UNITED AUTO GROUP, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
March 7, 1997
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
c/o United Auto Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Consulting Agreement
--------------------
Dear ▇▇▇▇:
This letter will set forth our mutual agreement regarding your resignation as
Chief Executive Officer of United Auto Group, Inc. (the "Company") and your
continuing to serve as a consultant to the Company.
1. Your resignation as Chief Executive Officer will be effective as of April
17, 1997 (your "Termination Date"). Until such date, you may continue to
occupy your current office and have the services of your secretary.
2. Your resignation as Chairman of the Board of Directors of the Company, as
a member of all committees thereof (including the Executive Committee),
and as an officer, employee, director and committee member of any and all
subsidiaries and affiliates of the Company will also be effective as of
April 17, 1997 (except for your resignation as a director of Foamex
International Inc., which will be effective as of the date hereof), and
you agree to execute the forms of resignation attached as Exhibit A
hereto and any additional documents necessary to effect all of the above
resignations as of such date.
3. In consideration for the covenants made by you under this letter and
subject to your execution and delivery on March 14, 1997 of your
irrevocable written confirmation that the seven-day revocation period
referenced in clause 13 below has expired and that you have elected not
to revoke the agreement set forth herein, the Company agrees to pay you
the following amounts, and to provide you with the following benefits, in
full satisfaction of all amounts required
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
March 7, 1997
Page 2
to be provided to you under your Employment Agreement, dated as of June
21, 1996 (your "Employment Agreement"): (i) on April 1, 1997, a bonus in
the amount of $375,000 and, on your Termination Date, base salary earned
as of your Termination Date and not yet paid, (ii) a monthly payment,
payable in accordance with the Company's normal pay practices, for the
period commencing on your Termination Date and ending December 31, 2000
(the "Salary Continuation Period"), at the rate of $83,333 per month,
(iii) on your Termination Date, full title in the Company automobile
currently being used by you, (iv) an unaccountable monthly allowance
through December 31, 2000, payable at the time of each payment under
subclause (ii) above, in the amount of $8,333; (v) continued
participation in the Company's life insurance plan, on the same basis as
for other Company employees, in accordance with the terms and conditions
of such plan and to the extent such coverage is not prevented by
applicable law or regulation and continued reimbursement for your
coverage under your prior employer's medical and dental plans on a "tax
grossed-up basis"; provided, however, that such participation and
reimbursement will cease on the earlier of (A) December 31, 2000, and (B)
the date or dates you receive similar coverage and benefits under the
plans and programs of a subsequent employer (such coverage and benefits
to be determined on a coverage-by-coverage, or benefit-by-benefit,
basis); (vi) the accelerated vesting of all unvested stock options, and
the grant of options (as described more fully in clause 4 below) and
(vii) all reasonable attorney's fees and expenses (not to exceed $18,000)
incurred by you in connection with the negotiation of this letter.
4. Subject to your execution and delivery on March 14, 1997 of your
irrevocable written confirmation that the seven day revocation period
referenced in clause 13 below has expired and that you have elected not
to revoke the agreement set forth herein, (i) the Company confirms that
the Stock Option Committee of the Company's Board of Directors has
granted you an option under the Company's Stock Option Plan to purchase
up to 100,000 shares of the Company's common stock at an exercise price
equal to the reported closing price of such common stock on April 16,
1997 on the New York Stock Exchange, which option shall be fully vested
and exercisable from April 17, 1997 and shall have the terms and
conditions set forth in the Stock Option Agreement attached hereto as
Exhibit B and (ii) notwithstanding any prior agreements to the contrary,
all options previously granted to you and referenced
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
March 7, 1997
Page 3
in Section 3.1(c) of your Employment Agreement will, as previously
contemplated, be fully vested and exercisable from April 17, 1997 through
and including April 17, 2001. To the extent any such options have not
been exercised on or prior to April 17, 2001, they will be immediately
forfeited. To the extent the issuance of shares upon exercise of any of
the options referred to in this clause 4 is not currently registered
under the Securities Act of 1933, the Company will file a registration
statement on Form S-8 on or before April 30, 1997 covering such issuance
and shall use its best efforts to keep all such registrations effective
until April 17, 2001. It is understood that the Stockholders Agreement
referred to in Section 3.1(c)(iv) of your Employment Agreement is no
longer in effect. The Company shall use commercially reasonable efforts
to obtain from ▇.▇. ▇▇▇▇▇▇ Securities Inc. a release from the 180-day
lock-up agreement as of April 17, 1997, for the 26,118 shares owned by
you and the shares issuable upon exercise of your options.
