EMPLOYMENT
AGREEMENT
This Employment Agreement
(“Agreement”) is entered into between Group 1
Automotive, Inc. (“Employer”), and John C. Rickel
(“Employee”), as of January 1, 2009 (the
“Effective Date”).
RECITALS
WHEREAS, Employer and Employee
previously entered into an employment agreement dated June 2,
2006 as amended (the “Prior Employment Agreement”) and
they desire to enter into a continuing employment relationship
under the following terms and to supersede the Prior Employment
Agreement in its entirety.
WHEREAS, Employee has made the
following representations to Employer, and Employer is relying upon
such representations: (i) Employee has previously completed
the term of the Prior Employment Agreement and recognizes that it
is null and void; (ii) Employee is not subject to any
non-compete or other provision in any other agreement to which he
is a party that would restrict his ability to perform his
obligations under this Agreement; and (iii) Employee is not
bound by the terms of any other agreement that would prevent him
from performing his obligations under this Agreement.
WHEREAS, simultaneously with the
execution of the Prior Employment Agreement, Employer and Employee
executed the Incentive Compensation and Non-Compete Agreement
(“Incentive Compensation Agreement”) governing the
terms and conditions of Employer’s grant of restricted stock
or restricted stock units (collectively “Restricted
Stock”) to Employee and the terms and conditions of
Employee’s non-competition obligations to Employer and
nothing herein shall affect the continued enforceability of the
Incentive Compensation Agreement.
AGREEMENT
For and in consideration of the
mutual promises, covenants, and obligations contained herein,
Employer and Employee agree as follows:
1.1. Agreement to Employ.
Employer shall employ Employee, and Employee shall be employed by
Employer, beginning on the Effective Date and continuing throughout
the Term (as defined below) of this Agreement, subject to the terms
and conditions of this Agreement and the Incentive Compensation
Agreement.
1.2. Position and
Responsibilities. Employee shall serve as Chief Financial
Officer of Employer. Employee shall perform diligently the duties
and services appertaining to such position as reasonably determined
by Employer, as well as such additional duties and services
appropriate to such position which Employee from time to time may
be reasonably directed to perform by Employer. Employee shall at
all times comply with and be subject to such reasonable policies
and procedures as Employer may establish from time to time, which
shall not be contrary to the terms of this Agreement. Employee
shall devote Employee’s full business time, energy, and best
efforts to the business and affairs of Employer. Employee shall not
engage, directly or indirectly, in any other business, investment,
or activity that interferes with Employee’s performance of
Employee’s duties hereunder, is contrary to the interests of
Employer or any of its subsidiaries or affiliates, or requires any
significant portion of Employee’s business time; provided,
however, that Employee may engage in passive personal investments
that do not conflict with the business and affairs of Employer or
any of its subsidiaries or affiliates or interfere with
Employee’s performance of his duties hereunder.
1.3. Fiduciary Duties.
Employee acknowledges and agrees that Employee owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the
best interests of Employer or any of its subsidiaries or affiliates
and to do no act which would be inconsistent with those duties. In
keeping with these duties, Employee shall make full disclosure to
Employer of all business opportunities pertaining to
Employer’s business and shall not appropriate for
Employee’s own benefit business opportunities concerning the
subject matter of the fiduciary relationship.
1.4. Conflicts of Interest.
Any direct or indirect interest of Employee in connection with, or
benefit received by the Employee from, any outside activities,
particularly commercial activities, which might in any way
adversely affect Employer, or any of its affiliates, shall be
deemed to be a conflict of interest. In keeping with
Employee’s fiduciary duties to Employer, Employee shall not
knowingly become involved in a conflict of interest with Employer,
or its affiliates, or upon discovery thereof, allow such a conflict
to continue. Moreover, Employee agrees that Employee shall disclose
to Employer’s Vice President, General Counsel and the audit
committee of the Employer’s board of directors (the
“Board”) any facts which might involve such a conflict
of interest that has not been approved by the Board. The
Employer’s determination as to whether a conflict of interest
exists shall be conclusive absent manifest error; but this standard
shall not apply to, nor shall any determination under this
Section 1.4 affect, any issue that may arise as to the
existence of “cause” under Section 3.2(i).
Employer reserves the right to take such action as, in its
judgment, will resolve the conflict, as long as such action is not
contrary to the terms of this Agreement.
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2.
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COMPENSATION AND BENEFITS
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2.1. Base Salary.
Employee’s base salary shall be $450,000.00 per annum and
shall be paid in semi-monthly installments in accordance with
Employer’s standard payroll practice. Employee’s base
salary may be increased from time to time by Employer and, after
any such increase, Employee’s new level of base salary shall
be Employee’s base salary for purposes of this Agreement
until the effective date of any subsequent change. At any time,
Employee’s base salary shall not be reduced other than
pursuant to a reduction that is applied to substantially all other
executive officers of Employer and that is no greater than the
percentage applied to substantially all other executive
officers.
