EX-10.1






EXHIBIT
10.1




[Company Letterhead]




January 28, 2009




American Honda Motor Co., Inc.

1919 Torrance Boulevard

Torrance, CA 90501

Attention: Dealer Development




                    RE:     AutoNation, Inc. Framework Agreement




Dear Mr. Colliver:




     Reference is made to that certain Framework Agreement, dated as of June 9, 1998 and as amended
from time to time (the “Framework Agreement”), by and between American Honda Motor Co.,
Inc. (“American Honda”) and AutoNation, Inc. (formerly known as Republic Industries, Inc.)
(“AutoNation”).



     American Honda hereby consents to the acquisition by ESL Investments, Inc. and any
person, entity or group that directly, or indirectly though one or more intermediaries, controls,
or is controlled by, or is under common control with, ESL Investments, Inc. (for the avoidance of
doubt, other than AutoNation and its subsidiaries) (collectively, the “ESL Parties”) of
fifty percent (50%) or more of the outstanding common stock, par value $0.01 per share, of
AutoNation (the “Common Stock”) (the “Acquisition”), upon the following terms and
conditions which shall only apply at such time and for so long as the ESL Parties own fifty percent
(50%) or more of the then outstanding Common Stock:




	 	1.	 	At each meeting of the stockholders of AutoNation, whether an annual meeting
or a special meeting, however called, and at each adjournment or postponement of any
such meeting (a “Stockholders’ Meeting”), and in all other circumstances in
which a vote, consent or other approval (including, without limitation, by written
consent) is sought by or from the stockholders of AutoNation (any such vote, consent
or approval, a “Stockholders’ Consent”), the ESL Parties




 









 







American Honda Motor Co., Inc.

Page 2





	 	 	 	shall appear at such
Stockholders’ Meeting or otherwise cause all shares of Common Stock owned by the ESL
Parties to be counted as present for the purpose of establishing a quorum.









	 	 	 	At each Stockholders’ Meeting and in connection with the execution of each
Stockholders’ Consent, in either case at such times that the
ESL Parties own in excess of fifty percent (50%) of the then outstanding Common
Stock, all shares of Common Stock owned by the ESL Parties in excess of fifty
percent (50%) of the then outstanding Common Stock on the applicable record date
(the “Additional Shares”) shall be voted on each matter proposed in the
same proportion as all outstanding shares of Common Stock not owned by the ESL
Parties are actually voted on such matter (it being understood that, in connection
with any Stockholders’ Consent, shares of Common Stock not owned by the ESL
Parties that abstain or are not present will be treated as shares abstaining or
not present, as the case may be).
	 
	 	2.	 	AutoNation shall use best efforts to provide that its board of directors
shall be comprised of a majority of directors who qualify as “independent” directors
under the listing standards of Rule 303A.02(b) of The New York Stock Exchange (the
“NYSE”) Listed Company Manual, as in effect on the date hereof, and who would
qualify as “independent” directors of ESL Investments, Inc. under the listing
standards of Rule 303A.02(b) of the NYSE Listed Company Manual, as in effect on the
date hereof, if ESL Investments, Inc. was an NYSE-listed company; provided,
however, that if AutoNation should fail to comply with the foregoing
requirement due to (i) a vacancy on its board of directors or (ii) a member of its
board of directors ceasing to meet such independence standards due to circumstances
beyond AutoNation’s reasonable control, AutoNation shall regain compliance with the
foregoing requirement by the later of (A) its next annual stockholders’ meeting or (B)
180 days from the occurrence of the event that caused the failure to comply.
	 
	 	3.	 	The parties hereto agree to the following:






	 	(a)	 	No ESL Party shall knowingly acquire any direct or indirect
ownership interest in any Honda or Acura dealership except through or in
conjunction with AutoNation (which acquisition will be subject to the
Framework Agreement), provided that the ESL Parties may make or acquire
passive investments in public companies, mutual funds and similar entities
where such investments by the ESL Parties represent cumulatively




 









 











American Honda Motor Co., Inc.

