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Exhibit 10.2
BENEFITS AGREEMENT
THIS BENEFITS AGREEMENT ("Agreement") dated as of June 30,
2000 is by and between AutoNation, Inc., a Delaware corporation (together with
its successors and permitted assigns, "AutoNation"), and ANC Rental Corporation,
a Delaware corporation (together with its successors and permitted assigns,
"ANC").
RECITALS
WHEREAS, ANC is presently a wholly-owned subsidiary of
AutoNation.
WHEREAS, the Board of Directors of AutoNation has determined
that it is in the best interest of AutoNation (i) to separate AutoNation's
automotive rental businesses and operations (the "Automotive Rental Business")
from AutoNation's other businesses and operations and (ii) to distribute to
AutoNation's stockholders on a tax-free basis all of the outstanding shares of
ANC's common stock (the "Distribution");
WHEREAS, AutoNation and ANC have entered into a Separation and
Distribution Agreement dated as of June 30, 2000 (the "Distribution Agreement")
which contemplates the Distribution and the execution and delivery of this
Agreement;
WHEREAS, this Agreement sets forth certain matters regarding
the treatment of employee benefits as a result of, and in connection with, the
Distribution.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements and covenants contained in this Agreement, the parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms have the following
meanings:
1.01 "Acquired Plans" means the pension and savings plans
listed on Schedule A which are sponsored and maintained by ANC or a member of
the ANC Group.
1.02 "Action" means any demand, action, suit, countersuit,
arbitration, inquiry, proceeding, or investigation by or before any federal,
state, local, foreign, or international Governmental Authority, or any
arbitration or mediation tribunal or any demand, action, suit, countersuit or
assertion of any claim by a third party.
1.03 "Active ANC Employee" means:
(a) Any person who is employed in the ANC Business on or after
January 1, 2000, including any employee of the ANC Business who is absent from
work on January 1, 2000 on account of sick leave, short-term disability, leave
of absence, or otherwise, and including any former employee of the ANC Business
who is receiving severance payments on January 1, 2000;
(b) Any corporate staff employee of the AutoNation Group who
is designated by ANC and AutoNation as an employee to whom ANC will offer
employment as of the Effective Date and who accepts such offer; and
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(c) Any employee of the ANC Business as of January 1, 2000 who
is determined to have incurred a long-term disability on or after January 1,
2000. The term "Active ANC Employee" shall not include an employee who is
determined before January 1, 2000 to have incurred a long-term disability.
1.04 "ANC Business" means:
(a) the Automotive Rental Business, including without
limitation, the business and operations of ANC and its present or former
subsidiaries or any other member of the ANC Group, consisting principally of all
operations conducted under the name of Alamo, National, or CarTemps USA,
including the rental of automobiles, trucks, and other vehicles in the daily
rental or replacement market; and
(b) any terminated, divested, or discontinued businesses or
operations that, at the time of termination, divestiture, or discontinuance,
primarily related to the Automotive Rental Business as then conducted.
1.05 "ANC Group" means ANC, its subsidiaries and any
subsidiary or division of any member of the AutoNation Group that is operated
under the direct or indirect control of ANC immediately after the Distribution
Date and is included in the results of ANC for internal financial reporting
purposes.
1.06 "ANC Indemnitees" means each member of the ANC Group, and
each of their respective directors, officers, employees, and agents, and each of
the heirs, executors, successors, and assigns of any of the foregoing.
1.07 "Ancillary Agreements" means the Transitional Services
Agreement (as defined in the Distribution Agreement), the Tax Sharing Agreement
(as defined in the Distribution Agreement), the Guarantee Agreement, and such
additional agreements between AutoNation and ANC and other related documents as
may be necessary to complete the Distribution.
1.08 "Automotive Rental Business" is defined in the recital of
this Agreement.
1.09 "AutoNation Group" means AutoNation, Inc. and its
subsidiaries and any subsidiary or division of any member of the AutoNation
Group that is operated under the direct or indirect control of AutoNation,
excluding any member of the ANC Group.
1.10 "AutoNation Indemnitees" means each member of the
AutoNation Group, and each of their respective directors, officers, employees,
and agents, and each of the heirs, executors, successors, and assigns of any of
the foregoing.
1.11 "Code" means the Internal Revenue Code of 1986, as
amended.
1.12 "Distribution" is defined in the recitals of this
Agreement.
1.13 "Distribution Agreement" is defined in the recitals of
this Agreement.
1.14 "Distribution Date" means the date on which the
Distribution occurs, as determined under the Distribution Agreement.
1.15 "Effective Date" means June 30, 2000.
