EXHIBIT 10.14
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT (this "AGREEMENT") is entered into as of
_______ __, ____, by and between Xxxxxx X. Xxxxxxx ("XXXXXXX") and First
Acceptance Corporation (f/k/a Liberte Investors Inc.), a Delaware corporation
(the "COMPANY"). The Company and Xxxxxxx are sometimes collectively referred to
herein as the "PARTIES" and individually as a "PARTY."
WHEREAS, Xxxxxxx and the Company are parties to the Employment
Agreement, dated as of July 1, 2002 (the "EMPLOYMENT AGREEMENT"), which sets
forth the terms and conditions of Xxxxxxx' employment as President and Chief
Executive Officer of the Company;
WHEREAS, the Company granted Xxxxxxx options (the "OPTIONS") to
purchase 2,573,678 shares of its common stock, par value $.01 per share ("COMMON
STOCK"), pursuant to the Nonqualified Stock Option Grant Agreement, dated July
9, 2003 (the "OPTION GRANT AGREEMENT");
WHEREAS, the Company, USAH Merger Sub, Inc., a Delaware corporation
and direct wholly-owned subsidiary of the Company ("MERGER SUB"), USAuto
Holdings, Inc., a Delaware corporation ("USAUTO"), and the stockholders of
USAuto are parties to the Agreement and Plan of Merger, dated as of December __,
2003 (the "MERGER AGREEMENT"), pursuant to which USAuto will merge with and into
Merger Sub upon the terms and subject to the conditions set forth therein (the
"MERGER"); and
WHEREAS, upon the Merger becoming effective and pursuant to the terms
and conditions set forth in this Agreement, Xxxxxxx' employment as an employee
and officer of the Company will terminate.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the Parties agree as follows:
1. SEPARATION AGREEMENTS.
(a) Subject to the terms and conditions set forth in this Agreement,
Xxxxxxx hereby resigns, and the Company accepts Xxxxxxx' resignation, from his
position as President and Chief Executive Officer of the Company (the
"SEPARATION"). Such Separation shall be deemed effective as of the Closing Date
(the "SEPARATION DATE").
(b) In connection with the Separation, and in consideration for the
execution, delivery and effectiveness of the General Release attached as EXHIBIT
A hereto by Xxxxxxx, the Company shall promptly pay to Xxxxxxx all of the
compensation contemplated by Section 5(d) of the Employment Agreement, which
compensation consists of the following: (i) any unpaid Base Salary (as defined
in the Employment Agreement) due to Xxxxxxx for all periods prior to the
Separation Date; (ii) Xxxxxxx' accrued PTO (as defined in the Employment
Agreement); and
(iii) a lump sum amount equal to (x) the present value (based on a rate of 4.75%
per annum) of all remaining Base Salary obligations through the end of the term
of the Employment Agreement plus (y) an amount equal to the higher of Xxxxxxx'
most recent annual bonus or target bonus agreed upon by the Company's Board of
Directors for the year in which the Separation occurs. The Company and Xxxxxxx
agree that the amount described in clause (iii) of the immediately preceding
sentence shall be $1,659,000. In addition, during the period beginning on the
date hereof and ending on July 1, 2007, the Company shall provide Xxxxxxx with
medical and dental insurance coverage for himself and for his family on terms
and in amounts consistent with the medical and dental insurance coverage made
available to the Company's senior management.
