Document:

exv10w4

 

Exhibit 10.4

Employee’s Copy   

Partnership’s
Copy

CAPITAL AUTOMOTIVE L.P.

EMPLOYMENT AGREEMENT

To David S. Kay:

     This Agreement establishes the terms of your employment with Capital
Automotive L.P., a Delaware limited partnership (the “Partnership”). It
replaces your prior employment agreement with Capital Automotive REIT, a
Maryland real estate investment trust (the “Company”), under which the Company assigned your agreement to the Partnership, and your prior employment agreement
with the Partnership. You remain an employee of the Company, but your primary
responsibility is as an employee of the Partnership.

	 	 	 
	Employment and Duties	 	
You and the Partnership agree to your
employment with the Partnership and to
your services as Senior Vice President
and Chief Financial Officer on the terms
contained herein. In such position, you
will report directly to the Company’s Chief Executive Officer (the “CEO”) and
to the General Partner of the
Partnership. You agree to perform
whatever duties the Partnership may
assign you from time to time, consistent
with your position as a senior executive.
During your employment, you agree to
devote your full business time,
attention, and energies to performing

those duties (except as the Partnership otherwise agrees from time to time). You
agree to faithfully serve the
Partnership, to conform to and comply
with the lawful and good faith directions
and instructions given you by the
Partnership, and to use your best efforts
to promote and serve the interests of the
Partnership. You agree to comply with
the non-competition, secrecy, and other
provisions of Exhibit A to this
Agreement.
	 	 	 
	Term	 	
Your employment under this Agreement
begins as of August 1, 2003 (the
“Effective Date”) and ends on January 1,
2007, unless it is terminated sooner
under this Agreement.
	 	 	 
	 	 	
The period running from the Effective
Date to the date that the Agreement
terminates as set forth in the preceding
sentence is the “Term.”
	 	 	 
	 	 	
Termination or expiration of this
Agreement ends your employment but does
not end your obligation to comply with
Exhibit A.
	 	 	 
	Compensation	 	 
	 	 	 
	          Salary and Bonus	 	
The Partnership (or, in its discretion,
the Company) will pay you an annual
salary (the “Salary”) for 2003 at the
rate of not less than $208,000 in
accordance with its payroll practices.
Your target bonus for calendar year 2003
will be $175,000. Each calendar year
thereafter while you are employed under
this Agreement, the Partnership or its
Compensation Committee will review your
Salary and target bonus and consider you
for increases from the Partnership.
	 	 	 
	          Employee Benefits	 	
While you are employed under this
Agreement, the Partnership will provide
you with the same benefits, including
medical insurance coverage, as the
Partnership makes generally available
from time to time to the Partnership’s employees, as those benefits are amended
or terminated from time to time, and such
other benefits as are commensurate with
your position as a senior executive of a
public company, including either a
company automobile or an allowance for an
automobile. Your participation in the
Partnership’s benefit plans will be
subject to the terms of the applicable
plan documents and the Partnership’s generally applied

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policies, and the
Partnership in its sole discretion may
from time to time adopt, modify,
interpret, or discontinue such plans or
policies.
	 	 	 
	Place of Employment	 	
Your principal place of employment will
be at the Partnership’s headquarters in
the Washington metropolitan area (or such
other offices as the Partnership may
establish from time to time and to which
it assigns you in its sole discretion).
You understand and agree that you must
travel from time to time for business
reasons.
	 	 	 
	Indemnification	 	
The Partnership will indemnify you to the
fullest extent authorized by law if you
are made a party to any action, suit, or
proceeding, whether criminal, civil,
administrative, or investigative, because
you are or were a manager, officer, or
employee of the Partnership or serve or
served any other entity as a director,
officer, or employee at the Partnership’s request; provided, however, that you must
repay the Partnership for any
indemnification if the final
determination of an arbitrator or a court
of competent jurisdiction declares, after
the expiration of the time within which
judicial review (if permitted) of such
determination may be perfected, that
indemnification by the Partnership is not
permissible under applicable law.
	 	 	 
	Expenses	 	
The Partnership will reimburse you for
reasonable and necessary travel and other
business-related expenses you incur for
the Partnership in performing your duties
under this Agreement. You must itemize
and substantiate all requests for
reimbursements. You must submit requests
for reimbursement in accordance with the
policies and practices of the Partnership and within 60 days after incurring the
expense.
	 	 	 
	No Other Employment 	 	
For so long as you are employed by the
Partnership, you agree that you will not,
directly or indirectly, provide services
to any person or organization for which
you receive compensation or otherwise
engage in activities that would conflict
or interfere significantly with the
faithful performance of your duties to
the Partnership without the Partnership’s prior written consent. (This prohibition
excludes any work performed at the
Partnership’s direction including any
work for the Company.) The Partnership acknowledges that, as of the Effective
Date, you serve as an Executive Advisory
Board member of the School of Accounting
at James Madison University. You may
manage your personal investments, as long
as the management takes only minimal
amounts of time and is consistent with
the provisions of the No Competition
Section in Exhibit A and is otherwise
consistent with the policies and
practices of the Partnership.
	 	 	 
	 	 	
You represent to the Partnership that you
are not subject to any agreement,
commitment, or policy of any third party
that would prevent you from entering into
or performing your duties under this
Agreement, and you agree that you will
not enter into any agreement or
commitment or agree to any policy that
would prevent or hinder your performance
of duties and obligations under this
Agreement, including Exhibit A.

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	No Conflicts of Interest	 	
You confirm that you have fully disclosed to the Partnership and
the Company, to the best of your knowledge, all circumstances
under which you, your spouse, and your relatives (including
their spouses, children, and relatives) have or may have a
conflict of interest with the Company or the Partnership. You
further agree to fully disclose to the Partnership any such
circumstances that might arise during the Term. You agree to
fully comply with the Partnership’s policy and practices
relating to conflicts of interest.
	 	 	 
	No Payments to
Governmental Officials

Termination	 	
You will neither pay nor permit payment of any remuneration to
or on behalf of any governmental official other than payments
required or permitted by applicable law.

Subject to the provisions of this section, the Partnership may
terminate your employment, or you may resign, except that, if
you voluntarily resign, you must provide the Partnership with 90
days’ prior written notice (unless the Partnership has
previously waived such notice in writing or authorized a shorter
notice period).
	 	 	 
	          For Cause	 	
The Partnership may terminate your employment for “Cause” if you:

	 	 	 
	 	 	
(i) engage in dishonesty that relates materially to the
performance of services or any obligations under this Agreement,
including Exhibit A;
	 	 	 
	 	 	
(ii) are convicted of, or plead guilty or no contest to, any
misdemeanor (other than for minor infractions) involving fraud,
breach of trust, misappropriation, or other similar activity or
any felony;
	 	 	 
	 	 	
(iii) perform your duties under this Agreement in a grossly
negligent manner; or
	 	 	 
	 	 	
(iv) willfully breach this Agreement, including Exhibit A, in a
manner materially injurious to the Partnership. An act or
omission is only “willful” if you acted in bad faith or without
any reasonable belief that the action or omission was in the
interests of the Partnership and consistent with your duties and
obligations under this Agreement.

	 	 	 
	 	 	
Your termination for Cause under (i) and (ii) will be effective
immediately upon the Partnership’s mailing or transmission of
such notice. Before terminating your employment for Cause under
(iii) or (iv), the Partnership will specify in writing to you
the nature of the act, omission, refusal, or failure that it
deems to constitute Cause. The Partnership will give you the
opportunity to correct the situation (and thus avoid termination
for Cause under (iii) or (iv)). You must complete the
correction within a reasonable period of time after the written
notice to you, and the Partnership agrees to provide you no less
than 15 days for such correction.

