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Exhibit 10.7
SEPARATION AGREEMENT AND GENERAL RELEASE
This Separation Agreement ("Agreement") is entered into by and between Xxxxxxx
X. Xxxxx ("Employee") and Insurance Auto Auctions, Inc. (the "Company") to set
forth the terms, conditions, and obligations of each party with respect to the
termination of the employment relationship between Employee and the Company.
Whereas, the parties acknowledge that the Company has requested that the
Employee terminate his employment relationship with the Company;
Whereas, the parties mutually agree that their joint interest would be furthered
by an amicable separation;
Now therefore, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
1. Termination of Employment. Termination of the employment relationship
between Employee and the Company shall be effective as of April 9, 2001
(the "Termination Date"). Employee shall resign from his position as an
officer and employee of the Company and any of its subsidiaries effective
as of the Termination Date.
2. Consideration. As consideration for Employee's entering into this
Agreement, the Company agrees:
a) Employee shall receive from the Company a lump sum cash payment equal
to the sum of (i), (ii) and (iii) below, payable on the next regular
payday following expiration of the revocation period described in
paragraph 11 below:
(i) 52 weeks of pay, computed at the Employee's regular weekly base
salary in effect on the Termination Date (such gross amount
equal to $148,304.00);
(ii) a bonus payment equal to the Employee's target bonus for the
Company's fiscal year during which Employee's employment is
terminated (such gross amount equal to $44,491);
(iii) Employee's auto allowance for the Company's fiscal year during
which the Employee's employment is terminated (such gross amount
equal to $1,466.99 per month or $17,603.88); and
b) (i) From the Termination Date until April 9, 2002 (the end of the
final month covered by Employee's severance pay (the "Severance
Period")), the Company shall continue to provide life, medical,
dental and long-term disability benefits (the "Company Plans")
as previously selected by
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Employee, for Employee and such of Employee's dependents for
whom the Company provided such benefits on the Termination Date;
provided Employee shall be responsible for the Employee's share
of the cost of coverage and benefits on the same basis as prior
to the Termination Date. Such benefits will be continued only to
the extent permissible under the terms of such Company Plans.
Notwithstanding anything contained in this Section 2b(i) to the
contrary, with respect to long-term disability, the Employee
must timely apply for conversion insurance and benefits payable
thereunder shall not exceed a maximum monthly benefit of $3,000.
(ii) If any of the Company Plans do not permit continued
participation by the Employee and the Employee's family after
termination of employment, then, during the Severance Period,
the Company will reimburse the Employee for the cost of
obtaining comparable coverage from a third-party insurer,
provided, however, that the amount of such reimbursement will
not exceed the amount that would have been paid by the Company
for coverage under the Company Plans during the Severance Period
had the Employee's employment not been terminated.
If during the Severance Period, and subject to (iii) below, the
Employee is reemployed by another employer, the rights of the
Employee and the Employee's family to receive benefits under any
Company Plan, or reimbursement for any third-party coverage,
will terminate on the date the Employee and Employee's family
become eligible to receive comparable benefits from such
employer.
(iii) If, at the termination of the Severance Period, the Employee is
receiving medical and/or dental benefits from a Company Plan,
the Company will continue to provide such medical and/or dental
benefits to the Employee and/or the Employee's family pursuant
to COBRA. For such purpose, the termination of the Severance
Period will be considered the date of the "qualifying event" as
such term is defined by COBRA and the cost of continued coverage
during the COBRA period will be determined pursuant to COBRA and
paid entirely by the Employee.
(iv) If the Company's Plans do not provide for continued medical
and/or dental benefit coverage during the Severance Period, then
the Termination Date will be considered the date of the
qualifying event for COBRA purposes. In such case, the Employee
may either elect to continue such coverage pursuant to COBRA or
obtain comparable third-party coverage as described in Section
2(b)(ii). If the Employee elects COBRA coverage, then during the
Severance Period, the Employee will be charged the amount that
such Employee would have paid for such coverage had such
Employee remained employed by the Company, and after the end of
such Severance Period and for the remainder of the COBRA period,
the cost of
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such coverage will be determined pursuant to COBRA and paid
entirely by the Employee.