(c) As a condition to the Separation, the Company hereby assigns and
transfers to [NEW ENTITY TO BE FORMED BY XXXXXXX] (the "NEW XXXXXXX ENTITY"),
subject to obtaining the landlord's consent, all of the Company's rights, title
and interest in and under the lease for the office space located at 000 Xxxxx
Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000 (the "CHICAGO LEASE") and
all furniture, fixtures and other personal property located therein, which
transfer of furniture, fixtures and other personal property shall be made
pursuant to a customary xxxx of sale, and the New Xxxxxxx Entity hereby assumes
all of the Company's obligations under the Chicago Lease and becomes entitled to
all of the Company's rights thereunder. In further consideration of the
Separation and, for the benefit of the Company, the execution and delivery by
Xxxxxxx, and the effectiveness of, the General Release attached as EXHIBIT A
hereto, the Company shall reimburse the New Xxxxxxx Entity for all obligations
and expenses incurred by the New Xxxxxxx Entity under the Chicago Lease (as in
effect on the Closing Date), including the obligations to make rental payments
thereunder and pay the expenses and real estate taxes specified therein
(collectively, the "LEASE OBLIGATIONS"), as and when such Lease Obligations are
incurred by the New Xxxxxxx Entity through the end of the term of the Chicago
Lease (as in effect on the Closing Date). The Company shall reimburse the New
Xxxxxxx Entity for payment of the Lease Obligations within 5 business days of
receipt of written notice from the New Xxxxxxx Entity requesting such
reimbursement, which notice shall include evidence of payment by the New Xxxxxxx
Entity of the Lease Obligations with respect to which the New Xxxxxxx Entity is
requesting reimbursement.
(d) Notwithstanding anything to the contrary contained in the Option
Grant Agreement, the Company and Xxxxxxx agree that, effective as of the
Separation Date, all of the Options granted to Xxxxxxx pursuant to the Option
Grant Agreement, including any additional Options issued to Xxxxxxx pursuant to
Section 12 of the Option Grant Agreement in connection with the consummation of
the Rights Offering (as defined below), shall become fully vested and
exercisable for all purposes under the Option Grant Agreement. In addition, the
Company and Xxxxxxx agree that, notwithstanding anything to the contrary
contained in the Option Grant Agreement, Xxxxxxx shall be entitled to exercise
the Options at any time prior to 5 p.m. on July 9, 2012. The Company and Xxxxxxx
further agree that effective immediately following the consummation of the
Rights Offering and the issuance of additional Options to Xxxxxxx pursuant to
Section 12 of the Option Grant Agreement in connection therewith, Section 12 of
the Option Grant Agreement shall be of no further force or effect, the Option
Grant Agreement shall be amended by deleting Section 12 therefrom in its
entirety and Xxxxxxx shall no longer be entitled to issuances of additional
Options in connection with future offerings of the Company's equity securities.
The term "RIGHTS OFFERING" as used herein means the grant by the Company to its
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stockholders of the right to acquire up to 12,500,000 shares of its Common
Stock, at an offering price per share that will result in the Company realizing
at least $50,000,000 in gross proceeds from such offering and the issuance of
such Common Stock pursuant thereto in order to finance a portion of
consideration to be paid in connection with the Merger and any transactions or
other actions taken in furtherance or a result thereof.
(e) In consideration of the agreements set forth in this SECTION 1,
Xxxxxxx agrees to execute the General Release attached as EXHIBIT A hereto.
2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Company and its affiliates, successors and assigns
and shall be binding upon and inure to the benefit of Xxxxxxx and his legal
representatives and assigns.
3. MODIFICATION OR WAIVER. No amendment, modification or waiver of
this Agreement shall be binding or effective for any purpose unless it is made
in a writing signed by the Party against whom enforcement of such amendment,
modification or waiver is sought. No course of dealing between the Parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of the Company or
Xxxxxxx in the exercise of any of their respective rights or remedies shall
operate as a waiver thereof, and no single or partial exercise by the Company or
Xxxxxxx of any such right or remedy shall preclude other or further exercises
thereof. A waiver of right or remedy on any one occasion shall not be construed
as a bar to or waiver of any such right or remedy on any other occasion.
4. GOVERNING LAW. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Illinois, without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Illinois or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Illinois.
5. SEVERABILITY. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or term of this Agreement shall be held to
be prohibited by or invalid under such applicable law, then such provision or
term shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement.
6. NO STRICT CONSTRUCTION. The language used in this Agreement
shall be deemed to be the language chosen by the Parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
Party.
