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Exhibit 10.4
SEPARATION AGREEMENT AND GENERAL RELEASE
This Separation Agreement ("Agreement") is entered into by and between Xxxxxxx
X. Xxxxxxxxxx ("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 March 31,
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 $145,000);
(ii) a bonus payment equal to 30% of Employee's annual
base salary (such gross amount equal to $43,500);
(iii) an automobile allowance equal to 12.21% of Employee's
annual base salary in effect on the Termination Date
(such gross amount equal to $17,700); and
b) (i) From the Termination Date until March 31, 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 Employee, for Employee and
such of Employee's dependents for whom the Company
provided such benefits on the Termination Date;
provided
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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 such
coverage will be determined pursuant to COBRA and
paid entirely by the Employee.
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(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 June 30, 2002. Stock options not exercised
by June 30, 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 July 17, 1997 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 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
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contents to any other person. Notwithstanding the above, Employee shall
be allowed to retain the Palm Pilot organizer (Palm VII) he is
currently using.
5. Restricted Activities. Except for the Permitted Activity (defined
below), for a period commencing on the date hereof and terminating at
the end of the Severance Period (the "Restricted Period"), the
Employee, unless acting in accordance with the Company's prior written
consent (which consent may be given by any duly authorized officer of
the Company) shall not, anywhere in the United States ("Restricted
Territory") directly or indirectly, own, manage, operate, control,
finance or participate in the ownership, management, operation, control
or financing of, or be connected as an officer, director, employee,
principal, agent, representative, consultant, investor, owner, partner,
manager, joint venturer or similar affiliation with, any business or
enterprise principally engaged in, or with a material portion of its
business comprised of the Business; provided, however, the Employee may
own, directly or indirectly, securities of any person having a class of
securities (a) registered under the Securities Exchange Act of 1934 and
(b) publicly traded, if the Employee is not a controlling person of, or
a member of a group which controls, such person and the Employee does
not, directly or indirectly own more than two percent (2%) of any class
of securities of such person (the "Permitted Activity"). "Business"
shall mean the business of towing, processing, appraising, auctioning
and selling, and processing claims with respect to damaged, abandoned,
repossessed, total loss, used and recovered theft automobiles, trucks,
motorcycles, boats, trailers, motor houses and other types of vehicles.
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. Customers. During the Restricted Period, the Employee shall not solicit
any person who is or was a customer or client of the Company, or its
subsidiaries and who becomes a customer or client of the Company or its
subsidiaries at any time during the Restricted Period, for the purpose
of (i) engaging in, or assisting any person or entity in engaging in,
the Business, or (ii) soliciting or encouraging any customer, client of
the Company, or its subsidiaries to terminate or otherwise alter his,
hers or its relationship or prospective relationship with the Company
or its subsidiaries.
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
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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 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.
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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 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;
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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 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. XXXXXXXXXX
By: /s/ Xxxxxx X. X'Xxxxx /s/ Xxxxxxx X. Xxxxxxxxxx
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Its: CEO
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Dated: 2-23-01
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Dated: 2-23-01
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Attachment A
Stock Options of Employee
Number Grant Date Number Exercise Price
------ ---------- ------ --------------
IA0313 8/5/97 5,000 $9.4375
IA0323 1/2/98 12,500 11.688
IA0449 12/15/98 10,000 11.125
IA0450 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 participate in the employment
termination program:
TITLE AGE(S)
----- ------
Vice President, Chief Financial Officer and Assistant 45
Secretary
Vice President, General Counsel and Secretary 43
The following employees were not selected to participate in the
employment termination program:
TITLE AGE(S)
----- ------
Vice President, Eastern Division 42
Vice President, Industry and Customer Relations 52
Vice-President, Western Division 41
Vice-President, Business Development 38
Senior Vice-President, Sales & Marketing 52
Vice-President, Information Technology & CIO 42
Vice-President, Public Affairs 49
