Document:

SEPARATION AGREEMENT & GENERAL RELEASE

 

SEPARATION AGREEMENT

AND GENERAL RELEASE OF ALL CLAIMS

     This Separation Agreement and General Release of All Claims (“Agreement”)
is entered into by and between Patricia A. McKay (“Executive”) and AutoNation,
Inc. (“AutoNation” or “Company”) relating to Executive’s employment and
separation of employment from the Company. When used herein, the term
“Company” includes each and every officer, director, employee, agent, parent
corporation(s), subsidiary corporation(s), wholly owned companies, affiliate(s)
and division(s), their successors, assigns, beneficiaries, servants, legal
representatives, insurers and heirs.

	1.	 	Separation Date. As a result of the Company’s restructuring of its
operations, Executive’s employment with the Company was terminated
effective May 1, 2003. On the next regular payroll date following her
separation, the Company will pay to Executive all wages earned through the
effective date of her separation. On or before the payroll date for the
pay period ending May 22, 2003, the Company will pay to Executive seven
(7) days of unused vacation time accrued by Executive through the
effective date of her separation. Executive acknowledges that the Company
owes no other bonuses, commissions, wages, vacation pay, sick pay, or
benefits to Executive as of the date of this Agreement.
	 
	2.	 	Company Consideration. For and in consideration for the promises made by
Executive in this Agreement, AutoNation agrees as follows:

	 	(a)	 	Severance Compensation. AutoNation shall pay to Executive a
severance payment equal to eleven (11) months of base salary, less
applicable taxes and withholdings. The severance payment will be
disbursed no later than the Company’s first payroll date after
Executive has signed and returned this Agreement to the Company
and
the revocation period provided in this Agreement has expired.
	 
	 	(b)	 	Additional Severance
Compensation. AutoNation shall pay to
Executive an additional severance payment in the total amount of Ten
Thousand One Hundred Eighty-Seven Dollars and Fifty-Four Cents
($10,187.54), less applicable taxes and withholdings. This
additional severance payment is equal to the cost of health
insurance coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA), not grossed up for taxes, based
on Executive’s health and/or dental elections as of April 1, 2003
and an eleven (11) month period. Executive is not required to elect
COBRA (as more fully explained in Paragraph 4 herein). This
additional severance payment will be disbursed in a lump sum no
later than fourteen (14) calendar days after Executive has signed
and returned this Agreement to the Company and the revocation period
provided in this Agreement has expired.
	 
	 	(c)	 	Outplacement. Upon Executive’s request, AutoNation shall
provide executive outplacement services to Executive to assist in
her efforts to obtain other employment. AutoNation and Executive
acknowledge that such services commenced as of March 26, 2003 and
shall continue to be provided after Executive has signed and
returned this Agreement to the Company and the revocation period
provided in this Agreement has expired.

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	 	(d)	 	No Entitlement. AutoNation shall not be obligated to provide
any consideration other than the consideration discussed in this
Paragraph 2. The benefits provided to Executive by AutoNation
pursuant to this Paragraph 2 represent benefits that Executive would
not be entitled to absent this Agreement.

	3.	 	Stock Options. Executive’s stock options cease vesting as of the date of
Executive’s separation of employment from the Company (i.e., May 1, 2003)
and all unvested stock options that Executive has terminate as of such
date. As provided for in the applicable Stock Option Plan, Executive will
have sixty (60) calendar days immediately following Executive’s date of
separation of employment to exercise Executive’s vested stock options.
Any vested stock options that Executive has not exercised on or prior to
sixty (60) calendar days immediately following the date of Executive’s
separation of employment will terminate and be forfeited effective as of
such date.
	 
	4.	 	Other Benefits. Executive’s participation in the Company’s group medical
and dental programs ceases on May 31, 2003. As of June 1, 2003, Executive
will be responsible for paying her entire monthly COBRA premiums.
Executive must elect to receive COBRA if she wants continuation coverage
under the Company’s group health benefits programs. Executive’s right to
COBRA and the time for electing COBRA and making the required COBRA
payments will be explained in a separate COBRA notice package. Also as of
May 1, 2003, Executive is no longer eligible to participate in any other
benefit programs offered by the Company, including, but not limited to,
vacation, 401(k) plan, short-term and long-term disability, accidental
death and dismemberment and life and dependent life insurance programs.
	 
