Exhibit 10.1
SEPARATION AGREEMENT
--------------------
THIS SEPARATION AGREEMENT ("Agreement") is made this 15th day of October,
2004 (the "Effective Date"), by and among Asbury Automotive Group, Inc., a
Delaware corporation ("Asbury"), Ben David McDavid, Sr. ("McDavid Sr."), Ben
David McDavid, Jr. ("David Jr."), and James McDavid ("James") (McDavid Sr.,
David Jr. and James are sometimes referred to collectively as the "Executives").
BACKGROUND
1. Asbury owns, indirectly, a group of retail automotive dealerships located
in Texas, which are known collectively as the "David McDavid Auto Group"
(the "McDavid Group").
2. From May 1, 1998 through July 29, 2003, Asbury Texas Management L.L.C., an
indirect wholly-owned subsidiary of Asbury ("Texas Management"), employed
McDavid Sr. as the President and CEO of the McDavid Group. As of July 30,
2003, McDavid Sr. ceased to be the President and CEO of the McDavid Group.
3. From May 1, 1998 through July 29, 2003, Texas Management also employed
David Jr. and James in various capacities. As of July 30, 2003, David Jr.
and James ceased to be employees of the McDavid Group.
4. The parties have agreed to enter into this Agreement to resolve any
disputes and controversies by and among them arising out of their
respective employment relationships.
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter provided, and intending to be legally bound hereby, the parties
agree as follows:
1. Termination of Employment. The parties hereby confirm that the Executives
left their employment with Texas Management and the McDavid Group as of
July 30, 2003.
2. Officers. Each of the Executives confirms that he no longer serves as an
officer of Asbury, or any of its subsidiaries or affiliates, including,
without limitation, the entities comprising the McDavid Group. If requested
by Asbury, the Executives will each deliver written acknowledgments that,
effective as of July 30, 2003, they ceased all offices of Asbury and any of
its subsidiaries and affiliates.
3. Severance Payments. In exchange for signing and not revoking the General
Release (as defined in Section 11 below) and the Executives' other
obligations under this Agreement, Asbury agrees to pay an aggregate of One
Million Five Hundred Thousand Dollars ($1,500,000) to the Executives in
lump sum payments, less applicable withholding and taxes, as follows: Two
Hundred Thousand Dollars ($200,000.00) to McDavid Sr., Six Hundred Fifty
Thousand Dollars ($650,000.00) to David Jr., and Six Hundred Fifty Thousand
Dollars ($650,000.00) to James (each, a "Severance Payment" and
collectively, the "Severance Payments"). Each of the Severance Payments
will be paid promptly upon Asbury's receipt of the signed General Releases
from all of the Executives and the expiration of the 7-day revocation
period following execution. For the avoidance of doubt, if any of the
Executives fails to sign and deliver, or revokes, his respective General
Release, then none of the Executives will be paid their respective
Severance Payments. David Jr. and James each acknowledge that, but for
Asbury's agreement to pay them the Severance Payments set forth herein,
they would not otherwise be entitled to any severance payments or benefits
in connection with the termination of their employment with Texas
Management and accordingly, the Severance Payments, among other things, are
good and valuable consideration for their respective obligations under this
Agreement.
4. Benefits. As of the Effective Date, the Executives and their families will
no longer participate in any health, dental or other benefit plans of
Asbury or the McDavid Group. At each of the Executives' options, COBRA
coverage will be available to them and their family as of the Effective
Date in accordance with the company policy of the McDavid Group.
5. Release from Non-Competition and other Obligations. In consideration of the
Executives' execution of the General Release and their other obligations
under this Agreement, Asbury, on behalf of itself, its subsidiaries and
affiliates, hereby releases each of the Executives from all obligations
under their Employment Agreements dated as of May 1, 1998 between each of
the Executives and Texas Management (the "Employment Agreements") and
further hereby releases each of the Executives from the non-competition
obligations of the Executives contained in any other document. McDavid Sr.
acknowledges that, but for Asbury's agreement to provide the release set
forth herein, he would be bound by a restrictive covenant prohibiting him
from competing with Asbury, its subsidiaries and affiliates, until May 1,
2005 and accordingly, the release provided herein, among other things, is
good and valuable consideration for McDavid Sr.'s respective obligations
under this Agreement.