Page 3






	 	 	 	less than
five percent (5%) interest in any Honda or Acura dealership in which such
entity is so invested. For purposes of this Section 3(a), any acquisition of
a direct or indirect ownership interest in any Honda or Acura dealership by
Edward S. Lampert or any person who is in the Immediate Family (as such term
is defined in the American Honda Motor Co., Inc. Policy on the Ownership of
Multiple Honda and
Acura Dealerships) of Edward S. Lampert shall be attributable to the ESL
Parties.







	 	(b)	 	The ESL Parties, AutoNation and American Honda agree that
any dispute arising under this letter agreement shall be resolved by the
dispute resolution procedures set forth in Section 8 of the Framework
Agreement.
	 
	 	(c)	 	The ESL Parties acknowledge and agree to abide by the
limits on representation of AutoNation on any Honda and Acura Dealer
organizations as set forth in Section 3 of the Framework Agreement.
	 
	 	(d)	 	The terms of this letter agreement shall be governed by and
construed according to the laws of the State of New York without applying is
conflicts of law principles.
	 
	 	(e)	 	The ESL Parties may not pledge or grant a security interest
in the Common Stock owned by the ESL Parties except as provided in the
following sentence or with the consent of American Honda in accordance with
the “American Honda Motor Co., Inc. Policy on the Granting of Security
Interest in the Shares of Any Entity That Owns an Interest in a Honda or
Acura Dealership,” a copy of which is attached as Exhibit A hereto.
American Honda hereby agrees that the ESL Parties may grant a security
interest in the proceeds of the sale of the shares of Common Stock owned by
the ESL Parties, provided that the grantee agrees as follows:






	 	(i)	 	that it will never attempt to vote such shares (except to approve an American Honda-approved transfer of
such shares) or exercise managerial control over any Listed
Dealership; and
	 
	 	(ii)	 	that its interest in such shares shall be
limited to the proceeds derived from the sale of such shares to the











 









 










American Honda Motor Co., Inc.

Page 4





	 	 	 	extent of the outstanding balance of the note secured by such shares.






	 	(f)	 	The ESL Parties agree to abide by the remedies set forth in
the Framework Agreement and, with respect to any ownership interest they may
have in a Listed Dealership that becomes subject to any such remedies, they
will cooperate in the execution of such remedies (for example, the purchase
of a Listed Dealership by American Honda as ordered by an arbitrator) and not oppose any such remedy except as part of AutoNation’s
participation in arbitration pursuant to Section 8 of the Framework
Agreement.
	 
	 	(g)	 	The ESL Parties shall be jointly and severally responsible
for compliance by each ESL Party with the provisions of Section 3 of this
letter agreement.
	 
	 	(h)	 	The ESL Parties that currently own Common Stock are listed
on Exhibit B hereto.






	 	4.	 	AutoNation and American Honda hereby reaffirm the terms and conditions of the
Framework Agreement, which they agree shall continue in existence without
modification. This letter agreement (a) may not be amended, waived or modified except
by an instrument in writing signed by American Honda, AutoNation and the ESL Parties
and (b) may be executed in one or more counterparts, each of which when executed shall
be deemed to be an original but which when taken together shall constitute one and the
same letter agreement.
	 
	 	5.	 	In light of the consent given pursuant to this letter agreement and in
consideration of the continuing adherence of AutoNation and the ESL Parties to the
terms hereof, American Honda will not exercise any rights pursuant to Section 1.3.5
and/or Section 7 of the Framework Agreement that it might otherwise have as a result
of the Acquisition. Nothing in this letter agreement shall be construed as consent to
a “Rule 13e-3 transaction” as that term is defined in Rule 13e-3 of the Securities
Exchange Act of 1934.
	 
	 	6.	 	All communications and notices pursuant to this letter agreement shall be in
writing and be given in person or by means of facsimile or other means of wire
transmission, by overnight courier or by mail and shall be addressed as follows:









 









 








American Honda Motor Co., Inc.

