EXHIBIT 10.1
SEPARATION AGREEMENT AND GENERAL RELEASE
     This SEPARATION AGREEMENT AND GENERAL RELEASE (“Agreement”) is made and
entered into this 9th day of May, by and between Group 1 Automotive, Inc., a
Delaware corporation (together with its affiliates (defined below), “Group 1”)
and B.B. Hollingsworth, Jr. (“Hollingsworth”). Hollingsworth and Group 1 are
sometimes herein collectively referred to herein as the “Parties” and
individually, a “Party.” The “Effective Date” of this Agreement shall be on the
later of (i) the eighth (8th) day after this Agreement has been signed by
Hollingsworth and (ii) the date of the expiration of the revocation period
described in Section 24 of this Agreement.
WITNESSETH:
     WHEREAS, Hollingsworth is employed as president, chairman, and chief
executive officer of Group 1, and serves as a member of Group 1’s board of
directors; and
     WHEREAS, the Parties entered into an Employment Agreement dated March 1,
2002 (which was amended pursuant to that certain First Amendment to Employment
Agreement dated May 21, 2003`) (the “Employment Agreement,” as amended) pursuant
to which the Parties agreed to certain terms and conditions of Hollingsworth’s
employment by Group 1;
     WHEREAS, because of his employment and his service on the board of
directors of Group 1, Hollingsworth has obtained intimate and unique knowledge
of all aspects of Group 1’s business operations, current and future plans,
financial plans and other confidential and proprietary information;
     WHEREAS, Hollingsworth has acknowledged that disclosure of confidential and
proprietary information relating to Group 1 to any person or entity in the
automotive business, or use of such information by Hollingsworth for personal
gain, would (i) violate Hollingsworth’s fiduciary obligation to Group 1 and the
terms of Sections 5 and 6 of the Employment Agreement and (ii) cause significant
and irreparable harm to Group 1; and
     WHEREAS, the Parties desire to finally, fully and completely resolve all
disputes that may now exist or may hereafter arise relating to the hiring,
employment and termination of employment relationship between Hollingsworth and
Group 1, and any and all matters concerning or in any manner relating to the
Employment Agreement, and all benefits and compensation to which Hollingsworth
may be entitled in connection with his employment by or service on the board of
directors of Group 1;
     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, and for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree
as follows:
     1. Termination of Employment. Hollingsworth’s employment with Group 1 shall
be terminated as of the Effective Date. Hollingsworth resigns as of the
Effective Date from any

 

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and all positions as an officer, member of the board of directors or other
position of Group 1 and any and all of its subsidiaries. Except as otherwise
expressly provided in this Agreement, all benefits, stock options, restricted
stock rights, compensation, perquisites and other rights of Hollingsworth under
the Employment Agreement or otherwise with Group 1 shall cease as of the
Effective Date including that no further salary, bonus, benefits, payments,
stock or stock options shall be due from or paid by Group 1 to Hollingsworth.
However, the Parties agree that the provisions of the First Amended Employment
Agreement dated May 21, 2003, shall continue to apply through the end of the
Consulting Term, defined below, at which time the Amended Employment Agreement
shall terminate.
     2. Continuing Nondisclosure, Protection of Proprietary Information, and
Non-Competition Obligations. The Ownership and Protection of Information,
Copyrights, and Post-Employment Non-Competition obligations of Hollingsworth set
forth in Sections 5 and 6 of the Employment Agreement shall continue in full
force and effect for the periods set forth in the Employment Agreement.
     3. Return Of Property. Within five (5) days after the Effective Date,
Hollingsworth shall (i) deliver to Group 1 all equipment and property of Group 1
in his possession, including all files and programs stored electronically or
otherwise, that relate or refer to Group 1 or any officer, director or employee
of Group 1, and (ii) deliver to Group 1 all originals and copies of non-public
documents, notes, memoranda or any other written materials that relate or refer
to Group 1. Group 1 hereby transfers ownership to Hollingsworth of the cellular
telephone, computer, and Blackberry currently provided to Hollingsworth by Group
1.
     4. Salary Rights. Group 1 shall pay to Hollingsworth his current monthly
salary amount (minus required withholdings) pursuant to Group 1’s normal payroll
schedule until November 2, 2005, but not thereafter.
     5. Split-Dollar Life Insurance Rights. Group 1’s obligations with respect
to continuation of the Split-Dollar Life Insurance Policy on Hollingsworth’s
life shall continue through December 31, 2008.
     6. Office and Secretary Rights. Group 1 shall have no obligation to, and
shall not, provide Hollingsworth with an office, a secretary or an assistant
beyond the Effective Date. The Parties agree that Hollingsworth may hire his
former secretary.
     7. Medical Insurance and COBRA Rights. Hollingsworth’s existing medical
insurance coverage shall be continued by Group 1 through the Consulting Term,
defined below. When the Consulting Term ends, Hollingsworth and his dependents
shall have the right to elect continuation of applicable medical insurance
coverage pursuant to COBRA, at their own cost. Group 1 shall provide in writing
to Hollingsworth at his home address, information regarding COBRA election.
     8. Rights Under 401(k), ESPP and Deferred Compensation. Any vested interest
held by Hollingsworth in Group 1’s 401(k), Employee Stock Purchase and Deferred
Compensation Plans shall be distributed in accordance with the terms of the
applicable Plans (the