6. Restrictions on McDavid Sr's Solicitation of Employees. In consideration of
the Severance Payment and the other benefits provided to him under this
Agreement, during the period from the Effective Date until January 1, 2005,
McDavid, Sr. agrees that he will not (a) directly or indirectly employ,
solicit, entice or encourage to leave the employ of Asbury or any of its
subsidiaries or affiliates, any person who is, or any time during the
preceding twelve months was, employed by, or otherwise engaged to perform
services for, Asbury or any of its subsidiaries or affiliates, or (b)
otherwise intentionally interfere with the relationship of Asbury or any of
its subsidiaries or affiliates with any person who is employed by, or
otherwise engaged to perform services for, Asbury or any of its
subsidiaries or affiliates.
7. Restriction on David Jr.'s and James' Solicitation of Employees. In
consideration of the Severance Payment and the other benefits provided to
them under this Agreement, each of David Jr. and James agrees that during
the period from the Effective Date until January 1, 2005, he will not (a)
directly or indirectly employ, solicit, entice or encourage to leave the
employ of Asbury or any of its subsidiaries or affiliates, any person who
is, or any time during the preceding twelve months was, employed by, or
otherwise engaged to perform services for, Asbury or any of its
subsidiaries or affiliates, or (b) otherwise intentionally interfere with
the relationship of Asbury or any of its subsidiaries or affiliates with
any person who is employed by, or otherwise engaged to perform services
for, Asbury or any of its subsidiaries or affiliates. This restriction
shall not prohibit David Jr. and/or James from retaining the services of
independent contractors who provide products or services on a non-exclusive
basis to the automotive industry. Knowing that Asbury is relying thereon,
each of David Jr. and James represents and warrants to Asbury that, except
as set forth below, from the period of July 29, 2003 through the Effective
Date, he has not directly or indirectly employed any person who is, or at
any time during the six months preceding such employment was, employed by
or otherwise engaged to perform services for, Asbury or any of its
subsidiaries or affiliates, or otherwise intentionally interfered with the
relationship of Asbury or any of its subsidiaries or affiliates and any
person who is employed by, or otherwise engaged to perform services for,
Asbury or any of its subsidiaries or affiliates. David Jr. acknowledges
that he has paid a former employee of the McDavid Dealerships, Walter
Dominigues, to do part time, day labor work for him and has requested
former employees, Billy Clark and Patrick Morrison (who are wholesale
buyers at other dealerships) to look for vehicles for him at public
auctions. Neither Mr. Morrison nor Mr. Clark have been paid by David Jr.
Also, David Jr. requested the advice of Clark Minton, a current employee of
the McDavid Dealerships, to aid him in the renewal of his insurance
policies, since Mr. Minton had originally assisted in obtaining his
coverage.
8. Duty of Confidentiality. Each of the Executives acknowledges that he will
not disclose to any person (other than to a management level employee or
director of Asbury or its subsidiaries or affiliates, and except as may be
required by law) and not use to compete with Asbury, its subsidiaries or
affiliates any confidential or proprietary information, knowledge or data
that is not in the public domain, which was obtained by him as an employee
of the McDavid Group, with respect to Asbury, its subsidiaries or
affiliates, or 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, its subsidiaries or affiliates.
9. Return of Documents. Each of the Executives represents and warrants to
Asbury that he has returned to Asbury or destroyed all documents, materials
and data of any nature pertaining to Asbury, its subsidiaries or
affiliates, that was acquired by him during the course of his employment
with Texas Management, and that he has not retained in his possession any
such documents, materials or data or any reproduction thereof; provided,
however, that the Executives shall be permitted to retain copies of the
Employment Agreements and all other agreements and documents provided to
the Executives in their capacity as shareholders of Asbury, directors of
Asbury, landlords of Asbury, contracting parties with Asbury or as sellers
to Asbury.
10. Injunctive Relief. The parties agree that in the event of any of the
Executives' breach of his respective obligations under Sections 6 ,7 , 8 or
9, Asbury shall be entitled to inform the breaching party's potential or
new employer of the terms of this Agreement, and to cease payments and
benefits that would otherwise be made under this Agreement to the breaching
party, as well as to obtain injunctive relief and actual damages which may
include but not be limited to recovery of amounts paid to the breaching
party under this Agreement and Asbury's reasonable attorneys fees and costs
incurred in enforcing the provisions of this Agreement.
11. Releases; Known Claims.
A. As a condition of receiving the Severance Payment and benefits
described in this Agreement (collectively, the "Severance Package"),
each of the Executives will execute the Separation of Employment and
General Release Agreement attached hereto as Exhibit "A" (the
"Release"). Each of the Executives has a minimum of twenty one (21)
days to consider the Release and will not receive the Severance
Package unless he executes the Release and returns it to Asbury no
later than the 22nd day after the Effective Date. Receipt of the
Severance Package is also conditioned on each of the Executives not
revoking the Release in the seven (7) day period after it has been
signed. Each of the Executives acknowledges that the Severance Package
he will receive is greater than the benefits he will receive if he
does not sign the Release. In accordance with the Older Worker Benefit
Protection Act, Asbury is required to advise each of the Executives to
consult with an attorney to the extent desired regarding the terms of
the Release.
