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Management And Consulting Agreement

This is an actual contract by Asbury Automotive Group.
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Sectors: Specialty Retail
Governing Law: Delaware, View Delaware State Laws
Effective Date: February 23, 1999
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EXHIBIT 10.7


MANAGEMENT AND CONSULTING AGREEMENT


MANAGEMENT AND CONSULTING AGREEMENT, dated as of February 23, 1999 (this "Agreement"), among ASBURY AUTOMOTIVE ARKANSAS L.L.C., a Delaware limited liability company (the "Company"), McLARTY COMPANIES, INC., an Arkansas corporation (the "Consulting Firm"), ASBURY AUTOMOTIVE GROUP L.L.C., a Delaware limited liability company ("Asbury Group") and Thomas F. McLarty, III ("Consultant").


W I T N E S S E T H :
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WHEREAS, the Company owns and operates certain retail motor vehicle dealerships located in the State of Arkansas (the "Business");


WHEREAS, the Company desires to retain the management and consulting services of Consultant, and Consultant desires to provide such services, in each case on the terms and conditions set forth in this Agreement;


WHEREAS, Asbury Group desires to retain the consulting services of Consultant, and Consultant desires to provide such services, in each case on the terms and conditions set forth in this Agreement; and


WHEREAS, the Consultant, as an employee of the Consulting Firm, desires to provide its services as aforesaid as an employee of the Consulting Firm, and the Consulting Firm desires to provide to the Company and Asbury Group the services of the Consultant;


NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements contained herein and for other good and valuable consideration, the parties hereto hereby agree as follows:


1. Agreements to Retain. (a) Upon the terms and subject to the conditions of this Agreement, the Company hereby retains the Consulting Firm for the purpose of causing Consultant to provide management and consulting services to the Company, and Consultant and the Consulting Firm hereby each accepts the terms of retainer herein by the Company.


(b) Upon the terms and subject to the conditions of this Agreement, Asbury Group hereby retains the Consulting Firm for the purpose of causing Consultant to provide consulting services to Asbury Group, and Consultant and the Consulting Firm each hereby accepts the terms of retainer herein by Asbury Group.


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2. Term; Services to be Provided. (a) Term of Agreement. The term of this Agreement shall commence on the date of this Agreement (the "Effective Date"), and shall remain in effect for an initial term expiring on the third anniversary of the Effective Date (the "Initial Term"); provided, that this Agreement may be sooner terminated with respect to the consulting and management arrangements among the Company, the Consulting Firm and Consultant (the "Company Arrangements"), or with respect to the consulting arrangements among Asbury Group, the Consulting Firm and Consultant (the "Asbury Arrangements") (or both), pursuant, in each case, to the applicable provisions of Section 6 hereof. After the Initial Term, this Agreement may be renewed for additional one-year terms (each, an "Extended Term") upon the mutual written consent, in the case of the Company Arrangements, of the Company, the Consulting Firm and Consultant, and in the case of the Asbury Arrangements, of Asbury Group, the Consulting Firm and Consultant. The period of time between the Effective Date and the termination of this Agreement pursuant to its terms is herein referred to, with respect to the Company Arrangements, as the "Company Term," and with respect to the Asbury Arrangements, as the "Asbury Term."


(b) Services to be Provided. (i) During the Company Term, the Consulting Firm will cause the Consultant to provide, and Consultant agrees to provide, to the Company, and, at the Company's request, to any direct or indirect subsidiary of the Company, consulting and management services equivalent to those services that would be provided by a chief executive officer of a corporation under the Delaware General Corporation Law (including, without limitation, those services described in Sections 3.3(b) and 3.4(d) of the First Amended and Restated Limited Liability Company (the "LLC Agreement"), dated as of the date hereof), and in addition, such other services as may be determined from time to time by or under the authority of the Board of Directors of the Company (the "Company Board"). All such services will be referred to as the "Company Services." The Consulting Firm will cause Consultant, and Consultant agrees, to devote his skill, knowledge and working time sufficient to conscientiously perform the Company Services to his best ability, subject to the arrangements described in the following sentence. The Company acknowledges that Consultant is engaged in various business and other interests that require his time, effort and attention and that Consultant will continue to participate in these interests and others which require his time, effort and attention.


(ii) During the Asbury Term, the Consulting Firm will cause the Consultant to provide, and Consultant agrees to provide, to Asbury Group, consulting services as may be determined from time to time by or under the authority of the Board of Directors of Asbury Group (the "Asbury Board"), which shall include, without limitation, acting as an ongoing intermediary between Asbury Group and automobile manufacturers. All such services will be referred to as the "Asbury Services". The Consulting Firm will cause Consultant, and Consultant agrees, to devote his skill, knowledge and working time


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sufficient to conscientiously perform the Asbury Services to his best ability, subject to the arrangements described in the last sentence of Section 2(b)(i), provided that in the event there is a conflict between the Asbury Services and the Company Services, the Company Services shall take precedence.


(iii) Each of the Consulting Firm and Consultant hereby represents that this Agreement and compliance by Consultant with the terms and conditions of this Agreement will not conflict with or result in the breach of any agreement to which either Consultant or the Consulting Firm is a party or by which he or it may be bound.


(iv) Authority of Consultant. Each of the relationships of each of the Consulting Firm and Consultant to the Company and Asbury Group (and to their respective affiliates) is that of an independent contractor, and nothing contained in this Agreement shall be construed as creating a joint venture, partnership or employment arrangement. The Consulting Firm will cause Consultant, and Consultant agrees, to discharge all obligations under federal, state, local or foreign law, regulation or order now or hereafter in force arising out of its or his provision of services hereunder. Consultant (but not the Consulting Firm) shall have the power and authority to enter into contracts in the name of, and on behalf of, the Company or any of its subsidiaries as if he were an authorized officer of the Company. Neither the Consulting Firm nor Consultant shall have the power or authority to enter into contracts in the name of, or on behalf of, Asbury Group or any of its affiliates, except as may be expressly stated in a written delegation of such power or authority from Asbury Group.