	5.	 	Compliance with Other
Agreements. Executive acknowledges and agrees that
she has complied and shall continue to comply with the terms of all other
agreements between Executive and the Company.
	 
	6.	 	Cooperation. Executive agrees to make herself available to the Company
and its officers, if necessary, for consultation on a reasonable basis
from time to time as to any matters on which she worked while an employee
of the Company. The Company acknowledges that Executive may have other
full-time employment and the Company agrees that it will use its
reasonable efforts to minimize the amount of time that any such
consultation shall require of her. Executive further agrees not to
testify for, appear on behalf of, or otherwise assist in any way any
individual, company, or agency in any claim against the Company, unless
and only pursuant to a lawful subpoena issued to Executive. Executive
also agrees to promptly notify the Company upon receipt of any notice or
contact (including whether written or oral, and including any subpoena or
deposition notice) requesting or compelling information or her testimony
or requesting documents related to matters which she worked on while an
employee of the Company, and Executive agrees to coordinate with the
Company in any response thereto.
	 
	7.	 	Confidential Information. Executive agrees that the records, information,
files, lists, operations data, and other materials of the Company that
Executive created, used, or had access to during her employment with the
Company belong exclusively to the Company and are confidential. Executive
further agrees that information about the Company’s customers or other
organizations with which it does business is the exclusive property of the
Company and is also confidential. Executive shall not use or disclose any
such confidential information, for the benefit of herself or another, and
shall treat such information as confidential, unless she has specific
prior written authorization from the Company to use or disclose it.

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	8.	 	Return of Company
Property. Executive agrees to return all property
belonging to the Company in her possession or under her control
(including, without limitation, cellular telephone, pager, company
identification card, laptop computer, etc.) no later than the effective
date of this Agreement. Executive also understands and agrees that,
effective on the date of Executive’s separation, Executive was and is no
longer authorized to incur any expenses or obligations or liabilities on
behalf of the Company.
	 
	9.	 	No Right to Give
Interviews. Executive agrees that she shall not give any
interviews or speeches concerning the Company, any matter that she
participated in while an employee of the Company, or any past or present
employee of the Company, or in relation to any matter concerning the
Company occurring after the date of her separation. Nor shall Executive,
directly or indirectly, prepare or assist any person or entity in the
preparation of any books, articles, television or motion picture
productions, or other creations concerning the Company or concerning any
person whom any member of the public might associate with the Company.
	 
	10.	 	Non-Disparagement. Executive agrees not to undertake any disparaging
conduct directed at the Company and to refrain from making any negative or
derogatory statements concerning the Company. Executive waives any
privilege or qualified privilege that may apply to any such communication.
	 
	11.	 	Full General Release of
Claims. Except for the obligations set forth in
this Agreement, Executive, for herself and for her heirs, successors and
assigns, irrevocably and unconditionally releases and forever discharges
the Company, its parents, subsidiaries and affiliates, and all of their
successors, assigns, officers, directors, representatives, agents,
employees, associates, and all other persons acting for or on behalf of
any of them, from any and all claims, complaints, liabilities,
obligations, promises, agreements, damages, causes of action, costs,
losses, debts and expenses of every kind, in law or in equity, whether
known or unknown, foreseen or unforeseen, from the beginning of time to
the date of this Agreement, including any and all claims in connection
with Executive’s employment with the Company, including without
limitation, those claims arising from or relating to Executive’s
separation from employment with the Company. This general release is a
full and final bar to any claims Executive may have against the Company,
including, without limitation, any claims:

	 	(a)	 	arising from Executive’s pay, bonuses, vacation, or any other
employee benefits, and other terms and conditions of employment or
employment practices of the Company;
	 
	 	(b)	 	relating to stock options, whether pursuant to a stock option
plan, agreement or otherwise (except, in the event that Executive’s
separation of employment is without “cause,” as expressly provided
in the applicable stock option plan, with respect to the right to
exercise vested stock options within 60 days of separation of
employment);
	 