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	          Without Cause	 	
Subject to the provisions below
under Payments on Termination,
the Partnership may terminate
your employment under this
Agreement before the end of the
Term without Cause
	 	 	 
	          Good Reason	 	
You may resign for Good Reason with 45 days’ advance written
notice as provided below. “Good
Reason” means the occurrence,
without your written consent, of
any of the following
circumstances:
	 	 	 
	 	 	
the Partnership’s failure to
perform or observe any of the
material terms or provisions of
this Agreement,

	 	 	 
	 	 	
the assignment to you of any
duties inconsistent with, or any
substantial diminution in, your
employment status or
responsibilities as in effect on
the date of this Agreement,

	 	 	 
	 	 	
the Partnership’s relocation of
its headquarters to a location
that would increase your
commuting distance by more than
50 miles, based on your
residence when this Agreement is
executed, or

	 	 	 
	 	 	
a Change of Control, consisting
of any one or more of the
following events:

	 	 	 
	 	 	
a person, entity, or group
(other than the Company, the
Partnership, any subsidiary of
either, any Company Group benefit plan, or any underwriter
temporarily holding securities
for an offering of such
securities) acquires ownership
of more than 40% of the
undiluted total voting power of
the Company’s then-outstanding
securities eligible to vote to
elect members of the Board (“Company Voting Securities”);
	 	 	 
	 	 	
consummation of a merger or
consolidation of the Company into any other entity—unless the
holders of the Company Voting
Securities outstanding
immediately before such
consummation, together with any
trustee or other fiduciary
holding securities under a
Company Group benefit plan, hold
securities that represent
immediately after such merger or
consolidation more than 60% of
the combined voting power of the
then outstanding voting
securities of either the Company or the other surviving entity or
its parent; or
	 	 	 
	 	 	
the stockholders of the Company approve (i) a plan of complete
liquidation or dissolution of
the Company or (ii) an agreement
for the Company’s sale or
disposition of all or
substantially all the Company’s assets, and such liquidation,
dissolution, sale, or
disposition is consummated.

	 	 	 
	 	 	
Even if other tests are met, a
Change of Control has not
occurred under any circumstance
in which the Company files for
bankruptcy protection or is
reorganized following a
bankruptcy filing.
	 	 	 
	 	 	
You must give notice to the
Partnership of your intention to
resign for Good Reason within 30
days after the occurrence of the
condition or event (within 24
months if the condition or event
is a Change of Control) that you
assert entitles you to resign
for Good Reason. In that
notice, you

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must specify the
condition or event that you
consider provides you with Good
Reason and (except if the
condition or event is a Change
of Control) must give the
Partnership an opportunity to
cure the condition or event
within 30 days after your
notice. If the Partnership
fails to cure the condition,
your resignation will be
effective on the 45th day after
your notice (unless the Board
has previously waived such
notice period in writing or
agreed to a shorter notice
period).
	 	 	 
	 	 	
You will not be treated as
resigning for Good Reason if the
Partnership had Cause to
terminate your employment as of
the date of your notice of
resignation.
	 	 	 
	          Disability	 	
If you become “disabled” (as
defined below), the Partnership
may terminate your employment.
If the Partnership terminates
your employment because you
become disabled or employment
terminates because of your
death, any unvested restricted
shares and any phantom shares
previously granted to you shall
become Pro Rata Vested (as
defined below). You are
“disabled” if you are unable,
despite whatever reasonable
accommodations the law requires,
to render services to the
Partnership for more than 90
consecutive days because of
physical or mental disability,
incapacity, or illness. You are
also disabled if you are deemed
to be disabled within the
meaning of the Partnership’s
long-term disability policy as
then in effect.
	 	 	 
	          Death	 	
If you die during the Term, the
Term will end as of the date of
your death.
	 	 	 
	          Payments on Termination	 	
If the Partnership terminates
your employment for or without
Cause or because of disability
or death or you resign, the
Partnership will pay you any
unpaid portion of your Salary
pro-rated through the date of
actual termination and any
annual bonuses already
determined by such date but not
yet paid, reimburse any
substantiated but unreimbursed
business expenses, pay any
accrued and unused vacation time
(to the extent consistent with
the Partnership’s policies), and
provide such other benefits as
applicable laws or the terms of
the benefits require. Except to
the extent the law requires
otherwise or as provided in the
Vesting and Other Benefits
section below or in your option
agreement, restricted share
agreement or phantom share
agreement(s), neither you nor
your beneficiary or estate will
have any rights or claims under
this Agreement or otherwise to
receive severance or any other
compensation, or to participate
in any other plan, arrangement,
or benefit, after such
termination.
	 	 	 
	          Vesting and Other
Benefits on
          Termination
or Change of Control	 	
In addition to the foregoing
payments, if a Change of Control
occurs, the Partnership
terminates your employment
without Cause, or you resign for
Good Reason before the end of
the Term:
	 	 	 

	 	I.	 	all of the stock options and
restricted shares held by you
before your termination of
employment or the Change of
Control (whichever is
applicable) will become fully
vested; and
	 
	 	II.	 	all of the phantom shares
credited to you before your
termination of employment or the
Change of Control (whichever is
applicable) shall be deemed to
have been credited for three (3)
years for purposes of Section
6.3 of the Capital Automotive
Group Phantom Share Purchase
Program; and

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III.
	 	(a)
	 	in the case of
termination without Cause or
resignation for Good Reason, and
provided that you have not
previously received any benefit
under the following paragraph
III(b), the Partnership will pay
you an amount equal to your
Salary, as then in effect, for
24 months in a single lump sum
as soon as practicable but in
any event no more than 90 days
after termination; or
	 	 	 	 	 	 	 
	 	 	 	 	(b)
	 	in the case of a Change of
Control, the Partnership will
pay you an amount equal to 3
times the sum of your annual
Salary, as then in effect, plus
your most recently established
target bonus, in a single lump
sum as soon as practicable but
in any event no more than 10
days after the Change of
Control; and

	 	IV.	 	the Partnership will pay the
premium cost for you to receive
any group health coverage the
Partnership must offer you under
Section 4980B of the Internal
Revenue Code of 1986 (the
“Code”) for the period of such
coverage; and
 
	 
	 	V.	 	the Partnership will pay you,
at the time the Partnership would otherwise pay your annual
bonus, your pro rata share of
the bonus for the year of your
termination (or Change of
Control), where the pro rata
factor is based on days elapsed
in such year until the date of
termination (or Change of
Control) over 365, less any
portion of the bonus for such
year already paid.

	 	 	 
	 	
You are not required to mitigate
amounts payable under the
Vesting and Other Benefits paragraphs by seeking other
employment or otherwise;
however, of the foregoing
benefits, an amount equal to two
hundred percent of your annual
Salary is being provided as
consideration for your
compliance with the requirements
of Exhibit A. Consequently, you
agree to return such amount if
you fail to comply with Exhibit
A.
	 	 	 
	 	
Expiration of this Agreement,
whether because of notice of
non-renewal or otherwise, does
not constitute termination
without Cause nor is it grounds
for resignation with Good
Reason.

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In addition to the foregoing, if
this Employment Agreement is not
renewed by the Partnership on or
before January 1, 2007, and the
Partnership at any time
thereafter terminates your
employment without Cause or you
resign for Good Reason, (i) any
unvested restricted shares
granted prior to or during the
Term and held by you before your
termination of employment will
become vested to the extent of
the ratio of the number of days
that you have been employed by
the Partnership or the Company since the date they were granted
and the total number of days of
employment otherwise required for
them to fully vest (determined
separately for each grant), and
(ii) all of the phantom shares
granted prior to or during the
Term and credited to you before
your termination of employment
will be deemed to have been
credited for three (3) years for
the purposes of Section 6.3 of
the Capital Automotive Group
Phantom Share Purchase Program to
the extent of the ratio of the
number of days that you have been
employed by the Partnership or
the Company since the date they
were granted and the three (3)
years of employment otherwise
required for them to fully vest
for purposes of that section
(determined separately for each
grant). The pro rata vesting and
crediting referenced in (i) and
(ii) in the foregoing sentence
are referred to herein as “Pro
Rata Vested.”
	 	 	 