7. NOTICE. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or upon confirmation of receipt if delivered by telecopy
or facsimile (but only if a copy of such telecopy or facsimile is delivered to
the recipient by a recognized next-day
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courier service), (b) on the first business day following the date of dispatch
if delivered by a recognized next-day courier service or (c) on the fifth
business day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered as set forth below, or pursuant to such other instructions as
have been previously designated in writing to the party sending such notice by
the party to receive such notice:
THE COMPANY:
First Acceptance Corporation
0000 Xxxxx Xxxxx Xxxxxxx Xxxxx Xxxxxxxxx,
Xxxxxxxxx 00000 Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
XXXXXXX:
Xxxxxx X. Xxxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
8. CAPTIONS. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no caption had been used in this Agreement.
9. COUNTERPARTS. This Agreement may be executed in counterparts,
any one of which need not contain the signatures of more than one Party, but all
such counterparts taken together shall constitute one and the same instrument.
* * * *
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IN WITNESS WHEREOF, the undersigned have executed this Separation
Agreement as of the date first above written.
FIRST ACCEPTANCE CORPORATION
By:
--------------------------------
Its:
--------------------------------
--------------------------------------
Xxxxxx X. Xxxxxxx
Exhibit A
GENERAL RELEASE
I, Xxxxxx X. Xxxxxxx, in consideration of and subject to the performance by
First Acceptance Corporation, a Delaware corporation (together with its
Subsidiaries, the "COMPANY"), of its material obligations under the Separation
Agreement, dated as of __________ __, 2004 (the "AGREEMENT"), do hereby release
and forever discharge as of the date hereof the Company and all present and
former directors, officers, agents, representatives, employees, successors and
assigns of the Company and its direct or indirect owners (collectively, the
"RELEASED PARTIES") to the extent provided below.
1. I understand that any payments or benefits paid or granted to me under
Section 1 of the Agreement represent, in part, consideration for signing
this General Release and are not salary, wages or benefits to which I was
already entitled. I understand and agree that I will not receive the
payments and benefits specified in Section 1 of the Agreement unless I
execute this General Release and do not revoke this General Release within
the time period permitted hereafter or breach this General Release.
2. Except as provided in paragraph 4 below and except for any Claims (as
defined below) arising out of the Agreement, I knowingly and voluntarily
release and forever discharge the Company and the other Released Parties
from any and all claims, controversies, actions, causes of action,
cross-claims, counter-claims, demands, debts, compensatory damages,
liquidated damages, punitive or exemplary damages, other damages, claims
for costs and attorneys' fees, or liabilities of any nature whatsoever in
law and in equity, both past and present (through the date of this General
Release) and whether known or unknown, suspected, or claimed against the
Company or any of the Released Parties which I, my spouse, or any of my
heirs, executors, administrators or assigns, may have, which arise out of
or are connected with my employment with, or my separation from, the
Company (including, but not limited to, any allegation, claim or violation,
arising under: Title VII of the Civil Rights Act of 1964, as amended; the
Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967,
as amended (including the Older Workers Benefit Protection Act); the Equal
Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990;
the Family and Medical Leave Act of 1993; the Civil Rights Act of 1866, as
amended; the Worker Adjustment Retraining and Notification Act; the
Employee Retirement Income Security Act of 1974; any applicable Executive
Order Programs; the Fair Labor Standards Act; or their state or local
counterparts; or under any other federal, state or local civil or human
rights law, or under any other local, state, or federal law, regulation or
ordinance; or under any public policy, contract or tort, or under common
law; or arising under any policies, practices or procedures of the Company;
or any claim for wrongful discharge, breach of contract, infliction of
emotional distress, defamation; or any claim for costs, fees, or other
expenses, including attorneys' fees incurred in these matters) (all of the
foregoing collectively referred to herein as the "CLAIMS").
3. I represent that I have made no assignment or transfer of any right, claim,
demand, cause of action or other matter covered by paragraph 2 above.
4. I agree that this General Release does not waive or release any rights or
claims that I may have under the Age Discrimination in Employment Act of
1967 which arise after the date I execute this General Release. I
acknowledge and agree that my separation from employment with the Company
in compliance with the terms of the Agreement shall not serve as the basis
for any claim or action (including, without limitation, any claim under the
Age Discrimination in Employment Act of 1967).
