EMPLOYMENT AGREEMENT
This Employment Agreement is dated as of August 1, 1995, and is
entered into between Landers Auto Sales, Inc., an Arkansas corporation (the
"Company"), and Steve Landers, an individual residing in Arkansas ("Executive").
WHEREAS, Executive and the Company desire to embody in this Agreement
the terms and conditions of Executive's employment by the Company.
NOW, THEREFORE, the parties hereby agree:
ARTICLE I
EMPLOYMENT, DUTIES AND RESPONSIBILITIES
1.01. EMPLOYMENT. The Company shall employ Executive as Chief
Executive Officer and President of the Company. Executive hereby accepts such
employment. Executive agrees to devote his full business time and efforts to
promote the interests of the Company and its subsidiaries.
1.02. DUTIES AND RESPONSIBILITIES. Executive shall be required to
perform such duties and responsibilities as are consistent with his position and
as the Board of Directors of the Company (the "Board"), the Executive Committee
thereof (the "Executive Committee") and/or the Chief Executive Officer of United
Auto Group, Inc. ("UAG") may from time to time prescribe. Notwithstanding the
foregoing, in the event that the Company conducts business on Sundays, Executive
shall be under no obligation to work on any Sunday, and any failure by Executive
to work on Sunday shall not, in and of itself, constitute a breach of this
Agreement.
1.03. BOARD AND EXECUTIVE COMMITTEE MEMBERSHIP. Subject to
Section 3.1 of the Shareholders Agreement, dated the date hereof, among the
Company, UAG, Executive and certain other parties named therein (the
"Shareholders Agreement"), the Company will nominate Executive for election to
the Board and will use its best efforts to secure Executive's election to the
Board and his appointment as a member of the Executive Committee.
1.04. REPORTING. Executive shall report, in the performance of
his duties, directly to the Chief Executive Officer of UAG.
ARTICLE II
TERM
2.01. TERM. The term of Executive's employment under this
Agreement (the "Term") shall commence on August 1, 1995 and shall continue until
July 31, 2000; provided that (i) the Term shall be renewed for an additional
one-year period as of August 1 of each year commencing with August 1, 2000
(each, a "Renewal Date"), unless either the Company or Executive gives written
notice, at least ninety (90) days prior to a Renewal Date, of its or his
intention not to so renew the Term, and (ii) this Agreement may be terminated
earlier as provided in Section 3.01(a) hereof and in Article V hereof.
2.02. NO VIOLATION. Executive represents and warrants to the
Company that neither the execution and delivery of this Agreement nor the
performance of his duties hereunder violates or will violate the provisions of
any other agreement to which he is a party or by which he is bound.
ARTICLE III
COMPENSATION AND EXPENSES
3.01. SALARY AND BENEFITS. As compensation and consideration for
the performance by Executive of his obligations under this Agreement, Executive
shall be entitled to the following (subject, in each case, to the provisions of
Article V hereof):
(a) SALARY. The Company shall pay Executive a salary during the
first three years of the Term, payable in accordance with the normal payment
procedures of the Company and subject to such withholdings and other normal
employee deductions as may be required by law, at the rate of $327,065 per annum
(or such PRO RATA amount thereof for any period of less than one year). Within
ninety (90) days of the end of the third year of the Term, Executive and the
Company shall agree on a salary to be paid to Executive for the remaining
portion of the Term. If the parties are unable to agree on a salary by the end
of the third year of the Term, then either party may terminate this Agreement
upon written notice to the other party pursuant to Section 6.02 hereof.
(b) BENEFIT PLANS. Executive shall participate during the Term
in such health and major medical insurance plans
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for the benefit of the employees of the Company as may be maintained from time
to time during the Term, if at all, in each case to the extent and in the manner
available to other officers of the Company and subject to the terms and
provisions of such plans or programs.
(c) DISABILITY INSURANCE. The Company shall obtain and maintain
a disability insurance policy providing for the payment of six months of salary
at the rate set forth in Section 3.01(a) hereof in the event this Agreement is
terminated pursuant to Section 5.04 hereof; provided, however, that in no event
shall the Company be required to spend in excess of $10,000 per year for such
insurance.
(d) VACATION. Executive shall be entitled to a paid vacation in
accordance with Company policy during the Term.
