MANAGEMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the ____ day of October,
1996, by and between UNITED AUTO GROUP, INC., a Delaware corporation ("UAG"),
UAG WEST, INC., a Delaware corporation ("Company"), and SCOTTSDALE JAGUAR, LTD.,
an Arizona corporation ("Dealership").
W I T N E S S E T H:
WHEREAS, Dealership operates a Jaguar automobile dealership, to service and
sell new and used Jaguar automobiles;
WHEREAS, Steven Knappenberger ("Knappenberger") is the Dealer Principal of
the Dealership;
WHEREAS, George W. Brochick ("Brochick") is the General Manager of the
Dealership and is responsible for day-to-day operating control of the
Dealership;
WHEREAS, Knappenberger has entered into a long-term employment agreement
with the Company pursuant to which Knappenberger is employed as President and
Chief Operating Officer of the Company (the "Knappenberger Employment
Agreement");
WHEREAS, Brochick has entered into a long-term employment agreement with
the Company pursuant to which Brochick is employed as Executive Vice-President
of the Company (the "Brochick Employment Agreement");
WHEREAS, Dealership and Company desire to enter into this Agreement
pursuant to which Dealership will presently maintain its current management
team;
NOW, THEREFORE, in consideration for the premises and of the promises and
agreements hereinafter set forth and for other good and valuable consideration,
the adequacy and sufficiency of which is hereby acknowledged, Dealership and
Company mutually agree as follows:
ARTICLE 1
MANAGEMENT AND OPERATION OF THE DEALERSHIP
1.1 Company shall employ Knappenberger as President and Chief Operating
Officer of the Company pursuant to the terms of the Knappenberger Employment
Agreement.
1.2 Company shall employ Brochick as Executive Vice-President of the
Company pursuant to the terms of the Brochick Employment Agreement.
1.3 Knappenberger shall continue to operate as Dealer Principal of the
Dealership. Brochick shall continue to operate as President and General Manager
of the Dealership and will be responsible for day-to-day operating control of
the Dealership and will continue to be the Dealer Operator. Any changes in the
Dealer Operator or Dealer Principal will be made in compliance with the terms of
the Dealer Agreement between Jaguar Cars and the Dealership (the "Dealership
Agreement").
1.4 The Dealership will continue to be operated in accordance with the
terms of the Dealership Agreement.
1.5 During the term of this Agreement, the Company shall provide or
arrange for financing necessary to operate the Dealership and to maintain
working capital levels as the Dealership and the Company determine are
reasonably necessary and to satisfy its liability under that certain
Indemnification Agreement of even date herewith by and between Dealership and
its stockholders. UAG and the Company shall guarantee any such indebtedness, as
may be reasonably necessary. Dealership agrees to pay the Company or UAG a
commercially reasonable fee for arranging or guaranteeing any third party
financing.
ARTICLE 2
MANAGEMENT FEE
2.1 As compensation for the services to be rendered hereunder by the
Company through its employees, Dealership shall pay to Company an annual fee of
Five Hundred Thousand Dollars ($500,000), payable monthly, which fee shall be
increased on January 1, 1998 and annually thereafter to an amount equal to the
then current annual fee plus a percentage of the then current annual fee equal
to the percentage increase in the Consumer Price Index published from time to
time by the United States Department of Labor for the preceding twelve month
period. The management fee for each monthly period shall be paid no later than
fifteen (15) days after the end of such monthly period, except that Dealership
may defer payment of the management fee for any monthly period to the extent
that the management fee during such period exceeds the Dealership's net income
after tax (calculated before taking into account the management fee) for such
period, and after establishment of any reserves for working capital as the
Dealership and the Company determines are reasonably necessary or for other
taxes due or to become due or indemnities in respect thereof. If the Dealership
defers payment of any management fees and has net income after tax in any
subsequent period, Dealership shall pay such deferred management fees as
promptly as reasonably possible.
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2.2 Dealership shall be solely liable for the costs and expenses of
maintaining and operating the Dealership and shall pay all costs and expenses of
maintaining, operating, and supervising the operation of the Dealership,
including without limitation, the salaries, bonuses, and fringe benefits of all
personnel employed by or for operations at the Dealership (other than the
salaries and bonuses of Knappenberger and Brochick). The termination of
Knappenberger's or Brochick's employment with the Company shall not terminate
this Agreement and shall have no effect on the Dealership's obligations
hereunder.