5. The provisions of Section 4.3(a) of your Employment Agreement (regarding
confidentiality) shall survive the execution of this letter agreement and
continue, without time limitation. Additionally, the provisions of
Section 4.3(b) of your Employment Agreement (regarding non-competition)
shall survive the execution of this letter agreement, and continue
through April 16, 1998. You agree that the Company will suffer
irreparable damage if the terms of any such provisions are breached and,
in addition to all other remedies available to the Company, that the
Company will be entitled as a matter of right to injunctive relief in
respect of any such breach.
6. The provisions of Sections 6.1, 6.2, 6.5 and 6.8 of your Employment
Agreement will also survive the execution of this letter agreement.
7. You affirm that you will not make any statements at any time that
disparage the reputation of the Company or any of its affiliates, or any
officers, directors, employees or agents of the Company or any of its
affiliates, or, until December 31, 2000, any automobile dealers or
manufacturers. The Company, on behalf of itself and its executive
officers, agrees that it will not make any statements at any time that
disparage your reputation.
8. The form of press release confirming your resignation described in
clauses 1 and 2 herein shall be subject
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
March 7, 1997
Page 4
to our mutual agreement. Any statements by the Company or you to third
parties or to employees of the Company regarding the termination of your
employment shall be consistent with such press release or subject to our
mutual agreement.
9. For the period commencing on your Termination Date and ending on December
31, 2000, subject to your other personal and business commitments, you
agree to provide such consulting services at mutually convenient times
and places as the Company may reasonably request, which requests shall be
consistent with your knowledge and responsibilities as former Chief
Executive Officer and Chairman of the Board of Directors of the Company.
Notwithstanding anything to the contrary in this letter, but without
limiting any other remedies available to the Company, a breach of this
clause 9 will not entitle the Company to withhold payments set forth in
clauses 3(ii) and (iv) or to offset any alleged damages for such breaches
against such payments.
10. In consideration for the payments set forth in this letter, you and your
heirs, executors, administrators, legal representatives, agents,
successors in interest and assigns, hereby knowingly and voluntarily
waive and unconditionally release and forever discharge, as of the date
hereof and as of your Termination Date, from all or any manner of
actions, causes and causes of actions, suits, debts, obligations,
damages, complaints, liabilities, losses, covenants, contracts,
controversies, agreements, promises, variances, trespasses, judgments,
and expenses (including attorneys' fees and costs), executions, claims
and demands whatsoever at law or in equity which you ever had, now have,
or which you hereafter can, shall or may have against the Company on or
prior to the date of this letter and your Termination Date, as the case
may be. This release and waiver includes but is not limited to any rights
or claims under United States federal, state or local law and the
national or local law of any foreign country (statutory or decisional),
for payments due or benefits required to be provided under your
Employment Agreement, for wrongful or abusive discharge, for breach of
your Employment Agreement or any other contract, or for discrimination
based upon race, color, ethnicity, sex, age, national origin, religion,
disability, sexual orientation, or any other unlawful criterion or
circumstance, including rights or claims under the Age Discrimination in
Employment Act of 1967, as amended. In this clause 10, the word "Company"
means United
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
March 7, 1997
Page 5
Auto Group, Inc. and its respective subsidiaries, affiliates, employees,
officers, directors, holders of 5% or more of the Company's common stock
(and their affiliates), representatives and agents, past or present, and
any person or entity which may succeed to the rights and liabilities of
any such entities or persons by assignment or otherwise. Notwithstanding
the foregoing, nothing in this clause 10 shall be deemed to release or
waive any obligations of the Company under this letter, your stock option
agreements or the Registration Rights Agreement, dated October 15, 1993,
as amended (collectively, the "Agreements").
11. Subject to your execution and delivery on March 14, 1997 of your
irrevocable written confirmation that the seven day revocation period
referenced in clause 13 below has expired and that you have elected not
to revoke the agreement set forth herein, in consideration for your
covenants in this letter, the Company hereby unconditionally releases and
forever discharges , as of the date hereof and as of your Termination
Date, you from all or any manner of actions, causes and causes of
actions, suits, debts, obligations, damages, complaints, liabilities,
losses, covenants, contracts, controversies, agreements, promises,
variances, trespasses, judgments, and expenses (including attorneys' fees
and costs), executions, claims and demands whatsoever at law or in equity
which the Company ever had, now has, or which the Company hereafter can,
shall or may have on or prior to the date of this letter and your
Termination Date, as the case may be. Notwithstanding the foregoing,
nothing in this clause 11 shall be deemed to release or discharge any of
your obligations under any of the Agreements.
12. You affirm that, prior to the execution of this letter, you have
consulted with an attorney concerning the terms and conditions set forth
herein, and that you have been given up to 21 days to consider signing
this letter.
13. For a period of seven days following your signing of this letter, you may
revoke and cancel the agreement set forth herein.
14. You will be under no obligation to seek other employment and there shall
be no offset against amounts due you under this letter on account of any
remuneration attributable to any subsequent employment that you may
obtain except as specifically provided in
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
March 7, 1997
Page 6
clause 3 above; however, during the Salary Continuation Period, you
hereby agree to inform the Company upon your participation in employee
benefit plans or programs of a subsequent employer which provide medical,
dental, hospitalization or life insurance coverage by such subsequent
employer to the extent you are provided with coverage and benefits
similar to those you are receiving from the Company.
15. You agree, for so long as this letter agreement is otherwise
confidential, that you will not disclose the fact of this letter or any
of its terms or provisions to any person without the prior written
consent of the Company; provided, however, that nothing in this clause 15
shall prohibit disclosure of such information to the extent required by
law, nor prohibit disclosure by you to any legal or financial consultant,
member of your immediate family or prospective employer, if such person
first agrees to be bound by the confidentiality provisions of this clause
15. It is acknowledged that this letter will be filed by the Company with
the Securities and Exchange Commission pursuant to applicable law.
16. This letter may be executed in any number of counterparts, each of which
when so executed and delivered shall constitute an original and which all
together shall constitute one agreement, with such counterparts being
deliverable by facsimile with the original being transmitted by overnight
courier.
17. This letter shall bind and inure to the benefit of the Company's
successors and permitted assigns.
18. Except for clauses 10 and 11 herein, if any term or provision of this
letter, or the application thereof, shall, to any extent, be invalid or
unenforceable, the remaining terms and provisions of this letter or the
application thereof shall not be invalidated thereby, and each term and
provision hereof shall be construed with all other remaining terms and
provisions hereof to effect the intent of the Company and you to the
fullest extent permitted by law. In the event clause 10 shall be invalid
or unenforceable, then this entire agreement shall become null and void
and any payments of any kind made to you hereunder shall be returned.
19. This letter may not be amended, waived or modified, in whole or in part,
except by a writing signed by each of you and the Company.
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
March 7, 1997
Page 7
20. Except for clause 10 herein, nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person or
entity (other than you or your beneficiaries and the Company) any rights
or remedies under or by reason of this letter.
21. You understand that nothing contained in this letter shall be deemed or
construed as an admission of wrongdoing or liability on your part or on
the part of the Company.
22. This letter (including the provisions of your Employment Agreement
explicitly incorporated by reference herein) and the other Agreements
constitute the entire agreement between you and the Company and supersede
all other prior agreements and understandings, oral and written, between
you and the Company with respect to the subject matter hereof.
23. This letter shall be construed and enforced in accordance with, and shall
be governed by, the laws of the State of New York without giving effect
to that State's choice of law principles.
24. The payments due to you hereunder shall be subject to reduction to
satisfy all applicable Federal, State and local income and employment tax
withholding obligations. To the extent payments hereunder are not
withheld, (a) you represent and warrant to the Company that you shall pay
all taxes due thereon and (b) you shall furnish such form (but not your
income tax return) reasonably requested by the Company to evidence such
payment. You shall indemnify the Company from all taxes, interest,
penalty or other loss (including reasonable attorneys' fees) arising from
any failure by the Company to withhold any such payments.
25. Any disputes arising under or in connection with this letter shall, at
the election of either you or the Company, be resolved by binding
arbitration, to be held in New York City in accordance with the rules and
procedures of the American Arbitration Association. Judgment upon the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Each party shall bear his or its own costs of the
arbitration or litigation. Pending the resolution of any arbitration or
court proceeding, the Company shall continue payment of all amounts due
you under this letter and all benefits to which you are entitled at the
time the dispute arises.
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
March 7, 1997
Page 8
If the foregoing is acceptable to you, please sign, date and return the
attached copy of this letter to the undersigned by hand or by express mail.
▇▇▇▇, I don't want the formal terms of this letter to obscure our appreciation
for your valuable service to the Company. As you begin a new phase of your
career, let me assure you that all of us wish you great success in your new
endeavors.
Very truly yours,
UNITED AUTO GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice Chairman and
Chairman of the
Executive Committee
AGREED: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ March 7, 1997
--------------------- ---------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Date
EXHIBIT A
FORMS OF RESIGNATION
Board of Directors
United Auto Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
I, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, hereby resign as Chief Executive Officer of United
Auto Group, Inc. ("UAG") as of April 17, 1997. Furthermore, as of that date, I
hereby resign as Chairman of the Board of Directors of UAG, as a member of all
committees thereof (including the Executive Committee), and as an officer,
employee, director and committee member of any and all subsidiaries and
affiliates of UAG.
------------------- ----------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Date
Board of Directors
Foamex International Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
I, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, hereby resign from the Board of Directors of
Foamex International Inc. and all committees thereof as of March 7, 1997.