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“Plans”) and law. Hollingsworth shall not be a participant in the 401(k) or
Employee Stock Purchase Plans after the Effective Date, and shall not be
entitled to any further contribution for any period of time after the Effective
Date. Group 1 shall provide to Hollingsworth in writing at his address for
notice, information necessary and as required by law to facilitate the transfer
or rollover of his 401(k) account. During the Consulting Term, defined herein,
Hollingsworth shall be eligible to participate in the Deferred Compensation
Plan. However, he shall not be entitled to receive Employer Deferrals as defined
in the Deferred Compensation Plan, after the Effective Date.
     9. Annual Bonus Rights. Provided Hollingsworth fully cooperates with Group
1 during the transition and satisfactorily fulfills his obligations to Group 1
during the Consulting Term as described in section 13 of this Agreement, and
subject to the discretion of the board of directors of Group 1, Group 1 may pay
Hollingsworth one-third of the annual bonus he would have received under Group
1’s 2005 Bonus Plan, up to a maximum of $380,000 (minus required withholdings),
payable in February 2006 pursuant to Group 1’s normal schedule. The Board of
Directors of Group 1 shall notify Hollingsworth in writing by February 28 of the
amount of his bonus, if any.
     10. Vehicle Rights. Hollingsworth shall be entitled to use the demonstrator
vehicles currently provided to him by Group 1 until the end of the Consulting
Term (defined below). During the Consulting Term, insurance coverage currently
provided by Group 1 in connection with use of demonstrator vehicles by
executives of the Group 1 shall continue to apply to the demonstrator vehicles
used by Hollingsworth. Upon expiration of the Consulting Term, Hollingsworth
shall immediately return all such demonstrator vehicles to Group 1.
     11. Restricted Stock and Stock Option Rights. On March 14, 2006, 12,500
shares of the 50,000 shares of restricted stock (or restricted stock units)
Group 1 granted to Hollingsworth in March 2005 shall become fully vested. The
remaining 37,500 shares of restricted stock shall forfeit to the Company in
accordance with the Restricted Stock Agreement. All stock options previously
granted to Hollingsworth under Incentive Stock Option Agreements have vested and
are exercisable in accordance with the terms of the applicable Incentive Stock
Option Agreements.
     12. Survivor Rights. Upon Hollingsworth’s death, this Agreement shall
operate in favor of his estate (“Estate”); provided, however, in the event of
Hollingsworth’s death, Group 1 shall have the option to accelerate all remaining
sums owed to Hollingsworth pursuant to this Agreement and pay such amount,
discounted to present value, in a lump sum to Hollingsworth’s Estate.
     13. Consulting. Group 1 shall retain Hollingsworth as an independent
consultant to Group 1 from the Effective Date through March 31, 2006 (the
“Consulting Term”). Hollingsworth shall be available during normal business
hours to provide consulting services to the chief executive officer and board of
directors of Group 1, as they deem necessary or appropriate. Such services shall
include assisting Group 1 in the transition of the new chief executive officer
and testifying (and preparing to testify) as a witness in any proceeding or
otherwise providing information or reasonable assistance to Group 1 in
connection with any