(v) The Employee's active participation in all other employee
benefits plans and programs maintained by the Employer,
including the Insurance Auto Auctions, Inc. 401(k) Plan and the
Insurance Auto Auctions, Inc. Employee Stock Purchase Plan,
shall be determined in accordance with the terms of such plans
and programs.
c) All outstanding stock options granted to Employee as set forth on
Attachment A hereto (to the extent not already vested) shall become
100% vested and exercisable on the day after the expiration of the
revocation period described in Section 11 below. Such vested stock
options will continue to be exercisable until the earlier of such
stock options' expiration date or July 9, 2002. Stock options not
exercised by July 9, 2002, shall expire and be of no further force or
effect. The options shall continue to be governed by the terms and
conditions of their respective Notices of Grant of Stock Option and
Stock Option Agreements, as amended by this subsection 2(c).
d) Employee shall receive accrued but unused vacation pay through the
Termination Date, to be paid on or before the Company's next regularly
scheduled pay date following the Termination Date.
e) Amounts paid to Employee pursuant to this Section 2 shall be subject
to applicable withholding taxes as may be required pursuant to
federal, state or local law, or by agreement with or consent of
Employee.
3. Confidentiality. Employee remains bound by all terms and conditions of the
Confidentiality Agreement dated as of February 11, 1998 and attached hereto
as Attachment B. Employee also agrees that except as may be specifically
required by law, Employee will not in any manner disclose or communicate
any part of this Agreement to any other person except Employee's current
spouse, Employee's accountant or financial advisor to the limited extent
needed for that person to prepare Employee's tax returns, or Employee's
attorney. Before any such authorized disclosure, Employee will inform each
such person to whom disclosure is to be made that every term of this
Agreement is confidential and obtain such person's agreement to maintain
the confidentiality of the entire Agreement.
4. Return of Company Property. By signing this Agreement, Employee affirms
that he has returned to the Company all of its property that was or is in
his possession, custody or control, including but not limited to all keys,
company credit cards, access cards, equipment, computers, hardware,
software, programs diskettes, data, notes, papers, books, files, documents,
records, policies, client and customer information and lists, marketing
information, design information, pricing information, blueprints,
specifications plans, data base information, mailing lists, and any other
property or information that Employee had relating to the Company and/or
its customers, employees, plans, strategies, inventions, policies, or
practices (whether those materials are in paper or computer-stored
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form). Employee affirms that he has not retained any such property or
information in any form, and that he will not give copies of such property
information or disclose their contents to any other person. Notwithstanding
the above, if Employee was provided with a Palm Pilot organizer, Employee
shall be allowed to retain the Palm Pilot organizer (Palm VII) he is
currently using.
5. Omitted.
6. Employees. During the Restricted Period, Employee shall not, directly or
indirectly, (i) solicit for employment and/or hire or offer employment to
any individual who is or was an employee of the Company within 90 days of
the date of this Agreement and who becomes an employee of the Company or
its subsidiaries at any time during the Restricted Period, or (ii)
encourage any Company employee to terminate his or her relationship with
the Company or its subsidiaries.
7. Omitted.
8. Release of Claims And Agreement Not To Xxx. (a) As consideration for the
obligations undertaken by the Company pursuant to this Agreement, Employee,
for himself, his successors, administrators, heirs or assigns, hereby fully
releases, waives and fully discharges the Released Parties (defined to
include the Company, its subsidiaries and affiliates, predecessors,
successors, and assigns, and their respective officers, directors, agents
and employees, whether past, present or future) from any and all claims,
causes of action, suits, demands, damages, judgements or liabilities, of
any nature, including attorney's fees and costs, known or unknown, absolute
or contingent, arising from or relating to Employee's employment or
separation from employment. This release includes, without limitation, any
and all claims for breach of contract (including the Change in Control and
Employment Agreement between the Company and Employee dated February 23,
1998), wrongful discharge or impairment of economic opportunity, any claims
under common law or at equity, claims of defamation or intentional
infliction of emotional harm, claims of any tort, claims for reimbursements
or commissions, and any and all rights and discrimination claims Employee
may have arising under the Age Discrimination in Employment Act, Title VII
of the Civil Rights Act of 1964, the Americans with Disabilities Act, and
any and all other federal, state or local laws or regulations. Employee
agrees not to xxx or to file any claims or actions against the Released
Parties with respect to claims covered by this release and affirms that no
such claims or actions are currently pending. Notwithstanding the above,
this waiver and release shall not apply to claims for indemnification
and/or the advancement of expenses pursuant to Article 7 of the Company's
Articles of Incorporation, Article 5 of the Company's Bylaws and any
indemnification agreement with the Company.
