EX-10.2






EXHIBIT
10.2




[Company Letterhead]




January 28, 2009




Toyota Motor Sales, U.S.A., Inc.

President

19001 South Western Avenue

Torrance, California 90509




                    RE:     AutoNation, Inc. Framework Agreement




Dear Sir or Madam:




     Reference is made to that certain Framework Agreement, dated as of September 26, 1997 (as
supplemented by that certain letter agreement dated September 26, 1997, the “Framework
Agreement”), by and between Toyota Motor Sales, U.S.A., Inc. (“Toyota”) and AutoNation,
Inc. (formerly known as Republic Industries, Inc.) (“AutoNation”). Capitalized terms used
but not defined in this letter agreement shall have the meanings ascribed thereto in the Framework
Agreement.



     Toyota hereby consents to, and waives all of its rights and remedies under Sections 6.1.1 and
10 of the Framework Agreement with respect to, the acquisition (as defined in the Framework
Agreement) or Ownership (for the avoidance of doubt, including Ownership resulting from any share
buy back program or other stock repurchase, reclassification or other change in share rights) by
ESL Investments, Inc., its investment affiliates set forth on Exhibit A hereto and any
other affiliates of ESL Investments, Inc. whose sole business is or shall be to invest in
securities and related instruments that in the future Own Common Stock (as defined below)
(collectively, “ESL”) of more than fifty percent (50%) of the outstanding common stock, par
value $0.01 per share, of AutoNation (the “Common Stock”) (the “ESL Acquisition”),
subject to the following terms and conditions which shall only apply at such time and for so long
as ESL Owns more than fifty percent (50%) of the then outstanding Common Stock:



 









 






Toyota Motor Sales, U.S.A., Inc.

Page 2







	 	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”), ESL shall appear at such
Stockholders’ Meeting or otherwise cause all shares of Common Stock Owned by ESL 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 ESL Owns in excess of fifty
percent (50%) of the then outstanding Common Stock, all shares of Common Stock Owned
by ESL in excess of fifty percent (50%) of the then outstanding Common Stock (the
“Additional Shares”) on the applicable record date shall be voted on each
matter proposed in the same proportion as all outstanding shares of Common Stock not
Owned by ESL are actually voted on such matter (it being understood that, in
connection with any Stockholders’ Consent, shares of Common Stock not Owned by ESL
that abstain or are not present will be treated as shares abstaining or not present,
as the case may be).
	 
	 	2.	 	In accordance with the listing standards of The New York Stock Exchange (the
“NYSE”) and AutoNation’s currently effective Corporate Governance Guidelines,
as part of AutoNation’s succession planning process, (i) the board of directors of
AutoNation has adopted the qualifications for Chief Executive Officer and Chief
Operating Officer attached as Exhibit B hereto and (ii) Michael E. Maroone has
at this time been designated as a successor to Mike Jackson as Chief Executive Officer
of AutoNation; however, Toyota recognizes that such qualifications and designation are
solely the determinations of the board of directors of AutoNation made based on its
fiduciary duties and may change at any time in the future.
	 
	 	 	 	In addition, the Chief Operating Officer of AutoNation shall have sufficient breadth
and depth of experience, a relevant, successful automotive track record and
extensive successful automotive experience, in each case as determined in the good
faith judgment of











 









 







Toyota Motor Sales, U.S.A., Inc.

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	 	 	 	AutoNation’s board of directors. In the event AutoNation’s board
of directors appoints a Chief Operating Officer who either is not Michael E. Maroone
or does not, in the good faith judgment of AutoNation’s board of directors, meet the
standards in the immediately preceding sentence, Toyota may notify AutoNation of
same in writing within sixty (60) days after the public announcement of such
appointment. AutoNation will reasonably cooperate with Toyota in Toyota’s efforts to
obtain information regarding the experience and qualifications of the newly
appointed Chief Operating Officer. Within twenty (20) days after receiving Toyota’s
written notice, AutoNation may initiate the dispute resolution procedures of Exhibit
13 of the Framework Agreement (the “Dispute Resolution”). In the event that
AutoNation does not initiate the Dispute Resolution within twenty (20) days, ESL
shall be required to dispose of the Additional Shares no later than nine (9) months
after receipt of Toyota’s notice referred to above, or if AutoNation does initiate
the Dispute Resolution within twenty (20) days and if a final determination is made
that the Chief Operating Officer does not meet the foregoing requirements, ESL shall
be required to
dispose of the Additional Shares not later than nine (9) months after the conclusion
of the Dispute Resolution (in either case, the relevant nine (9) month period being
the “Disposal Period”).






	 	 	 	In the event that, notwithstanding the foregoing, ESL fails to dispose of the
Additional Shares under the circumstances required by the preceding paragraph (a)
within the Disposal Period or (b) within nine (9) months after the conclusion of the
Disposal Period, then until ESL disposes of the Additional Shares, all shares of
Common Stock Owned by ESL in excess of twenty-five percent (25%) in the case of
clause (a) above, or in excess of zero percent (0%) in the case of clause (b) above,
of the then outstanding Common Stock on the applicable record date for any
AutoNation Stockholders’ Meeting or Stockholders’ Consent shall be voted on each
matter proposed in the same proportion as all outstanding shares of Common Stock not
Owned by ESL are actually voted on such matter (it being understood that, in
connection with any Stockholders’ Consent, shares of Common Stock not Owned by ESL
that abstain or are not present will be treated as shares abstaining or not present,
as the case may be).