	          Internal
Revenue Code

          Section 280G	 	
If you become entitled to any
benefits under this Agreement
(the “Agreement Benefits”), and
any of those benefits will be
subject to the tax (the “Excise
Tax”) imposed by Section 4999 of
the Code (or any similar tax that
may hereafter be imposed), the
Partnership will pay to you an
additional amount (the “Gross-up
Payment”) such that the net
amount retained by you, after
deduction of any Excise Tax on
the total benefits received by
you and any federal, state and
local income tax and Excise Tax on the Gross-up Payment provided
for by this section, but before
deduction for any federal, state
or local income tax on the
Agreement Benefits, will be equal
to the total benefits that you
would have received had the
Excise Tax not been applicable
and the Gross-up Payment not
paid. Notwithstanding the
foregoing, you and the
Partnership agree to in good
faith take any reasonable
actions, at no cost to either
party, to minimize or avoid
application of the Excise Tax.
	 	 	 
	Assignment	 	
The Partnership may assign or
otherwise transfer this Agreement
and any and all of its rights,
duties, obligations, or interests
under it to:

	 	 	 
	 	 	
the Company or any of the
affiliates or subsidiaries of the
Company or
	 	 	 
	 	 	
the Partnership or to any
business entity that at any time
by merger, consolidation, or
otherwise acquires all or
substantially all of the
Company’s stock or assets or the
partnership units or assets of
the Partnership or to which the
Company or the Partnership transfers all or substantially
all of its assets.

	 	 	 
	 	 	
Upon such assignment or transfer,
any such business entity will be
deemed to be substituted for the
Partnership for all purposes.
Assignment or transfer does not
constitute termination without
Cause nor is it grounds for
resignation with Good Reason absent the occurrence of a Change
of Control. This Agreement binds
the Partnership, its successors
or assigns, and your heirs and
the personal representatives of
your estate. Without

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the Partnership’s prior written
consent, you may not assign or
delegate this Agreement or any or
all rights, duties, obligations,
or interests under it.
	 	 	 
	Severability	 	
If the final determination of an
arbitrator or a court of
competent jurisdiction declares,
after the expiration of the time
within which judicial review (if
permitted) of such determination
may be perfected, that any term
or provision of this Agreement,
including any provision of
Exhibit A, is invalid or
unenforceable, the remaining
terms and provisions will be
unimpaired, and the invalid or
unenforceable term or provision
will be deemed replaced by a term
or provision that is valid and
enforceable and that comes
closest to expressing the
intention of the invalid or
unenforceable term or provision.
	 	 	 
	Amendment; Waiver	 	
Neither you nor the Partnership may modify, amend, or waive the
terms of this Agreement other
than by a written instrument
signed by you and a duly
authorized representative of the
General Partner of the
Partnership. Either party’s
waiver of the other party’s
compliance with any provision of
this Agreement is not a waiver of
any other provision of this
Agreement or of any subsequent
breach by such party of a
provision of this Agreement.
	 	 	 
	Withholding	 	
The Partnership will reduce its
compensatory payments to you for
withholding and FICA taxes, and
any other withholdings and
contributions required by law.
	 	 	 
	Third Party Beneficiary	 	
You understand and agree that the
Company is a third party
beneficiary of this Agreement.
	 	 	 
	Governing Law	 	
The laws of the Commonwealth of
Virginia (other than its conflict
of laws provisions) govern this
Agreement.
	 	 	 
	Notices	 	
Notices must be given in writing
by personal delivery, by
certified mail, return receipt
requested, by telecopy, or by
overnight delivery. You should
send or deliver your notices to
the Partnership’s headquarters.
The Partnership will send or
deliver any notice given to you
at your address as reflected on
the Partnership’s personnel
records. You and the Partnership may change the address for notice
by like notice to the others.
You and the Partnership agree
that notice is received on the
date it is personally delivered,
the date it is received by
certified mail, the date of
guaranteed delivery by the
overnight service, or the date
the fax machine confirms receipt.
	 	 	 
	Payments and Benefits Upon Death	 	
If, at the time of your death,
the Partnership owes you any
payments or other benefits as a
result of termination of your
employment, resignation, a Change
of Control, or your Disability,
all of those payments and
benefits shall become due and
payable to your estate to the
same extent, at the same times,
and subject to the same terms as
they would have been due and
payable to you but for your
death. Further, any payments or
other benefits that become due on
account of your death shall be
paid to your estate.

8

 

	 	 	 
	Legal Fees	 	
If a claim is asserted for breach of any provision
of this Agreement, you will be entitled to recover
your reasonable attorney’s fees and expenses if you
prevail.
	 	 	 
	Arbitration	 	
Any disputes between the Partnership and you in any
way concerning your employment, the termination of
your employment, this Agreement or its enforcement
shall be submitted at the initiative of either party
to binding arbitration in the Washington
Metropolitan area before a single arbitrator
pursuant to the Rules for Resolution of Employment
Disputes of the American Arbitration Association, or
its successor, then in effect. The decision of the
arbitrator shall be rendered in writing, shall be
final, and may be entered as a judgment in any court
in the Commonwealth of Virginia. The Partnership and you each irrevocably consents to the
jurisdiction of the federal and state courts located
in Virginia for this purpose. Each party shall be
responsible for its or his own costs incurred in
such arbitration and in enforcing any arbitration
award, including attorney’s fees, provided, however,
that you will be entitled to recover your reasonable
attorney’s fees and expenses if you prevail.
Notwithstanding the foregoing, the Partnership, in
its sole discretion, may bring an action in any
court of competent jurisdiction to seek injunctive
relief and such other relief as it shall elect to
enforce your obligations in Exhibit A.
	 	 	 
	Superseding Effect	 	
This Agreement supersedes any prior oral or written
employment or severance agreements between you and
the Company or the Partnership. This Agreement
supersedes all prior or contemporaneous
negotiations, commitments, agreements, and writings
with respect to the subject matter of this
Agreement. All such other negotiations,
commitments, agreements, and writings will have no
further force or effect; and the parties to any such
other negotiation, commitment, agreement, or writing
will have no further rights or obligations
thereunder.

9

 

If you accept the terms of this Agreement, please sign in the space indicated
below. We encourage you to consult with any advisors of your choosing.

	 	 	 	 	 
	 	 	CAPITAL AUTOMOTIVE L.P.
	 	 	 	 	 
	 	 	General Partner:
	 	 	 	 	 
	 	 	CAPITAL AUTOMOTIVE REIT, a Maryland
real 
      estate investment trust
	 	 	 	 	 
	 	 	
By:
	 	/s/ Thomas D. Eckert
	 	 	 	

	 	 	 	 	 
	 	 	
Its:
	President and Chief Executive Officer
	 	 	 	 	 
	 	 	SEEN & AGREED TO:
	 	 	 	 	 
	 	 	CAPITAL AUTOMOTIVE REIT
	 	 	 	 	 
	 	 	
By:
	 	/s/ Thomas D. Eckert
	 	 	 	

	 	 	 	 	 
	 	 	
Its:
	President and Chief Executive Officer

I accept and agree to the terms of employment set forth in this Agreement:

	 
	/s/ David S. Kay
	

	David S. Kay
	 
	Dated: August 11, 2003

10

 

Exhibit A

	 	 	 
	No Competition	 	
In consideration of your employment by the Partnership and salary and benefits under this Agreement, during the
term of your employment, and except as set forth below,
until the date two years after your employment with the
Company, the Partnership, or their successors, assigns,
affiliates, or subsidiaries (collectively, the “Company
Group”) ends for any reason (the “Restricted Period”),
you agree as follows:
	 	 	 
	 	 	
The Company is a real estate investment trust formed to
acquire real properties owned by automobile dealerships
and other automotive-related businesses and lease the
properties to such businesses. You will not, directly
or indirectly, promote, be employed by, lend money to,
invest in, or engage in any Competing Business within
the Market Area. That prohibition includes, but is not
limited to, acting, either singly or jointly or as agent
for, or as an employee of or consultant to, any one or
more persons, firms, entities, or corporations directly
or indirectly (as a director, independent contractor,
representative, consultant, member, or otherwise) that
constitutes such a Competing Business. You may own up
to 3% of the outstanding capital stock of any
corporation that is actively publicly traded without
violating this No Competition covenant. This covenant
does not preclude you from being employed by any
non-public automobile dealership or dealership group or
other non-public automotive-related business that is a
lessee or prospective lessee of properties the Company or the Partnership holds or is actively considering
acquiring.
	 	 	 