Page 5






	 
	 	 	 	If to American Honda:




American Honda Motor Co., Inc.

Honda Division

1919 Torrance Boulevard

Torrance, CA 90501

Attention: Dealer Development

Facsimile: (310) 222-7065



with a copy to:



Associate General Counsel

Honda North America, Inc.

Law Department

700 Van Ness Avenue

Torrance, CA 90509-2206

Facsimile: (310) 781-4970



If to AutoNation:



AutoNation, Inc.

110 S.E. 6th St.

Fort Lauderdale, FL 33301

Attention: President

Facsimile: (954) 769-4666



with a copy to:



AutoNation, Inc.

110 S.E. 6th St.

Fort Lauderdale, FL 33301

Attention: General Counsel

Facsimile: (954) 769-6340



If to the ESL Parties:



ESL Investments, Inc

200 Greenwich Avenue

Greenwich, CT 06830

Attention: William C. Crowley

Facsimile: 203-861-9834




*     *     *     *




 









 








American Honda Motor Co., Inc.

Page 6




     This letter agreement may be executed in one or more counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same instrument. Please
acknowledge your agreement to the foregoing by signing and returning to the undersigned as soon as
possible a counterpart of this letter.



	 	 	 	 	 
	 	Very truly yours,





AUTONATION, INC.

 	 
	 	/s/ Michael E. Maroone
 	 
	 	Michael E. Maroone, President 	 
	 	 	 
	 



AGREED TO AS OF THE DATE

FIRST WRITTEN ABOVE:




AMERICAN HONDA MOTOR CO., INC.




	 	 	 	 	 
	 	 	 
	/s/ Richard Colliver
 	 
	Richard Colliver, Executive Vice President 	 
	 	 	 
	 


SOLELY WITH RESPECT TO SECTIONS 1, 2, 3, 5 AND 6 ABOVE AND THE SECOND SENTENCE OF SECTION 4 ABOVE,
ACKNOWLEDGED BY AND AGREED TO AS OF THE DATE FIRST WRITTEN ABOVE:




ESL INVESTMENTS, INC. (on behalf of itself and the ESL Parties)




	 	 	 	 	 
	 	 	 
	/s/ William C. Crowley
 	 
	William C. Crowley, President & Chief Operating Officer 	 
	 	 	 
	 




 









 








Exhibit A





Attached.




A-1









 





AMERICAN HONDA MOTOR CO., INC.




POLICY ON THE GRANTING OF SECURITY

INTEREST IN THE SHARES OF ANY ENTITY

THAT OWNS AN INTEREST IN A HONDA OR ACURA DEALERSHIP





	I.	 	PURPOSE OF THIS POLICY




This “Policy on the Granting of Security Interest in the Shares of Any Entity That Owns an Interest
in a Honda or Acura Dealership” (the “Security Interest Policy”) is intended to respond to
questions that are frequently addressed to American Honda Motor Co., Inc. (“AHM”) by its Dealers as
to whether and when it may be appropriate under the Honda and/or Acura Automobile Dealer Sales and
Service Agreement (the “Dealer Agreement”) for Dealers to grant a security interest in an entity
that owns any Honda and/or Acura dealership(s) and the form that such security interest may take.





	II.	 	SUMMARY OF THE SECURITY INTEREST POLICY






	 	A.	 	Any pledging of stock (or membership interests in the case of a non-corporate
entity) of an Ownership Entity (as this term is defined in Section III below) is a
violation of the Dealer Agreement and may result in AHM’s termination of the Dealer
Agreement.
	 
	 	B.	 	Any grant of a security interest in the stock (or membership interests in the
case of a non-corporate entity) of a Direct Ownership Entity (as this term is defined
in Section III below) is a violation of the Dealer Agreement and may result in AHM’s
termination of the Dealer Agreement.
	 
