EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of May
14, 2003 by and between AUTONATION, INC. (together with its subsidiaries and
affiliates, the "Company"), and XXXXXXX X. XXXXXXX (the "Executive"), an
individual resident of the State of Florida.
RECITALS
WHEREAS, the Executive currently serves as the President and Chief
Operating Officer of the Company pursuant to an Employment Agreement dated as of
August 1, 2000 (the "Initial Employment Agreement"), which is scheduled to
expire by its terms on December 31, 2003; and
WHEREAS, the Company and the Executive desire to replace and supersede
the Initial Employment Agreement with this Agreement effective as of the date
hereof, and desire to set forth herein the terms and conditions of the
Executive's employment with the Company, as well as certain non-competition
covenants applicable to the Executive.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained in this Agreement, the parties hereto agree as follows:
1. EMPLOYMENT.
(a) EMPLOYMENT PERIOD. The Executive shall serve as President
and Chief Operating Officer of the Company. The period during which the
Executive shall serve as President and Chief Operating Officer of the Company
(the "Employment Period") pursuant to the terms of this Agreement shall commence
on the date hereof and shall continue until the close of business on December
31, 2005, unless earlier terminated pursuant to PARAGRAPH 2 of this Agreement.
The parties hereto agree that the Initial Employment Agreement shall terminate
and be of no further force and effect as of the execution and delivery of this
Agreement.
(b) DUTIES AND RESPONSIBILITIES. During the Employment Period,
the Executive shall have such authority and responsibility and perform such
duties as are customary to the office the Executive holds or as may be assigned
to him from time to time at the direction of the Company's Chairman of the Board
and Chief Executive Officer. During the Employment Period, the Executive's
employment shall be full time and the Executive shall perform his duties
honestly, diligently, competently, in good faith and in what he believes to be
the best interests of the Company and shall use his best efforts to promote the
interests of the Company.
(c) BASE SALARY. In consideration for the Executive's services
hereunder and the restrictive covenants contained herein, the Executive shall be
paid a base salary at an annual rate of $900,000 in 2003, and commencing during
calendar year 2004 at an annual rate of $1,000,000 (the "Salary"). The Salary
will be payable in accordance with the Company's customary payroll practices and
will be subject to annual review and adjustment by the Compensation Committee of
the Company's Board of Directors; PROVIDED, HOWEVER, that the Salary shall not
be reduced during the Employment Period.
(d) BONUS. During the Employment Period, the Executive shall
participate in the Company's Senior Executive Incentive Bonus Plan (the "Plan"),
or any successor or substitute to the Plan, at such target award levels and upon
such terms and conditions as are determined in the discretion of the Executive
Compensation Subcommittee (the "Committee"); PROVIDED, HOWEVER, that, for the
2004 Plan year and each Plan year thereafter during the Employment Period, the
target award level for annual incentive bonuses under the Plan, or any successor
or substitute to the Plan, will be no less than 100% of the Executive's Salary
at such time.
(e) BENEFITS. During the Employment Period, the Executive
shall be entitled to (i) participate in any retirement plans, insurance programs
and other fringe benefits plans and programs as are from time to time
established and maintained for the benefit of executives of the Company, subject
to the provisions of such plans and programs, (ii) participate in the
CEO/President Car Policy, and (iii) use of the Company's corporate aircraft for
personal travel for up to 100 hours per year (PROVIDED that the cost of such
travel will be included in the Executive's annual income subject to tax).
(f) EXPENSES. In addition to the compensation and benefits
described above, the Executive shall be reimbursed for all out-of-pocket
expenses reasonably incurred by him on behalf of or in connection with the
business of the Company during the Employment Period, upon delivery of receipts
and pursuant to the reimbursement standards and guidelines of the Company.
(g) STOCK OPTIONS. The Executive shall be entitled to
participate in any annual stock option grants during the Employment Period (or
other broad-based stock option grants that include senior executives of the
Company) at an appropriate level as determined by the Committee.
