1
Exhibit 10.8
EXECUTION COPY
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 March 9, 2001
(the "Termination Date"). Employee's duties as an officer, director and
employee of the Company and any of its subsidiaries shall end 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 $150,000);
(ii) a bonus payment equal to 38% of Employee's annual base salary
(such gross amount equal to $57,000);
(iii) an aggregate automobile allowance equal to $17,700; and
b) (i) From the Termination Date until the last day of March 2002 (the
end of the final month covered by your 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
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.
2
Such benefits will be continued only to the extent permissible
under the terms of such Company Plans. Notwithstanding anything
contained in this paragraph b(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 paragraph (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 only the amount
that such Employee would have paid for such coverage had such
Employee remained employed by the Company (the "Employee
Premium") (and the Company paying the remainder), 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. If the Employee directs
the Company not to deduct the entire amount of Employee Premium
for the Severance Period from the lump sum paid under Section
2(a), the Employee shall be
2
3
responsible for mailing the Employee Premium to the Company by
the first day of every month during the Severance Period.
(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 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 9,
2002. Stock options not exercised by June 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) The Company shall provide Employee with outplacement benefits from
Drake Beam Xxxxx (Executive Program) consistent with those benefits
offered other Company executives terminated in March 2001.
f) 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 3, 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, Employee's
attorney or an outplacement firm hired by Employee or the Company. 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
3
4
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 or information or disclose
their contents to any other person. Notwithstanding the above, Employee
shall be allowed to retain the Palm Pilot organizer (Palm VII) he was using
while employed by the Company.
5. Expenses. Employee shall be reimbursed for his business expenses incurred
prior to the Termination Date in accordance with the Company's expense
reimbursement policies.
6. Employees. For a period commencing on the date hereof and terminating at
the end of the Severance Period (the "Restricted Period"), Employee shall
not, directly or indirectly, (i) solicit for employment and/or hire or
offer employment to any individual who is then currently employed by the
Company, or (ii) encourage any such individual to terminate his or her
relationship with the Company or its subsidiaries.
7. Omitted.
8. Release of Claims And Agreement Not To Xxx. As consideration for the
obligations undertaken by the Company pursuant to this Agreement, Employee,
for himself, his executors, administrators, heirs and assigns (the
"Employee Released Parties"), hereby fully releases, waives and fully
discharges the Company 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. The Company Released Parties, as consideration for the
obligations undertaken by Employee pursuant to this Agreement, hereby fully
release, waive and fully discharge the Employee Released Parties 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. The Employee's 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 Released Parties and Company
Released Parties agree not to xxx or to file any claims or actions against
the other with respect to claims covered by the aforementioned mutual
releases and affirm that no such claims or actions are currently pending.
Notwithstanding the above, the Employee's waiver and release shall not
apply
4
5
to claims for indemnification pursuant to Article 7 of the Company's
Articles of Incorporation, Article 5 of the Company's Bylaws and that
certain Indemnification Agreement between Employee and the Company dated
February 24, 1999. Nothing herein shall preclude Employee from seeking
benefits under any Company directors and officers or liability insurance
policy, subject in each case to the specific terms of the policy.
9. No Disparagement or Encouragement.
a) Until March 9, 2004, Employee 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 Company or any of its past or
present officers, employees, business, products, services or its
relationships; provided, however, that nothing herein shall limit or
prohibit Employee 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 Company
Released Parties. Employee will not assist any person who has filed a
lawsuit, charge, claim, or complaint against any of the Company
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.
b) Until March 9, 2004, Company agrees not to do anything, and not to
make any oral, electronic or written statement to any person
(including without limitation the press), that disparages or places in
a false or negative light the Employee; provided, however, that
nothing herein shall limit or prohibit Company from cooperating in any
truthful manner with any governmental authority or agency or
responding truthfully under oath in a legal proceeding. Company will
not encourage any person to file a lawsuit, charge, claim, or
complaint against the Employee Released Parties. Company will not
assist any person who has filed a lawsuit, charge, claim, or complaint
against Employee Released Parties unless the Company is required to
render such assistance pursuant to a lawful subpoena or becomes
subject to any such legal obligation. If the Company is served with
any such legal subpoena or becomes subject to any such legal
obligation, the Company will provide prompt written notice to the
Employee in which the Company 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.
5
6
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), 2(c) and 2(e) above.
12. No Admission. This Agreement does not constitute an admission by any of the
parties, and the parties specifically deny that any action or failure to
act by any of the parties was wrongful, unlawful, or susceptible of causing
any damages or injury to the other party.
13. Severability. The Employee acknowledges and agrees that the Restrictive
Covenant (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 Covenant, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenant 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, provided such release or waiver is
approved by such Employee's legal counsel.
14. Rights and Remedies Upon Breach. If the Employee breaches, or threatens to
commit a breach of, any of the covenants set forth in Section 6 of this
Agreement (the "Restrictive Covenant"), the Company shall have the right
and remedy to have the Restrictive Covenant 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 Covenant 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 Covenant, 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 and provided further the Company remains bound by the Indemnification
Agreement provided in Section 8.
6
7
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. XXXXX
By: /s/ Xxxxxx X'Xxxxx /s/ Xxxxxxx X. Xxxxx
----------------------------------- ----------------------------
Its:
---------------------------------- Dated: April 12, 2001
----------------------
Dated:
--------------------------------
7
8
Attachment A
Stock Options of Employee
Number Grant Date Number Exercise Price
------ ---------- ------ --------------
IA0304 2/25/97 5,000 $ 8.50
IA0320 1/2/98 12,500 $11.688
IA0447 12/15/98 10,000 $11.125
IA0448 12/15/98 15,000 $11.125
9
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