	 	C.	 	Under certain conditions (discussed in Section IV below), AHM will consent to
the granting of a security interest in the stock (or membership interests in the case
of a non-corporate entity) of an Indirect Ownership Entity (as this term is defined in
Section III below). These conditions include contractual provisions that insure that
the party to whom the security interest is granted will be limited to obtaining an
interest in the proceeds of the sale of the stock but will never exercise any practical
control over the dealership or the Direct Ownership Entity.
	 
	 	D.	 	Nothing in this Security Interest Policy shall be construed to limit any
Ownership Entity from granting a security interest in any of its tangible assets.





III.     BACKGROUND



AHM requires that each Honda and or Acura dealership be organized as a separate legal entity.
(Most frequently, a dealership is organized as a corporation, a limited liability company (“LLC”)
or a partnership.) In this Security Interest Policy, the separate legal entity that owns and
operates the individual Honda or Acura dealership is referred to as a Direct Ownership Entity.
Direct Ownership Entities are frequently owned, in whole or in part, by other companies, which, in
turn, may be owned by other companies and so on. In this Security Interest Policy, a company that
owns any interest in a Direct Ownership Entity, whether directly or through one or more layers of
other companies, is referred to as an Indirect Ownership Entity. Direct Ownership Entities and
Indirect Ownership Entities are referred to generally as Ownership Entities.




 









 








Security Interest Policy (104-0603)

Revised 03/04

Page 2



In connection with financing the purchase of Honda and Acura Automobiles, Parts and Accessories and
improvements to Dealership Premises, Ownership Entities generally grant security interests in the
tangible assets (for example, automobiles, parts, tools, real estate) of their Dealership
Operations. Such security interests are standard in the industry. Nothing in this Security Interest
Policy is intended to have any impact on the granting of security interests in tangible assets.



On a number of occasions, AHM has been approached by Dealer Owners who wish to grant a security
interest in the shares (that is, the stock or membership interests) of a Direct Ownership Entity in
order to secure a bank loan or some other financial obligation. In all cases, AHM has rejected
such requests. The Dealer Agreement states that there shall be no voluntary or involuntary change,
direct or indirect, in the legal or beneficial ownership or responsibility of Dealer for the
Dealership Operations, without the prior written approval of American Honda. The grant of a
security interest in the shares of a Direct Ownership Entity effects a change in the beneficial
ownership of a Dealership Operations and would, in the event of a default by the Dealer Owner who
has granted such security interest, vest control and/or ownership of the Dealership Operations in
the party to whom the security interest has been granted.



The situation may be less critical with respect to the granting of a security interest in the
shares of an Indirect Ownership Entity. At one extreme, if a large, publicly-traded corporation
owned an interest in a Honda or Acura dealership, AHM would not attempt to prevent the owners of
the publicly traded stock from granting a security interest in that stock for at least two reasons:
(1) such prohibition would be impossible to monitor and enforce; and (2) granting a security
interest in freely-tradeable stock would almost certainly have no greater impact on the control of
the dealership than the sale of that stock, which is generally permitted.1 



Recently AHM has been confronted by what it considers to be an intermediate situation. By way of
illustration, Investor X owns shares of A, an Indirect Ownership Entity that has an ownership
interest in Direct Ownership Entity B. Investor X requests permission to pledge the shares of A to
Bank C, to secure a loan that would be invested in improvements in the dealership. AHM would not
approve the transaction for the reasons described above; that is, that, in the event of a default
by Investor X, Bank C, through its control of the shares of Indirect Ownership Entity A, might
control or influence the management of Direct Ownership Entity B.



However, AHM may permit the transaction to go forward provided that Bank C agrees that it will not,
under any circumstances, exercise control over the dealership; that it will respect AHM’s right to
approve or, if appropriate, deny approval of the transfer of the dealership; and that its sole
interest will be in the proceeds of the sale of the stock or membership interests. In summary,
rather than pledging the shares of A to Bank C, Investor X would grant Bank C a security interest
in the proceeds of the sale of the shares of A. In such case, X would get his loan and AHM would
have a contractual guarantee that B will at all times be managed by experienced, professional
automobile-oriented personnel.