3.02. EXPENSES. The Company will reimburse Executive for
reasonable business-related expenses incurred by him in connection with the
performance of his duties hereunder during the Term, subject, however, to the
Company's policies relating to business-related expenses as in effect from time
to time during the Term.
ARTICLE IV
EXCLUSIVITY, ETC.
4.01. EXCLUSIVITY. Executive agrees to perform his duties,
responsibilities and obligations hereunder to the best of his ability.
Executive agrees that he will devote his entire working time, care and attention
and best efforts to such duties, responsibilities and obligations throughout the
Term. Executive also agrees that he will not engage in any other business
activities, pursued for gain, profit or other pecuniary advantage, that are
competitive with the activities of the Company or any of its subsidiaries,
except as permitted in Section 4.02 below. Executive agrees that all of his
activities as an employee of the Company shall be in conformity with all
policies, rules and regulations and directions of the Company not inconsistent
with this Agreement.
4.02. OTHER BUSINESS VENTURES. Executive agrees that, so long as
he is employed by the Company, he will not have any financial or other
beneficial interest in any business enterprise which is engaged in, or
competitive with, any business engaged in by the Company or any of its
subsidiaries. Notwithstanding the foregoing, Executive may own, directly or
indirectly, up to one
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percent (1%) of the outstanding capital stock of any such business having a
class of capital stock which is traded on any national stock exchange or in the
over-the-counter market.
4.03. CONFIDENTIALITY; NON-COMPETITION. (a) Executive agrees
that he will not, at any time during or after the Term, make use of or divulge
to any other person, firm or corporation any trade or business secret, process,
method or means, or any other confidential information concerning the business
or policies of the Company, any of its subsidiaries or their affiliates. For
purposes of this Agreement, a "trade or business secret, process, method or
means, or any other confidential information" shall mean and include information
treated as confidential or as a trade secret by the Company, any of its
subsidiaries or their affiliates, including but not limited to information
regarding contemplated products, models, compilations, business and financial
methods or practices, marketing, merchandising and selling techniques,
customers, vendors, suppliers, trade secrets, training programs, manuals or
materials, technical information, contracts, systems, procedures, mailing lists,
know-how, trade names, improvements, pricing, price lists, financial or other
data (including the revenues, costs or profits associated with any of the
Company's or its subsidiaries' products or services), business plans, strategy,
code books, invoices and other financial statements, computer programs, software
systems, databases, discs and printouts, other plans (technical or otherwise),
customer and industry lists, supplier lists, correspondence, internal reports,
personnel files, sales and advertising material, telephone numbers, names,
addresses or any other compilation of information, written or unwritten, which
is or was used in the business of the Company, any of its subsidiaries or their
affiliates. Executive's obligation under this Section 4.03(a) shall not apply
to any information which is in the public domain or hereafter enters the public
domain without the fault of Executive. Executive agrees not to remove from the
premises of the Company or any of its subsidiaries, except as an employee of the
Company in pursuit of the business of the Company or except as specifically
permitted in writing by the Company, any document or other object containing or
reflecting any such information. Executive agrees and acknowledges that all of
such information, in any form, and copies and extracts thereof, are and shall
remain the sole and exclusive property of the Company, and upon termination of
his employment with the Company, Executive shall return to the Company the
originals and all copies of any such information provided to or acquired by
Executive in connection with the performance of his duties for the Company, and
shall return to the Company all files, correspondence and/or other
communications received, maintained and/or originated by Executive during the
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course of his employment, and no copy of any such shall be retained by him.