(b) As consideration for the obligations undertaken by the Employee
pursuant to this Agreement, the Company, for itself, its successors and
assigns, hereby fully releases, waives and fully discharges the Employee
from any and all claims, causes of action, suits, demands, damages,
judgements or liabilities, of any nature, including attorney's fees and
costs, known or unknown, absolute or contingent, arising from or relating
to Employee's employment or separation from employment unless such claims,
causes of
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action, suits, demands, damages, judgments or liabilities resulted from
Employee's acts or omissions which were (i) grossly negligent, (ii)
fraudulent or (iii) intentionally harmful.
9. No Disparagement or Encouragement. Each party agrees not to do anything,
and not to make any oral, electronic or written statement to any person
(including without limitation any employee, client, customer, supplier,
vendor of the Company or the press), that disparages or places in a false
or negative light the other party (and in the case of the Company, any of
its past or present officers, employees, business, products, services or
its relationships); provided, however, that nothing herein shall limit or
prohibit either party from cooperating in any truthful manner with any
governmental authority or agency or responding truthfully under oath in a
legal proceeding. Employee will not encourage any person to file a lawsuit,
charge, claim, or complaint against any of the Released Parties. Employee
will not assist any person who has filed a lawsuit, charge, claim, or
complaint against any of the Released Parties unless Employee is required
to render such assistance pursuant to a lawful subpoena or other legal
obligation. If Employee is served with any such legal subpoena or becomes
subject to any such legal obligation, Employee will provide prompt written
notice to the General Counsel of the Company in which Employee shall
enclose a copy of the subpoena and any other documents describing the legal
obligation.
10. No Reinstatement or Reemployment. Employee agrees not to apply for
employment or otherwise seek to be hired, rehired, employed, reemployed, or
reinstated by the Company, its affiliates and subsidiaries.
11. Revocation Period. Employee has the right to revoke this Agreement for up
to seven (7) days after Employee signs it. In order to revoke this
Agreement, Employee must sign and send a written notice of the decision to
do so, addressed to Chief Executive Officer, Insurance Auto Auctions, 000
Xxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000, and that written
notice must be received by Employer no later than the eighth day after
Employee signs this Agreement. If Employee revokes this Agreement, the
Employee will not be entitled to any of the consideration from the Company
described in Sections 2(a), 2(b), and 2(c) above.
12. No Admission. This Agreement does not constitute an admission by any of the
Released Parties, and the Company specifically denies that any action or
failure to act by any of the Released Parties was wrongful, unlawful, or
susceptible of causing any damages or injury to Employee. This Agreement
does not constitute an admission by the Employee, and the Employee
specifically denies that any action or failure to act by the Employee was
wrongful, unlawful, or susceptible of causing any damages or injury to the
Company.
13. Severability. The Employee acknowledges and agrees that the Restrictive
Covenants (as defined below) are reasonable, necessary and valid in
duration and geographical scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall
not be affected thereby and shall be given full effect without regard to
the invalid portions. Provided, however, that if Employee brings a lawsuit,
claim, charge, or
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complaint against the Company, and a court of competent jurisdiction finds
that a release or waiver of claims or rights by Employee in Section 8 above
is illegal, void or unenforceable, Employee agrees that upon request by the
Company, Employee will promptly sign a release or waiver that is legal and
enforceable.
