This agreement is entered into as of September 29,2003 between Asbury Automotive
Group, Inc. ("Asbury") and J. Gordon Smith ("Executive"), a key employee of
Asbury, in order to provide for an agreed-upon compensation in the event that
Executive's employment is terminated as defined in this agreement.
1. Severance Pay Arrangement
If a Termination (as defined below) of Executive's employment occurs at any
time during Executive's employment, Asbury will pay Executive 12 months of
Executive's base salary as of the date of Termination as Severance Pay.
Payment (subject to required withholding) will be made by Asbury to
Executive monthly on the regular payroll dates of Asbury starting with the
date of Termination.
If Executive participates in a bonus compensation plan at the date of
Termination, Severance Pay will also include a portion of the target bonus
for the year of Termination in an amount equal to the target bonus
multiplied by the percentage of such year that has expired through the date
of Termination.
In addition, Executive shall be entitled for 12 months following the date
of Termination to continue to participate at the same level of coverage and
Executive contribution in any health, dental, disability and life insurance
plans, as may be amended from time to time, in which Executive was
participating immediately prior to the date of Termination. Such
participation will terminate 30 days after Executive has obtained other
employment under which Executive is covered by equal benefits. Executive
agrees to notify Asbury promptly upon obtaining such other employment. At
the option of Executive, COBRA coverage will be available, as provided by
company policy, at the termination of the extended benefits provided above.
2. Change of Control Arrangement
In the event that a Termination occurs at any time within two years after a
Change of Control, then (1) the term "12 months" in the first and third
paragraphs of Section 1 of this agreement shall be replaced with "36
months" and (2) the term "one year" in Section 5 and Section 6 of this
agreement shall be replaced with "36 months". For purposes of this Section,
"Change of Control" shall having the meaning ascribed to such term in
Asbury's 2002 Stock Option Plan, as such plan may be amended from time to
time.
3. Definition of Termination Triggering Severance Pay
A "Termination" triggering the Severance Pay set forth above in Sections 1
and 2 is defined as (1) termination of Executive's employment by Asbury for
any reason, except death, disability, retirement, voluntary resignation or
"cause", or (2) termination by Executive because of mandatory relocation of
Executive's current principal place of business to a location more than 50
miles away, or (3) Asbury's reduction of Executive's base salary, or (4)
any material diminution of Executive's duties or job title, except in a
termination for "cause", death, "disability," retirement or voluntary
resignation. The definition of "cause" is: (a) Executive's gross negligence
or serious misconduct (including, without limitation, any criminal,
fraudulent or dishonest conduct) that is injurious to Asbury or any of its
affiliates; or (b) Executive being convicted of, or entering a plea of nolo
contendere to, any crime that constitutes a felony or involves moral
turpitude; or (c) Executive's material breach of Sections 4, 5 or 6 below
or (d) Executive's willful and continued failure to substantially perform
Executive's duties with Asbury or (e) Executive's material breach of a
material written policy of Asbury. The definition of "disability" is a
physical or mental disability or infirmity that prevents the performance by
Executive of his duties lasting (or likely to last, based on competent
medical evidence presented to Asbury) for a continuous period of six months
or longer.
4. Confidential Information Nondisclosure Provision
During and after employment with Asbury, Executive agrees not to disclose
to any person (other than to an employee or director of Asbury or any
affiliate and except as may be required by law) and not to use to compete
with Asbury or any affiliate any confidential or proprietary information,
knowledge or data that is not in the public domain that was obtained by
Executive while employed by Asbury with respect to Asbury or any affiliate
or with respect to any products, improvements, customers, methods of
distribution, sales, prices, profits, costs, contracts, suppliers, business
prospects, business methods, techniques, research, trade secrets or
know-how of Asbury or any affiliate (collectively, "Confidential
Information"). In the event Executive's employment terminates for any
reason, Executive will deliver to Asbury on or before the date of
termination all documents and data of any nature pertaining to Executive's
work with Asbury and will not take any documents or data or any
reproduction, or any documents containing or pertaining to any Confidential
Information. Executive agrees that in the event of a breach by Executive of
this provision, Asbury shall be entitled to inform all potential or new
employers of this provision and to cease payments and benefits that would
otherwise be made pursuant to Sections 1 and 2 above, as well as to obtain
injunctive relief and damages which may include recovery of amounts paid to
Executive under this agreement.