 









 






Toyota Motor Sales, U.S.A., Inc.

Page 4





	 	 	 	ESL shall not purchase any Common Stock after the commencement of the Disposal
Period. In the event ESL fails to dispose of the Additional Shares by the end of
the Disposal Period, ESL hereby consents to the entry of a court order directing ESL
to comply with the voting restrictions set forth in the preceding paragraph pending
such disposition. ESL shall reimburse Toyota for Toyota’s reasonable attorneys’
fees in obtaining or enforcing such court order.
	 
	 	3.	 	The board of directors of AutoNation shall be comprised of a majority of
directors who qualify as “independent” directors under the listing standards of Rule
303A.02(b) of 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.
	 
	 	4.	 	AutoNation and Toyota (i) reaffirm the terms and conditions of the Framework
Agreement, including Section 5.1.3 thereof, which the parties hereto agree shall
continue in existence except to the extent expressly modified herein and (ii) agree







	 	 	 	and acknowledge that this letter agreement shall constitute written notice of a
proposed Change in Management or Ownership to Toyota pursuant to, and in compliance
with, Section 6.2 of the Framework Agreement; provided, however,
that both parties recognize and acknowledge that ESL is not a party to this Section
4 or to such agreement.
	 
	 	5.	 	For the avoidance of doubt, Toyota’s consent to, and waiver of its rights and
remedies with respect to, the ESL Acquisition shall apply only to the ESL Acquisition
and not to the acquisition of any Ownership interest in AutoNation by any other Person
or any other Change in Management or Ownership under Section 6 of the Framework
Agreement.













 









 







Toyota Motor Sales, U.S.A., Inc.

Page 5






	 	 	 	This letter constitutes Toyota’s consent to the ESL Acquisition to the extent any
such consent is required under any Toyota Dealer Agreement or Lexus Dealer
Agreement. Other than as set forth in the preceding sentence, nothing in this letter
shall constitute a waiver or modification of any party’s rights or remedies under,
or any other provision in, any Dealer Agreements; provided that the terms of this
letter agreement shall supersede any terms of the Dealer Agreements to the extent of
any contrary provisions but only for so long as this letter agreement is in effect.
	 
	 	6.	 	In the event that AutoNation merges, consolidates or combines with, or is
merged, consolidated or combined with, any Person, the surviving entity shall be
subject to the terms and conditions of this letter agreement and the Framework
Agreement. AutoNation agrees that it shall not merge, consolidate or combine with, or
be merged, consolidated or combined with, any Person owned or controlled, directly or
indirectly, by ESL, unless Toyota consents thereto in writing in advance.
	 
	 	7.	 	Toyota’s consent and waiver pursuant to this letter agreement shall terminate
on December 31, 2009 (the “Termination Date”) solely with respect to shares of
Common Stock acquired by ESL after the Termination Date, provided that ESL may
seek successive annual one-year extensions of the Termination Date and Toyota shall not
unreasonably withhold or delay its consent thereto. For the avoidance of doubt, for
purposes of the immediately foregoing sentence, the term “acquired” shall not include
any increases in ESL’s Ownership of Common Stock resulting from any customary share buy
back program, reclassification or other customary change in share rights applicable
generally to the Common Stock (including a stock split). Notwithstanding the
foregoing, this letter agreement shall remain in effect so long as ESL continues to Own
in excess of fifty percent (50%) of the then outstanding Common Stock.







 










 





Toyota Motor Sales, U.S.A., Inc.

Page 6






	 	8.	 	In the event that ESL, after having Owned in excess of fifty percent (50%) of
the outstanding Common Stock, no longer Owns in excess of fifty percent (50%) of the
then outstanding Common Stock (including, without limitation, because
of a disposal of shares under Section 2 above), this letter agreement, and Toyota’s consent and waiver
hereunder, shall automatically terminate and be of no further force and effect, and
Sections 6.1.1 and 10 of the Framework Agreement shall apply to any future acquisition
of in excess of fifty percent (50%) of the then outstanding Common Stock by ESL.
	 
	 	9.	 	ESL agrees that any other investment affiliates of ESL Investments, Inc. not
listed on Exhibit A hereto that in the future Own Common Stock shall be added
as parties to this letter agreement within thirty (30) days of acquisition of Common
Stock. ESL also agrees that Edward S. Lampert and William C. Crowley shall be added as
parties to this letter agreement within thirty (30) days in the event that such person
(individually and together with immediate family members) directly owns shares of
Common Stock outside of ESL in excess of one-half percent (0.5%) of the then
outstanding Common Stock.