5. In signing this General Release, I acknowledge and intend that it shall be
effective as a bar to each and every one of the Claims hereinabove
mentioned or implied. I expressly consent that this General Release shall
be given full force and effect according to each and all of its express
terms and provisions, including those relating to unknown and unsuspected
Claims (notwithstanding any state statute that expressly limits the
effectiveness of a general release of unknown, unsuspected and
unanticipated Claims), if any, as well as those relating to any other
Claims hereinabove mentioned or implied. I acknowledge and agree that this
waiver is an essential and material term of this General Release and that
without such waiver the Company would not have agreed to the terms of the
Agreement. I further agree that in the event I should bring a Claim seeking
damages against the Company, or in the event I should seek to recover
against the Company in any Claim brought by a governmental agency on my
behalf, this General Release shall serve as a complete defense to such
Claims. I further agree that I am not aware of any pending charge or
complaint of the type described in paragraph 2 hereof as of the execution
of this General Release.
6. I agree that neither this General Release, nor the furnishing of the
consideration for this General Release, shall be deemed or construed at any
time to be an admission by the Company, any Released Party or myself of any
improper or unlawful conduct.
7. I agree that I will forfeit all amounts payable by the Company pursuant to
Section 1 of the Agreement if I challenge the validity of this General
Release. I also agree that if I violate this General Release by suing the
Company or the other Released Parties, I will pay all costs and expenses of
defending against the suit incurred by the Released Parties, including
reasonable attorneys' fees, and return all payments received by me pursuant
to Section 1 the Agreement.
8. I agree to reasonably cooperate with the Company in any internal
investigation or administrative, regulatory or judicial proceeding. I
understand and agree that my cooperation may include, but not be limited
to, making myself available to the Company upon reasonable notice for
interviews and factual investigations; appearing at the Company's request
to give testimony without requiring service of a subpoena or other legal
process; volunteering to the Company pertinent information; and turning
over to the Company all relevant documents which are or may come into my
possession all at times and on schedules that are reasonably consistent
with my other permitted activities and commitments. I understand that in
the event the Company asks for my cooperation in
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accordance with this provision, the Company will reimburse me solely for
reasonable travel expenses, including lodging and meals, upon my submission
of receipts.
9. Notwithstanding anything in this General Release to the contrary, this
General Release shall not relinquish, diminish, or in any way affect any
rights or claims arising out of any breach by the Company or by any
Released Party of the Agreement.
10. Whenever possible, each provision of this General Release shall be
interpreted in, such manner as to be effective and valid under applicable
law, but if any provision of this General Release is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision or any other jurisdiction, but this General
Release shall be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision had never been
contained herein.
BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:
1. I HAVE READ IT CAREFULLY;
2. I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT
RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED; TITLE VII OF THE
CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963; THE
AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED;
3. I VOLUNTARILY CONSENT TO EVERYTHING IN IT;
4. I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT
AND HAVE DONE SO, OR, AFTER CAREFUL READING AND CONSIDERATION, I HAVE
CHOSEN NOT TO DO SO OF MY OWN VOLITION;
5. I HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS
RELEASE SUBSTANTIALLY IN ITS FINAL FORM ON _______________ __, _____
TO CONSIDER IT AND THE CHANGES MADE SINCE THE _______________ __,
_____ VERSION OF THIS RELEASE ARE NOT MATERIAL AND WILL NOT RESTART
THE REQUIRED 21-DAY PERIOD;
6. THE CHANGES TO THE AGREEMENT SINCE _______________ ___, _____ EITHER
ARE NOT MATERIAL OR WERE MADE AT MY REQUEST;
7. I UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS
RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL
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NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS
EXPIRED;
8. I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH
THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT;
AND
9. I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE
AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN
WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY
ME.
DATE: ___________ __, ______ ------------------------------
Xxxxxx X. Xxxxxxx
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