------------------- ----------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Date
EXHIBIT B
STOCK OPTION AGREEMENT
----------------------
This Stock Option Agreement ("Agreement") is dated as of April 17,
1997, and is entered into between United Auto Group, Inc., a Delaware
corporation (the "Company"), and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ("Executive").
W I T N E S S E T H:
WHEREAS, the Company is a party to an employment agreement with
Executive, dated as of June 21, 1996 (as amended, supplemented or otherwise
modified from time to time, the "Employment Agreement"); and
WHEREAS, the Company is a party to a consulting agreement with
Executive, dated March 7, 1997 (the "Consulting Agreement"); and
WHEREAS, pursuant to the Employment Agreement and Consulting
Agreement, the Company is granting the Executive options to purchase shares of
voting common stock, par value $0.0001 per share (the "Common Stock"), of the
Company, on the terms and conditions set forth herein and in the Employment and
Consulting Agreements.
NOW, THEREFORE, the parties hereby agree:
1. Grant of Options. The Company hereby grants to the Executive an
option (the "Option") to purchase, at the exercise price of $_____ per share,
100,000 shares of Common Stock.
2. Exercisability of Options. The Option will be fully vested and
exercisable as of the date of this Agreement.
3. Method of Exercising Options. (a) The Executive may exercise the
Option by delivering to the Company a written notice stating the number of
shares that the Executive has elected to purchase at that time from the Company
and full payment of the purchase price of the shares then to be purchased.
Payment of the purchase price of the shares may be made (i) by certified or
bank cashier's check payable to the order of the Company, or (ii) in the
discretion of the Board of Directors of the Company or duly authorized
committee thereof, by such other method as may be approved by such board or
committee from time to time.
(b) At the time of exercise, the Executive shall pay to the Company
such amount as is necessary to satisfy the Company's obligation to withhold
Federal, state or local income or other taxes incurred by reason of the
exercise or the transfer of shares thereupon.
4. Issuance of Shares. As promptly as practicable after receipt of
notification of exercise, full payment of purchase price and satisfaction of
tax withholding as provided in Section 3, the Company shall issue or transfer
to the Executive the number of shares as to which the Options have been so
exercised and shall deliver to the Executive a certificate or certificates
therefor, registered in his name.
5. Terms and Conditions of Exercise. (i) The Option shall terminate on
April 17, 2001.
(ii) The Option shall not be transferable, except by will or the
laws of descent and distribution, provided that Executive may at any time
transfer all or a portion of the Option to his spouse, any of his descendants
or trusts for the benefit of Executive, his spouse or his descendants, subject
to all of the terms and conditions of the Option.
(iii) Whenever the word "Executive" is used in any provision of
this Agreement under circumstances where the provision should logically be
construed to apply to the executors, the administrators, personal
representatives, or the person or persons to whom the Option may be transferred
pursuant to clause (ii) of this Section 5, the word "Executive" shall be deemed
to include such person or persons.
6. Rights as Stockholder. The Executive or a transferee of the Option
shall have no rights as a stockholder with respect to any shares of Common
Stock covered by the Option until he shall have become the holder of record of
such shares.
7. Recapitalizations, Reorganizations, Etc. (a) The existence of the
Option shall not affect the power of the Company or its stockholders to
accomplish adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business, or any merger or consolidation
of the Company, or any issue of stock or of options, warrants or rights to
purchase stock or securities ahead of or affecting any of the shares of Common
Stock or the rights thereof or convertible into or exchangeable for shares of
Common Stock, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act.
(b) Upon any change in the outstanding shares of Common Stock by
reason of any recapitalization, merger,
-2-
consolidation, spin-off, combination or exchange of shares or other corporate
change, or any distributions to common shareholders other than ordinary cash
dividends, the Company shall make such substitutions or adjustments as are
appropriate and equitable, as to the number or kind of shares of Common Stock
or other securities covered by the Option and the exercise price thereof.
8. Notice. Any notice required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered or if sent by
telegram, telex, facsimile transmission or by registered or certified mail,
postage prepaid, with return receipt requested, as follows:
(a) If to the Company:
United Auto Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
or to such other address or to the attention of such other person as the
Company shall designate by written notice to the Executive; and
(b) If to the Executive:
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other address as the Executive shall designate by written notice to
the Company. Any notice given hereunder shall be deemed to have been given at
the time of receipt thereof by the party to whom such notice is given.
9. Non-Qualified Option. The Option is not an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.
10. Any disputes arising under or in connection with this Agreement
shall be resolved as provided in clause 25 of the Consulting Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
UNITED AUTO GROUP, INC.
-3-
By:
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Vice President, Secretary
and General Counsel
----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-4-