3. Consulting Fees. (a) In consideration for all Company Services to be rendered by Consultant to the Company, the Company shall pay to the Consulting Firm during the Company Term the fees provided in this Section 3(a).


(i) Cash Compensation. The Company shall pay the Consulting Firm an
annual consulting fee of $125,000 ("Company Consulting Fee"), payable in
arrears in equal monthly installments.


(ii) Incentive Compensation. The Company shall pay the Consulting
Firm an additional annual consulting fee, based on the performance of
Consultant for any calendar year, in an amount that the Company Board
shall in its sole discretion determine has been earned by Consultant on
behalf of the Consulting Firm during such year. In addition, Consultant
shall be entitled to participate in any stock option or similar program
of the Company, if adopted, provided that applicable law would permit the
participation of Consultant in such stock option or similar program.


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(b) In consideration for all Asbury Services to be rendered by Consultant to Asbury Group, Asbury Group shall pay to the Consulting Firm during the Asbury Term an annual fee of $50,000 ("Asbury Fee"), payable in arrears in equal monthly installments.


4. Benefits. During the Company Term and the Asbury Term, Consultant, as an independent contractor, will not be permitted to participate in any of the life insurance, medical insurance, disability insurance and other benefits that may be provided to employees of the Company or Asbury Group from time to time.


5. Expenses. (a) The Company shall reimburse the Consulting Firm for reasonable travel, lodging and meal expenses incurred by Consultant in connection with his performance of the Company Services upon submission of evidence, satisfactory to the Company Board, of the incurrence and purpose of each such expense.


(b) Asbury Group shall reimburse the Consulting Firm for reasonable travel, lodging and meal expenses incurred by Consultant in connection with his performance of the Asbury Services upon submission of evidence, satisfactory to the Asbury Board, of the incurrence and purpose of each such expense.


6. Termination of Agreement. (a) Termination Due to Death or Disability. Consultant's provision of Company Services and Asbury Services shall automatically terminate upon his death or Disability. For purposes of this Agreement, "Disability" shall mean a physical or mental disability or infirmity that prevents the performance by Consultant of his duties hereunder lasting (or likely to last, based on competent medical evidence presented to the Company Board and the Asbury Board) for a continuous period of six months or longer. The reasoned and good faith judgment of the Company Board as to Disability shall be final and shall be based on such competent medical evidence as shall be presented to it by Consultant or by any physician or group of physicians or other competent medical experts employed by Consultant or the Company to advise the Company Board.


(b) Termination for Cause. (i) Consultant's provision of Company Services may be terminated for "Cause" by the Company Board.


(ii) Consultants provision of Asbury Services may be terminated for "Cause" by the Asbury Board.


(iii) "Cause", with respect to the termination of the Company Services or the Asbury Services, shall mean (A) the willful failure by Consultant to substantially perform his duties with respect to the Company or Asbury Group, as the case may be, and continuance of such failure for more than 20 days after the Company or Asbury Group, as


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applicable, notifies Consultant and the Consulting Firm in writing that Consultant is failing to substantially perform his duties, which writing shall specify in reasonable detail sufficient to inform Consultant and the Consulting Firm of the duties that Consultant is alleged to have failed to substantially perform and the actions required to cure such failure, (B) Consultant's engaging in serious misconduct (including, without limitation, any criminal, fraudulent or dishonest conduct) that is injurious to the Company or Asbury Group, as applicable, or any of their respective affiliates or subsidiaries, (C) Consultant's conviction of, or entering a plea of nolo contendere to, any crime that constitutes a felony or involves moral turpitude, or (D) the breach by Consultant of any written covenant or agreement with the Company or Asbury Group, as applicable, or any of their respective affiliates not to disclose any information pertaining to the Company or Asbury Group, as applicable, or any of their respective affiliates or not to compete or interfere with the Company or Asbury Group, as applicable, or any of their respective affiliates, including without limitation the covenants set forth in Sections 7, 8, 9 and 10 hereof.


(c) Termination Without Cause. (i) Consultant's provision of Company Services may be terminated "Without Cause" by the Company Board.


(ii) Consultant's provision of Asbury Services may be terminated "Without Cause" by the Asbury Board.


(iii) A termination "Without Cause" shall mean, with respect to the termination of the Company Services of the Asbury Services, a termination of Company Services or Asbury Services by the Company Board or the Asbury Board, as applicable, other than due to death or Disability as described in Section 6(a) or Cause as defined in Section 6(b).


(d) Termination by Consultant. (i) Consultant may terminate his provision of Company Services for "Good Reason".


(ii) Consultant may terminate his provision of Asbury Services for "Good Reason".


(iii) "Good Reason" shall mean, with respect to the termination of the Company Services or the Asbury Services, a termination by Consultant of his provision of Company Services or Asbury Services, as applicable, within 30 days following (A) any material diminution by the Company Board or the Asbury Board, as applicable, in Consultant's duties, except in connection with termination of Consultant's provision of services for Cause as provided in Section 6(b) or death or Disability as provided in Section 6(a), (B) any requirement by the Company Board or the Asbury Board, as applicable, that Consultant be based outside of the State of Arkansas or (C) the failure of the Company or Asbury Group, as applicable, timely to pay Consultant's or the


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Consulting Firm's fees or benefits, provided that (x) Consultant shall have given the Company or Asbury Group, as applicable, written notice of the circumstances constituting Good Reason and the Company or Asbury Group, as applicable, shall have failed to cure such circumstances within 20 days, and (y)
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