ARTICLE 3
TERM
The term of this agreement shall commence as of the date first written
above and shall continue until the earlier of (i) the thirtieth (30th)
anniversary of the date of this Agreement or (ii) the loss by Dealership of its
Jaguar franchise.
ARTICLE 4
MISCELLANEOUS
4.1 INDEMNIFICATION. Dealership agrees to indemnify, fully defend, save
and hold harmless Company and any of its respective officers, directors,
employees, stockholders, advisers, representatives, agents and affiliates (each
an "Indemnified Party"), if an Indemnified Party shall at any time or from time
to time suffer any Costs (as defined below) arising, directly or indirectly, out
of or resulting from, or shall pay or become obligated to pay any sum on account
of, this Agreement or UAG West's obligations hereunder other than Costs arising
out of UAG West's breach of this Agreement, gross negligence or wilful
misconduct, as to which UAG West shall indemnify Dealership for all Costs
arising therefrom, and provided, further, that nothing herein shall be deemed to
modify or limit any other obligation of the parties to one another. For
purposes of this Agreement, Costs shall mean all liabilities, losses, costs,
damages, expenses, claims, attorneys' fees, experts' fees, consultants' fees and
disbursements of any kind or of any nature whatsoever.
4.2 HEADINGS. The section headings herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be deemed
to limit or otherwise affect any of the provisions hereof.
4.3 NOTICES. All notices or other communications required or permitted
hereunder shall be given in writing and shall be deemed sufficient if delivered
by hand, recognized overnight delivery service or facsimile transmission or
mailed by registered or certified mail, postage prepaid (return receipt
requested), as follows:
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If to the Company:
Steven Knappenberger
6725 E. McDowell Road
Scottsdale, Arizona 85257
with a copy to:
Snell & Wilmer, L.L.P.
One Arizona Center
Phoenix, Arizona 85004-0001
Attn: Steven D. Pidgeon, Esq.
If to UAG West:
United Auto Group, Inc.
375 Park Avenue
New York, New York 10022
Attn: George G. Lowrance, Esq.,
Executive Vice President
with a copy to:
Rogers & Hardin
2700 Cain Tower,
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Michael Rosenzweig, Esq.
or such other address as shall be furnished in writing by such party, and any
such notice or communication shall be effective and be deemed to have been given
as of the date so delivered or three (3) days after the date so mailed;
PROVIDED, HOWEVER, that any notice or communication changing any of the
addresses set forth above shall be effective and deemed given only upon its
receipt.
4.4 WAIVER AND AMENDMENTS. Any failure of a party to comply with any
obligation, covenant, agreement or condition herein may be expressly waived in
writing by the other party, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. This Agreement may be amended, modified or supplemented only by a
written instrument executed by the parties hereto.
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4.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
4.6 SEVERABILITY. If any one or more of the provisions of this Agreement
shall be held to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of this Agreement shall not be
affected thereby. To the extent permitted by applicable law, each party waives
any provision of law which renders any provision of this Agreement invalid,
illegal or unenforceable in any respect.
4.7 TIME IS OF THE ESSENCE. Time is of the essence for purposes of this
Agreement.
4.8 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Arizona, without giving effect to the
choice-of-law provisions thereof.
4.9 SPECIFIC PERFORMANCE. The parties hereto agree that any violation of
this Agreement will result in irreparable injury to the non-breaching party and
that damages at law would not be reasonable or adequate compensation to such
non-breaching party for a violation of this Agreement, and the non-breaching
party shall be entitled to have the provisions of this Agreement specifically
enforced by preliminary and permanent injunctive relief without the necessity of
proving actual damages and without posting bond or other security.
4.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of and be enforceable against the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered, as of the date and year first above written.
UNITED AUTO GROUP, INC.
By:______________________________
Its:___________________________
UAG WEST, INC.
By:______________________________
Its:___________________________
SCOTTSDALE JAGUAR, LTD.
By:______________________________
Its:___________________________
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