B. As additional consideration for this Agreement, Asbury shall execute
and deliver to the Executives, a General Release Agreement in the form
attached hereto as Exhibit "B".
C. Knowing that Asbury is relying thereon, each of the Executives
represents and warrants to Asbury that, he has no knowledge of any
causes of action, suits, past due debts, claims, and demands
whatsoever in law or in equity, which he ever had or now has or, with
the passage of time or giving of notice or both may have against
Asbury, its affiliates or subsidiaries, or their respective officers,
directors, owners, employees, agents or representatives. For the
avoidance of doubt, the foregoing representation relates to causes of
action, suits, past due debts, claims and demands arising out of any
and all circumstances and transactions among the Executives, Asbury,
and Asbury's subsidiaries and affiliates, including, without
limitation, any of the Executive's or his affiliate's lease or sale of
real property to Asbury or its subsidiaries. Nothing in this
subparagraph is intended to waive, release or discharge obligations of
Asbury, and/or its subsidiaries to the Executives and/or their
affiliates, arising out of leases or other agreements for which the
obligation is not currently due. It is the intent of this subparagraph
to acknowledge that the Executives do not know of any of such
obligations that are now in default.
D. Knowing that the Executives are relying thereon, Asbury represents and
warrants to the Executives that Asbury has no knowledge of any causes
of action, suits, past due debts, claims, and demands whatsoever in
law or in equity, which it ever had, now has, or with the passage of
time or giving of notice or both may have against any of the
Executives and/or their affiliates. For the avoidance of doubt, the
foregoing representation relates to causes of action, suits, past due
debts, claims and demands arising out of any and all circumstances and
transactions among Asbury, its subsidiaries and affiliates and the
Executives, including, without limitation, any of the Executive's or
his affiliate's lease or sale of real property to Asbury or its
subsidiaries. For purposes of this Section 11 D, Asbury's "knowledge"
is defined as the actual knowledge of the CEO, any Senior Vice
President, Vice President, or Officer of Asbury Automotive Group,
Inc., or any officer of Asbury Texas Management, L.L.C. Nothing in
this subparagraph is intended to waive, release or discharge
obligations of the Executives, and/or their affilliates to Asbury
and/or its subsidiaries, arising out of leases or other agreements for
which the obligation is not currently due. It is the intent of this
subparagraph to acknowledge that Asbury does not know of any of such
obligations that are now in default.
12. Demonstrator Vehicles.
A. The Executives, jointly and severally, warrant and represent that
attached hereto as Exhibit "C" is a true, correct and complete list of
all of the demonstrator vehicles owned by the McDavid Group
dealerships that were in the possession or control of the Executives
from and after July 30, 2003 (the "Demonstrator Vehicles").
Concurrently with their execution of this Agreement, the Executives
will return the Demonstrator Vehicles to the McDavid Group.
B. Within thirty (30) days of the return of the Demonstrator Vehicles to
the McDavid Group, Asbury will make cash payments, less applicable
withholding and taxes, to each of the Executives in the amount as
follows:
McDavid Sr. $ 75,000.00
David Jr. $100,000.00
James $100,000.00
TOTAL: $ 275,000.00
C. The Executives agree to indemnify and hold Asbury and its subsidiaries
harmless from claims, liabilities, obligations, losses or damages
asserted by third parties against Asbury arising out of the use of the
Demonstrator Vehicles by the Executives or those driving the Vehicles
with consent of the Executives, to the extent that such claims are not
(i) covered by insurance maintained by Asbury or its subsidiaries;
provided, however, that the Executives shall be liable and shall
reimburse Asbury or its subsidiaries for any insurance deductible (not
to exceed $5,000.00 per occurrence) or (ii) subject to obligations of
indemnity from Asbury or its subsidiaries to the Executives under the
agreements or instruments identified on Exhibit "A" attached hereto
and made a part hereof for all purposes.
13. Approval of Board of Directors of Asbury. Asbury's performance of its
obligations under this Agreement has been approved by Asbury's Board of
Directors.