	 	 	
If, during the Restricted Period, you are offered and
want to accept employment with a business that engages
in activities similar to the Company’s or the
Partnership’s, you will inform the Partnership in
writing of the identity of the business, your proposed
duties with that business, and the proposed starting
date of that employment. You will also inform that
business of the terms of this Exhibit A. The
Partnership will analyze the proposed employment and
make a good faith determination as to whether it would
threaten the Partnership’s legitimate competitive
interests. If the Partnership determines that the
proposed employment would not pose an unacceptable
threat to its interests, the Partnership will notify you
that it does not object to the employment.
	 	 	 
	 	 	
You acknowledge that, during the portion of the
Restricted Period that follows your employment, you may
engage in any business activity or gainful employment of
any type and in any place except as described above.
You acknowledge that you will be reasonably able to earn
a livelihood without violating the terms of this
Agreement.
	 	 	 
	 	 	
You understand and agree that the rights and obligations
set forth in this No Competition Section will continue
for two years from the date of termination of this
Agreement and your employment with the Partnership or
the Company Group.

11

 

	 	 	 
	Definitions	 	 
	 	 	 
	          Competing
Business	 	
Competing Business means any service or
financial product of any person or
organization other than the Company Group, in
existence or then under development, that
competes or could potentially compete,
directly or indirectly, with any service or
financial product of the Company Group upon
which or with which you have worked for the
Partnership or the Company Group or about
which you acquire knowledge while working for
the Partnership or the Company Group.
Competing Business includes any enterprise
engaged in the formation or operation of real
estate investment trusts or other entities
that invest primarily in automobile
dealership or automotive-related properties
or provide real estate financing to
automobile dealerships or automotive-related
businesses, provided that Competing Business excludes banks, finance companies, and other
financial institutions that are not primarily
involved in real estate financing so long as
your employment or other involvement is also
not primarily involved in real estate
financing. Competing Business also includes
any public company the primary business of
which is to retail and/or service motor
vehicles. Competing Business excludes real
estate investment trusts and similar entities
that do not engage in activities related to
automotive dealerships or automotive-related
businesses.
	 	 	 
	          Market Area	 	
The Market Area consists of the United States.
	 	 	 
	No Interference;

No Solicitation	 	
During the Restricted Period, you agree that
you will not, directly or indirectly, whether
for yourself or for any other individual or
entity (other than the Partnership or its
affiliates or subsidiaries), intentionally
solicit or endeavor to entice away from the
Company Group:

	 	 	 
	 	 	
any person whom the Company Group employs
(other than as your personal secretary) or
otherwise engages to perform services as a
consultant or sales representatives; or
	 	 	 
	 	 	
any person or entity who is, or was, within
the Restricted Period, a contractor or
subcontractor of the Company Group known to
you or a lessee or prospective lessee of
properties the Company Group holds or is
actively considering acquiring.

	 	 	 
	Secrecy	 	 
	 	 	 
	          Preserving
Company

          Confidences	 	
Your employment with the Partnership under
and, if applicable, before this Agreement has
given and will give you Confidential
Information (as defined below). You
acknowledge and agree that using, disclosing,
or publishing any Confidential Information in
an unauthorized or improper manner could
cause the Partnership or Company Group substantial loss and damages that could not
be readily calculated and for which no remedy
at law would be adequate. Accordingly, you
agree with the Partnership that you will not
at any time, except in performing your
employment duties to the Partnership or the
Company Group under this Agreement (or with
the Partnership’s prior written consent),
directly or indirectly, use, disclose, or
publish, or permit others not so authorized
to use, disclose, or publish any Confidential
Information that you may learn or become
aware of, or may have learned or become aware
of, because of your prior or continuing
employment, ownership, or association with
the Partnership or

12

 

	 	 	 
	 	 	
the Company Group or any of their
predecessors, or use any such information in
a manner detrimental to the interests of the
Partnership or the Company Group.
	 	 	 
	     Preserving Others’
Confidences	 	
You agree not to use in working for the
Company Group and not to disclose to the
Company Group any trade secrets or other
information you do not have the right to use
or disclose and that the Company Group is not
free to use without liability of any kind.
You agree to promptly inform the Partnership in writing of any patents, copyrights,
trademarks, or other proprietary rights known
to you that the Partnership or the Company
Group might violate because of information
you provide.
	 	 	 
	     Confidential Information	 	
“Confidential Information” includes, without
limitation, information the Partnership or
the Company Group has not previously
disclosed to the public or to the trade with
respect to the Partnership’s or the Company
Group’s present or future business,
operations, services, products, research,
inventions, discoveries, drawings, designs,
plans, processes, models, technical
information, facilities, methods, trade
secrets, copyrights, software, source code,
systems, patents, procedures, manuals,
specifications, any other intellectual
property, confidential reports, price lists,
pricing formulas, customer lists, financial
information (including the revenues, costs,
or profits associated with any of the
Partnership’s or the Company Group’s products
or services), business plans, lease
structure, projections, prospects,
opportunities or strategies, acquisitions or
mergers, advertising or promotions, personnel
matters, legal matters, any other
confidential and proprietary information, and
any other information not generally known
outside the Partnership or the Company Group that may be of value to the Partnership or
the Company Group but excludes any
information already properly in the public
domain. “Confidential Information” also
includes confidential and proprietary
information and trade secrets that third
parties entrust to the Partnership or the
Company Group in confidence.
	 	 	 
	 	 	
You understand and agree that the rights and
obligations set forth in this Secrecy Section
will continue indefinitely and will survive
termination of this Agreement and your
employment with the Partnership or the
Company Group.
	 	 	 
	Exclusive Property	 	
You confirm that all Confidential Information is and must remain the exclusive property of
the Partnership or the relevant member of the
Company Group. All business records,
business papers, and business documents you
keep or make in the course of your employment
by the Partnership relating to the
Partnership or any member of the Company
Group must be and remain the property of the
Partnership or the relevant member of the
Company Group. Upon the termination of this
Agreement with the Partnership or upon the
Partnership’s request at any time, you must
promptly deliver to the Partnership or to the
relevant member of the Company Group any
Confidential Information or other materials
(written or otherwise) not available to the
public or made available to the public in a
manner you know or reasonably should
recognize the Partnership did not authorize,
and any copies, excerpts, summaries,
compilations, records and documents you made
or that came into your possession during your
employment. You agree that you will not,
without the Partnership’s consent, retain
copies, excerpts, summaries or compilations
of the foregoing information and materials.
You understand and agree that the

13

 

	 	 	 
	 	 	
rights and obligations set forth in this
Exclusive Property Section will continue
indefinitely and will survive termination of
this Agreement and your employment with the
Company Group.
	 	 	 
	Maximum Limits	 	
If any of the provisions of Exhibit A are
ever deemed to exceed the time, geographic
area, or activity limitations the law
permits, you and the Partnership agree to
reduce the limitations to the maximum
permissible limitation, and you and the
Partnership authorize a court or arbitrator
having jurisdiction to reform the provisions
to the maximum time, geographic area, and
activity limitations the law permits.
	 	 	 
	Injunctive Relief	 	
Without limiting the remedies available to
the Partnership, you acknowledge:

	 	 	 
	 	 	
that a breach of any of the covenants in this
Exhibit A may result in material irreparable
injury to the Partnership and Company Group for which there is no adequate remedy at law;
and
	 	 	 
	 	 	
that it will not be possible to measure
damages for such injuries precisely.

	 	 	 
	 	 	
You agree that, if there is a breach or
threatened breach, the Partnership or any
member of the Company Group will be entitled
to obtain a temporary restraining order
and/or a preliminary or permanent injunction
restraining you from engaging in activities
prohibited by any provisions of this Exhibit
A or such other relief as may be required to
specifically enforce any of the covenants in
this Exhibit A.

14exv10w5

 

Exhibit 10.5

	 	 
	 	Employee’s Copy
	 	Partnership’s Copy

CAPITAL AUTOMOTIVE L.P.

