EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") made this 16th day of September,
1998 between SONIC AUTOMOTIVE, INC., a Delaware corporation (the "Employer") and
DENNIS D. HIGGINBOTHAM ("Employee").
R E C I T A L S
WHEREAS, Employer desires to acquire certain of the automobile dealership
assets of Employee within the State of Florida; and
WHEREAS, Employer desires to retain the services of Employee in order to
manage the existing dealerships and acquire and manage additional dealerships;
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
hereby accepts employment from Employer, for the period commencing with the
closing of the sale transferring those assets in which Employee has an interest
in various dealerships in the State of Florida to Employer (the "Commencement
Date") and ending three (3) years thereafter, unless sooner terminated pursuant
to the provisions of paragraph 5 hereof (the "Employment Period").
2. Duties of Employee. Employee shall be employed by Employer as
President of Retail Operations for Sonic Automotive, Inc. Employee shall report
to Employer's Chief Executive Officer and the Employer's Board of Directors.
Employee shall be proposed as a nominee for election to Employer's Board of
Directors as promptly as reasonably practicable after the Closing. Employee
shall assist in the management and supervision of all Employerowned dealerships.
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. Employee specifically understands that Employer shall have final authority
over the terms and conditions of all acquisitions. Employee shall not be
required to relocate his base of employment from the Daytona Beach area.
3. Compensation. For all services rendered by Employee under this
Agreement, he shall be entitled to compensation in accordance with the
following:
(a) Base Salary. During the Employment Period, the Employee
shall receive an annual base salary ("Annual Base Salary") of FOUR HUNDRED
THOUSAND AND NO/100 DOLLARS ($400,000.00) which shall be paid in equal monthly
installments in the amount of THIRTY-THREE THOUSAND THREE HUNDRED THIRTY-THREE
AND THIRTY-THREE/100 DOLLARS ($33,333.33).
(b) Additional Salary and Bonus. In addition to the Annual
Base Salary 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.
4. Fringe Benefits. During the Employment Period, Employee shall
receive 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 four demonstrator vehicles annually of
Employee's choice, including all reasonably 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.
(c) Prompt reimbursement for all reasonable employment,
travel, entertainment and other business related expenses incurred by the
Employee in accordance with the policies, practices and procedures of the
Employer.
(d) An office, located in New Smyrna Beach, Florida and
selected by Employee, of a size and with furnishings and other appointments, and
with secretarial assistance, comparable to that provided with respect to other
peer executives of the Employer.
(e) An annual paid vacation in accordance with the policies,
practices and procedures of the Employer as in effect generally at any time with
respect to other peer executives of the Employer.
(f) Reimbursement for use of personal aircraft for specified
business purposes which have been previously approved by Employer, at $1,500 per
hour, and reimbursement of pilot's reasonable out-of-pocket overnight
expenditures when required.
5. Termination of Employment. This Agreement shall terminate as
follows:
(a) Death or Disability. The Employee's employment shall
terminate 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, and that such inability is likely to
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continue for a period of more than six (6) months, 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 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.
(b) Cause. The Employer may terminate the Employee'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 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 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 follows:
(a) Generally. Except as provided in paragraph 6(b) below,
upon termination of Employee's employment for any reason, Employee shall be
entitled only to payment of his Annual Base Salary, together with those fringe
benefits described in paragraphs 4(a) and 4(b) hereof, through the effective
date of such termination.
(b) Without Cause. If Employee's employment is terminated by
Employer without cause, then Employer shall continue to pay Employee his Annual
Base Salary, together with those fringe benefits described in paragraphs 4(a)
and 4(b) hereof, for a period of one year from the date of such termination. Any
payments under this Section 6 will be offset against (and
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will thereby reduce) any other severance to which Employee might be entitled
from Employer pursuant to any agreement or policy
7. Stock Option. Employee shall be eligible to participate in the
Sonic Automotive, Inc. 1998 Stock Option Plan (the "Stock Option Plan").
Employee's initial grant of options under the Stock Option Plan shall be in an
amount which is consistent with the grants of stock options for similar
employees of the Employer. The exercise price of such initial options shall be
the fair market value of the shares of the common stock of Employer on the date
of such initial grant. Any 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 options granted to Employee pursuant to the
Stock Option Plan shall otherwise be governed by the provisions of the Stock
Option Plan.
8. Restrictive Covenants. For purposes of this Agreement,
"Restrictive 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 and selling 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 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:
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(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;
(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 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 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
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 the Standard Metropolitan
Statistical Areas, as determined by the United States Office
of Management and Budget, for: Houston, Texas; Charlotte,
North Carolina; Chattanooga, Tennessee; Nashville, Tennessee;
TampaSt. Petersburg - Clearwater, Florida; Daytona Beach,
Florida; Columbus, Ohio; Atlanta, Georgia; and Montgomery,
Alabama.
9. Remedies. It is stipulated that a breach by Employee of the
Restrictive 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
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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.
10. Acknowledgment of Reasonableness. Employee has carefully read
and 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, 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. Entire Agreement. This Agreement contains the entire agreement
of the parties hereto, and shall not be modified or changed in any respect
except by a writing executed by the parties hereto.
13. Successors and Assigns. The rights and obligations of Employee
under 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.
14. Notice. All notices required and permitted to be give hereunder
shall 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:
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If to Employer: 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, North Carolina 28244
Charlotte, North Carolina 28218 Telecopier No.: (704) 334-4706
Telecopier No.: (704) 532-3323 Attention: Edward W. Wellman, Jr.
Attention: Chief Financial Officer
If to Employee: With a copy to:
Dennis D. Higginbotham Cobb, Cole & Bell
Higginbotham Management, Inc. P. O. Box 2491
P.O. Box 770 150 Magnolia Avenue
104 Riverside Drive Daytona Beach, Florida 32114
New Smyrna Beach, Florida 32170 Telecopier No.: (904) 238-7003
Telecopier No.: (904) 426-8111 Attention: Larry Marsh
15. Governing Law; Forum. This Agreement shall, in all respects, be
governed by and construed according to the laws of the State of Florida. Any
dispute or controversy arising out of or relating to this Agreement shall also
be governed by the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date first above written.
EMPLOYEE:
/s/ Dennis D. Higginbotham
--------------------------------------(SEAL)
Dennis D. Higginbotham
EMPLOYER:
SONIC AUTOMOTIVE, INC.
By: /s/ O. Bruton Smith
-----------------------------------
Title: Chief Executive Officer
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