2. TERMINATION.
(a) CAUSE, DEATH AND DISABILITY. At any time during the
Employment Period, the Company shall have the right to terminate the Employment
Period and to discharge the Executive for "Cause" (as defined below). Upon any
such termination by the Company for Cause, the Executive or his legal
representatives shall be entitled to that portion of the Salary prorated through
the date of termination, and the Company shall have no further obligations
hereunder. Termination for Cause shall mean termination because of: (i) the
Executive's breach of his
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covenants contained in this Agreement; (ii) the Executive's failure or refusal
to perform the duties and responsibilities required to be performed by the
Executive under the terms of this Agreement; (iii) the Executive willfully
engaging in illegal conduct or gross misconduct in the performance of his duties
hereunder (PROVIDED, that no act or failure to act shall be deemed "willful" if
done, or omitted to be done, in good faith and with the reasonable belief that
such action or omission was in the best interests of the Company); (iv) the
Executive's commission of an act of fraud or dishonesty affecting the Company or
the commission of an act constituting a felony; or (v) Executive's violation of
Company policies in any material respect. The Company acknowledges that the
Executive may resign or otherwise terminate the Employment Period and his
employment with the Company without Good Reason (as defined below), PROVIDED,
that (a) the Company shall have no further obligations hereunder from and after
the end of the Employment Period in such event and (b) Executive shall provide
reasonable written notice to the Company (in no event less than twenty (20)
business days) of such resignation or termination, shall provide a reasonable
transition of his duties and responsibilities with the Company and shall
coordinate with the Company as to the public communication of the resignation or
termination in order to ensure an orderly transition.
In addition, in the event that during the Employment Period
the Executive (i) dies, the Employment Period shall automatically terminate, or
(ii) is unable to perform his duties and responsibilities as provided herein due
to his physical or mental disability or sickness (a) for more than ninety (90)
days (whether or not consecutive) during any period of twelve (12) consecutive
months or (b) reasonably expected to extend for greater than three (3) months,
the Company may at its election terminate the Employment Period and Executive's
employment. In the case of CLAUSE (I) or CLAUSE (II) above, the Company shall
have no further obligations hereunder from and after such termination date and
the Executive's rights with respect to any employee stock options held by him
shall be as set forth in the applicable stock option plan.
(b) WITHOUT CAUSE BY THE COMPANY OR BY EXECUTIVE FOR GOOD
REASON. At any time during the Employment Period, the Company shall have the
right to terminate the Employment Period and to discharge the Executive without
Cause effective upon delivery of written notice to the Executive. At any time
during the Employment Period, the Executive shall have the right to terminate
the Employment Period for Good Reason if, after delivery of written notice to
the Company, the Company has not cured the circumstances constituting "Good
Reason" within ten (10) business days. Upon such termination of the Employment
Period by the Company without Cause or by the Executive for Good Reason, as long
as the Executive is in compliance with the provisions of Paragraphs 3 and 4
below and the Executive executes a reasonable and mutually acceptable severance
agreement with the Company that includes a release of the Company and a covenant
of reasonable cooperation on matters Executive is involved with pertaining to
the Company (a "Severance Agreement"), the Executive will be entitled to an
amount equal to (i) the sum of the Executive's then-current Salary plus annual
bonus awarded to the Executive in the calendar year prior to such termination of
the Executive's employment PLUS (ii) the pro rata portion (based on the portion
of the calendar year actually served by the Executive) of the annual
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bonus to which the Executive would have been entitled had the Executive not been
terminated, to the extent applicable performance targets are met. Payment of the
amount due under CLAUSE (I) above will be made by the Company within thirty (30)
days following termination of the Executive. Payment of the amount due under
CLAUSE (II) above will be made by the Company at the same time as annual bonuses
are paid to the Company's bonus-eligible employees for the year in which the
Executive is terminated.
In addition, upon such termination of the Employment Period by
the Company without Cause or by the Executive for Good Reason, as long as the
Executive is in compliance with the provisions of Paragraphs 3 and 4 below and
the Executive executes a Severance Agreement:
(1) the Executive and his dependents will be entitled
to continue to participate in the Company's group health and welfare
benefit plans (as such plans are in effect at such time) for a period
of 18 months following such termination at the same cost to the
Executive as such benefits were provided prior to such termination (or
the Company will procure and pay for comparable benefits during such
time period);
(2) all vested employee stock options held by the
Executive as of such termination will survive and be exercisable for
the remainder of their initial 10-year term, at which time such stock
options, if not exercised, will terminate and be void (it being
understood that, pursuant to the terms of a certain letter agreement
dated March 26, 1999, the Company agreed that, upon termination of the
Executive's employment with the Company, all stock options granted to
the Executive prior to March 26, 1999 would continue to vest and be
exercisable through the duration of their original 10-year terms and,
accordingly, such stock options are not intended to be modified by this
CLAUSE (2)); and
(3) all unvested employee stock options held by the
Executive will immediately vest on such termination and will survive
and be exercisable for one year following such termination, at which
time such stock options, if not exercised, will terminate and be void.