EMPLOYMENT AGREEMENT

To John M. Weaver:

          This Agreement establishes the terms of your employment with Capital
Automotive L.P., a Delaware limited partnership (the “Partnership”). It
replaces your prior employment agreement with the Partnership. You remain an
employee of Capital Automotive REIT (the “Company”), but your primary
responsibility is as an employee of the Partnership.

	 	 	 
	Employment and Duties	 	
You and the Partnership agree to your
employment with the Partnership and to your
services as Senior Vice President, General
Counsel and Secretary on the terms contained
herein. In such position, you will report
directly to the Company’s Chief Executive
Officer (the “CEO”) and to the General
Partner of the Partnership. You agree to
perform whatever duties the Partnership may
assign you from time to time, consistent
with your position as a senior executive.
During your employment, you agree to devote
your full business time, attention, and
energies to performing those duties (except
as the Partnership otherwise agrees from
time to time). You agree to faithfully
serve the Partnership, to conform to and
comply with the lawful and good faith
directions and instructions given you by the
Partnership, and to use your best efforts to
promote and serve the interests of the
Partnership. You agree to comply with the
non-competition, secrecy, and other
provisions of Exhibit A to this Agreement.
	 	 	 
	Term	 	
Your employment under this Agreement begins
as of August 1, 2003 (the “Effective Date”)
and ends on January 1, 2007, unless it is
terminated sooner under this Agreement.
	 	 	 
	 	 	
The period running from the Effective Date to the date that the Agreement terminates as
set forth in the preceding sentence is the
“Term.”
	 	 	 
	 	 	
Termination or expiration of this Agreement
ends your employment but does not end your
obligation to comply with Exhibit A.
	 	 	 
	Compensation	 	 

	 	 	 
	   Salary and Bonus	 	
The Partnership (or, in its discretion, the
Company) will pay you an annual salary (the
“Salary”) for 2003 at the rate of not less
than $205,000 in accordance with its payroll
practices. Your target bonus for calendar
year 2003 will be $175,000. Each calendar
year thereafter while you are employed under
this Agreement, the Partnership or its
Compensation Committee will review your
Salary and target bonus and consider you for
increases from the Partnership
	 	 	 
	   Employee Benefits	 	
While you are employed under this Agreement,
the Partnership will provide you with the
same benefits, including medical insurance
coverage, as the Partnership makes generally
available from time to time to the
Partnership’s employees, as those benefits
are amended or terminated from time to time,
and such other benefits as are commensurate
with your position as a senior executive of
a public company, including either a company
automobile or an allowance for an
automobile. Your participation in the
Partnership’s benefit plans will be subject
to the terms

	 	 	 

1

 

	 	 	 
	 	 	
of the applicable plan documents and the
Partnership’s generally applied policies,
and the Partnership in its sole discretion
may from time to time adopt, modify,
interpret, or discontinue such plans or
policies.
	 	 	 
	Place of Employment	 	
Your principal place of employment will be
at the Partnership’s headquarters in the
Washington metropolitan area (or such other
offices as the Partnership may establish
from time to time and to which it assigns
you in its sole discretion). You understand
and agree that you must travel from time to
time for business reasons.
	 	 	 
	Indemnification	 	
The Partnership will indemnify you to the
fullest extent authorized by law if you are
made a party to any action, suit, or
proceeding, whether criminal, civil,
administrative, or investigative, because
you are or were a manager, officer, or
employee of the Partnership or serve or
served any other entity as a director,
officer, or employee at the Partnership’s request; provided, however, that you must
repay the Partnership for any
indemnification if the final determination
of an arbitrator or a court of competent
jurisdiction declares, after the expiration
of the time within which judicial review (if
permitted) of such determination may be
perfected, that indemnification by the
Partnership is not permissible under
applicable law.
	 	 	 
	Expenses	 	
The Partnership will reimburse you for
reasonable and necessary travel and other
business-related expenses you incur for the
Partnership in performing your duties under
this Agreement. You must itemize and
substantiate all requests for
reimbursements. You must submit requests
for reimbursement in accordance with the
policies and practices of the Partnership and within 60 days after incurring the
expense.
	 	 	 
	No Other Employment	 	
For so long as you are employed by the
Partnership, you agree that you will not,
directly or indirectly, provide services to
any person or organization for which you
receive compensation or otherwise engage in
activities that would conflict or interfere
significantly with the faithful performance
of your duties to the Partnership without
the Partnership’s prior written consent.
(This prohibition excludes any work
performed at the Partnership’s direction
including any work for the Company.) You
may manage your personal investments, as
long as the management takes only minimal
amounts of time and is consistent with the
provisions of the No Competition Section in
Exhibit A and is otherwise consistent with
the policies and practices of the
Partnership.
	 	 	 
	 	 	
You represent to the Partnership that you
are not subject to any agreement,
commitment, or policy of any third party
that would prevent you from entering into or
performing your duties under this Agreement,
and you agree that you will not enter into
any agreement or commitment or agree to any
policy that would prevent or hinder your
performance of duties and obligations under
this Agreement, including Exhibit A.

2

 

	 	 	 
	No Conflicts of Interest	 	
You confirm that you have fully disclosed to the Partnership and
the Company, to the best of your knowledge, all circumstances
under which you, your spouse, and your relatives (including
their spouses, children, and relatives) have or may have a
conflict of interest with the Company or the Partnership. You
further agree to fully disclose to the Partnership any such
circumstances that might arise during the Term. You agree to
fully comply with the Partnership’s policy and practices
relating to conflicts of interest.
	 	 	 
	No Payments to Governmental
Officials	 	
You will neither pay nor permit payment of any remuneration to
or on behalf of any governmental official other than payments
required or permitted by applicable law.
	 	 	 
	Termination	 	
Subject to the provisions of this section, the Partnership may
terminate your employment, or you may resign, except that, if
you voluntarily resign, you must provide the Partnership with 90
days’ prior written notice (unless the Partnership has
previously waived such notice in writing or authorized a shorter
notice period).
	 	 	 
	   For Cause	 	
The Partnership may terminate your employment for “Cause” if you:

	 	 	 
	 	 	
(i) engage in dishonesty that relates materially to the
performance of services or any obligations under this Agreement,
including Exhibit A;
	 	 	 
	 	 	
(ii) are convicted of, or plead guilty or no contest to, any
misdemeanor (other than for minor infractions) involving fraud,
breach of trust, misappropriation, or other similar activity or
any felony;
	 	 	 
	 	 	
(iii) perform your duties under this Agreement in a grossly
negligent manner; or
	 	 	 
	 	 	
(iv) willfully breach this Agreement, including Exhibit A, in a
manner materially injurious to the Partnership. An act or
omission is only “willful” if you acted in bad faith or without
any reasonable belief that the action or omission was in the
interests of the Partnership and consistent with your duties and
obligations under this Agreement.

	 	 	 
	 	 	Your termination for Cause under (i) and (ii) will be effective
immediately upon the Partnership’s mailing or transmission of
such notice. Before terminating your employment for Cause under
(iii) or (iv), the Partnership will specify in writing to you
the nature of the act, omission, refusal, or failure that it
deems to constitute Cause. The Partnership will give you the
opportunity to correct the situation (and thus avoid termination
for Cause under (iii) or (iv)). You must complete the
correction within a reasonable period of time after the written
notice to you, and the Partnership agrees to provide you no less
than 15 days for such correction

3

 

	 	 	 	 	 
	 	 	
Without Cause 	 	Subject to the provisions below under Payments
on Termination, the Partnership may terminate
your employment under this Agreement before the
end of the Term without Cause.
	 	 	 	 	 