5. Non-Solicitation of Employees
Executive agrees that for a period of one year following final payment to
Executive as required under Sections 1and 2, Executive shall not directly
or indirectly solicit for employment or employ any person who, at any time
during the 12 months preceding such last day of Executive's employment, is
or was employed by Asbury or any affiliate or induce or attempt to persuade
any employee of Asbury or any affiliate to terminate their employment
relationship. Executive agrees that in the event of a breach by Executive
of this provision, Asbury shall be entitled to inform all potential or new
employers of this provision and to cease payments and benefits that would
otherwise be made pursuant to Sections 1 and 2 above, as well as to obtain
injunctive relief and damages which may include recovery of amounts paid to
Executive under this agreement.
6. Covenant Not to Compete
While Executive is employed by Asbury, Executive shall not directly or
indirectly engage in, participate in, represent or be connected with in any
way, as an officer, director, partner, owner, employee, agent, independent
contractor, consultant, proprietor or stockholder (except for the ownership
of a less than 5% stock interest in a publicly-traded corporation) or
otherwise, any business or activity which competes with the business of
Asbury or any affiliate unless expressly consented to in writing by the
Chief Executive Officer of Asbury (collectively, "Covenant Not To
Compete").
In the event Executive's employment terminates for any reason, the
provisions of the Covenant Not To Compete shall remain in effect for a
period of one year following final payment to Executive as required under
Sections 1 and 2, except that the prohibition above on "any business or
activity which competes with the business of Asbury or any affiliate" shall
be limited to Autonation, Sonic, Lithia, United Auto Group and other public
groups. Executive shall disclose in writing to Asbury the name, address and
type of business conducted by any proposed new employer of Executive if
requested in writing by Asbury. Executive agrees that in the event of a
breach by Executive of this Covenant Not To Compete, Asbury shall be
entitled to inform all potential or new employers of this Covenant and to
cease payments and benefits that would otherwise be made pursuant to
Sections 1 and 2 above, as well as to obtain injunctive relief and damages
which may include recovery of amounts paid to Executive under this
agreement.
7. Parachute Payment Limitation
Notwithstanding anything in this agreement to the contrary, if any
severance pay or benefits payable under this agreement (without the
application of this Section 7), either alone or together with other
payments, awards, benefits or distributions (or any acceleration of any
payment, award, benefit or distribution) pursuant to any agreement, plan or
arrangement with Asbury or any of its affiliates (the "Total Payments"),
would constitute a "parachute payment" (as defined in Section 280G of the
U.S. Internal Revenue Code of 1986, as amended, and regulations thereunder
(the "Code")), then [the following shall occur:
(a) tax counsel selected by Asbury's independent auditors and
acceptable to Executive shall compute the net present value to
Executive of all the Total Payments after reduction for the excise
taxes imposed by Code Section 4999 and for any normal income taxes
that would be imposed on Executive if such Total Payments
constituted Executive's sole taxable income; and
(b) said tax counsel shall next compute the maximum Total Payments that
can be provided without any such Total Payments being characterized
as "Excess Parachute Payments" (as defined in Code Section 280G)
and reduce the result by the amount of any normal income taxes that
would be imposed on Executive if such reduced Total Payments
constituted Executive's sole taxable income.
