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EXHIBIT 10.10
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT (this "Agreement"), is dated as of this 31st day
of December, 1999, by and between AutoNation, Inc., a Delaware corporation
("AutoNation"), and Xxxxx X. Xxxx, a Florida resident ("Xxxx").
W I T N E S S E T H :
WHEREAS, Xxxx has served AutoNation as Senior Vice President, General
Counsel and Secretary since June 2, 1997.
WHEREAS, in accordance with this Agreement, Xxxx'x employment as an
executive officer of AutoNation will be terminated by mutual agreement of the
parties.
WHEREAS, Xxxx and AutoNation desire to set forth herein certain agreements
between them with respect to Xxxx'x termination as an executive officer and
employee of AutoNation.
NOW, THEREFORE, in consideration of the mutual promises and the covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. RESIGNATION OF EMPLOYMENT. The foregoing recitals are true and correct
and are part of this Agreement. The terms and conditions of this Agreement have
been approved by the Board of Directors of AutoNation, and this Agreement is
enforceable in accordance with its terms against the parties. For purposes of
this Agreement, the termination of Xxxx'x employment by AutoNation shall be
effective (the "Effective Date") on December 31, 1999.
2. SEVERANCE COMPENSATION AND BENEFITS. Xxxx shall receive the following
severance compensation and benefits:
(a) So long as Xxxx is in compliance in all material respects with
the terms of paragraph 7 of this Agreement, as severance compensation,
AutoNation shall continue to pay Xxxx his current base salary at the rate of
$450,000 per year until June 30, 2001 (the "Severance Period"), payable in
biweekly or such other installments as is in accordance with AutoNation's normal
payroll practices, and subject to all applicable tax withholding requirements
and other deductions. Xxxx shall have no obligation to mitigate the severance
compensation by seeking other employment, and no amount of any other
compensation earned by Xxxx in any other capacity during the Severance Period
shall offset or reduce AutoNation's obligation to pay the severance compensation
to him.
(b) So long as Xxxx is in compliance in all material respects with
the terms of paragraph 7 of this Agreement, Xxxx shall not be entitled to any
bonuses during the Severance Period, except that he shall be eligible to receive
the portion of his bonus for 1999 to the extent it is related to his individual
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performance (i.e. 75% of his bonus), but the portion of his bonus related to
AutoNation's performance against its financial and/or business objectives (i.e.,
25% of his bonus) will be adjusted depending on AutoNation's success in meeting
its financial and/or business objectives in 1999. Xxxx'x total bonus eligibility
will be 35% of his 1999 salary of $450,000. This bonus will be paid in the
course of AutoNation's regular payout schedule in the year 2000.
(c) Xxxx shall be eligible for continuation of AutoNation's group
medical and dental coverage as set forth in the Consolidated Omnibus Budget
Reconciliation Act of 1985. As of the Effective Date, Xxxx will no longer be
eligible to participate in the following associate benefit programs offered by
AutoNation: (i) vacation benefits, (ii) 401(k), (iii) short term or long term
disability benefits, (iv) travel and accident benefits, or life or dependent
life insurance.