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1.16 "Employee Liabilities" means all wages, salaries,
pension, incentive compensation, severance pay, workers compensation, and any
taxes, liabilities, obligations and Actions related thereto and Welfare Claims.
1.17 "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
1.18 "Former ANC Employee" means any former employee of the
ANC Business as of January 1, 2000 (including, without limitation, an employee
of the ANC Business who retired or otherwise terminated employment before
January 1, 2000) whose last day of active employment was with the ANC Business
and who is not an Active ANC Employee.
1.19 "401(k) Plan" means the AutoNation 401(k) Plan.
1.20 "Governmental Authority" means any federal, state, local,
foreign, or internal court, government, department, commission, board, bureau,
agency, official, or other regulatory, administrative, or governmental
authority.
1.21 "Holding Plan" means the National Car System, Inc.
Republic Holding Plan.
1.22 "Stock Option Plans" means AutoNation's stock option
plans listed on Schedule B.
1.23 "Welfare Claims" means employee health (including,
without limitation, medical and dental), life insurance (including, without
limitation, disability waiver of premium claims), short-term disability claims,
long-term disability claims, and any other welfare benefit claims, and any
taxes, expenses, Actions or other liabilities related thereto.
ARTICLE II
EMPLOYEES AND ALLOCATION OF LIABILITIES
2.01 Allocation of Employee Liabilities. As of the Effective
Date, ANC shall assume, retain and be liable for all Employee Liabilities with
respect to Active ANC Employees, except as specifically provided otherwise in
this Agreement. ANC shall assume, retain and be liable for Employee Liabilities
with respect to Former ANC Employees only as provided in this Agreement, except
that if any Employee Liability arises with respect to an Active or Former ANC
Employee that is not covered in this Agreement, ANC shall be liable for such
Employee Liability.
2.02 Benefit Plan Coverage. Active ANC Employees shall not
continue to be active participants in benefit plans maintained by the AutoNation
Group on or after the Effective Date and, instead, shall be eligible to
participate in applicable ANC plans, as determined by ANC, as of the Effective
Date.
2.03 Collective Bargaining Agreements. ANC or a member of the
ANC Group shall continue to be liable for any and all obligations under
collective bargaining agreements with respect to Active or Former ANC Employees
and any and all obligations of the ANC Group to contribute to multiemployer
plans (as defined in section 3(37) of ERISA) with respect to Active or Former
ANC Employees. On and after the Effective Date, any withdrawal liability
obligations, and any expenses or other amounts related thereto, that are payable
to any multiemployer plan with respect to Active or Former ANC Employees,
regardless of whether such obligations relate to services performed before or
after the Effective Date, shall be the sole responsibility of ANC. ANC shall
notify the proper union representative of any change to the benefit provisions
set forth in the collective bargaining agreements.
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2.04 Administration. ANC and AutoNation shall each make its
appropriate employees and data regarding employee benefit coverage available to
the other at such reasonable times as may be necessary for the proper
administration by the other of any and all matters relating to employee benefits
and worker's compensation claims affecting its employees.
ARTICLE III
PENSION AND SAVINGS PLANS
3.01 Acquired Plans.
(a) ANC (or a member of the ANC Group) shall retain
responsibility for all of the expenses, liabilities, obligations and Actions
with respect to the Acquired Plans. ANC (or a member of the ANC Group) shall
continue to sponsor and maintain each Acquired Plan on and after the Effective
Date; provided, however, that nothing herein shall require or be construed to
require the maintenance of any Acquired Plan for any specified period of time
following the Effective Date.
(b) ANC (or a member of ANC Group) shall retain responsibility
for any trust or insurance contract established under an Acquired Plan.
3.02 Plans to be Transferred to ANC.
(a) The portion of the AutoNation 401(k) Plan benefiting
Active and Former ANC Employees of the ANC Group and the beneficiaries of such
employees, and the assets (including, to the extent applicable, any stock of
AutoNation or ANC) and liabilities under the 401(k) Plan and the trust
established thereunder attributable to Active and Former Employees of the ANC
Group and the beneficiaries of such employees shall be spun off from the 401(k)
Plan and merged with and into a savings plan to be established as of the
Effective Date or as soon thereafter as reasonably practicable by ANC (or a
member of the ANC Group) and the trust established thereunder.
