" means:
(1) all Standard Metropolitan Statistical Areas, as
determined by the United States Office of Management and
Budget, in which Employer has an office, store or other
place of business on the date of the expiration or
termination of this Agreement for any reason.
(2) all counties in which Employer has an office, store
or other place of business on the date of the expiration or
termination of this Agreement for any reason.
9. Remedies. It is stipulated that a breach by Employee of the Restrictive
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Covenants would cause irreparable damage to Employer. Employer, in addition to
any other rights or remedies which Employer may have, shall be entitled to an
injunction restraining Employee from violating or continuing any violation of
such Restrictive Covenants. Such right to obtain injunctive relief may be
exercised at the option of Employer, concurrently with, prior to, after or in
lieu of, the exercise of any other rights or remedies which Employer may have as
a result of any such breach or threatened breach. Employee agrees that upon
breach of any of the Restrictive Covenants, Employer shall be entitled to an
accounting and repayment of all profits, royalties, compensation, and/or other
benefits that Employee directly or indirectly has realized or may realize as a
result of, or in connection with, any such breach. Employee further agrees that
the Restrictive Period shall be extended by a period of time equal to any period
of time in which any Employee is in violation of the Restrictive Covenants.
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10. Acknowledgment of Reasonableness. Employee has carefully read and
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considered the provisions of this Agreement and has had the opportunity for
consultation with an attorney of Employee's choice and agrees that the
restrictions set forth herein are fair and reasonably required for the
protection of Employer. In the event that any provision relating to the
Restrictive Period, the Restricted Territory or the scope of the restrictions
shall be declared by a court of competent jurisdiction to exceed the maximum
period of time, geographical area or scope that such court deems reasonable and
enforceable under applicable law, such time period, geographical area or scope
of restriction held reasonable and enforceable by the court shall thereafter be
the Restricted Period, Restricted Territory and/or scope under this Agreement.
11. Surrender of Books and Records. Employee acknowledges that all files,
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records, lists, designs, specifications, books, products, plans and other
materials owned or used by Employer in connection with conduct of its business
shall at all times remain the property of Employer, and that upon termination or
expiration of this Agreement for any reason, Employee will immediately surrender
to Employer all such materials.
12. Resignation of Directorships. Upon termination of this Agreement for
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any reason or upon termination of the Employee's employment with the Employer
for any reason, the Employee will resign all directorships he may then hold with
the Employer or any of its subsidiaries.
13. Entire Agreement. This Agreement contains the entire agreement of the
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parties hereto, and shall not be modified or changed in any respect except by a
writing executed by the parties hereto.
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14. Successors and Assigns. The rights and obligations of Employee under
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this Agreement shall inure to the benefit of Employer, its successors and
assigns, and shall be binding upon Employee and his respective successors, heirs
and assigns. Employer shall have the right to assign, transfer, or convey this
Agreement to its affiliated companies, successor entities, or assignees or
transferees of substantially all of Employer's business activities. This
Agreement, being personal in nature to the Employee, may not be assigned by
Employee without Employer's prior written consent.
15. Notice. All notices required and permitted to be give hereunder shall
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be in writing and shall be deemed to have been given when mailed by certified or
registered mail, return receipt requested, addressed to the intended recipient
as follows or at such other address as is provided by either party to the other:
If to Employer: With a copy to:
Sonic Automotive, Inc. Sonic Automotive, Inc.
Attention: Chairman Attention: General Counsel
5401 E. Independence Blvd. 6415 Idlewild Road, Suite 109
Charlotte, NC 28212 Charlotte, NC 28212
If to Employee: With a copy to:
Theodore M. Wright _____________________________
2900 Highridge Road _____________________________
Charlotte, NC 28270 _____________________________
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16. Governing Law; Forum. This Agreement shall, in all respects, be
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governed by and construed according to the laws of the State of North Carolina.
Any dispute or controversy arising out of or relating to this Agreement shall
also be governed by the laws of the
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State of North Carolina. Any suit or other proceeding arising out of or relating
to this Agreement shall be instituted and maintained in the state courts of
Mecklenburg County, North Carolina, and the parties hereby waive any objection
to such jurisdiction and venue and irrevocably submit to the jurisdiction of
such court in any such action or proceeding. Each party shall bear its own costs
and expenses, including without limitation, attorneys' fees, in connection with
any such suit or proceeding.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first above written.
EMPLOYEE:
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/s/ Theodore M. Wright (SEAL)
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Theodore M. Wright
EMPLOYER:
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SONIC AUTOMOTIVE, INC.
By: /s/ O. Bruton Smith
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Name: O. Bruton Smith
Title: Chairman and Chief Executive Officer
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