	 	 	
Good Reason 	 	You may resign for Good Reason with 45 days’
advance written notice as provided below. “Good
Reason” means the occurrence, without your
written consent, of any of the following
circumstances:

	 	 	 
	 	 	
the Partnership’s failure to perform or observe
any of the material terms or provisions of this
Agreement,
	 	 	 
	 	 	
the assignment to you of any duties inconsistent
with, or any substantial diminution in, your
employment status or responsibilities as in
effect on the date of this Agreement,
	 	 	 
	 	 	
the Partnership’s relocation of its headquarters
to a location that would increase your commuting
distance by more than 50 miles, based on your
residence when this Agreement is executed, or
	 	 	 
	 	 	
a Change of Control, consisting of any one or
more of the following events:

	 	 	 
	 	 	
a person, entity, or group (other than the
Company, the Partnership, any subsidiary of
either, any Company Group benefit plan, or any
underwriter temporarily holding securities for
an offering of such securities) acquires
ownership of more than 40% of the undiluted
total voting power of the Company’s then-outstanding securities eligible to vote to
elect members of the Board (“Company Voting
Securities”);
	 	 	 
	 	 	
consummation of a merger or consolidation of the
Company into any other entity — unless the
holders of the Company Voting Securities outstanding immediately before such
consummation, together with any trustee or other
fiduciary holding securities under a Company
Group benefit plan, hold securities that
represent immediately after such merger or
consolidation more than 60% of the combined
voting power of the then outstanding voting
securities of either the Company or the other
surviving entity or its parent; or
	 	 	 
	 	 	
the stockholders of the Company approve (i) a
plan of complete liquidation or dissolution of
the Company or (ii) an agreement for the
Company’s sale or disposition of all or
substantially all the Company’s assets, and such
liquidation, dissolution, sale, or disposition
is consummated.

4

 

	 	 	 
	 	 	
Even if other tests are met, a
Change of Control has not occurred
under any circumstance in which the
Company files for bankruptcy
protection or is reorganized
following a bankruptcy filing.
	 	 	 
	 	 	
You must give notice to the
Partnership of your intention to
resign for Good Reason within 30
days after the occurrence of the
condition or event (within 24
months if the condition or event is
a Change of Control) that you
assert entitles you to resign for
Good Reason. In that notice, you
must specify the condition or event
that you consider provides you with
Good Reason and (except if the
condition or event is a Change of
Control) must give the Partnership
an opportunity to cure the
condition or event within 30 days
after your notice. If the
Partnership fails to cure the
condition, your resignation will be
effective on the 45th day after
your notice (unless the Board has
previously waived such notice
period in writing or agreed to a
shorter notice period).
	 	 	 
	 	 	
You will not be treated as
resigning for Good Reason if the
Partnership had Cause to terminate
your employment as of the date of
your notice of resignation.
	 	 	 

	 	 	 	 	 
	 	 	
Disability
	 	If you become “disabled” (as
defined below), the Partnership may
terminate your employment. If the
Partnership terminates your
employment because you become
disabled or employment terminates
because of your death, any unvested
restricted shares and any phantom
shares previously granted to you
shall become Pro Rata Vested (as
defined below). You are “disabled”
if you are unable, despite whatever
reasonable accommodations the law
requires, to render services to the
Partnership for more than 90
consecutive days because of
physical or mental disability,
incapacity, or illness. You are
also disabled if you are deemed to
be disabled within the meaning of
the Partnership’s long-term
disability policy as then in
effect.
	 	 	 	 	 
	 	 	
Death
	 	If you die during the Term, the
Term will end as of the date of
your death.
	 	 	 	 	 
	 	 	
Payments on Termination
	 	If the Partnership terminates your
employment for or without Cause or
because of disability or death or
you resign, the Partnership will
pay you any unpaid portion of your
Salary pro-rated through the date
of actual termination and any
annual bonuses already determined
by such date but not yet paid,
reimburse any substantiated but
unreimbursed business expenses, pay
any accrued and unused vacation
time (to the extent consistent with
the Partnership’s policies), and
provide such other benefits as
applicable laws or the terms of the
benefits require. Except to the
extent the law requires otherwise
or as provided in the Vesting and
Other Benefits section below or in
your option agreement, restricted
share agreement or phantom share
agreement(s), neither you nor your
beneficiary or estate will have any
rights or claims under this
Agreement or otherwise to receive
severance or any other
compensation, or to participate in
any other plan, arrangement, or
benefit, after such termination.
	 	 	 	 	 
	 	 	
Vesting and Other
Benefits on Termination
or Change of Control
	 	In addition to the foregoing
payments, if a Change of Control
occurs, the Partnership terminates
your employment without Cause, or
you resign for Good Reason before
the end of the Term:

5

 

	 	 	 	 	 
	 	 	
I.
	 	all of the stock options and
restricted shares held by you
before your termination of
employment or the Change of Control (whichever is applicable) will
become fully vested; and
	 	 	 	 	 
	 	 	
II.
	 	all of the phantom shares
credited to you before your
termination of employment or the
Change of Control (whichever is
applicable) shall be deemed to have
been credited for three (3) years
for purposes of Section 6.3 of the
Capital Automotive Group Phantom
Share Purchase Program; and

	 	 	 	 	 
	 	 	
III.
	(a)	in the case of
termination without Cause or
resignation for Good Reason, and
provided that you have not
previously received any benefit
under the following paragraph
III(b), the Partnership will pay
you an amount equal to your Salary,
as then in effect, for 24 months in
a single lump sum as soon as
practicable but in any event no
more than 90 days after
termination; or
	 	 	 	 	 
	 	 	
 
	(b)	in the case of a Change of
Control, the Partnership will pay
you an amount equal to 3 times the
sum of your annual Salary, as then
in effect, plus your most recently
established target bonus, in a
single lump sum as soon as
practicable but in any event no
more than 10 days after the Change
of Control; and

	 	 	 	 	 
	 	 	
IV.
	 	the Partnership will pay the
premium cost for you to receive any
group health coverage the
Partnership must offer you under
Section 4980B of the Internal
Revenue Code of 1986 (the “Code”)
for the period of such coverage;
and
	 	 	 	 	 
	 	 	
V.
	 	the Partnership will pay you, at
the time the Partnership would
otherwise pay your annual bonus,
your pro rata share of the bonus
for the year of your termination
(or Change of Control), where the
pro rata factor is based on days
elapsed in such year until the date
of termination (or Change of
Control) over 365, less any portion
of the bonus for such year already
paid.

	 	 	 	 	 
	 	 	 	 	You are not required to mitigate
amounts payable under the Vesting
and Other Benefits paragraphs by
seeking other employment or
otherwise; however, of the
foregoing benefits, an amount equal
to two hundred percent of your
annual Salary is being provided as
consideration for your compliance
with the requirements of Exhibit A.
Consequently, you agree to return
such amount if you fail to comply
with Exhibit A.
	 	 	 	 	 
	 	 	 	 	Expiration of this Agreement,
whether because of notice of
non-renewal or otherwise, does not
constitute termination without
Cause nor is it grounds for
resignation with Good Reason.

6

 

	 	 	 	 	 
	 	 	 	 	In addition to the foregoing, if
this Employment Agreement is not
renewed by the Partnership on or
before January 1, 2007, and the
Partnership at any time thereafter
terminates your employment without
Cause or you resign for Good
Reason, (i) any unvested
restricted shares granted prior to
or during the Term and held by you
before your termination of
employment will become vested to
the extent of the ratio of the
number of days that you have been
employed by the Partnership or the
Company since the date they were
granted and the total number of
days of employment otherwise
required for them to fully vest
(determined separately for each
grant), and (ii) all of the
phantom shares granted prior to or
during the Term and credited to
you before your termination of
employment will be deemed to have
been credited for three (3) years
for the purposes of Section 6.3 of
the Capital Automotive Group
Phantom Share Purchase Program to
the extent of the ratio of the
number of days that you have been
employed by the Partnership or the
Company since the date they were
granted and the three (3) years of
employment otherwise required for
them to fully vest for purposes of
that section (determined
separately for each grant). The
pro rata vesting and crediting
referenced in (i) and (ii) in the
foregoing sentence are referred to
herein as “Pro Rata Vested.”
	 	 	 	 	 