(b) As of the Effective Date, the Holding Plan and the trust
established thereunder shall be transferred to ANC (or a member of the ANC
Group). ANC (or a member of the ANC Group) shall maintain the Holding Plan and
the trust established thereunder on and after the Effective Date and shall take
all actions necessary to be substituted for AutoNation, in all capacities, with
respect to the Holding Plan including, but not limited to, obtaining an IRS
letter of determination with respect to the tax qualification status of the
Holding Plan and satisfying all ERISA reporting and disclosure requirements;
provided that nothing herein shall require or be construed to require the
maintenance of the Holding Plan for any specified period of time following the
Effective Date. AutoNation shall cease to be the plan sponsor of the Holding
Plan as of the Effective Date.
3.03 Assumption of Liabilities Upon Transfer of Plan Assets
and Assumption of Trusts; Filings.
(a) AutoNation shall effectuate the transfer of assets
described under Section 3.02(a) as soon as administratively practicable after
the Effective Date. As of the date of transfer, the ANC Group shall assume all
liabilities in connection with the transferred assets and any Actions related
thereto, and the AutoNation Group shall have no further liability with respect
to the assets and liabilities that are transferred. As of the Effective Date,
AutoNation shall effectuate the transfer of the Holding Plan as described under
Section 3.02(b). As of the Effective Date, the ANC Group shall assume all
liabilities in connection with the transfer of the Holding Plan and trust and
any Actions related thereto, and the AutoNation Group shall have no further
liability with respect to the assets and liabilities
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that are transferred or the plans or trusts that are transferred or assumed. The
AutoNation Group shall have no liability to ANC or any member of the ANC Group
with respect to the Acquired Plans, the Holding Plan, or the trusts established
thereunder or any matter related thereto. The AutoNation Group shall have no
liability with respect to the portion of the 401(k) Plan or the trust
established thereunder benefiting Active and Former ANC Employees of the ANC
Group and the beneficiaries of such employees.
(b) ANC and AutoNation shall make the appropriate filings
required under the Code or ERISA in connection with the transfers and
assumptions described in this Article III in a timely manner. The parties agree
that the transfers and assumptions described in this Article III shall be made
in accordance with section 414(1) of the Code.
(c) In connection with its continued responsibility for all
Actions, obligations and liabilities of the Acquired Plans, ANC (or a member of
the ANC Group) shall retain all responsibility, liability, and obligations
relating to the termination of, and the distribution of assets from, the Value
Rent-A-Car Defined Benefit Plan and the Auto Rental, Inc. Money Purchase Plan.
ARTICLE IV
EMPLOYEE STOCK OPTION PLANS
4.01 Administration of Stock Options.
(a) Each stock option granted under the Stock Option Plans
before the Effective Date to an individual who is an Active ANC Employee on the
Effective Date shall be administered after the Effective Date in accordance with
the provisions of the applicable Stock Option Plan under which the option was
granted and/or any agreement relating to such options between AutoNation and
Active ANC Employees.
(b) After the Effective Date, the human resources department
of AutoNation shall administer the options granted before the Effective Date to
the Active ANC Employees listed on Schedule C before the Effective Date. For the
purposes of allowing AutoNation to administer the options of the Active ANC
Employees identified on Schedule C, ANC agrees to provide the human resources
department of AutoNation such information as is necessary to administer the
options. Such information shall include a monthly report indicating the Active
ANC Employees who have terminated employment with the ANC Group during that
month. ANC shall also provide a mechanism to verify employment with ANC or a
member of the ANC Group on the date that the option is exercised. Xxxxxxx Xxxxx
shall perform the services necessary to administer the options granted to Active
ANC Employees at a rate of $1,500 per month. ANC shall pay Xxxxxxx Xxxxx
directly for the services associated with the administration of the options.
ARTICLE V
OTHER EMPLOYEE PLANS
5.01 Welfare Benefit Plans.
(a) ANC shall be liable for all Welfare Claims that are
incurred on or after January 1, 2000 with respect to Active ANC Employees and
their beneficiaries and dependents and Former ANC Employees and their
beneficiaries and dependents. In addition, ANC shall be liable for all "run-off
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claims," including any run-off claims paid by AutoNation. For purposes of this
section 5.01(a), "run-off claims" shall mean all medical, dental and vision
claims incurred on or before January 1, 2000 by Active ANC Employees and Former
ANC Employees under the health plan maintained by AutoNation which are paid by
AutoNation after January 1, 2000. As soon as administratively feasible after the
Distribution Date, AutoNation shall transfer to ANC the actuarially required
reserves as of the Distribution Date as determined by Aon Consulting for run-off
claims attributable to Active ANC Employees and Former ANC Employees. AutoNation
shall provide ANC a copy of the report prepared by Aon Consulting as soon as
such report is finalized.
