Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of July
24, 2002 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 Chief Executive Officer
of the Company pursuant to an Employment Agreement dated as of September 22,
1999 (the "Initial Employment Agreement"), which is scheduled to expire by its
terms on September 24, 2002; 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 following termination of the Initial
Employment Agreement, 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 Chief
Executive Officer of the Company. The period during which the Executive
shall serve as Chief Executive 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 September
24, 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 Board of Directors or Chairman of the Board. 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 during calendar year 2002 at an annual rate
of $1,150,000 (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 and Nominating
Committee (the "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 Committee; PROVIDED, HOWEVER, that the target
award level for annual incentive bonuses under the Plan, or any
successor or substitute to the Plan, will be no less than the existing
target award level of 133 1/3% of the Executive's Salary at such time.
A portion of the Executive's annual bonus will be deferred in
accordance with the existing 3-year deferred bonus program for the
Executive adopted by the Committee in 2001. Upon expiration of the
3-year deferred bonus program at the end of 2003, a new 3-year deferred
bonus program similar to the current program will be established for
the Executive.
(e) BENEFITS. During the Employment Period, the Executive
shall be entitled to (i) participate in any retirement plans, insurance
programs and other fringe benefit 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 the Director Car
Program (or successor programs) pursuant to which the Executive is
entitled to the use of two vehicles selected by the Executive, 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"
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(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 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
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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) twice 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 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); 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 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 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.
(c) Upon termination of the Employment Period hereunder, at
the Company's request the Executive shall resign from the Company's
Board of Directors.
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
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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
(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,
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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 interviews 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 any
way 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):
To the Company:
AutoNation, Inc.
000 X.X. 0xx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chairman of the Board
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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
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
September 24, 2005, (i) the respective obligations of the parties under
Paragraphs 1 and 2 hereof shall terminate on September 24, 2005, and
(ii) the provisions of Paragraphs 3-11 under this Agreement shall
survive.
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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 September 24, 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 September 24, 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.
* * * *
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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
/s/ H. Xxxxx Xxxxxxxx
----------------------------------
By: H. Xxxxx Xxxxxxxx
Its: Chairman of the Board
/s/ XXXXXXX X. XXXXXXX
----------------------------------
XXXXXXX X. XXXXXXX, individually
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