	 	 	
Internal Revenue Code
Section 280G 	 	If you become entitled to any
benefits under this Agreement (the
“Agreement Benefits”), and any of
those benefits will be subject to
the tax (the “Excise Tax”) imposed
by Section 4999 of the Code (or
any similar tax that may hereafter
be imposed), the Partnership will
pay to you an additional amount
(the “Gross-up Payment”) such that
the net amount retained by you,
after deduction of any Excise Tax on the total benefits received by
you and any federal, state and
local income tax and Excise Tax on
the Gross-up Payment provided for
by this section, but before
deduction for any federal, state
or local income tax on the
Agreement Benefits, will be equal
to the total benefits that you
would have received had the Excise
Tax not been applicable and the
Gross-up Payment not paid.
Notwithstanding the foregoing, you
and the Partnership agree to in
good faith take any reasonable
actions, at no cost to either
party, to minimize or avoid
application of the Excise Tax.
	 	 	 	 	 
	Assignment	 	 	 	The Partnership may assign or
otherwise transfer this Agreement
and any and all of its rights,
duties, obligations, or interests
under it to:

	 	 	 
	 	 	
the Company or any of the
affiliates or subsidiaries of the
Company or
	 	 	 
	 	 	
the Partnership or to any business
entity that at any time by merger,
consolidation, or otherwise
acquires all or substantially all
of the Company’s stock or assets
or the partnership units or assets
of the Partnership or to which the
Company or the Partnership transfers all or substantially all
of its assets.

	 	 
	 	Upon such assignment or transfer,
any such business entity will be
deemed to be substituted for the
Partnership for all purposes.
Assignment or transfer does not
constitute termination without
Cause nor is it grounds for
resignation with Good Reason absent the occurrence of a Change
of Control. This Agreement binds
the Partnership, its successors or
assigns, and your heirs and the
personal representatives of your
estate. Without

7

 

	 	 	 
	 	 	
the Partnership’s prior written
consent, you may not assign or
delegate this Agreement or any or
all rights, duties, obligations,
or interests under it.
	 	 	 
	Severability	 	
If the final determination of an
arbitrator or a court of competent
jurisdiction declares, after the
expiration of the time within
which judicial review (if
permitted) of such determination
may be perfected, that any term or
provision of this Agreement,
including any provision of Exhibit
A, is invalid or unenforceable,
the remaining terms and provisions
will be unimpaired, and the
invalid or unenforceable term or
provision will be deemed replaced
by a term or provision that is
valid and enforceable and that
comes closest to expressing the
intention of the invalid or
unenforceable term or provision.
	 	 	 
	Amendment; Waiver	 	
Neither you nor the Partnership may modify, amend, or waive the
terms of this Agreement other than
by a written instrument signed by
you and a duly authorized
representative of the General
Partner of the Partnership.
Either party’s waiver of the other
party’s compliance with any
provision of this Agreement is not
a waiver of any other provision of
this Agreement or of any
subsequent breach by such party of
a provision of this Agreement.
	 	 	 
	Withholding	 	
The Partnership will reduce its
compensatory payments to you for
withholding and FICA taxes, and
any other withholdings and
contributions required by law.
	 	 	 
	Third Party Beneficiary	 	
You understand and agree that the
Company is a third party
beneficiary of this Agreement.
	 	 	 
	Governing Law	 	
The laws of the Commonwealth of
Virginia (other than its conflict
of laws provisions) govern this
Agreement.
	 	 	 
	Notices	 	
Notices must be given in writing
by personal delivery, by certified
mail, return receipt requested, by
telecopy, or by overnight
delivery. You should send or
deliver your notices to the
Partnership’s headquarters. The
Partnership will send or deliver
any notice given to you at your
address as reflected on the
Partnership’s personnel records.
You and the Partnership may change
the address for notice by like
notice to the others. You and the
Partnership agree that notice is
received on the date it is
personally delivered, the date it
is received by certified mail, the
date of guaranteed delivery by the
overnight service, or the date the
fax machine confirms receipt.
	 	 	 
	Payments and Benefits Upon Death	 	
If, at the time of your death, the
Partnership owes you any payments
or other benefits as a result of
termination of your employment,
resignation, a Change of Control,
or your Disability, all of those
payments and benefits shall become
due and payable to your estate to
the same extent, at the same
times, and subject to the same
terms as they would have been due
and payable to you but for your
death. Further, any payments or
other benefits that become due on
account of your death shall be
paid to your estate.

8

 

	 	 	 
	Legal Fees	 	
If a claim is asserted for breach of any provision of
this Agreement, you will be entitled to recover your
reasonable attorney’s fees and expenses if you prevail.
	 	 	 
	Arbitration	 	
Any disputes between the Partnership and you in any way
concerning your employment, the termination of your
employment, this Agreement or its enforcement shall be
submitted at the initiative of either party to binding
arbitration in the Washington Metropolitan area before
a single arbitrator pursuant to the Rules for
Resolution of Employment Disputes of the American
Arbitration Association, or its successor, then in
effect. The decision of the arbitrator shall be
rendered in writing, shall be final, and may be entered
as a judgment in any court in the Commonwealth of
Virginia. The Partnership and you each irrevocably
consents to the jurisdiction of the federal and state
courts located in Virginia for this purpose. Each
party shall be responsible for its or his own costs
incurred in such arbitration and in enforcing any
arbitration award, including attorney’s fees, provided,
however, that you will be entitled to recover your
reasonable attorney’s fees and expenses if you prevail.
Notwithstanding the foregoing, the Partnership, in its
sole discretion, may bring an action in any court of
competent jurisdiction to seek injunctive relief and
such other relief as it shall elect to enforce your
obligations in Exhibit A.
	 	 	 
	Superseding Effect	 	
This Agreement supersedes any prior oral or written
employment or severance agreements between you and the
Company or the Partnership. This Agreement supersedes
all prior or contemporaneous negotiations, commitments,
agreements, and writings with respect to the subject
matter of this Agreement. All such other negotiations,
commitments, agreements, and writings will have no
further force or effect; and the parties to any such
other negotiation, commitment, agreement, or writing
will have no further rights or obligations thereunder.

9

 

If you accept the terms of this Agreement, please sign in the space indicated
below. We encourage you to consult with any advisors of your choosing.

	 	 	 	 	 
	 	 	CAPITAL AUTOMOTIVE L.P.
	 	 	 	 	 
	 	 	General Partner:
	 	 	 	 	 
	 	 	CAPITAL AUTOMOTIVE REIT, a Maryland real
	 	 	 	 	estate investment trust
	 	 	 	 	 
	 	 	
By:
	 	/s/ Thomas D. Eckert

	 	 	 	 	 
	 	 	
Its:
	 	President and Chief Executive Officer
	 	 	 	 	 
	 	 	SEEN & AGREED TO:
	 	 	 	 	 
	 	 	CAPITAL AUTOMOTIVE REIT
	 	 	 	 	 
	 	 	
By:
	 	/s/ Thomas D. Eckert

	 	 	 	 	 
	 	 	
Its:
	 	President and Chief Executive Officer

I accept and agree to the terms of employment set forth in this Agreement:

	 
	   /s/ John M. Weaver

John M. Weaver
	 
	Dated: August 11, 2003

10

 

Exhibit A

	 	 	 
	No Competition	 	
In consideration of your employment by the Partnership and
salary and benefits under this Agreement, during the term
of your employment, and except as set forth below, until
the date two years after your employment with the Company,
the Partnership, or their successors, assigns, affiliates,
or subsidiaries (collectively, the “Company Group”) ends
for any reason (the “Restricted Period”), you agree as
follows:
	 	 	 
	 	 	
The Company is a real estate investment trust formed to
acquire real properties owned by automobile dealerships and
other automotive-related businesses and lease the
properties to such businesses. You will not, directly or
indirectly, promote, be employed by, lend money to, invest
in, or engage in any Competing Business within the Market
Area. That prohibition includes, but is not limited to,
acting, either singly or jointly or as agent for, or as an
employee of or consultant to, any one or more persons,
firms, entities, or corporations directly or indirectly (as
a director, independent contractor, representative,
consultant, member, or otherwise) that constitutes such a
Competing Business. You may own up to 3% of the
outstanding capital stock of any corporation that is
actively publicly traded without violating this No
Competition covenant. This covenant does not preclude you
from being employed by any non-public automobile dealership
or dealership group or other non-public automotive-related
business that is a lessee or prospective lessee of
properties the Company or the Partnership holds or is
actively considering acquiring.
	 	 	 
