EMPLOYMENT AGREEMENT
This Employment Agreement is dated as of January 16, 1996, and is
entered into between UAG Atlanta, Inc., a Delaware corporation ("UAG/Atlanta"),
Atlanta Toyota, Inc., a Texas corporation (the "Company") and John R. Smith, an
individual resident of the State of Georgia ("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 1
EMPLOYMENT, DUTIES AND RESPONSIBILITIES
1.1. EMPLOYMENT. Executive shall be employed as President of the
Company and Vice-President of UAG/Atlanta. 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.
1.2. 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") and/or the Chief
Executive Officer of United Auto Group, Inc. may from time to time prescribe.
1.3. REPORTING. Executive shall report, in the performance of his
duties, directly to the Chief Executive Officer of UAG/Atlanta.
ARTICLE 2
TERM
2.1. TERM. The term of Executive's employment under this Agreement
(the "Term") shall commence on January 1, 1996 and shall continue until December
31, 1996; provided that this Agreement may be terminated earlier as provided in
Article 5 hereof.
2.2. NO VIOLATION. Executive represents and warrants to the Company
and UAG/Atlanta 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 3
COMPENSATION AND EXPENSES
3.1. 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 5 hereof):
(a) SALARY. The Company shall pay Executive a salary 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 $350,000 per annum (or such PRO RATA amount thereof for any period
of less than one year). In addition, the Company shall pay executive a bonus to
be determined in accordance with the terms of the 1996 Bonus Agreement attached
hereto as Exhibit A.
(b) BENEFIT PLANS. Executive shall participate during the Term in
such health, major medical insurance and other plans 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) VACATION. Executive shall be entitled to a paid vacation in
accordance with Company policy during the Term.
ARTICLE 4
EXCLUSIVITY, ETC.
4.1. 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 4.2 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.
4.2. 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 or affiliates.
Notwithstanding the foregoing, Executive may own, directly or indirectly, up to
one percent (1%) of the outstanding capital stock of any such business
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having a class of capital stock which is traded on any national stock exchange
or in the over-the-counter market.
4.3. CONFIDENTIALITY; NON-INTERFERENCE. (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 or models, unless such information is otherwise
available to Executive or to the public generally; business and financial
methods or practices, marketing, merchandising and selling techniques which were
devised, designed or invented by the Company, any of its subsidiaries or their
affiliates; customers, vendors or suppliers, or lists thereof, where such
information is not generally available to the public; trade secrets of the
Company, any of its subsidiaries or their affiliates; training programs, manuals
or materials other than general business practices generally used in the
business of selling and leasing motor vehicles; the specific terms of contracts
between the Company, any of its subsidiaries or their affiliates and its
customers, vendors and suppliers; systems or procedures which were designed,
devised or invented by the Company, any of its subsidiaries or their affiliates,
and which are unique to them; mailing lists, pricing plans or schemes designed,
devised or invented by the Company, any of its subsidiaries or their affiliates;
price lists, financial data (including the revenues, costs or profits associated
with any of the Company's or its subsidiaries' products or services); specific
business plans or goals of the Company, any of its subsidiaries or their
affiliates, and the strategies designed or devised by the Company, any of its
subsidiaries or their affiliates to achieve or reach those plans or goals; code
books, invoices and other financial statements; computer programs, software
systems or discs and printouts containing such programs or systems, which are
not commonly available to the public and which are customized for the Company,
any of its subsidiaries or their affiliates; databases containing any of the
information set out in this subsection; customer and industry lists compiled by
the Company, any of its subsidiaries or their affiliates; correspondence
containing any of the information set out in this subsection; internal reports;
personnel files; sales and advertising material or any other compilation of
information, written or unwritten, which contains any of the information set out
in this subsection in regard to the business of the Company, any of its
subsidiaries or their affiliates; provided, however, that nothing set forth
herein is intended to prohibit Executive from accepting employment with any
automobile or truck dealership or ancillary business after this Agreement is
terminated, whether the Agreement is terminated by the Company or by Executive.
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Executive's obligation under this Section 4.3(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
course of his employment, and no copy of any such shall be retained by him.
(b) During the Term and thereafter until June 30, 1997, 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 customer, client, supplier,
manufacturer, distributor, consultant, independent contractor or employee of the
Company or any of its subsidiaries or their affiliates. The provisions of this
Section 4.3(b) shall not apply if the Executive is terminated by the Company
without 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
five (5) 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 or UAG/Atlanta Board or the
Chief Executive Officer of United Auto Group 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, (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 contenders or its equivalent) by Executive with
respect to, a felony or any act of fraud, misappropriation or embezzlement under
federal or state law, (vii) the commission by Executive of an act of fraud or
embezzlement against the Company, or (viii) Executive's other material breach of
this Agreement.
(c) It is the desire and intent of the parties that the provisions of
this Section 4.3 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
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any particular portion of this Section 4.3 shall be adjudicated to be invalid or
unenforceable, this Section 4.3 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 4.3 in the particular
jurisdiction in which such adjudication is made.
(d) 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 4.3.
ARTICLE 5
TERMINATION
5.1. TERMINATION BY THE COMPANY. Subject to Section 5.4, the Company
shall have the right to terminate Executive's employment at any time.
5.2. DEATH. In the event Executive dies during the Term, this
Agreement shall automatically terminate (subject to Section 5.4 hereof), such
termination to be effective on the date of Executive's death.
5.3. 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 5.5 hereof), such termination to be
effective upon the giving of notice thereof to Executive in accordance with
Section 6.2 hereof.
5.4. EFFECT OF TERMINATION. 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.
ARTICLE 6
MISCELLANEOUS
6.1. BENEFIT OF AGREEMENT; ASSIGNMENT; BENEFICIARY. 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.
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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.
6.2. 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 John R. Smith c/o
Atlanta Toyota, Inc., 2345 Pleasant Hill Road, Duluth, Georgia 30136 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.
6.3. AMENDMENT. This Agreement may not be changed or modified except
by an instrument in writing signed by both of the parties hereto.
6.4. 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 any subsequent breach hereof. Any waiver must be in
writing and signed by Executive or the Company, as the case may be.
6.5. 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.
6.6. GOVERNING LAW. This Agreement shall be governed by, and
construed and interpreted in accordance with, the internal laws of the State of
Georgia without reference to the principles of conflict of laws.
6.7. 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.
6.8. 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.
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6.9. 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.
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement effective as of the date first above written.
ATLANTA TOYOTA, INC., a Texas corporation
By: /s/Jeffrey A. Gurske
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Its: Executive
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UAG ATLANTA, INC., a Delaware corporation
By: /s/John R. Smith
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Its: President
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John R. Smith
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