(b) Executive acknowledges that the agreements and covenants
contained in this Section 4.03(b) are essential to protect the value of the
Company's and its subsidiaries' and their affiliates' business and assets and by
virtue of his employment with the Company, Executive has obtained and will
obtain knowledge, contacts, know-how, training, experience and other information
relating to the Company's and its subsidiaries' and their affiliates' business
operations, and there is a substantial probability that such knowledge,
know-how, contacts, training, experience and information could be used to the
substantial advantage of a competitor of the Company and its subsidiaries and
their affiliates and to the Company's and its subsidiaries' and their
affiliates' substantial detriment. Accordingly, for a period commencing on the
date of termination of Executive's employment with the Company and ending on the
earlier to occur of three (3) years from and after such date or two years from
and after the fifth anniversary of the date hereof (or such later date of
termination of Executive's employment if the Term is renewed pursuant to Section
2.01 hereof) (the "Non-Compete Period"), Executive shall not, directly or
indirectly, for himself or on behalf of or in conjunction with any person,
partnership, corporation or other entity, compete, own, operate, control, or
participate or engage in the ownership, management, operation or control of, or
be connected with as an officer, employee, partner, director, shareholder,
representative, consultant, independent contractor, guarantor, advisor or in any
other manner or otherwise have a financial interest in, a proprietorship,
partnership, joint venture, association, firm, corporation or other business
organization or enterprise that competes with the Company or any of its
subsidiaries or their affiliates (including any business or enterprise that
operates dealerships for the retail sales of new and used automobiles or trucks
and businesses ancillary thereto), provided that such business or enterprise (A)
is or becomes located or otherwise engaged within a 100 mile radius of any
automobile or truck dealership or ancillary business in which the Company (or
any affiliate thereof), directly or indirectly, has on ownership interest at any
time during the Non-Compete Period or (B) is an automobile or truck dealership
or group of affiliated automobile or truck dealerships (and all businesses
ancillary thereto) whose aggregate gross sales during the 12 month period
immediately preceding the date of Executive's termination exceeded $500,000,000.
During the Non-Compete Period, Executive shall not interfere with or disrupt, or
attempt to interfere with or disrupt, the relationship, contractual or
otherwise, between the Company or any of its subsidiaries or their affiliates
and any
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customer, client, supplier, manufacturer, distributor, consultant, independent
contractor or employee of the Company or any of its subsidiaries or their
affiliates.
(ii) It is the desire and intent of the parties that the
provisions of this Section 4.03(b) shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular portion of this
Section 4.03(b) shall be adjudicated to be invalid or unenforceable, this
Section 4.03(b) shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of this Section 4.03(b) in the particular jurisdiction
in which such adjudication is made.
(c) Executive agrees that, at any time and from time to time
during and after the Term, he will execute any and all documents which the
Company may deem reasonably necessary or appropriate to effectuate the
provisions of this Section 4.03.
ARTICLE V
TERMINATION
5.01. TERMINATION BY THE COMPANY. Subject to Section 5.05, the
Company shall have the right to terminate Executive's employment at any time,
with "Cause." For purposes of this Agreement, "Cause" shall mean: (i)
Executive's failure, neglect or refusal to perform his duties hereunder, which
failure, neglect or refusal shall not have been remedied by Executive within
fifteen (15) days of receipt by Executive of written notice from the Company of
such failure, neglect or refusal, (ii) Executive's refusal to follow the
instructions, orders or directives of the Board, the Executive Committee or the
Chief Executive Officer of UAG with respect to his duties and responsibilities
hereunder, (iii) any willful or intentional act of Executive that has the effect
of injuring the reputation or business of the Company or its affiliates in any
material respect, (iv) any continued or repeated absence from the Company,
unless such absence is (A) approved or excused by the Board or (B) is the result
of Executive's illness, disability or incapacity or a personal or family
emergency, (v) use of illegal drugs by Executive, (vi) conviction of Executive
for, or the entry of a plea (including nolo contendere or its equivalent) by
Executive with respect to, a felony (or equivalent offense not categorized as a
"felony") under federal or state law, (vii) the commission by Executive of an
act of fraud or embezzlement
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against the Company, or (viii) Executive's other material breach of this
Agreement that causes material harm to the Company.
5.02. TERMINATION FOR GOOD REASON. "Termination for Good Reason"
shall mean a termination of Executive's employment at his initiative as promptly
as practicable following the occurrence, without Executive's written consent, of
one or more of the following events: (i) the assignment to Executive of duties
which are materially inconsistent with his position as Chief Executive Officer
of the Company, or (ii) the relocation of Executive's own office location as
assigned to him by the Company to a location more than 30 miles from Little
Rock, Arkansas.
5.03. DEATH. In the event Executive dies during the Term, this
Agreement shall automatically terminate (subject to Section 5.05 hereof), such
termination to be effective on the date of Executive's death.
