SEVERANCE AGREEMENT BETWEEN CRAIG T. MONAGHAN & ASBURY AUTOMOTIVE GROUP, INC



 Exhibit 10.5 
 

 
  
  
  

Reference is made to that certain agreement entered into as of May 9, 2008 (the “Agreement”) between Asbury Automotive Group, Inc. and its
subsidiaries and affiliates (“Asbury” or the “Company”) and Craig Monaghan (“Executive”), a key employee of Asbury, which provides for an agreed-upon compensation in the event of a Termination (as
such term is defined in this Agreement) of Executive’s employment with Asbury. The parties hereto agree to amend and restate such Agreement as hereinafter provided, as of April 29, 2009. 
  

	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 in a lump sum within 30 days of Termination. 
 If Executive participates in a bonus
compensation plan at the date of Termination, the Company shall pay Executive a pro rata bonus for the year of the Termination equal to the amount of the bonus that Executive would have received if Executive’s employment not been terminated
during such year, multiplied by the percentage of such year that has expired through the date of Termination. Such bonus shall be paid at such time as bonuses are paid under the bonus compensation plan to the Company’s other employees whose
employment has not terminated in such year. 
 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. 
 Notwithstanding anything herein to the contrary, if Executive is determined to be a “specified employee” within the meaning of Section 409A of the Code (as defined in Section 7 below) and if one or more of the payments
or benefits to be received by Executive pursuant to this agreement would be considered deferred compensation subject to Section 409A of the Code, then no such payment shall be made or benefit provided until six (6) months following
Executive’s date of Termination. 








	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 6 of this agreement shall be replaced with “36 months.” For purposes of this Section, “Change of Control” shall have the meaning ascribed to such term in Asbury’s 2002
Equity Incentive 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 a termination of Executive’s employment with Asbury, which constitutes a “separation from
service” from the Company (within the meaning of Section 409A(a)(2)(A)(i) of the Code, and Treasury Regulation Section 1.409A-1(h)) (1) by Asbury without “cause” (as defined below), or (2) by Executive because of
(x) a material change in the geographic location at which Executive must perform Executive’s services (which shall in no event include a relocation of Executive’s current principal place of business to a location less than 50 miles
away), (y) a material diminution in Executive’s base compensation, or (z) a material diminution in Executive’s authority, duties, or responsibilities. For the avoidance of doubt, a “Termination” shall not include a
termination of Executive’s employment by Asbury for “cause” or due to Executive’s 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 or may be 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 payment to Executive as required under Sections 1 and 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 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, Group One, Penske Automotive Group inc. f/k/a 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 inure to the
benefit of and 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 (2) 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
		  	2905 Premiere Parkway, Suite 300
		  	Duluth, GA 30097
		  	
	 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 supersedes any and all agreements between Asbury and Executive relating to payments
upon termination of employment or severance pay, including but not limited to the Agreement 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 New York. 
 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. 
 The parties hereto acknowledge and agree that, to the extent applicable, this agreement shall be interpreted in accordance with, and incorporate the terms
and conditions required by, Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder. Notwithstanding any provision of this agreement to the contrary, in the event that the Company
determines that any amounts payable hereunder will be immediately taxable to Executive under Section 409A of the Code and related Department of Treasury guidance, the Company and Executive shall cooperate in good faith to (x) adopt such
amendments to this agreement and appropriate policies and procedures, including amendments and policies with retroactive effect, that they mutually determine to be necessary or appropriate to preserve the intended tax treatment of the benefits
provided by this agreement, to preserve the economic benefits of this agreement and to avoid less favorable accounting or tax consequences for the 








 
Company and/or (y) take such other actions as mutually determined to be necessary or appropriate to exempt the amounts payable hereunder from
Section 409A of the Code or to comply with the requirements of Section 409A of the Code and thereby avoid the application of penalty taxes thereunder. 
  
  
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 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 April 29, 2009 
  
  

			
	BY EXECUTIVE	  	BY ASBURY AUTOMOTIVE
		  	GROUP, INC.
		  	
	 /s/ Craig T. Monaghan
	  	 /s/ Philip Johnson

		
	Print Name:	  	Print Name and Title:
		  	
	 Craig T. Monaghan
	  	 Philip Johnson, Vice President of Human Resources