     This letter agreement (a) may not be amended, waived or modified except by an instrument in
writing signed by Toyota, AutoNation and ESL Investments, Inc. 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. Neither this letter agreement
nor any of the rights, interests or obligations hereunder shall be assigned by Toyota, AutoNation
or ESL (whether by operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this letter agreement shall be binding upon, inure to
the benefit of and be enforceable by Toyota, AutoNation and ESL and their respective successors and
assigns.



     Please acknowledge your agreement to the foregoing by signing and returning to the undersigned
as soon as possible a counterpart of this letter.



*     *     *     *




 









 





Toyota Motor Sales, U.S.A., Inc.

Page 7




	 	 	 	 	 
	 	Very truly yours,



AUTONATION, INC.

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




AGREED TO AS OF THE DATE

FIRST WRITTEN ABOVE:




TOYOTA MOTOR SALES, U.S.A., INC.




	 	 	 	 	 
	 	 	 
	/s/
James Lentz 	 
	James Lentz, President 	 
	 	 	 
	 



SOLELY WITH RESPECT TO SECTION 4 ABOVE,

ACKNOWLEDGED AS OF THE DATE

FIRST WRITTEN ABOVE, AND

WITH RESPECT TO ALL OTHER PROVISIONS

OF THIS LETTER AGREEMENT

ACKNOWLEDGED AND AGREED TO AS OF THE DATE

FIRST WRITTEN ABOVE:




ESL INVESTMENTS, INC.




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



ESL PARTNERS, L.P.




	 	 	 	 	 
	 	 	 
	/s/ William C. Crowley
 	 
	William C. Crowley, President & Chief Operating Officer 	 
	of ESL Investments, Inc., the
ultimate General Partner to

ESL Partners, L.P. 	 



 









 






Toyota Motor Sales, U.S.A., Inc.

Page 8




ESL INSTITUTIONAL PARTNERS, L.P.




	 	 	 	 	 
	 	 	 
	/s/ William C. Crowley
 	 
	William C. Crowley, President & Chief Operating Officer 	 
	of ESL Investments, Inc., the
ultimate General Partner to

ESL Institutional Partners, L.P. 	 
	 



ESL INVESTORS, L.L.C.




	 	 	 	 	 
	 	 	 
	/s/ William C. Crowley
 	 
	William C. Crowley, President & Chief Operating Officer 	 
	of ESL Investments, Inc., the ultimate Managing Member to
ESL Investors, L.L.C. 	 
	 



CBL PARTNERS, L.P.




	 	 	 	 	 
	 	 	 
	/s/ William C. Crowley
 	 
	William C. Crowley, President & Chief Operating Officer 	 
	of ESL Investments, Inc., the ultimate General Partner to
CBL Partners, L.P. 	 
	 



TYNAN, LLC




	 	 	 	 	 
	 	 	 
	/s/ William C. Crowley
 	 
	William C. Crowley, Managing Member 	 
	 	 	 
	 



 









 







Toyota Motor Sales, U.S.A., Inc.

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ESL INVESTMENT MANAGEMENT, L.P.




	 	 	 	 	 
	 	 	 
	/s/ William C. Crowley
 	 
	William C. Crowley, President & Chief Operating Officer 	 
	of ESL Investments, Inc., the ultimate General Partner to

ESL Investment Management, L.P. 	 




RBS PARTNERS, L.P.




	 	 	 	 	 
	 	 	 
	/s/ William C. Crowley
 	 
	William C. Crowley, President & Chief Operating Officer 	 
	of ESL Investments, Inc., the ultimate General Partner to

RBS Partners, L.P. 	 
	 



RBS INVESTMENT MANAGEMENT, L.L.C.




	 	 	 	 	 
	 	 	 
	/s/ William C. Crowley
 	 
	William C. Crowley, President & Chief Operating Officer 	 
	of ESL Investments, Inc., the
ultimate Managing Member to RBS Investment Management, L.L.C. 	 
	 




 









 








Exhibit A




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




A-1









 





Exhibit B




Chief Executive Officer





	•	 	Outstanding leadership ability






	 	–	 	Excellent communication and interpersonal skills
	 
	 	–	 	Tone from the top – ability to set the right standard of conduct for the
organization
	 
	 	–	 	Ability to motivate retail store leadership






	•	 	Strategic vision






	 	–	 	Ability to align organization and motivate management to implement strategy






	•	 	Ability to attract, motivate and retain top talent






	•	 	Understanding of retail business, combined with large company management experience






	•	 	Ability to drive process change while maintaining the positive attributes of
entrepreneurial spirit of organization






	•	 	Seasoned judgment and ability to make tough decisions






	•	 	Ability to shape auto industry and public policy issues





President & Chief Operating Officer





	•	 	Strong operations experience






	•	 	Strategic management skills






	 	–	 	Ability to leverage scale and implement standardized processes

	 
	 	–	 	Ability to develop store leadership
	 
	 	–	 	Ability to drive strategic plan to increase customer loyalty and
profitability






	•	 	Outstanding leadership ability






	 	–	 	Excellent communication and people skills

	 
	 	–	 	Ability to motivate store leadership






	•	 	Ability to attract, motivate and retain top talent






	•	 	Deep understanding of auto retail business






	•	 	Ability to establish strong relationships with auto manufacturers






B-1