At all times during the Employment Period, the foregoing provisions of CLAUSE
(2) and CLAUSE (3) of this paragraph shall govern in the event of any conflict
between such provisions and the provisions of any stock option agreement to
which the Executive is a party or the provisions of any stock option plan
pursuant to which the Executive's employee stock options were granted.
"Good Reason" shall mean the occurrence of any of the
following: (i) a material change by the Company in the Executive's duties or
responsibilities which would cause Executive's position with the Company to
become of materially and substantially less responsibility and importance than
those associated with his duties or responsibilities as of the
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date hereof; or (ii) a material breach of this Agreement by the Company, which
breach is not cured within ten (10) days after written notice thereof is
received by the Company.
3. RESTRICTIVE COVENANTS. The Executive hereby acknowledges that the
Company is as of the date hereof engaged primarily in the sale, leasing,
financing and servicing of new and used vehicles, as well as the provision of
related services and products, such as the sale of parts and accessories,
extended service contracts, aftermarket automotive products and collision repair
services (the "Auto Business"). The Executive further acknowledges that: (i) the
Company may engage in additional related businesses or in separate and distinct
businesses from time to time, (ii) the Company currently engages in its
businesses by means of traditional retail establishments, the Internet and
otherwise and the Company may in the future engage in its businesses by
alternative means, and (iii) the Executive's position with the Company is such
that he will be privy to specific trade secrets, confidential information,
confidential business lists, confidential records, customer goodwill,
specialized training and employees, any or all of which have great and
competitive value to the Company.
The Executive hereby agrees that, for a period of one (1) year
following the termination of the Executive's employment with the Company (by the
Company or the Executive for any reason), the Executive shall not, directly or
indirectly, anywhere in the United States (or in any other geographic area
outside the United States where the Company conducts business at any time during
Executive's employment with the Company):
(a) participate or engage in or own an interest in, directly
or indirectly, any individual proprietorship, partnership, corporation, joint
venture, trust or other form of business entity, whether as an individual
proprietor, partner, joint venturer, officer, director, member, employee,
consultant, independent contractor, stockholder, lender, landlord, finder,
agent, broker, trustee, or in any manner whatsoever (except for an ownership
interest not exceeding 1% of a publicly-traded entity), if such entity or its
affiliates is engaged, directly or indirectly, in the Auto Business or any other
business of the type and character engaged in or competitive with any business
conducted by the Company at any time during the Executive's employment by the
Company on or after the date hereof;
(b) employ, or knowingly permit any company or business
directly or indirectly controlled by him to employ, any person who was employed
by the Company or any subsidiary or affiliate of the Company at or within the
prior six (6) months, or in any manner seek to induce any such person to leave
his or her employment (including, without limitation, for or on behalf of a
subsequent employer of the Executive);
(c) solicit any customers to patronize any business directly
or indirectly in competition with the businesses conducted by the Company or any
subsidiary or affiliate of the Company at any time during the Executive's
relationship with the Company; or
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(d) request or advise any Person who is a customer or vendor
of the Company or any subsidiary or affiliate of the Company or its successors
to withdraw, curtail or cancel any such customer's or vendor's business with any
such entity.
4. CONFIDENTIALITY. The Executive acknowledges that he, as a material
inducement to the Company entering into this Agreement, entered into an Employee
Confidentiality Agreement as of the date hereof, a copy of which is attached
hereto as Exhibit "A." The Executive hereby also agrees that, without the prior
approval of the Company, he shall not at any time during his employment with the
Company and for a period of five (5) years thereafter: (1) give any interview or
speeches, write any books or articles, make any public statements (whether
through the press, at automobile trade conferences or meetings or through
similar media), or make any disparaging or negative statements: (x) concerning
the Company or any of its businesses or reputation or the personal or business
reputations of its directors, officers, shareholders or employees, (y)
concerning any matter he has participated in while an employee of the Company,
or (z) in relation to any matter concerning the Company or any of its businesses
occurring after the Employment Period; or (2) in anyway impede, disrupt or
interfere with the contracts, agreements, understandings, communications or
relationships of the Company with any third party.