(b) Except as otherwise provided in this Article V, AutoNation
shall be liable for all Welfare Claims that are incurred and paid before January
1, 2000 with respect to Active ANC Employees and their beneficiaries and
dependents and Former ANC Employees and their beneficiaries and dependents.
(c) If either party pays any Welfare Claims that are a
liability of the other party, the responsible party shall reimburse the paying
party for all such payments within 30 days of receipt of proper documentation of
such payment.
(d) For purposes of this Section 5.01, a health benefit claim
is incurred when the medical services are rendered, and a life insurance claim
is incurred when the covered employee dies. A long-term disability shall be
deemed to have been incurred on the date the condition causing the disability
rendered the employee disabled, as determined by the committee, plan
administrator or insurance company making the determination; costs for all
long-term disability benefits relating to the claim shall be included in the
claim.
(e) For purposes of allowing AutoNation to determine health
care continuation requirement obligations, if any, under the Code and ERISA, ANC
agrees to provide such health care information as is required by AutoNation with
respect to the volume and level of coverage under health care plans. ANC shall
be liable for any health care continuation obligations under section 4980B of
the Code and sections 601 through 608 of ERISA ("COBRA") with respect to Active
and Former ANC Employees and persons who are "qualified beneficiaries" (as that
term is used in section 4980B of the Code) of such employees (including, without
limitation, any such employees and qualified beneficiaries who, as of the
Effective Date, are receiving or entitled to receive COBRA benefits under, or
with respect to, any plan or contract, and regardless of whether or not the
COBRA qualifying event giving rise to such obligation occurs before, on, or
after the Effective Date), to the same extent as ANC is liable for the
underlying health care coverage of the Active or Former ANC Employees pursuant
to subsection (a) above.
(f) As of the Effective Date, ANC shall assume all of the
AutoNation Group's responsibilities with respect to any section 125 plan benefit
covering Active ANC Employees and including any flexible spending account plan
in which an Active ANC Employee is participating immediately before the
Effective Date. ANC (or a member of the ANC Group) shall maintain each flexible
spending account plan assumed pursuant to this Section 5.01 and shall take all
actions to be substituted for the AutoNation Group, in all capacities, with
respect to each assumed flexible spending account plan.
(g) Pursuant to subsection (a) above, ANC and its long-term
disability plan shall be liable for any long-term disability claims that are
incurred on or after January 1, 2000 with respect to Active ANC Employees.
(h) The Distribution shall not be considered an event
entitling any employee to salary continuation or other severance benefits.
Notwithstanding subsection (a) and this subsection (h), ANC shall assume
liability for all salary continuation, retirement agreements and other severance
benefits that become payable on or after January 1, 2000 with respect to all
Active ANC Employees and Former ANC Employees.
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5.02 Vacation Pay and Similar Items. ANC shall assume or retain
liability for all unpaid vacation pay, sick pay, and personal leave accrued by
Active ANC Employees and Former ANC Employees.
ARTICLE VI
INDEMNIFICATION
6.01 ANC Indemnification of the AutoNation Group. On and after
the Effective Date, ANC shall indemnify, defend, and hold harmless the
AutoNation Indemnitees from and against any and all damage, loss, liability and
expense (including, without limitation, reasonable expenses of investigation and
reasonable attorney fees and expenses in connection with any and all Actions or
threatened Actions) incurred or suffered by any of the AutoNation Indemnitees
and arising out of, or due to the failure of, ANC or any member of the ANC Group
to pay, perform, or otherwise discharge, any of the employee benefit liabilities
and obligations assumed or retained, and agreements made, by ANC pursuant to
this Agreement.
6.02 AutoNation Indemnification of ANC Group. On and after the
Effective Date, AutoNation shall indemnify, defend, and hold harmless the ANC
Indemnitees from and against any and all damage, loss, liability and expense
(including, without limitation, reasonable expenses of investigation and
reasonable attorney fees and expenses in connection with any and all Actions or
threatened Actions) incurred or suffered by any of the ANC Indemnitees and
arising out of, or due to the failure of, AutoNation or any member of the
AutoNation Group to pay, perform, or otherwise discharge, any of the employee
benefit liabilities and obligations assumed or retained, and agreements made, by
AutoNation pursuant to this Agreement.
6.03 Insurance and Third Party Obligations. No insurer or any
other third party shall be (a) entitled to a benefit it would not be entitled to
receive in the absence of the foregoing indemnification provisions, (b) relieved
of the responsibility to pay any claims to which it is obligated, or (c)
entitled to any subrogation rights with respect to any obligation hereunder.