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claim or suit. Hollingsworth shall cooperate with Group 1 regarding any pending
or subsequently-filed litigation, claims or other disputed items involving Group
1 that relate to maters within the knowledge or responsibility of Hollingsworth
during his employment. Hollingsworth shall (i) meet with Group 1’s
representatives, its counsel or other designees at mutually convenient times and
places with respect to any items within the scope of this provision;
(ii) provide truthful testimony regarding same to any court, agency or other
adjudicatory body; and (iii) provide Group 1 with notice of contact by any
adverse party (known by Hollingsworth to be adverse to Group 1 or its
interests), and shall not voluntarily assist any such non-governmental adverse
party or such adverse party’s representatives. For his consulting services,
Group 1 shall pay to Hollingsworth a total of $100,000 (minus required
withholdings) over the Consulting Term, to be paid in five equal monthly
installments (each being payable on the last day of each calendar month) of
$20,000 (minus required withholdings), beginning November 30, 2005 and ending on
March 31, 2006. Such payments are expressly conditioned on Hollingsworth’s
compliance with all terms of this Agreement and the Ownership and Protection of
Information and Post-Employment Non-Competition obligations in Sections 5 and 6
of the Employment Agreement.
     14. Release By Hollingsworth. Hollingsworth hereby releases Group 1 and its
employees, officers, agents, directors, stockholders and affiliates
(collectively referred to as “Releasees”), from any and all claims, causes of
action, losses, obligations, liabilities, damages, judgments, costs, expenses
(including attorneys fees) of any kind whatsoever, through the Effective Date,
including, but not limited to, disputes or claims arising out of Hollingsworth’s
Employment Agreement, hiring, employment or termination of such employment with
Group 1, including any disputes regarding compensation, bonus, stock, or
options. This Release includes, but is not limited to, all claims, whether
arising in contract or allegations of tort, common law or assertion of federal
or state statutory rights, including, but not limited to, Title VII of the Civil
Rights Act of 1964, as amended, the Texas Commission on Human Rights Act, the
Americans with Disabilities Act, or the Age Discrimination in Employment Act,
encompassing claims of age discrimination, claims for wrongful discharge, breach
of express or implied contract or implied covenant of good faith and fair
dealing, as well as any expenses, costs or attorneys fees. Hollingsworth does
not release his right to enforce the terms of this Agreement. Furthermore,
Hollingsworth hereby relinquishes any right to re-employment with Group 1. For
purposes of this Agreement the term “Affiliate” means a party, person or entity
that, directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such party, where “control”,
“controlled by” and “under common control with” means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such party, whether through the ownership of voting securities,
by voting trust, contract or similar arrangement, as trustee or executor, or
otherwise.
     15. Release By Group 1. Group 1 hereby releases Hollingsworth from any and
all claims, causes of action, losses, obligations, liabilities, damages,
judgments, costs, expenses (including attorneys’ fees) which arise out of
actions taken by Hollingsworth while serving Group 1 and acting in good faith,
and which he had no reasonable cause to believe the conduct was unlawful or
illegal, including, but not limited to, claims under federal, state or local
constitution, statute, law, ordinance or regulation provided, however, Group 1
does not release its right to enforce the terms of this Agreement.