	 	 	
If, during the Restricted Period, you are offered and want
to accept employment with a business that engages in
activities similar to the Company’s or the Partnership’s,
you will inform the Partnership in writing of the identity
of the business, your proposed duties with that business,
and the proposed starting date of that employment. You
will also inform that business of the terms of this Exhibit
A. The Partnership will analyze the proposed employment
and make a good faith determination as to whether it would
threaten the Partnership’s legitimate competitive
interests. If the Partnership determines that the proposed
employment would not pose an unacceptable threat to its
interests, the Partnership will notify you that it does not
object to the employment.
	 	 	 
	 	 	
You acknowledge that, during the portion of the Restricted
Period that follows your employment, you may engage in any
business activity or gainful employment of any type and in
any place except as described above. You acknowledge that
you will be reasonably able to earn a livelihood without
violating the terms of this Agreement.
	 	 	 
	 	 	
You understand and agree that the rights and obligations
set forth in this No Competition Section will continue for
two years from the date of termination of this Agreement
and your employment with the Partnership or the Company
Group.

11

 

	 	 	 
	Definitions	 	 
	 	 	 
	   Competing Business	 	
Competing Business means any service or
financial product of any person or
organization other than the Company Group, in
existence or then under development, that
competes or could potentially compete,
directly or indirectly, with any service or
financial product of the Company Group upon
which or with which you have worked for the
Partnership or the Company Group or about
which you acquire knowledge while working for
the Partnership or the Company Group.
Competing Business includes any enterprise
engaged in the formation or operation of real
estate investment trusts or other entities
that invest primarily in automobile
dealership or automotive-related properties
or provide real estate financing to
automobile dealerships or automotive-related
businesses, provided that Competing Business excludes banks, finance companies, and other
financial institutions that are not primarily
involved in real estate financing so long as
your employment or other involvement is also
not primarily involved in real estate
financing. Competing Business also includes
any public company the primary business of
which is to retail and/or service motor
vehicles. Competing Business excludes real
estate investment trusts and similar entities
that do not engage in activities related to
automotive dealerships or automotive-related
businesses.
	 	 	 
	   Market Area	 	
The Market Area consists of the United States.
	 	 	 
	No Interference;
No Solicitation	 	
During the Restricted Period, you agree that
you will not, directly or indirectly, whether
for yourself or for any other individual or
entity (other than the Partnership or its
affiliates or subsidiaries), intentionally
solicit or endeavor to entice away from the
Company Group:

	 	 	 
	 	 	
any person whom the Company Group employs
(other than as your personal secretary) or
otherwise engages to perform services as a
consultant or sales representatives; or
	 	 	 
	 	 	
any person or entity who is, or was, within
the Restricted Period, a contractor or
subcontractor of the Company Group known to
you or a lessee or prospective lessee of
properties the Company Group holds or is
actively considering acquiring.
	 	 	 

	 	 	 
	Secrecy	 	 
	 	 	 
	   Preserving Company Confidences	 	
Your employment with the Partnership under
and, if applicable, before this Agreement has
given and will give you Confidential
Information (as defined below). You
acknowledge and agree that using, disclosing,
or publishing any Confidential Information in
an unauthorized or improper manner could
cause the Partnership or Company Group substantial loss and damages that could not
be readily calculated and for which no remedy
at law would be adequate. Accordingly, you
agree with the Partnership that you will not
at any time, except in performing your
employment duties to the Partnership or the
Company Group under this Agreement (or with
the Partnership’s prior written consent),
directly or indirectly, use, disclose, or
publish, or permit others not so authorized
to use, disclose, or publish any Confidential
Information that you may learn or become
aware of, or may have learned or become aware
of, because of your prior or continuing
employment, ownership, or association with
the Partnership or

12

 

	 	 	 
	 	 	
the Company Group or any of their
predecessors, or use any such information in
a manner detrimental to the interests of the
Partnership or the Company Group.
	 	 	 
	          Preserving Others’ Confidences	 	
You agree not to use in working for the
Company Group and not to disclose to the
Company Group any trade secrets or other
information you do not have the right to use
or disclose and that the Company Group is not
free to use without liability of any kind.
You agree to promptly inform the Partnership in writing of any patents, copyrights,
trademarks, or other proprietary rights known
to you that the Partnership or the Company
Group might violate because of information
you provide.
	 	 	 
	          Confidential Information	 	
“Confidential Information” includes, without
limitation, information the Partnership or
the Company Group has not previously
disclosed to the public or to the trade with
respect to the Partnership’s or the Company
Group’s present or future business,
operations, services, products, research,
inventions, discoveries, drawings, designs,
plans, processes, models, technical
information, facilities, methods, trade
secrets, copyrights, software, source code,
systems, patents, procedures, manuals,
specifications, any other intellectual
property, confidential reports, price lists,
pricing formulas, customer lists, financial
information (including the revenues, costs,
or profits associated with any of the
Partnership’s or the Company Group’s products
or services), business plans, lease
structure, projections, prospects,
opportunities or strategies, acquisitions or
mergers, advertising or promotions, personnel
matters, legal matters, any other
confidential and proprietary information, and
any other information not generally known
outside the Partnership or the Company Group that may be of value to the Partnership or
the Company Group but excludes any
information already properly in the public
domain. “Confidential Information” also
includes confidential and proprietary
information and trade secrets that third
parties entrust to the Partnership or the
Company Group in confidence.
	 	 	 
	 	 	
You understand and agree that the rights and
obligations set forth in this Secrecy Section
will continue indefinitely and will survive
termination of this Agreement and your
employment with the Partnership or the
Company Group.
	 	 	 
	Exclusive Property	 	
You confirm that all Confidential Information is and must remain the exclusive property of
the Partnership or the relevant member of the
Company Group. All business records,
business papers, and business documents you
keep or make in the course of your employment
by the Partnership relating to the
Partnership or any member of the Company
Group must be and remain the property of the
Partnership or the relevant member of the
Company Group. Upon the termination of this
Agreement with the Partnership or upon the
Partnership’s request at any time, you must
promptly deliver to the Partnership or to the
relevant member of the Company Group any
Confidential Information or other materials
(written or otherwise) not available to the
public or made available to the public in a
manner you know or reasonably should
recognize the Partnership did not authorize,
and any copies, excerpts, summaries,
compilations, records and documents you made
or that came into your possession during your
employment. You agree that you will not,
without the Partnership’s consent, retain
copies, excerpts, summaries or compilations
of the foregoing information and materials.
You understand and agree that the

13

 

	 	 	 
	 	 	
rights and obligations set forth in this
Exclusive Property Section will continue
indefinitely and will survive termination of
this Agreement and your employment with the
Company Group.
	 	 	 
	Maximum Limits	 	
If any of the provisions of Exhibit A are
ever deemed to exceed the time, geographic
area, or activity limitations the law
permits, you and the Partnership agree to
reduce the limitations to the maximum
permissible limitation, and you and the
Partnership authorize a court or arbitrator
having jurisdiction to reform the provisions
to the maximum time, geographic area, and
activity limitations the law permits.
	 	 	 
	Injunctive Relief	 	
Without limiting the remedies available to
the Partnership, you acknowledge:

	 	 	 
	 	 	
that a breach of any of the covenants in this
Exhibit A may result in material irreparable
injury to the Partnership and Company Group for which there is no adequate remedy at law;
and
	 	 	 
	 	 	
that it will not be possible to measure
damages for such injuries precisely.

	 	 
	 	You agree that, if there is a breach or
threatened breach, the Partnership or any
member of the Company Group will be entitled
to obtain a temporary restraining order
and/or a preliminary or permanent injunction
restraining you from engaging in activities
prohibited by any provisions of this Exhibit
A or such other relief as may be required to
specifically enforce any of the covenants in
this Exhibit A

14

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