14. Notices. All notices and other communications under this Agreement shall be
in writing and shall be sent by certified mail, postage prepaid, return
receipt requested, or by an overnight express courier service that provides
written confirmation of delivery; addressed as follows:
If to McDavid Sr., David Jr. or James:
David McDavid
17120 N. Dallas Parkway, Suite 235
Dallas, TX 75248
With a copy to:
Robert Kelsoe
5220 Spring Valley Road, Suite 500
Dallas, TX 75254
If to Asbury:
Asbury Automotive Group, Inc.
622 Third Avenue, 37th Floor
New York, New York 10017
Attention: General Counsel
Any notice so given, shall be deemed to be delivered on the third (3rd)
business day after the same is deposited in the United States Mail, or on
the next business day if sent by overnight courier. Any party may change
its address for receiving notice by giving notice of a new address in the
manner provided herein.
15. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Delaware without reference to conflicts of laws
provisions thereof.
16. Binding Effect. The parties hereto intend to be legally bound hereby and
agree that this Agreement shall inure to the benefit and be binding upon
the parties hereto, their successors, heirs, executors and assigns.
17. Invalid Provisions. If any term, condition, clause or provision of this
Agreement shall be determined or declared to be void or invalid in law or
otherwise, then only that term, condition, clause or provisions shall be
stricken from this Agreement and in all other respects this Agreement shall
be valid and continue in full force, effect and operation.
18. Headings. Any headings preceding the text of the paragraphs hereof are
inserted solely for the convenience of reference and shall not constitute a
part of this Agreement nor shall they affect the meaning, construction or
effect of any provision hereof.
19. Taxes; Withholding. All payments made to the Executives under this
Agreement will be subject to all Federal, state, city and other applicable
taxes and withholding.
20. Representation by Counsel. The parties acknowledge that they have had the
opportunity to be advised by competent legal counsel of their own choosing
in connection with the execution of this Agreement and have sought such
counsel, that they have read each and every paragraph of this Agreement and
that they understand their respective rights and obligations.
21. Mutual Drafting. This Agreement is the result of the joint efforts of the
parties hereto and each provision has been subject to the mutual
negotiation and agreement of the parties. There shall be no construction
against any party based on any presumption of that party's involvement in
the drafting of this Agreement.
22. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute on and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Separation Agreement to be
executed and delivered on the day and year first above written.
ASBURY AUTOMOTIVE GROUP, INC.
By: /s/ Kenneth B. Gilman
---------------------------------------
Kenneth B. Gilman, President and CEO
/s/ Ben David McDavid, Sr.
-----------------------------------------
BEN DAVID McDAVID, SR.
/s/ Ben David McDavid, Jr.
-----------------------------------------
BEN DAVID McDAVID, JR.
/s/ James McDavid
-----------------------------------------
JAMES McDAVID
EXHIBIT "A"
-----------
SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE
1. I, , for and in consideration of the payments and undertakings of Asbury
Automotive Group, Inc. set forth in that certain Separation Agreement dated ,
2004 (the "Separation Agreement"), do hereby REMISE, RELEASE AND FOREVER
DISCHARGE Asbury Automotive Group, Inc., its subsidiaries and affiliates,
including, without limitation, Asbury Texas Management L.L.C., and its and their
respective officers, directors, owners, employees, agents, successors and
assigns, heirs, representatives, executors, and administrators (hereinafter
collectively referred to as "Asbury"), from all causes of action, suits, debts,
claims, and demands whatsoever in law or in equity, which I ever had, now have,
or hereafter may have, or which my heirs, executors, or administrators may have,
whether known or unknown, arising from or relating in any way to my employment
relationship with Asbury, the termination of that relationship, and the terms
and conditions of that termination, including, but not limited, any claims
arising under the Age Discrimination in Employment Act, as amended.
Notwithstanding the foregoing, this Release shall not release any right to
contribution or indemnity that the undersigned may have as a result of the
obligations of contribution or indemnity, if any, from Asbury or its
subsidiaries to the undersigned under the agreements or instruments identified
on Exhibit "A" attached hereto and made a part hereof for all purposes.
2. I agree and covenant that I will not institute any proceedings in a
court of law seeking legal or equitable relief involving any matter arising out
of my employment relationship with Asbury, the termination of that relationship,
or the terms and conditions of that termination, including, but not limited, any
claims arising under the Age Discrimination in Employment Act, as amended. In
the event of any administrative claim against Asbury, I agree that I will not be
entitled to receive any additional monetary relief aside from the consideration
received in exchange for this Agreement.
3. I agree and recognize that my employment relationship with Asbury has
been permanently and irrevocably severed, and that Asbury has no obligation,
contractual or otherwise, to employ or appoint me in the future.