	IV.	 	THE SECURITY INTEREST POLICY






	 	A.	 	AHM will strictly enforce the prohibition on the pledging of the stock (or
membership interests, in the case of a non-corporate entity) of Ownership Entities.
	 
	 	B.	 	AHM will strictly enforce the prohibition on the granting of any security
interests in the stock (or membership interests, in the case of a non-corporate entity)
of Direct Ownership Entities.







 




			
	 	 	1 Certain sales of the stock of public corporations that own interests in Honda and
Acura dealerships are regulated through contracts between AHM and such public corporations.




 









 










Security Interest Policy (104-0603)

Revised 03/04

Page 3





	 	C.	 	AHM will review on a case-by-case basis requests by individuals and entities that wish to
grant a security interest in the proceeds of the sale of the stock (or membership interests,
in the case of a non-corporate entity) of Indirect Ownership Entities. AHM will not approve
any such transaction unless:






	 	1.	 	Both the party that wishes to grant the security interest in
the shares (the “grantor”) and the Indirect Ownership Entity are otherwise in
compliance with their agreements with AHM.
	 
	 	2.	 	The party to whom the security interest will be granted (the
“grantee”) is a responsible financial institution and agrees in writing to
abide by all applicable provisions of any agreements between AHM and grantor,
the Indirect Ownership Entity and the Direct Ownership Entity.
	 
	 	3.	 	The grantee and AHM enter into a written agreement that insures
that:






	 	a)	 	the grantee will never attempt to vote the shares of
the Indirect Ownership Entity (except to ratify an AHM-approved transfer of
the shares) or exercise managerial control over the dealership;
	 
	 	b)	 	the grantee’s interest in the shares shall be limited
to the proceeds derived from the sale of such shares to the extent of the
outstanding balance of the note;
	 
	 	c)	 	the grantee will not transfer the shares without AHM’s
prior written approval, which will be based on the qualifications of the
proposed transferee to own and operate an automobile dealership;
	 
	 	d)	 	in the event that it cannot timely locate a buyer for
the shares that meets with AHM’s approval, the grantee will
transfer the shares to AHM or AHM’s designee at fair market value; and
	 
	 	e)	 	in the event of a dispute as to the fair market value
of the shares, AHM and the grantee will submit the matter to expedited,
binding arbitration.






	 	4.	 	In addition to the provisions set forth in Section
IV.C.3(a)-(e) above, AHM may require further contractual protections to insure
compliance with the objectives of the Security Interest Policy, including, by
way of example:






	 	a)	 	Placement of the stock in escrow with an escrow
agent approved by AHM;
	 
	 	b)	 	Management of the dealership by AHM’s designee
pending transfer of the shares;
	 
	 	c)	 	Cooperation of the grantee with AHM to effect
an orderly and prompt sale of the dealership to an AHM-approved owner;
	 
	 	d)	 	Time limitations on the duration of the security interest; and





 









 





Security Interest Policy (104-0603)

Revised 03/04

Page 4





	 	e)	 	Indemnification of AHM for liabilities incurred
in connection with the transaction.






	 	5.	 	AHM RESERVES THE RIGHT TO REJECT ANY REQUEST TO GRANT A
SECURITY INTEREST IN THE SHARES OF ANY ENTITY THAT OWNS AN INTEREST IN A HONDA
OR ACURA DEALERSHIP IF SUCH SECURITY INTEREST WOULD BE DETRIMENTAL TO THE
INTERESTS OF AHM, ITS DEALER NETWORK OR ITS CUSTOMERS.





Revised 3/04





 











 








Exhibit B




ESL Partners, L.P.

ESL Institutional Partners, L.P.

ESL Investors, L.L.C.

CBL Partners, L.P.

Tynan, LLC

ESL Investment Management, L.P.

RBS Partners, L.P.

RBS Investment Management, L.L.C.

Edward S. Lampert

William C. Crowley





B-1