EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into and effective this 31st day of
December, 1996 by and between NATIONAL AUTO FINANCE COMPANY L.P., a Delaware
limited partnership with its principal offices located in Boca Raton, Florida
(hereinafter referred to as the "Limited Partnership") and XXXXXXX X. XXXXX,
with an address at 00000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx (hereinafter referred
to as the "Employee").
WITNESSETH
WHEREAS, the Limited Partnership currently employs Employee as
a member of its senior management;
WHEREAS, the Limited Partnership wishes to reduce to writing
the terms and conditions of Employee's employment; and
WHEREAS, Employee wishes also to reduce to writing the terms
and conditions of his employment by the Limited Partnership.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements and obligations contained herein, and intending to be legally bound,
the parties hereto agree as follows:
1. Employment and Term. The Limited Partnership hereby employs
Employee and Employee hereby accepts employment with the Limited Partnership as
a member of its senior management. The term of such employment shall begin on
the effective date hereof and end on June 30, 1999 unless sooner terminated as
provided in Section 10 herein (the "Term").
2. Duties. During the Term, Employee shall serve the Limited
Partnership faithfully and to the best of his ability and devote such time to
the business of the Limited Partnership, subject to the provisions of Section 3
herein, as (i) is necessary to carry out the duties and responsibilities
customarily incident to a position in senior management, including, without
limitation, the supervision of other executive officers and employees of the
Limited Partnership who are subordinate to Employee, and (ii) may be reasonably
assigned to him from time to time by the Board of Directors or Chairman, Chief
Executive Officer and/or President of National Auto Finance Corporation, the
general partner of the Limited Partnership (the "General Partner") or by the
Chairman, Chief Executive Officer and/or President of the Limited Partnership.
Employee shall
report to the Board of Directors and Chairman, Chief Executive Officer and
President, if any, of the General Partner, to the Chairman, Chief Executive
Officer and President, if any, of NAFCO, and to the Chairman, Chief Executive
Officer and President of the Limited Partnership.
3. Other Business Activities. During the Term, Employee shall
not, without the prior written consent of the Limited Partnership, directly or
indirectly engage in any other business activities or pursuits, except
activities in connection with charitable or civic activities, personal
investments, service as an executor, trustee or in other similar fiduciary
capacities and such other activities as are not inconsistent with his positions
with the Limited Partnership and do not interfere with the performance of
Employee's duties, responsibilities and obligations pursuant to this Agreement.
4. Compensation.
(a) