Exhibit 10.11
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT dated as of the 20th day of April, 1998 between
HOMETOWN AUTO RETAILERS, INC., a Delaware corporation (the "COMPANY"), with its
principal place of business at 000 Xxxxxxx Xxxxxxxx, Xxxxxxxxx, XX 00000 and
XXXXXXX X. XXXXXXXX XX. ("EXECUTIVE"), residing at 000 Xxxxxx Xxxxx, Xxxxxxx, XX
00000.
1. TERM.
(a) Subject to the terms and conditions hereof, the term of employment of
the Executive under this Agreement shall be for the five year period (the
"EMPLOYMENT PERIOD") commencing (the "COMMENCEMENT DATE") on the closing date of
the initial public offering of the Common Stock of the Company (the "OFFERING")
and expiring on the fifth anniversary thereof, unless sooner terminated as
provided in any of Sections 5, 6 or 7 hereof (the "TERMINATION DATE").
(b) The parties agree to use their reasonable best efforts to commence
discussions beginning on the fourth anniversary of the Commencement Date with
respect to the status of the Executive's employment after the Termination Date.
2. DUTIES AND RESPONSIBILITIES. The Company shall employ the Executive,
and the Executive accepts such employment, as Vice President--Mergers and
Acquisitions of the Company during the Employment Period. The Executive shall
report
to and be subject to the direction of the President and Chief Operating Officer
of the Company and shall render such executive and administrative services as
the Board of Directors may from time to time assign to him, provided they are
consistent with his status as Vice President--Mergers and Acquisitions. During
the Employment Period, the Executive shall devote his full time, energy, skill
and attention to the businesses of the Company and shall perform his duties in a
diligent, trustworthy, loyal and businesslike manner. Notwithstanding the
foregoing, the Executive shall have the right to engage in limited real estate
brokerage activities and to direct financing transactions to Falcon Financial,
LLC, PROVIDED, HOWEVER, that none of such activities shall, in the opinion of
the President, interfere with the performance by the Executive of his duties for
the Company and, PROVIDED, FURTHER, that none of such activities shall be
commenced by the Executive without the prior written consent in each instance of
the President in his sole discretion.
3. COMPENSATION AND BENEFITS. During the Employment Term:
(a) The Executive's base compensation shall be at the rate of
$150,000 per year, payable in regular installments in accordance with the
Company's practice for its executives, less applicable withholding for income
and employment taxes as required by law and other deductions as to which the
Executive shall agree. Such base compensation shall be subject to increases as
and when determined by the Board in its sole discretion.
(b) Except as otherwise herein provided, the Executive shall be
entitled to participate, to the extent he qualifies, in any bonus or other
incentive compensation, profit-sharing or retirement plans, life or health
insurance plans or other
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benefit plans maintained by the Company, upon such terms and conditions as are
generally made available to executives of the Company.
(c) The Executive shall be entitled to reimbursement of all
reasonable, ordinary and necessary business related expenses incurred by him in
the course of his duties and upon compliance with the Company's procedures.
(d) The Executive shall be entitled to paid vacation during each
calendar year in accordance with the policies and procedures of the Company in
effect from time to time.
4. STOCK OPTIONS. The Company's present intention is to adopt a Stock
Option Plan (the "STOCK OPTION PLAN"). Promptly following its adoption of the
Stock Option Plan, the Company shall grant to the Executive options (the "STOCK
OPTIONS") to acquire 14,000 shares of Class A Common Stock, par value $.001 per
share, of the Company (the "COMMON STOCK") at a price equal to the per share
price to the public in the Offering and upon such other terms and conditions as
are set forth therein. Such Stock Options are intended to constitute Incentive
Stock Options as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "CODE") to the maximum extent permitted under the Code. Such Stock
Options may be exercised at such time and in such manner as provided in the
Stock Option Agreement; PROVIDED, HOWEVER, that one-third of such Stock Options
shall vest and become exercisable on each anniversary of the Commencement Date
during the Employment Period. In the event that the Executive's employment is
terminated for any reason other than death or Disability (as defined in Section
5 hereof) any nonvested Incentive Stock Options shall immediately be cancelled
without any further action being required to be taken by the Company.
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5. TERMINATION IN CASE OF DISABILITY; DEATH. In case of a Disability
which, for purposes of this Agreement only, shall mean that as a result of
illness or injury, the Executive is unable substantially to perform his duties
hereunder for a period of at least 180 consecutive days, or a total of at least
270 days in any period of 365 consecutive days, the Company may terminate the
Executive's employment hereunder upon giving the Executive at least thirty (30)
days' written notice of termination. In addition, this Agreement shall
automatically terminate upon the death of the Executive.
6. TERMINATION BY THE COMPANY FOR CAUSE.
(a) The Company may terminate the Executive's employment for Cause
(as defined in paragraph (b) below). Upon such termination, the Company shall
have no further obligations to the Executive on account of his employment by the
Company.
(b) "CAUSE" shall mean (i) a material breach by the Executive of any
of the terms, covenants, agreements or representations set forth herein, or (ii)
the Executive's engaging in misconduct which is materially injurious to the
Company, monetarily or otherwise, including, but not limited to, engaging in any
conduct which constitutes a crime under federal, state or local laws (other than
minor traffic violations).
7. TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive may
terminate his employment for "GOOD REASON" if: (i) he is assigned, without his
express written consent, any duties inconsistent with his positions, duties,
responsibilities, authority and status with the Company as of the date hereof,
or any adverse change in his reporting responsibilities or titles as in effect
as of the date hereof except in connection with the termination of his
employment by him without Good Reason; or (ii) his
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compensation is reduced other than in connection with a Company-wide reduction
of executive compensation. Upon such termination, the Company's sole obligation
to the Executive, in addition to paying any amounts owed to the Executive
through the date of termination, shall be to continue paying the base
compensation provided for herein, subject to any reduction permitted by
applicable law in connection with the Executive's duty to mitigate such damages.
The Executive hereby agrees that he shall not have any other claims or rights
against the Company.
8. DATE AND TERMS OF TERMINATION. "DATE OF TERMINATION" shall mean
the date on which a notice of termination is given. In the event of termination
under paragraph 5, 6 or 7, the Executive or his estate, as the case may be,
shall be entitled to salary and benefits accrued to the Date of Termination, as
well as the right to convert benefits such as health, disability and life
insurance to his own name and continue the same at his own expense. In the
event of termination by the Executive pursuant to paragraph 7, there shall be no
duty on the part of the Executive to mitigate damages which may be suffered by
the Company on account of such termination.
9. CERTAIN EMPLOYEE COVENANTS.
9.1 CONFIDENTIALITY. The Executive agrees that during the term hereof, or
at any time thereafter, he will not, directly or indirectly, use for his own
benefit or for the benefit of any third party, or reveal or cause to be revealed
to any person, firm, entity or corporation, any Confidential Information (as
defined herein) which relates to the Company or any Affiliate of the Company or
any of their customers and that upon termination of his employment he will
deliver all lists of customers, notes, records and all other property belonging
to the Company or any Affiliate of the Company or relating to
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its or their business or customers. "CONFIDENTIAL INFORMATION" shall include,
but not be limited to, trade secrets, supplier lists, customer lists,
intellectual property and any other information, whether or not proprietary,
which relates to the business of the Company or any Affiliate of the Company and
which otherwise is not considered to be public information. Confidential
Information shall not include general information regarding the automotive
industry which is generally known to those involved in the operation of an
automotive dealership.
9.2 NON-COMPETE. The Executive further agrees that during the term of
this Agreement and for a period of two (2) years after the termination of this
Agreement, he will not, directly or indirectly, in any manner: (i) engage in any
other business in which the Company or any Affiliate of the Company is engaged
on the Date of Termination within a 20-mile radius of any business then
conducted by the Company or any Affiliate of the Company, and will not, directly
or indirectly, own, manage, operate, join, control or participate in the
ownership, management, operation or control of, or be employed by or connected
in any manner with any corporation, firm, entity, or business that is so engaged
unless duly authorized by written consent of the Company; PROVIDED, HOWEVER,
that nothing herein shall prohibit the Executive from owning not more than three
(3%) percent of the outstanding stock of any publicly held corporation, (ii)
persuade or attempt to persuade any employee of the Company or of any Affiliate
of the Company to leave the employ of the Company or of such Affiliate or to
become employed by any other entity, (iii) persuade or attempt to persuade any
current client or former client to reduce the amount of business it does or
intends or anticipates doing with the Company or with any Affiliate of the
Company or (iv) take any action which might divert from the
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Company or any Affiliate of the Company any opportunity of which he became aware
during his employment with the Company or with any Affiliate of the Company
which would be within the scope of any of the businesses then engaged in or
planned to be engaged in by the Company or any Affiliate of the Company.
9.3 GENERAL PROVISIONS.
(a) The Executive acknowledges that a violation of any of the covenants
contained in paragraph 2 or in this paragraph 9 may cause irreparable injury to
the Company or any Affiliate of the Company and that the Company, including any
Affiliate of the Company, will be entitled, in addition to any other rights and
remedies it may have, to injunctive relief; PROVIDED, HOWEVER, that nothing
contained herein constitutes a waiver by the Executive of his rights to contest
the existence of any such violation of such covenants.
(b) In the event the covenants contained in this paragraph 9 should be
held by any court or other duly constituted judicial authority to be void or
otherwise unenforceable in any particular jurisdiction or with respect to any
particular activity, then such covenants so affected shall be deemed to have
been amended and modified so as to eliminate therefrom the particular
jurisdiction or activity as to which such covenants are so held to be void or
otherwise unenforceable, and, as to all other jurisdictions and activities
covered hereby, the terms and provisions hereof shall remain in full force and
effect.
(c) As used herein, the term "AFFILIATE" shall mean any corporation or
other entity of which the Company owns, directly or indirectly, at least 40% of
the equity interest thereof.
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(d) In the event that this Agreement shall be terminated, then
notwithstanding such termination, the provisions of this paragraph 9 shall
survive such termination.
10. EXECUTIVE REPRESENTATIONS. The Executive hereby represents and
warrants to the Company that he is not a party to any other agreement or
understanding, whether of employment or otherwise, which would in any way
restrict or prohibit him from undertaking or performing the duties and
obligations provided for herein in accordance with the terms and conditions of
this Agreement.
11. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure to the
benefit of and be enforceable by the parties hereto, their personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amount would still
be payable to him hereunder had he continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to his devisee, legatee or other designee or, if there be no such
designee, to his estate.
12. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement (except that
all notices to the Company shall be directed to the attention of a senior
officer of the Company other than the Executive, with a copy to the Secretary of
the Company) or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of address
shall be effective only upon receipt.
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13. GOVERNING LAW; CHANGE OR TERMINATION. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Connecticut applicable to agreements made and to be performed in Connecticut,
and may not be changed or terminated orally.
14. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement in any respect shall not affect the validity or enforceability of such
provision in any other respect or of any other provision of this Agreement, all
of which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Employment
Agreement to be duly executed and delivered as of the date first hereinabove
written.
Hometown Auto Retailers, Inc.
By: /s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
President and Chief Operating Officer
/s/ Xxxxxxx X. Xxxxxxxx Xx.
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Xxxxxxx X. Xxxxxxxx Xx.
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