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     16. Non-Disparagement. Hollingsworth shall not make any public disparaging
or critical statements regarding the Releasees and Group 1 shall cause its
members of the board of directors and new Chief Executive Officer not to make
any public disparaging or critical statements regarding Hollingsworth.
     17. Breach By Hollingsworth. In the event Hollingsworth breaches any term
or provision of this Agreement, all amounts which otherwise would be payable by
Group 1 to Hollingsworth under this Agreement shall cease and Group 1 shall be
excused and have no further obligation for payment of any further amounts to
Hollingsworth. Provided, however, that notwithstanding such cessation of Group 1
obligations, Hollingsworth’s obligations pursuant to the Ownership and
Protection of Information and Post-Employment Non-Competition provisions of the
Employment Agreement shall continue in full force and effect as specified in
this Agreement. In addition to the remedies referenced above, Group 1 may bring
suit in a court of competent jurisdiction to enforce any term or provision of
this Agreement, and in the event said court determines that Hollingsworth has
breached or failed to perform any material term or provision of this Agreement,
damages and injunctive relief may be issued against Hollingsworth.
     18. Recovery Of Attorneys Fees. If Group 1 seeks and obtains judicial or
equitable relief for any violation of this Agreement by Hollingsworth, Group 1
shall be entitled to recover from Hollingsworth its costs and reasonable
attorneys’ fees expended in such effort. If Hollingsworth seeks and obtains
judicial or equitable relief for any violation of this Agreement by Group 1, he
shall be entitled to recover from Group 1 his costs and reasonable attorneys’
fees expended in such efforts.
     19. Right Of Cancellation. If Hollingsworth or anyone acting on his behalf
brings suit or files a claim for arbitration against Group 1 for any claims
released in Section 14 of this Agreement, except any action to enforce this
Agreement, Group 1 may choose to cancel all of the remaining terms of this
Agreement and recover from Hollingsworth (or Hollingsworth’s successors or
assigns) the value of anything else paid by Group 1 in exchange for this
Agreement, including any profit realized by Hollingsworth pursuant to the
exercise of any option, as described in section 11 of this Agreement. If the
Agreement is not canceled by Group 1, then the terms of this Agreement shall
continue in full force and effect.
     20. Notices. All notices and other communications hereunder will be in
writing. Any notice or other communication hereunder shall be deemed duly given
if it is sent by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth:
     If to Hollingsworth:
Mr. B.B. Hollingsworth, Jr.
3416 Ella Lee Lane
Houston, Texas 77027
     If to Group 1:
General Counsel
Group 1 Automotive, Inc.
950 Echo Lane, Suite 100
Houston, Texas 77024

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Any party may send any notice or other communication hereunder to the intended
recipient at the address set forth above using any other means (including
personal delivery, expedited courier, messenger services, telecopy, telex,
ordinary mail or electronic mail), but no such notice or other communication
shall be deemed to have been duly given unless and until it is actually received
by the intended recipient. Any party may change the address to which notices and
other communications hereunder are to be delivered by giving the other party
notice in the manner set forth herein.
     21. Joint Preparation. The Parties acknowledge that this Agreement has been
drafted, prepared, negotiated and agreed to jointly, with advice of each Party’s
respective legal counsel, and to the extent that any ambiguity should appear,
now, or at any time in the future, latent or apparent, such ambiguity shall not
be resolved or construed against either Party.
     22. Non-Admission. This Agreement shall not in any way be construed as an
admission by either Party of any acts of wrongdoing, violation of any statute,
law or legal or contractual right. Group 1 and Hollingsworth acknowledge that
each has willingly to entered into this Agreement described herein.
     23. Review By Counsel. Hollingsworth and Group 1 acknowledge that they have
thoroughly discussed all aspects of this Agreement and the effect of same with
their respective legal counsel, that they have had a reasonable time to review
the Agreement, that they fully understand all the provisions of the Agreement
and are voluntarily entering into this Agreement. The parties further represent
that they have not transferred or assigned to any person or entity any claim
involving the other party or any portion thereof or interest therein.
     24. Period Of Consideration And Revocation. Hollingsworth acknowledges that
he has been given a period of 21 days from April 9, 2005, to review and consider
this Agreement before executing it. He has the right to use as much or as little
of the 21-day period as he wishes before executing this Agreement. Hollingsworth
may revoke this Agreement within 7 days after signing it, in which case this
Agreement and the obligations herein, are null and void. Revocation is only
effective if Hollingsworth delivers a written notice of revocation to Group 1,
c/o Jeff Cameron, 950 Echo Lane, Suite 100, Houston, Texas 77024, within 7 days
after executing the Agreement. Hollingsworth understands that Group 1’s
obligations under this Agreement do not become effective until after the 7 day
revocation period has expired.
     25. Execution In Multiple Counterparts. This Agreement may be executed in
multiple counterparts, whether or not all signatories appear on these
counterparts, and each counterpart shall be deemed an original for all purposes.
This Agreement shall be deemed performable by all Parties in Harris County,
Texas and the construction and enforcement of this Agreement shall be governed
by Texas law without regard to its conflicts of law rules.
*     *     *     *     *

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     I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THE FOREGOING AGREEMENT, THAT I
UNDERSTAND ALL OF ITS TERMS, AND THAT I AM ENTERING INTO IT VOLUNTARILY.
     IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed as of the day and year first above written.

                        B.B. Hollingsworth, Jr.              GROUP 1 AUTOMOTIVE,
INC.
      By:         Name:         Title:      

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