(d) Xxxx has been granted options to purchase a total of 348,385
shares of common stock under AutoNation's various Stock Option Plans
(collectively, the "Plans"), 102,097 of which have previously vested, 87,096 of
which will vest between the Effective Date and June 30, 2000 in accordance with
their original vesting schedules (the "vested options"), and the balance of
159,192 will be canceled and not vest or be exercisable, as set forth below,
notwithstanding anything to the contrary in any of the Plans or stock option
agreements entered into by Xxxx at the time of the grants:
AS OF NEXT
NUMBER OF AS OF APPLICABLE AS OF
SHARES THE DATE VESTING EFFECTIVE
UNDER- HEREOF, DATE; TOTAL DATE,
LYING PER SHARE NUMBER OF NUMBER OF NUMBER OF
OPTIONS EXERCISE OPTIONS OPTIONS OPTIONS EXPIRATION
GRANT DATE GRANTED PRICE($) VESTED CANCELED CANCELED DATE
---------- ------------ ---------- --------- ------------ ------------- -----------
06/02/97 160,000 12.75 80,000 120,000 40,000 06/02/07
01/02/98 88,385 12.75 20,097 44,293 44,292 01/02/08
01/06/99 100,000 15.9375 -0- 25,000 75,000 01/06/09
Notwithstanding Xxxx'x termination of employment as provided hereunder, the
vested options as set forth above shall be eligible to be exercised by Xxxx for
the duration of their respective original terms (in each case, 10 years from the
date of grant thereof as set forth above), and shall not expire or be terminated
earlier as a result of the termination of Xxxx'x employment with AutoNation
hereunder. During the Severance Period, Xxxx shall have the same rights with
regard to the vested options that active, then current executive officers as a
class have with respect to their outstanding stock options, including with
respect to any repricing of outstanding options. At all times, the vested
options shall be adjusted appropriately and automatically for any changes in the
securities underlying the vested options, including stock splits, dividends and
other reclassifications of any nature. Xxxx acknowledges that he has no further
claim or entitlement to be awarded any future additional grant of options under
the Plans or any other stock option plan of AutoNation. Xxxx also acknowledges
that the 159,192 options being canceled as of the Effective Date shall be
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forfeited. AutoNation agrees that it will not set off its obligations under the
Plans or this Agreement against any obligation which Xxxx may have under this
Agreement or otherwise to AutoNation, and AutoNation further agrees that it will
not cancel, forfeit or otherwise refuse to allow Xxxx to duly exercise his stock
options. Upon exercise by Xxxx of any of the vested stock options and payment in
full for the underlying shares, AutoNation shall deliver certificates for such
shares to Xxxx within five days to the address which he specifies in the
exercise notice.
(e) In the event of Xxxx'x death or incapacity during the Severance
Period, the severance compensation, benefits and the vested stock options
described above shall be paid or provided to, or be exercisable by, as the case
may be, Xxx X. Xxxx, his wife, his estate, personal representative or guardian.
3. COOPERATION; RECORDS; CONFIDENTIALITY. During the Severance Period,
Xxxx agrees to make himself available to AutoNation and its officers for
consultation on a reasonable basis from time to time as to any and all matters
which he worked on while an officer of AutoNation, provided that AutoNation
shall reimburse Xxxx for his reasonable expenses incurred in providing such
consultation and making himself available, including attorney's fees and costs,
if necessary (e.g., if Xxxx is required to be deposed as a witness in any
litigation involving AutoNation). AutoNation acknowledges that Xxxx may engage
in other full-time employment and AutoNation agrees that it will use its best
efforts to attempt to minimize the amount of time which it shall require of him.
Xxxx agrees that all records, files, documents, books, security/access badge(s),
and other property of AutoNation (including, without limitation, any cellular
telephone, pager and/or laptop computer, etc.) shall remain in AutoNation's
possession and that he shall not remove any of the same from AutoNation's
premises, without the prior consent of AutoNation. The foregoing
notwithstanding, it is agreed that Xxxx may retain the computer installed in
Xxxx'x home. At all times hereafter, Xxxx agrees to maintain the confidentiality
of all proprietary, secret, confidential and other non-public information
concerning AutoNation, including without limitation, any management, sales,
promotional or marketing plans, programs, techniques, practices or strategies,
any expansion plans in existing or new markets or for new or expanded products,
services or lines of business, and any financial statements, monthly operating
reports, budgets, projections and other financial information. Neither Xxxx nor
AutoNation shall publicly disclose the contents of this Agreement, except to the
extent required under applicable law.
4. NO RIGHT TO GIVE INTERVIEWS OR WRITE BOOKS, ETC. During the Severance
Period and the one year period thereafter, except as authorized by AutoNation,
Xxxx shall not give any interviews or speeches primarily concerning AutoNation,
nor shall Xxxx, directly or indirectly, prepare or assist any person or entity
in the preparation of any books, articles, television or motion picture
productions or other creations concerning AutoNation, including, without
limitation, any material concerning any person, whether or not fictional, whom
any member of the public might associate with AutoNation (regardless of whether
or not there shall appear any disclaimer purporting to disassociate such
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fictitious person from AutoNation). Notwithstanding the foregoing, Xxxx may
publicly state factual information about his employment with AutoNation in
providing others with background and resume information about himself, in public
filings with the SEC when required with respect to other issuers for which such
disclosure about him is required, and in similar contexts. During the Severance
Period and thereafter, Xxxx agrees that he shall not, in any communications with
any third party, criticize, ridicule or make any statement which disparages or
is derogatory of AutoNation or any of AutoNation's affiliates or any of its or
their officers, directors, agents or employees, and AutoNation agrees that it
shall not, in any communications with any third party, criticize, ridicule or
make any statement which disparages or is derogatory of Xxxx.