	 	(c)	 	relating to any claims for punitive, compensatory, and/or
retaliatory discharge damages; back and/or front pay claims and
fringe benefits; or payment of any attorneys’ fees for Executive;
	 
	 	(d)	 	arising under Civil Rights Acts of 1866, 1871, and 1991;
Title VII of the Civil Right Act of 1964; 42 U.S.C. §1981; the
Worker Adjustment and Retraining Notification Act; the Employee
Retirement Income Security Act; the Rehabilitation Act; the
Americans with Disabilities Act; the Fair Labor Standards Act; the
Equal Pay Act; the Age Discrimination in Employment Act; the Older
Worker Benefits Protection Act; the

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	 	 	 	Occupational Safety and Health Act; the Family and Medical Leave
Act; the Consolidated Omnibus Benefit Reconciliation Act; Florida’s
workers’ compensation law; the Florida Civil Rights Act (as any of
these laws may have been amended); or any other federal, state, or
local labor, employment, or anti-discrimination laws; and/or
	 
	 	(e)	 	based on any contract, tort, whistleblower, personal injury,
or wrongful discharge theory.

	12.	 	Time to Consider. Executive has been advised to consult with an attorney
prior to signing this Agreement. Executive has 45 calendar days from the
date that she receives this Agreement to consider and accept this
Agreement by signing and returning this Agreement to the Senior Vice
President, Corporate Human Resources, AutoNation, Inc., 110 Southeast
Sixth Street, Fort Lauderdale, Florida 33301. A list of the eligibility
factors for the terminations resulting from the Company’s restructuring is
attached hereto.
	 
	13.	 	Revocation Period. The Company and Executive acknowledge that Executive
has the right to revoke this Agreement within seven calendar days
following the date Executive signs this Agreement (“revocation period”).
If Executive does not advise the Company in writing within the revocation
period of her intent to revoke this Agreement, this Agreement will become
effective and enforceable upon the expiration of the seven days.
	 
	14.	 	Voluntary Action. Executive acknowledges that she has read each paragraph
of this Agreement and understands her rights and obligations. Executive
further acknowledges and agrees that: (a) this Agreement is written in a
manner understandable to her; (b) this Agreement is granted in exchange
for consideration which is in addition to anything of value to which
Executive is otherwise entitled; (c) she has been given a reasonable
opportunity to consider and review this Agreement; (d) she has had an
opportunity to consult with an attorney prior to deciding whether to enter
into this Agreement; (e) she may challenge the validity of her waiver in
this Agreement of her rights under the Age Discrimination in Employment
Act and the Older Worker Benefits Protection Act; and (f) her signature on
this Agreement is knowing and voluntary.
	 
	15.	 	Miscellaneous.

	 	(a)	 	Entire Agreement. Except as stated in this paragraph, this
Agreement contains the entire agreement between Executive and the
Company relating to the subject matter hereof, and all prior
agreements, negotiations and representations are replaced by this
Agreement. Nothing in this Agreement shall limit or modify the
rights of the Company or the obligations of Executive contained in
any confidentiality agreement, non-compete agreement and/or
restrictive covenants previously signed by Executive, as amended,
modified and/or supplemented, as such provisions shall survive the
execution of this Agreement and separation of employment. In
addition, nothing in this Agreement shall limit or modify the rights
and obligations of the parties as contained in any exculpatory
provisions or indemnification provisions set forth in the Company’s
articles, bylaws or other governing documents, and any insurance
(including fidelity and director and officer insurance) applicable
to Executive’s employment with the Company. This Agreement may only
be changed by a written amendment signed by Executive and the Senior
Vice President of Corporate Human Resources.
	 
	 	(b)	 	No Admission. The Company and Executive agree that the
payments to Executive, and the terms and conditions of said payments
by the Company, are not to be construed as an admission of liability
by the Company. Executive specifically agrees that the Company’s
payments are not intended to be, and will not be offered in evidence
or argued in any

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	 	 	 	proceeding as, an admission of liability. The Company specifically
disclaims any liability to Executive or to any other person or
entity.
	 