5.04. DISABILITY. In the event that Executive shall suffer a
disability which shall have prevented him from performing satisfactorily his
obligations hereunder for a period of at least 90 consecutive days, or 180 non-
consecutive days within any 365 day period, the Company shall have the right to
terminate this Agreement (subject to Section 5.05 hereof), such termination to
be effective upon the giving of notice thereof to Executive in accordance with
Section 6.02 hereof.
5.05. EFFECT OF TERMINATION. (a) In the event of termination of
Executive's employment for any reason, the Company shall pay to Executive (or
his beneficiary in the event of his death) any salary earned but not paid to
Executive prior to the effective date of such termination.
(b) The parties hereto acknowledge that the continued employment
of Executive was a significant factor in UAG's valuation of the Company and
UAG's determination to pay the Purchase Price provided for in the Amended and
Restated Stock Purchase Agreement, dated July 1, 1995, among UAG, the Company,
Executive, John Landers and Bob Landers. Accordingly, notwithstanding anything
contained herein to the contrary, in the event Executive's employment is
terminated for any reason, Executive shall pay UAG, in equal monthly
installments for a period equal to the lesser of (i) three years from the date
of termination of Executive's employment and (ii) the number of years and days
remaining in the period commencing on the date hereof and ending on the fifth
anniversary of the date hereof (the "Remaining Term"), an aggregate amount equal
to the product of (A) $375,000 and (B) the sum of (x) the number of full years
comprising the Remaining Term and (y) a fraction, the numerator
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of which is equal to the number of days comprising the stub period between the
last full year of the Remaining Term and the last day of the Remaining Term, and
the denominator of which is equal to 365.
ARTICLE VI
MISCELLANEOUS
6.01. BENEFIT OF AGREEMENT; ASSIGNMENT; BENEFICIARY. (a) This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns, including, without limitation, any corporation or person
which may acquire all or substantially all of the Company's assets or business,
or with or into which the Company may be consolidated or merged. This Agreement
shall also inure to the benefit of, and be enforceable by, Executive and his
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Executive should die while any amount
would still be payable to Executive hereunder if he had continued to live, all
such amounts shall be paid in accordance with the terms of this Agreement to
Executive's beneficiary, devisee, legatee or other designee, or if there is no
such designee, to Executive's estate.
6.02. NOTICES. Any notice required or permitted hereunder shall
be in writing and shall be sufficiently given if personally delivered or if sent
by telegram or telex or by registered or certified mail, postage prepaid, with
return receipt requested, addressed: (a) in the case of the Company to c/o
United Auto Group, Inc. 375 Park Avenue, New York, New York 10022, facsimile
no. (212) 223-5148, Attention: General Counsel, or to such other address and/or
to the attention of such other person as the Company shall designate by written
notice to Executive; and (b) in the case of Executive, to 3316 Highway 5,
Benton, Arkansas 72015, facsimile no. (501) 778-4077, or to such other address
as Executive shall designate by written notice to the Company. Any notice given
hereunder shall be effective and deemed to have been given as of the date so
delivered or three (3) days after the date so mailed.
6.03. AMENDMENT. This Agreement may not be changed or modified
except by an instrument in writing signed by both of the parties hereto.
6.04. WAIVER. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a continuing
waiver or as a consent to or waiver of
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any subsequent breach hereof. Any waiver must be in writing and signed by
Executive or the Company, as the case may be.
6.05. HEADINGS. The Article and Section headings herein are for
convenience of reference only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions hereof.
6.06. GOVERNING LAW. This Agreement shall be governed by, and
construed and interpreted in accordance with, the internal laws of the State of
Arkansas without reference to the principles of conflict of laws.
6.07. AGREEMENT TO TAKE ACTIONS. Each party hereto shall execute
and deliver such documents, certificates, agreements and other instruments, and
shall take such other actions, as may be reasonably necessary or desirable in
order to perform his or its obligations under this Agreement or to effectuate
the purposes hereof.
6.08. SURVIVORSHIP. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
6.09. VALIDITY. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision or provisions of this Agreement, which
shall remain in full force and effect.
6.10. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement effective as of the date first above written.
LANDERS AUTO SALES, INC.
By: /s/Carl Spielvogel
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Name: Carl Spielvogel
Title: Chairman of the Board
/s/Steve Landers
--------------------------------
Steve Landers
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