If the result derived in clause (a) above is greater than the result
derived in clause (b) above by more than 10% of the result derived in
clause (b) above, then Asbury shall pay Executive the full amount of the
Total Payments without reduction. If the result derived from clause (a)
above is not greater than the result derived in clause (b) above by more
than 10% of the result derived in clause (b) above, then Asbury shall pay
Executive the maximum Total Payments possible without any such Total
Payments being characterized as Excess Parachute Payments. The
determination of how such Total Payments will be reduced shall be made by
Executive in good faith after consultation with Asbury.
GENERAL PROVISIONS
A. Employment is At Will
Executive and Asbury acknowledge and agree that Executive is an "at
will" employee, which means that either Executive or Asbury may
terminate the employment relationship at any time, for any reason, with
or without cause or notice, and that nothing in this agreement shall be
construed as an express or implied contract of employment.
B. Execution of Release
As a condition to the receipt of the Severance Pay payments and
benefits described in Sections 1 and 2 above, Executive agrees to
execute a release of all claims arising out of Executive's employment
or termination, including, but not limited to, any claim of
discrimination, harassment or wrongful discharge under local, state or
federal law.
C. Other Provisions
This agreement shall be binding upon the heirs, executors,
administrators, successors and assigns of Executive and Asbury,
including any successor to Asbury.
The transfer of Executive from Asbury to any of its affiliates shall
not be deemed to be a termination pursuant to clause (1) of Section 3
of this agreement until such time as Executive is no longer employed by
Asbury or any of its affiliates. If Executive is transferred to an
affiliate of Asbury, references to "Asbury" herein shall be deemed to
include the applicable affiliate to which Executive is transferred.
The headings and captions are provided for reference and convenience
only and shall not be considered part of this agreement.
If any provision of this agreement shall be held invalid or
unenforceable, such holding shall not affect any other provisions, and
this agreement shall be construed and enforced as if such provisions
had not been included.
Any disputes arising under or in connection with this agreement shall
be resolved by third party mediation of the dispute and, if such
dispute is not resolved within 30 days, by binding arbitration, to be
held in New York City, New York, in accordance with the rules and
procedures of the American Arbitration Association. Judgment upon the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Each party shall bear his or its own costs of the
mediation, arbitration or litigation.
All notices and other communications required or permitted under this
agreement shall be in writing (including a facsimile or similar
writing) and shall be deemed given when (1) delivered personally, (2)
sent by certified or registered mail, postage prepaid, return receipt
requested or delivered by overnight courier (provided that a written
acknowledgment of receipt is obtained by the overnight courier) to the
party concerned at the address indicated below or to such changed
address as such party may subsequently give such notice of or (3) if
given by facsimile, at the time transmitted to the respective facsimile
numbers set forth below, or to such other facsimile number as either
party may have furnished to the other in writing in accordance
herewith, and the appropriate confirmation received (or, if such time
is not during a business day, at the beginning of the next such
business day); provided, however, that notice of change of address
shall be effective only upon receipt:
If to Asbury: Asbury Automotive Group, Inc.
c/o General Counsel
3 Landmark Square
Suite 500
Stamford, CT 06901
Facsimile: (203) 356-4474
If to Executive: To the most recent address and facsimile number,
if applicable, of Executive set forth in the
personnel records of Asbury.
This agreement supercedes any and all agreements between Asbury and
Executive relating to payments upon termination of employment or
severance pay and may only be modified in writing signed by Asbury and
Executive.
This agreement shall be governed by and construed in accordance with
the laws of the State of Connecticut.
All payments hereunder shall be subject to any required withholding of
federal, state, local and foreign taxes pursuant to any applicable law
or regulation.
No provision of this agreement shall be waived unless the waiver is
agreed to in writing and signed by Executive and the Chief Executive
Officer of Asbury. No waiver by either party of any breach of, or of
compliance with, any condition or provision of this agreement by the
other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.
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.
AGREED TO AS OF THE DATE FIRST WRITTEN ABOVE:
BY EXECUTIVE BY ASBURY AUTOMOTIVE GROUP, INC.
/s/ J. Gordon Smith /s/ Kenneth B. Gilman
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J. Gordon Smith Kenneth B. Gilman