2.2. Annual Incentive Compensation
Program. Employee’s bonus shall be determined by the
compensation committee of the Board (the “Compensation
Committee”) in its sole discretion in accordance with the
terms of Employer’s Annual Incentive Compensation Program.
Notwithstanding the foregoing, Employee shall receive, no later
than March 31 st of each calendar year, his Annual
Incentive Compensation Program outlining his potential bonus
calculations and performance criteria to achieve such discretionary
bonus for such calendar year. Any payments made pursuant to the
Annual Incentive Compensation Program shall be made on or before
March 15th of the year following the release of earnings for
the year in which the services giving rise to such bonus award were
performed.
2.3. Benefits and Vacation.
While employed by Employer, Employee shall be allowed to
participate, on the same basis generally as other executive level
employees of Employer, in all general and executive level employee
benefit plans and programs, including improvements or modifications
of the same, which on the Effective Date or thereafter are made
available by Employer to all or substantially all of
Employer’s employees. Such benefits, plans, and programs may
include, without limitation, medical, health, vision and dental
care, life insurance, disability protection, deferred compensation
and retirement plans. Employer will furnish Employee one
“demonstrator vehicle” of Employee’s choice, and
one vehicle allowance totaling $1,250.00 per month. Additional
perquisites must be approved by the Board and the Compensation
Committee. Nothing in this Agreement is to be construed or
interpreted to provide greater rights, participation, coverage, or
benefits under such benefit plans or programs than provided to
similarly situated employees pursuant to the terms and conditions
of such benefit plans and programs. In addition, Employer may
furnish to Employee benefit plans and programs that are not
generally available to other employees, including, without
limitation, Employer’s Deferred Compensation Plan, Executive
Long-Term Disability Plan, and executive life insurance
programs.
2.4. Business Expenses.
Employee shall be entitled to incur, and be reimbursed for, all
reasonable out-of-pocket business expenses incurred in the
performance of Employee’s duties on behalf of Employer.
Employer shall reimburse Employee for such expenses, in accordance
with Employer’s policies regarding reimbursement of expenses
(which policies will comply with Treasury Regulation §
1.409A-3(i)(1)(iv)), subject to the Employee presenting appropriate
supporting documents regarding such expenses as required by such
policies.
2.5. Benefit Obligations.
Employer shall not by reason of this Section 2 be obligated to
institute, maintain, or refrain from changing, amending, or
discontinuing, any incentive compensation or employee benefit
program or plan, so long as such actions are similarly applicable
to other covered employees generally. Moreover, unless specifically
provided for in a written plan document adopted by the Board or the
Compensation Committee, none of the benefits or arrangements
described in this Section 2 shall be secured or funded in any
way, and each shall instead constitute an unfunded and unsecured
promise to pay money in the future exclusively from the general
assets of Employer and its subsidiaries and affiliates.
2.6. Taxes. Employer may
withhold from any compensation, benefits, or amounts payable under
this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or
ruling.
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3.
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TERM OF THIS AGREEMENT, EFFECT OF
EXPIRATION OF TERM, AND TERMINATION PRIOR TO EXPIRATION OF TERM AND
EFFECTS OF SUCH TERMINATION
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3.1. Term. The initial term of
this Agreement shall be from January 1, 2009 through
December 31, 2010 (the “Initial Term”), unless
earlier terminated as provided for herein. Unless earlier
terminated as provided for herein, the Term shall be automatically
renewed for successive one-year periods (each defined as a
“Renewal Term”) unless either party notifies the other
party in writing, not less than sixty (60) days prior to
expiration of the Initial Term or Renewal Term, as applicable, of
that party’s intent to not renew this Agreement. The Initial
Term and any Renewal Term(s) are collectively referred to herein as
the “Term.”
3.2. Termination by Employer.
Notwithstanding any other provisions of this Agreement, Employer
shall have the right to terminate Employee’s employment under
this Agreement at any time, including during the Term, for any of
the following reasons:
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(i)
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For “cause,” which, as used in
this Section 3.2(i), shall mean any of the following;
(a) the Employee’s conviction or plea of nolo
contendere to a felony or a crime involving moral turpitude;
(b) the Employee’s breach of any material provision of
either this Agreement, the Employee Handbook, Employer’s Code
of Conduct, or the Code of Ethics for Specified Officers of
Employer signed by Employee; (c) the Employee’s using
for his own benefit any confidential or proprietary information of
Employer, or willfully divulging for his benefit such information;
(d) the Employee’s (1) fraud or
(2) misappropriation or theft of any of the Employer’s
funds or property; or (e) the Employee’s willful refusal
to perform his duties or gross negligence, provided that Employer,
before terminating Employee under subsection (b) or
(e) must first give written notice to Employee of the nature
of the alleged breach or refusal and must provide the Employee with
a minimum of fifteen (15) days to correct the problem and,
provided further, before terminating Employee for purported gross
negligence Employer must give written notice that explains the
alleged gross negligence in detail and must provide Employee with a
minimum of twenty (20) days to correct the problem, unless
correction is inherently impossible;
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(ii)
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For any other reason whatsoever, including
termination without cause, in the sole discretion of
Employer’s Board of Directors;
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(iii)
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Upon Employee’s death; or
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(iv)
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Upon Employee’s becoming incapacitated
by accident, sickness, or other circumstance which in the
reasonable opinion of a qualified doctor approved by the Board
renders him mentally or physically incapable of performing the
essential functions of Employee’s position, with or without
reasonable accommodation, and which will continue in the reasonable
opinion of such doctor for a period of not less than 180 days.