5. FULL SATISFACTION AND RELEASES. The parties agree that, except as
otherwise provided in this Agreement, this Agreement xxxxxx all relationships
between them and shall act as a mutual release of all claims of any nature which
each party may have against the other party as of the Effective Date, except
that the following claims shall not be released hereby: (i) claims by either
party against the other under or pursuant to this Agreement, (ii) claims by Xxxx
under applicable law in respect of statutory employment benefit rights (such as
COBRA or ERISA claims), and (iii) claims or rights of Xxxx under law or
AutoNation's certificate of incorporation and bylaws to indemnification against
third party claims arising with respect to his service as an officer and/or
director of AutoNation or any of its subsidiaries, affiliates and related
companies prior to the Effective Date. AutoNation agrees to maintain its
existing or substantially comparable directors and officers insurance coverage
in place for at least five years following the Effective Date, to the extent the
premiums therefor are not more than 200% of the cost of existing premiums, and
agrees to keep the same or broader indemnification rights in place under its
bylaws for at least five years following the Effective Date, to the extent
allowed by applicable law.
6. SEC FILING. Xxxx shall timely file a Form 4 with the Securities and
Exchange Commission reporting that he is no longer an executive officer of
AutoNation as of the Effective Date. After the Effective Date, AutoNation shall
cease to refer to or include Xxxx as an executive officer in any of its SEC
filings or press releases.
7. NON-COMPETE AND NON-SOLICITATION. Xxxx agrees that for a period of one
(1) year immediately following the Effective Date, except with the prior written
consent of AutoNation, Xxxx shall not directly or indirectly (whether
individually or as a partner, joint venturer, officer, director, employee,
consultant, agent, independent contractor or stockholder of or lender to any
company or business entity or otherwise), for any reason:
(a) engage in any retail automotive consumer business in any market
in the United States (collectively, the "Automotive Business"); or
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(b) request, advise or induce any material customer or material
vendor of AutoNation, its subsidiaries and related companies (collectively,
the "AutoNation Group") to withdraw, curtail or cancel any such customer's
or vendor's business with the AutoNation Group; or
(c)(i) solicit for employment, or knowingly permit any company or
business directly or indirectly controlled by him to solicit for
employment, any person who is employed in Fort Lauderdale, Florida by the
AutoNation Group at that time, or in any manner seek to induce any such
person to leave his or her employment with the AutoNation Group, or (ii)
employ, or permit any company or business directly or indirectly controlled
by him to employ, any person who is employed in Fort Lauderdale, Florida by
the AutoNation Group at that time or who was so employed within one year
prior to that time, provided, however, that Xxxx, or any company or
business directly or indirectly controlled by him, may employ any person at
any time after such person has been terminated (with or without cause) by
AutoNation. For purposes hereof, "controlled by or affiliated with" shall
mean any company or business, for which and so long as Xxxx both (i)
beneficially owns more than 50% of the outstanding equity, including for
purposes of such calculation the underlying shares of all options,
warrants, convertible securities and other rights to purchase securities
held by Xxxx, AND (ii) is a general partner, director or executive officer.
Xxxx agrees to have written policies in place at companies or businesses
that are controlled by him that such companies or businesses are not to
solicit or employ persons in contravention of this paragraph 7(c). In the
event Xxxx or a company or business controlled by him hires a current or
former employee of AutoNation in violation of this paragraph 7(c),
AutoNation shall provide prompt written notice to Xxxx, and if such
employee is not terminated by the company or business controlled by Xxxx
within thirty (30) days following the date of such notice, then AutoNation
shall have the right to seek injunctive and other relief, but shall not
have the right to cause forfeiture of any of Xxxx'x vested options
hereunder or to cease payment of severance compensation hereunder.