	 	(c)	 	Severability. The invalidity, illegality, or unenforceability
of any provision of this Agreement will not affect any other
provision of this Agreement, which shall remain in full force and
effect. Nor will the invalidity, illegality or unenforceability of
a portion of any provision of this Agreement affect the balance of
such provision. In the event that any one or more of the provisions
contained in this Agreement, or any portion thereof, is held to be
invalid, illegal, or unenforceable in any respect, this Agreement
shall be reformed, construed, and enforced as if such invalid,
illegal, or unenforceable provision had never been contained herein.
	 
	 	(d)	 	Effect of Waiver. The failure of the Company at any time to
require performance of any provision of this Agreement will in no
manner affect the right to enforce the same.
	 
	 	(e)	 	Exclusive Venue and
Jurisdiction. Any suit, action, or
proceeding relating to this Agreement shall be brought in the state
courts of Broward County, Florida or in the United States District
Court for the Southern District of Florida. The Company and
Executive hereby accept the exclusive jurisdiction of those courts
for the purpose of any such suit, action, or proceeding.
	 
	 	(f)	 	Binding Nature. This Agreement will be binding upon
AutoNation and Executive and will inure to the benefit of any
successor or successors of the Company. This Agreement is not
assignable by Executive, except in the case of death or permanent
and total disability where Executive’s estate or guardian shall be
entitled to receive the consideration to be paid under Paragraph 2
of this Agreement.
	 
	 	(g)	 	Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of
which together will constitute one and the same instrument.
	 
	 	(h)	 	Headings. The section headings contained in this Agreement
are for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
	 
	 	(i)	 	Construction. The Company and Executive have jointly
participated in the negotiation of this Agreement. In the event of
an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if it was drafted jointly by the
Company and Executive and no presumptions or burdens of proof shall
arise favoring any party by virtue of authorship of this Agreement.
	 
	 	(j)	 	Notice. Any notice, request, statement, information or other
document to be given to either party by the other must be in writing
and delivered as follows:

	 	 	 
	If to the Company:	 	
If to Executive:
	Senior Vice President	 	
 
	Corporate Human Resources	 	
 
	AutoNation, Inc.	 	
 
	110 S.E. Sixth Street	 	 
	Fort Lauderdale, Florida 33301	 	 

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	With Copy to:	 	 
	General Counsel	 	 
	AutoNation, Inc.	 	 
	110 S.E. Sixth Street	 	 
	Fort Lauderdale, Florida 33301	 	 

	 	 	 	Any party may change the address to which notices hereunder are to
be sent to it by giving written notice of a change of address.
	 
	 	(k)	 	Liability for Breach. In the event of Executive’s breach of
any terms of this Agreement, the Company may pursue any and all
remedies allowable under state and/or federal law. Depending on the
interpretation of applicable law, these remedies may include
monetary damages, equitable relief, and recoupment of the severance
benefits described in Paragraph 2 of this Agreement. In the event
of Executive’s breach of Paragraph 5 (“Compliance with
Other Agreements” provision), Paragraph 6 (“Cooperation” provision),
Paragraph 7 (“Confidential Information” provision),
Paragraph 8 (“Return of Company Property” provision), Paragraph 9 (“No Right to
Give Interviews” provision), and/or Paragraph 10
(“Non-Disparagement” provision), Executive agrees that she will
relinquish the severance benefits set forth in Paragraph 2 of this
Agreement. The Company may also pursue recovery of attorney’s fees
to the extent allowable under state and/or federal law.
	 
	 	(l)	 	Applicable Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Florida,
without regard to its choice of law rules.

     IN WITNESS WHEREOF, the Company and Executive have executed this
Separation Agreement and General Release of All Claims on the date set forth by
each party below.

	 	 	 	 	 	 	 
	
AutoNation, Inc.
	 	Executive
	By:	 	 	 	 	 	 
	 	 	/s/ PETER C.
SMITH

	 	/s/ PATRICIA A.
McKAY

	 	 	
Peter C. Smith
	 	Patricia A. McKay
	Its:	 	
Senior Vice President	 	 	 	 
	 	 	
Human Resources	 	 	 	 
	Date:	 	 	 	Date:	 	 
	 	 	6/11/03

	 	 	 	6/10/03

To be Signed by Executive upon
Receipt of Agreement:

I hereby acknowledge that I received a copy of this Separation Agreement and
Release of All Claims on this 14 day of May 2003, and was informed that I
have up to 45 days from this date to consider it before signing.

