1
Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of
August 1, 2000 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 Company acquired the Maroone Automotive Group in 1997 and
the Executive has served as a senior executive of the Company since the
acquisition; and
WHEREAS, the Executive currently serves as the President and Chief
Operating Officer of the Company and the Executive and the Company desire to set
forth herein the terms and conditions of the Executive's employment with the
Company and certain non-competition covenants applicable to 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. 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 continue from the date hereof until the close of
business on December 31, 2003, unless earlier terminated pursuant to
Section 2 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, Chairman of the Board or 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 an annual base salary of $850,000 (the "Salary") during
the Employment Period payable in accordance with the Company's
customary payroll practices, subject to annual adjustment as approved
by the Compensation Committee of the Company's Board of Directors (the
"Compensation Committee").
2
(d) BONUS. For 2000, the Executive has been designated to
participate in the Company's 1999 Senior Executive Bonus Plan (the
"Plan"). In accordance with the terms and conditions of the Plan, the
Executive is entitled to receive an annual performance bonus for 2000
of 70% of the Salary if the Company meets the performance goal under
the Plan of earnings per share of $0.90 for fiscal year 2000. After
2000 and during the Employment Period, the Executive will be entitled
to continue to participate in the Plan, with bonus eligibility and
performance objectives as established by the Compensation Committee.
(e) BENEFITS. During the Employment Period, the Executive
shall be entitled to 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. The
Executive shall be entitled to four (4) weeks paid vacation each year
(or such greater amount, if applicable, as may be provided from time to
time in accordance with Company vacation policy). During the Employment
Period, the Executive shall be entitled to reasonable use of
demonstrator vehicles in accordance with applicable Company policies
related thereto.
(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 receive a sign-on bonus
grant of an option to purchase 350,000 shares of the Company's common
stock, effective on the date hereof, at an exercise price of $6.875 per
share. The Executive shall also receive a grant of an option to
purchase 500,000 shares of the Company's common stock in connection
with the Company's annual stock option grant on August 1, 2000, at an
exercise price of $6.875 per share. The options will be granted
pursuant to, and governed by, the applicable Company stock option plans
and the stock option agreements to be entered into by the Executive and
the Company with respect thereto. The Executive shall be included in
any other 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 Company's
Compensation Committee.
2. TERMINATION.
(a) DEATH, DISABILITY AND CAUSE. 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
2
3
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's negligence or willful misconduct in the performance of his
duties hereunder, (iv) the Executive's commission of an act of
dishonesty affecting the Company or the commission of an act
constituting fraud or a felony, (v) the Executive's commission of an
act (other than the good faith exercise of his business judgment in the
exercise of his responsibilities) resulting in material damages to the
Company; (vi) the Executive's inability to perform his duties and
responsibilities as provided herein due to his death, or physical or
mental disability or sickness (1) for more than sixty (60) days
(whether or not consecutive) during any period of twelve (12)
consecutive months or (2) reasonably expected to extend for greater
than two (2) months; or (vii) Executive's violation of Company
policies. The Company acknowledges that the Executive may resign or
otherwise terminate 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.
(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 termination of the Employment Period by the Company
without Cause or by the Executive for Good Reason, or if the Executive
is not offered continued employment upon mutually agreeable terms at
the end of the Employment Period, the Executive shall be entitled to
receive (i) the greater of (A) one year's base Salary or (B) his
then-current base Salary for the remainder of the term of the
Employment Period, PLUS (ii) a pro-rated bonus for the year in which he
is terminated (based on the portion of the year worked) to the
extent the performance objectives relating thereto are met and the
bonus is earned, 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.
"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
3
4
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.
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 further acknowledges that (i) in connection with
the acquisition (the "Acquisition") by the Company of the Maroone Automotive
Group pursuant to that certain Merger and Acquisition Agreement dated January
12, 1997 (the "Acquisition Agreement") and (ii) pursuant to an employment
agreement (the "1997 Employment Agreement") entered into as of January 13, 1997
by the Executive in connection with the Acquisition, the Executive agreed to
certain non-competition covenants (including as set forth in Section 5.11 of the
Acquisition Agreement and Section 3 of the 1997 Employment Agreement). In
connection with entering into this Agreement, the Executive and the Company
desire to modify and re-state the Executive's non-competition covenants as set
forth below.
The Executive hereby agrees that during the Restricted Period
(as defined below) 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, shareholder, joint venturer, officer,
director, consultant, finder, broker, employee, sales person, trustee,
independent contractor, 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;
4
5
(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; and
(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.
As used in this Agreement, the term "Company" shall mean and
include AutoNation, Inc. and all of its affiliates, subsidiaries, successors and
assigns.
As used in this Agreement, the term "Restricted Period" shall
have either of the following meanings, as applicable: (i) in the event the
Executive's employment with the Company is terminated (whether by the Company or
the Executive) prior to January 1, 2002, the "Restricted Period" shall commence
on the date hereof and shall end on the two-year anniversary of the last day of
the Executive's employment (PROVIDED, that if the Executive's employment is
terminated by the Company without Cause or by the Executive with Good Reason,
the Restricted Period shall terminate on the one-year anniversary of the last
day of the Executive's employment); and (ii) in the event the Executive's
employment with the Company is terminated (whether by the Company or the
Executive) at any time on or after January 1, 2002 (including after December 31,
2003 if the Executive continues his employment with the Company thereafter), the
"Restricted Period" shall commence on the date hereof and shall end on the
one-year anniversary of the last day of the Executive's employment with the
Company (whether such date of termination occurs on, before or after December
31, 2003).
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 he shall not at any
time during his employment with the Company and for a period of five (5) years
thereafter, orally, in writing or otherwise, (i) disparage in any manner the
Company or any of its subsidiaries or affiliates, their respective businesses or
reputations, or the personal or business reputations of their directors,
officers, shareholders or employees, or engage in any disparaging conduct or
make any negative or derogatory statements concerning any of the foregoing, or
(ii) in any way impede, disrupt or interfere with the contracts, agreements,
understandings, communications or relationships of the Company and its
subsidiaries and affiliates 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
5
6
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 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: Chief Executive Officer
Telecopy: (000) 000-0000
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
6
7
Copy To:
Xxxxx X. Xxxxx, Esq.
Williams, Stevens, XxXxxxxxxx & Xxxxxxxx, P.C.
0000 Xxxxxxx Xxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
7. AMENDMENT, WAIVER, REMEDIES. This Agreement may not be modified,
amended, supplemented, 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. 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 Sections 1 and 2) will survive the termination for any reason of
Executive's relationship with the Company.
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. AGENCY. Nothing herein shall imply or shall be deemed to imply an
agency relationship between the Executive and the Company.
7
8
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AUTONATION, INC.
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
By: Xxxxxxx X. Xxxxxxx
Its: Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx, individually
8