ARTICLE VII
INDEMNIFICATION PROCEDURES
7.01 Procedures for Indemnification. The procedures for
indemnification are identical to those set forth in Article IV of the
Distribution Agreement, which indemnification procedures are hereby incorporated
by this reference.
ARTICLE VIII
MISCELLANEOUS
8.01 Notices. All notices and communications under this
Agreement shall be in writing and any communications or delivery hereunder shall
be deemed to have been duly given when received addressed as follows:
If to AutoNation, to:
AutoNation, Inc.
000 XX 0xx Xxxxxx
Xxxx Xxxxxxxxxx, XX 00000
Attention: General Counsel
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With a copy to: Senior Vice President, Human Resources
If to ANC, to:
ANC Rental Corporation
000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxxxxxxx, XX 00000
Attention: Senior Vice President, Human Resources
Either party may, by written notice so delivered to the other party, change the
address to which delivery of any notice shall thereafter be made.
8.02 Amendment and Waiver. This Agreement may not be altered
or amended, nor may rights hereunder be waived, except by an instrument in
writing executed by the party or parties to be charged with such amendment or
waiver. No waiver of any terms, provision or condition of or failure to exercise
or delay in exercising any rights or remedies under this Agreement, in any one
or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, provision, condition, right or remedy or as
a waiver of any other term, provision or condition of this Agreement.
8.03 Entire Agreement. This Agreement, together with the
Distribution Agreement and the Ancillary Agreements referred to therein,
constitute the entire understanding of the parties hereto with respect to the
subject matter hereof, superseding all negotiations, prior discussions and prior
agreements and understandings relating to such subject matter. To the extent
that the provisions of this Agreement are inconsistent with the provisions of
the Distribution Agreement or any Ancillary Agreement, the provisions of this
Agreement shall prevail.
8.04 Parties in Interest. Neither of the parties hereto may
assign its rights or delegate any of its duties under this Agreement without the
prior written consent of each other party. This Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns. Nothing contained in this Agreement, express
or implied, is intended to confer any benefits, rights or remedies upon any
person or entity other than members of the AutoNation Group and the ANC Group,
and the AutoNation Indemnitees and ANC Indemnitees under Articles VI and VII
hereof.
8.05 Further Assurances and Consents. In addition to the
actions specifically provided for elsewhere in this Agreement, each of the
parties hereto will use its reasonable efforts to (a) execute and deliver such
further instruments and documents and take such other actions as any other party
may reasonably request in order to effectuate the purposes of this Agreement and
to carry out the terms hereof and (b) take, or cause to be taken, all actions,
and to do, or cause to be done, all things, reasonably necessary, proper or
advisable under applicable laws, regulations and agreements or otherwise to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, using its reasonable efforts to obtain any
consents and approvals and to make any filings and applications necessary or
desirable in order to consummate the transactions contemplated by this
Agreement; provided that no party hereto shall be obligated to pay any
consideration therefor (except for filing fees and other similar charges) to any
third party from whom such consents, approvals and amendments are requested or
to take any action or omit to take any action if the taking of or the omission
to take such action would be unreasonably burdensome to the party or its Group
or the business thereof. To the extent that either party is obligated to deliver
shares of the other party in satisfaction of obligations under employee or
director benefit plans or other arrangements, including, without limitation,
savings plans, stock option plans, stock purchase plans and bonus and incentive
plans, the party whose shares are required for such purpose shall make such
shares available from authorized but unissued shares or treasury shares on such
terms as may be appropriate to the transaction.
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8.06 Severability. The provisions of this Agreement are
severable and should any provision hereof be void, voidable or unenforceable
under any applicable law, such provision shall not affect or invalidate any
other provision of this Agreement, which shall continue to govern the relative
rights and duties of the parties as though such void, voidable or unenforceable
provision were not part hereof.
8.07 Governing Law. This Agreement shall be construed in
accordance with, and governed by, the laws of the State of Florida, without
regard to the conflicts of law rules of such state.
8.08 Counterparts. This Agreement may be executed in one or
more counterparts each of which shall be deemed an original instrument, but all
of which together shall constitute but one and the same Agreement.
8.09 Disputes. Resolution of any and all disputes arising from
or in connection with this Agreement, whether based on contract, tort, statute
or otherwise, including, but not limited to, disputes in connection with claims
by third parties shall be exclusively governed by and settled in accordance with
provisions identical to those set forth in the Distribution Agreement, which
provisions are hereby incorporated by this reference.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day and year first above written.
AutoNation, Inc.
By: /s/ Xxxxxx Xxxx Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: Vice President
ANC Rental Corporation
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
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