4. I acknowledge that I remain bound by certain obligations as set forth in
the Separation Agreement. I understand and agree that any violation of these
obligations will be deemed to be a material breach of the Separation Agreement
and this Agreement, and in such event I authorize Asbury to terminate any
payments or benefits remaining under the Separation Agreement, and to seek
recovery of any payments or benefits made prior to discovery of the breach and
Asbury's reasonable attorneys' fees and costs incurred in enforcing such
obligations.
5. I certify and acknowledge as follows:
a. That I have read the terms of this Agreement, and that I understand
its terms and effects, including the fact that I have agreed to RELEASE AND
FOREVER DISCHARGE Asbury from any legal action arising out of my employment
relationship with Asbury, the termination of that relationship, and the
terms and conditions of that termination, including, but not limited, any
claims arising under the Age Discrimination in Employment Act, as amended;
b. That I have signed this Agreement voluntarily and knowingly in
exchange for the consideration described in the Separation Agreement, which
I acknowledge is adequate and satisfactory to me;
c. That the payments, benefits, promises and undertakings set forth in
the Separation Agreement exceed and are greater than the payments and
benefits, if any, to which I would have been entitled upon termination of
my employment with Asbury had I not executed the Separation Agreement and
this Agreement;
d. That I have been advised in writing to consult with an attorney
concerning this Agreement;
e. That Asbury has provided me with a period of at least twenty one
(21) days in which to consider this Agreement, and that I have signed on
the date indicated below after concluding that this Agreement is
satisfactory to me; and
f. That neither Asbury nor any of its agents, representatives,
employees, or attorneys, have made any representations to me construing the
terms or effects of this Agreement other than those contained in this
Agreement.
6. This Agreement may be revoked in writing by Asbury or me within seven
(7) days after execution, and shall not become effective or enforceable until
such revocation period expires. I understand and agree that in the event I wish
to revoke this Agreement, notice of such revocation must be delivered, before 5
p.m. local time on the seventh day following my execution of this Agreement, to
Asbury Automotive Group, Inc., Attn: General Counsel, 622 Third Avenue, 37th
Floor, New York, New York 10017.
IN WITNESS WHEREOF, and intending to be legally bound hereby, I hereby
execute the foregoing Separation of Employment Agreement and General Release
this _____ of ___________, 2004.
Witness:
-------------------------------- ---------------------------
Print Name: [NAME]
EXHIBIT "A"
-----------
1. Indemnification Agreement dated March 10, 2003, between Asbury Automotive
Group, Inc. and Ben David McDavid, Sr.
2. Certificate of Incorporation of Asbury Automotive Group, Inc. as in effect
during the period of Executives' employment with Asbury Texas.
EXHIBIT "B"
-----------
RELEASE
For a good and valuable consideration, Asbury Automotive Group, Inc., on
behalf of itself and its subsidiaries and affiliates, including, without
limitation, Asbury Texas Management L.L.C. ("Asbury") does hereby REMISE,
RELEASE AND FOREVER DISCHARGE Ben David McDavid, Sr., David McDavid, Jr. and
James McDavid (the "Executives"), jointly and severally from all causes of
action, suits, debts, claims, and demands whatsoever in law or in equity, which
it ever had, now have, or hereafter may have, or which its successors or assigns
may have, whether known or unknown, arising from or relating in any way to the
employment relationship of the Executives with Asbury, the termination of that
relationship, and the terms and conditions of that termination.
Notwithstanding the foregoing, this Release shall not release any claim or
action for contribution or indemnity that Asbury has or may have in the future
against any of the Executives arising out of a claim or action asserted by a
third party against Asbury for which Asbury is not required to provide
contribution or indemnity to such Executive under the agreements or instruments
identified on Exhibit "A" attached hereto and made a part hereof for all
purposes.
Asbury agrees and covenants that it will not institute any proceedings in a
court of law seeking legal or equitable relief involving any matter released
herein.
Notwithstanding anything to the contrary herein, this release shall be null
and void and of no further force or effect if any of the Executives revokes the
Separation of Employment Agreement and General Release dated October ___ 2004 .
Signed this _____day of ___________, 2004.
ASBURY AUTOMOTIVE GROUP, INC.
BY:
------------------------------------------
Kenneth B. Gilman President and CEO
EXHIBIT "C"
-----------
Demonstrator Vehicles
GMC Sierra 1500 2wd 4dr pickup
GMC Yukon XL 1/2 ton-4wd
GMC Yukon XL 1/2 ton-2wd
GMC Yukon XL Denali-awd
Honda Accord 4dr EX V-6
Acura MDX 5dr Tour&Nav
Lincoln Navigator 4wd