	 	 	 
	 	 	/s/ PATRICIA A.
McKAY

	 	 	Executive

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AUTONATION INVOLUNTARY TERMINATION PROGRAM -

NOTICE OF ELIGIBILITY FACTORS

In the process of determining which AutoNation associates would be selected for
termination, the Company followed specific procedures to ensure fairness.
Specifically, the Company selected associates based upon one or more of the
following factors: the associate’s job experience and skills; change in the
duties or requirements of the associate’s position; elimination of the
associate’s position; and/or performance history.

7exv4w1

 

Exhibit 4.1

	 	 	 	 	 
		 	[FORM OF STOCK CERTIFICATE-FRONT SIDE]
	 	
	 

	Number	 	
[DIRECT GENERAL CORPORATION LOGO]
	 	Shares
	 	 	 	 	 
	COMMON STOCK	 	
INCORPORATED UNDER THE LAWS OF THE STATE OF TENNESSEE
	 	COMMON STOCK
	 	 	 	 	 
	 	 	 	 	CUSIP 25456W 20 4
	 	 	 	 	 
	This Certifies
that	____________________________________________	 	SEE REVERSE FOR

CERTAIN DEFINITIONS

AND RESTRICTIONS

ON TRANSFER
	 	 	 	 	 
	is the owner
of	____________________________________________	 	 

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, NO PAR VALUE PER SHARE, OF

Direct General Corporation
(hereinafter and on the back hereof called the “Corporation”), transferable on the books of the Corporation
in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate and the shares represented hereby are issued and shall be subject to all provisions of the Charter and Bylaws of the Corporation (copies of which are on file with the
Transfer Agent), as now or hereafter amended, to all of which the holder
hereof by acceptance hereof assents. This Certificate is not
valid until countersigned and registered by the Transfer Agent and Registrar.

     In
Witness Whereof, the Corporation has caused the facsimile signatures
of its duly authorized officers and its corporate seal to be
affixed hereto.

     Dated:

	 	 	 	 	 
	/s/ Ronald F. Wilson	 	[CORPORATE SEAL]	 	/s/ William C. Adair, Jr.
	
	 	 	 	

	SECRETARY	 	 	 	CHAIRMAN OF THE BOARD

 

[FORM OF STOCK CERTIFICATE-BACK SIDE]

Direct General Corporation

     In addition to the Common Stock, the
Corporation is authorized to issue Preferred Stock in such series or
classes and with such rights, preferences, privileges and restrictions as the Board of Directors of the
Corporation may determine from time to time. The Corporation will furnish to the shareholder information
regarding the designations, relative rights, preferences, and limitations applicable to each class and the
variations in rights, preferences and limitations determined for each series of stock issued by the Corporation
(and the authority of the board of directors to determine variations for future series) upon request in writing
and without charge.

     The following abbreviations, when used in the inscription on the face of this certificate, shall be construed
as though they were written out in full according to applicable laws or regulations:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TEN COM	 	—	 	as tenants in common	 	UNIF GIFT MIN ACT	 	—	 	________________	 	Custodian	 	__________________
	TEN ENT	 	—	 	as tenants by the entireties	 	 	 	 	(Cust)	 	 	 	(Minor)
	JT TEN	 	—	 	as joint tenants with right of

survivorship and not as tenants in

common	 	 	 	 	under Uniform Gifts to Minors

Act_____________________

               
       (State)
	 	 

Additional abbreviations may also be used though not in the above list.

For value received, _____________ hereby sell, assign and transfer unto

	 	 
	PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE
	 
	 	 
	
	 

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)

shares of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _______________________________
Attorney to transfer the said stock on the books of the within-named Corporation
with full power of substitution in the premises.

Dated __________________

	 	 	 
	NOTICE:	 	____________________________________________________________________________

THE SIGNATURE TO THE ASSIGNMENT MUST CORRESPOND WITH THE

NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY

PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
	 	 	 
	SIGNATURE(S) GUARANTEED:	 	     
	 	 	____________________________________________________________________________

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.

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