5. ACKNOWLEDGMENTS OF THE PARTIES. The parties agree and acknowledge
that the restrictions contained in Paragraphs 3 and 4 are reasonable in scope
and duration and are necessary to protect the Company. If any provision of
Paragraphs 3 or 4 as applied to any party or to any circumstance is adjudged by
a court to be invalid or unenforceable, the same shall in no way affect any
other circumstances or the validity or enforceability of any other provisions of
this Agreement. If any such provision, or any part thereof, is held to be
unenforceable because of the duration of such provision or the area covered
thereby, the parties agree that the court making such determination shall have
the power to reduce the duration and/or area of such provision and/or to delete
specific words or phrases and in its reduced form, such provision shall then be
enforceable and shall be enforced. The Executive agrees and acknowledges that
the breach of Paragraph 3 or 4 will cause irreparable injury to the Company, and
upon breach of any provision of such Paragraphs, the Company shall be entitled
to injunctive relief, specific performance or other equitable relief, provided,
however, that such remedies shall in no way limit any other remedies which the
Company may have (including, without limitation, the right to seek monetary
damages).
6. NOTICES. All notices requests, demands, claims or other
communications hereunder shall be in writing and shall be deemed given if
delivered by certified or registered mail (first class postage pre-paid), hand
delivery, guaranteed overnight delivery or facsimile transmission if such
transmission is confirmed by certified or registered mail (first class postage
pre-paid) or guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers which such
party shall designate in writing to the other parties):
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To the Company: AutoNation, Inc.
000 X.X. 0xx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chairman of the Board
Copy To: AutoNation, Inc.
000 X.X. 0xx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
To Executive: Xxxxxxx X. Xxxxxxx
AutoNation, Inc.
000 X.X. 0xx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
7. AMENDMENT, WAIVER, REMEDIES. This Agreement may not be modified,
amended, supplemented, extended, canceled or discharged, except by written
instrument executed by all parties. No failure to exercise, and no delay in
exercising, any right, power or privilege hereunder preclude the exercise of any
other right, power or privilege. No waiver of any breach of any provision shall
be deemed to be a waiver of any preceding or succeeding breach of the same or
other provision, nor shall any waiver be implied from any course of dealing
between the parties. No extension of time for performance of any obligations or
other acts hereunder or under any other agreement shall be deemed to be an
extension of the time for performance of any other obligations or any other
acts. The rights and remedies of the parties under this Agreement are in
addition to all other rights and remedies, at law or in equity, that they may
have against each other.
8. ASSIGNMENT. This Agreement, and the Executive's rights and
obligations hereunder, may not be assigned by him. The Company may assign its
rights, together with its obligations hereunder, to any of its affiliates or
subsidiaries, or any successor thereto.
9. SEVERABILITY; SURVIVAL; TERM. In the event that any provision of
this Agreement is found to be void and unenforceable by a court of competent
jurisdiction, then such unenforceable provision shall be deemed modified so as
to be enforceable (or if not subject to modification then eliminated herefrom)
for the purpose of those procedures to the extent necessary to permit the
remaining provisions to be enforced. The provisions of this Agreement (other
than Paragraph 1 and, except for obligations in Paragraph 2 resulting from a
termination of the Employment Period, Paragraph 2) will survive the termination
for any reason of the Employment Period and Executive's relationship with the
Company. If the Employment Period has not been terminated in accordance with
Paragraph 2 of this Agreement prior to December 31, 2005, (i) the respective
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obligations of the parties under Paragraphs 1 and 2 hereof shall terminate on
December 31, 2005, and (ii) the provisions of Paragraphs 3-11 under this
Agreement will survive.
10. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
11. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed for all purposes by the laws of the State of Florida applicable to
contracts executed and to be wholly performed within such State.
12. SUCCESSOR AGREEMENT. The Company hereby agrees that, in the event
that the Company desires to continue the employment relationship with the
Executive provided herein following the termination of the Employment Period
hereunder, prior to December 31, 2004 the Company shall so notify the Executive
so that the Executive and the Company may negotiate in good faith with respect
to a successor employment agreement that would become effective following
December 31, 2005 (PROVIDED, that neither the Company nor the Executive shall be
legally bound thereby unless and until a definitive successor employment
agreement is executed and delivered by each of the Company and the Executive).
13. AGENCY. Nothing herein shall imply or shall be deemed to imply an
agency relationship between the Executive and the Company.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AUTONATION, INC., a Delaware corporation
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------
XXXXXXX X. XXXXXXX,
Chairman of the Board
/s/ XXXXXXX X. XXXXXXX
-----------------------------------
XXXXXXX X. XXXXXXX, individually
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