14. Rights and Remedies Upon Breach. If the Employee breaches, or threatens to
commit a breach of, any of the covenants set forth in Sections 5, 6 or 7 of
this Agreement (the "Restrictive Covenants"), the Company shall have the
right and remedy to have the Restrictive Covenants specifically enforced by
any court of competent jurisdiction, including immediate temporary
injunctive relief without bond and without the necessity of showing actual
monetary damages, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and
that money damages would not provide an adequate remedy to the Company,
which right and remedy is in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or in equity. The
Restricted Period shall be extended by any period that the Employee is in
breach of the Restrictive Covenants, unless such breach is not willful and
does not materially damage the Company.
15. Agreement Inadmissible as Evidence. This Agreement, its execution, and its
implementation may not be used as evidence, and shall not be admissible in
any proceeding except one claiming a violation of this Agreement.
16. Entire Agreement. This Agreement sets forth the full understanding and
agreement of the parties and supersedes any and all other understandings or
agreements, written or oral; provided, however, that Employee shall
continue to be bound by the Confidentiality Agreement described in Section
3.
17. Governing Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with laws and judicial decisions of the State of
Illinois, without regard to its principles of conflicts of laws.
18. Knowing and Voluntary Waiver. Employee specifically agrees as follows:
a) Employee is knowingly and voluntarily entering into this Agreement;
b) Employee acknowledges that the Company is providing benefits in the
form of payments and compensation, to which Employee would not
otherwise be entitled, as part of the consideration for Employee's
entering into this Agreement;
c) Employee acknowledges receiving from the Company the informational
disclosures attached to this Agreement as Exhibit A at the same time
Employee received this Agreement;
d) Employee is hereby advised by the Company to consult with an attorney
before signing this Agreement;
e) Employee understands that he has a period of forty-five (45) days from
the date a copy of this Agreement is provided to Employee in which to
consider and sign the
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Agreement (during which the offer will remain open), and that the
Employee has an additional seven (7) days after signing this Agreement
within which to revoke acceptance of the Agreement; and,
f) If during the seven (7) day revocation period Employee should revoke
acceptance of the Agreement, then this Agreement shall be void.
19. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
INSURANCE AUTO AUCTIONS, INC. XXXXXXX X. XXXXX
By: /s/ Xxxxxx X. X'Xxxxx /s/ P. T. Xxxxx
------------------------------- -------------------------------
Its: President and CEO
------------------------------ Dated: 4/12/01
-------------------------
Dated: 4-12-01
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Attachment A
Stock Options of Employee
Number Grant Date Number Exercise Price
------ ---------- ------ --------------
IA0014 11/20/91 15,000 $ 11.00
IA0055 09/14/93 3,000 $ 32.00
IA0086 12/20/93 6,048 $ 37.50
IA0087 12/20/93 952 $ 37.50
IA0268 11/08/95 9,334 $ 7.00
IA0269 11/08/95 666 $ 7.00
IA0324 01/02/98 12,500 $11.688
IA0459 12/15/98 10,000 $11.125
IA0460 12/15/98 15,000 $11.125
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Exhibit A
INFORMATIONAL DISCLOSURES
The following disclosures are intended to inform you about which job
positions at Insurance Auto Auctions, Inc. were selected to participate in the
employment termination program, which job positions were not selected to
participate in the employment termination program, and the ages of the employees
holding those positions. You are being given this information to assist you in
making an informed decision about signing the accompanying Separation Agreement
and General Release.
You have 45 days from the date of receiving these disclosures to sign the
Separation Agreement and General Release, if you so chose. If you sign the
Agreement, you have 7 days from the date of signature to revoke the Agreement.
If you revoke, you will not be entitled to any consideration under the
Agreement.
The following employees were selected to be terminated:
TITLE AGE(S)
----- ------
Vice President, Eastern Division 42
Vice President, Business Development 38
Vice President, Chief Financial Officer and Assistant 45
Secretary
Vice President, General Counsel and Secretary 43
The following employees were not selected to be terminated:
TITLE AGE(S)
----- ------
Vice President, Industry and Customer Relations 52
Vice President, Western Division 41
Senior Vice President, Sales & Marketing 52
Vice President, Information Technology & CIO 42
Vice President, Public Affairs 49