If the Employee disagrees with the determination, the Employee may
appoint a doctor of his own choosing and if that doctor reaches a
determination different than that of the first doctor, the two
doctors shall mutually select a third doctor within ten
(10) days and such third doctor’s determination shall be
deemed conclusive.
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The termination of Employee’s employment shall constitute
a “Termination for Cause” if made pursuant to
Section 3.2(i); the effect of such termination is specified in
Section 3.4.
The termination of Employee’s employment shall constitute
an “Involuntary Termination” if made pursuant to
Section 3.2(ii) or notice by Employer of its intent that this
Agreement not renew for a Renewal Term at any time; the effect of
such termination is specified in Section 3.5.
The effect of the employment relationship being terminated
pursuant to Section 3.2(iii) as a result of Employee’s
death is specified in Section 3.7.
The effect of the employment relationship being terminated
pursuant to Section 3.2(iv) as a result of the
Employee’s inability to perform the essential functions of
the position is specified in Section 3.8.
3.3. Termination by Employee.
Notwithstanding any other provisions of this Agreement, Employee
shall have the right to terminate the employment relationship under
this Agreement at any time for any of the following reasons:
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(i)
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A breach by Employer of any material provision
of this Agreement or the occurrence of a “Constructive
Termination Event,” which shall be defined as (a) the
failure by the Employer to pay the Employee’s compensation as
provided in this Agreement, (b) relocation without the
Employee’s prior written consent of the Employee’s
primary employment location to a location that is more than 50
miles from the location to which he was required to report on the
Effective Date, (c) a material diminution in the
Employee’s position, duties, responsibilities, reporting
status, or authority, without the Employee’s prior written
consent, or (d) if the Employee is requested to perform any
illegal activity or to sign-off on any inappropriate financial
statement or acknowledgement, except that before exercising his
right to terminate the employment relationship pursuant to any of
the provisions of this subsection (i), the Employee must first give
written notice to the Employer’s Board of Directors of the
circumstances purportedly giving rise to his right to so terminate
and must provide the Employer with a minimum thirty (30) days
to correct the problem, unless correction is inherently impossible;
provided, however, that in the event of a Corporate Change (as
defined below) in which Employer either ceases to exist and its
successor does not succeed to Employer’s obligations under
this Agreement by operation of law or Employer has sold or
otherwise disposed of substantially all its assets, if
Employer’s successor assumes in writing Employer’s
obligations under this Agreement effective as of the date of such
Corporate Change, Employee shall not be entitled to resign for the
reasons described in Section 3.3(i) or 3.3(ii) and receive the
compensation and benefits described in Section 3.5 without a
breach by such successor of this Agreement or a “Constructive
Termination Event” or “Compensation Reduction”
(as defined below) occurring upon or following such Corporate
Change.
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(ii)
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The involuntary reduction of Employee’s
base salary or incentive compensation targets (other than a
reduction in such targets applied consistently to the
Company’s other executive officers that is designed to
account for changes in relative EPS projections as a result of such
Corporate Change) within six (6) months after the occurrence
of any Corporate Change (defined below) (a “Compensation
Reduction”) that is not cured by Employer or its successor,
as applicable, within thirty (30) days of receiving detailed
written notice of such event from Employee. A “Corporate
Change” shall mean the first to occur of any of the following
events: (1) an acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (each, a “Person”) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of either: (i) the then
outstanding shares of common stock of Employer (the
“Outstanding Common Stock”) or (ii) the combined
voting power of the then outstanding voting securities of Employer
entitled to vote generally in the election of directors (the
“Outstanding Voting Securities”); excluding, however,
the following: (A) any acquisition directly from Employer
(including without limitation any public offering), other than an
acquisition by virtue of the exercise of a conversion privilege
unless the security being so converted was itself acquired directly
from Employer; (B) any acquisition by Employer; (C) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by Employer or any Person controlled by
Employer; or (D) any acquisition by any Person pursuant to a
transaction which complies with clauses (A), (B) and
(C) of subsection (1) of this definition of
“Corporate Change”); (2) the consummation of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of Employer
(a “Corporate Transaction”); excluding, however, such a
Corporate Transaction pursuant to which (i) all or substantially
all of the individuals and entities who are the beneficial owners,
respectively, of the Outstanding Common Stock and Out
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