Notwithstanding the foregoing, (i) Xxxx'x beneficial ownership of less than
five percent (5%) of the outstanding shares of stock of any corporation having a
class of equity securities actively traded on a national securities exchange or
over-the-counter market, including for purposes of such calculation the
underlying shares of all options, warrants, convertible securities and other
rights to purchase securities held by Xxxx, shall not be deemed, in and of
itself, to violate the prohibitions of paragraph 7(a), and (ii) if any business
or company (on a consolidated basis with all of its majority-owned subsidiaries)
derives less than five percent (5%) of its annual revenue from the Automotive
Business as defined above, such business or company shall not be deemed for
purposes of paragraph 7(a) to be engaged in the Automotive Business. Also,
Xxxx'x representation as a lawyer of any entity or person engaged in the
Automotive Business shall not be deemed a violation of paragraph 7(a).
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8. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof. It
supersedes all prior negotiations, letters, agreements and understandings
relating to the subject matter hereof.
(b) CHOICE OF LAW. This Agreement will be interpreted, construed and
enforced in accordance with the laws of the State of Florida.
(c) EFFECT OF WAIVER. The failure of any party at any time or times
to require performance of any provision of this Agreement will in no manner
affect the right to enforce the same. The waiver by any party of any breach of
any provision of this Agreement will not be construed to be a waiver by any such
party of any succeeding breach of that provision or a waiver by such party of
any breach of any other provision.
(d) SEVERABILITY. The invalidity, illegality or unenforceability of
any provision or provisions of this Agreement will not affect any other
provision of this Agreement, which will remain in full force and effect, nor
will the invalidity, illegality or unenforceability of a portion of any
provision of this Agreement affect the balance of such provision. In the event
that any one or more of the provisions contained in this Agreement or any
portion thereof shall for any reason be held to be invalid, illegal or
unenforceable in any respect, this Agreement shall be reformed, construed and
enforced as if such invalid, illegal or unenforceable provision had never been
contained herein.
(e) EXCLUSIVE VENUE AND JURISDICTION. In the event of a claimed
breach by either party, the non-breaching party may seek injunctive or other
relief from a court of law, but AutoNation shall not have the right to cause
forfeiture of the vested options or to cease payment of severance compensation,
except in accordance with a judgment entered by a court of competent
jurisdiction. Any suit, action or proceeding with respect to this Agreement
shall be brought in the courts of Broward County in the State of Florida or in
the U.S. District Court for the Southern District of Florida. The parties hereto
hereby accept the exclusive jurisdiction of those courts for the purpose of any
such suit, action or proceeding.
(f) BINDING NATURE. This Agreement will be binding upon the parties
and will inure to the benefit of any successor or successors of AutoNation. This
Agreement is not assignable by Xxxx.
(g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
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(h) NOTICES. All notices which either party shall be required or
permitted to make or give under this Agreement shall be in writing and shall be
sufficiently made or given if sent by personally delivery, by certified mail,
return receipt requested or by nationally recognized overnight courier service,
addressed as set forth below, unless a notice of a change of address has been
previously given in accordance with the foregoing:
If to Xxxx: Xxxxx X. Xxxx
00 Xxxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
If to AutoNation: AutoNation, Inc.
000 X.X. 0xx Xxxxxx
Xxxx Xxxxxxxxxx, XX 00000
Attn: Chief Executive Officer
(i) PRESS RELEASE. Xxxx and AutoNation shall mutually agree on the
text of any press release to be issued regarding the termination of Xxxx'x
employment but Xxxx acknowledges that AutoNation shall have final control over
the time of any press release and comment. All subsequent press releases and
public comment shall be consistent with the mutually agreed upon language of the
initial press release.
(j) ARM'S LENGTH NEGOTIATIONS. Each party herein expressly represents
and warrants to the other that (a) before executing this Agreement, said party
has fully informed itself of the terms, contents, conditions and effects of this
Agreement; (b) said party has relied solely and completely upon its own judgment
in executing this Agreement; (c) said party has had the opportunity to seek and
has obtained the advice of its own counsel before executing this Agreement; (d)
said party has acted voluntarily and of its own free will in executing this
Agreement; (e) said party is not acting under duress, whether economic or
physical, in executing this Agreement; and (f) this Agreement is the result of
arm's length negotiations conducted by and among the parties and their
respective counsel.
[signatures on next page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
AUTONATION, INC.
By: /s/ XXXXXXX X. XXXXXXX
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Xxxxxxx X. Xxxxxxx,
Chief Executive Officer
/s/ XXXXX X. XXXX
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XXXXX X. XXXX
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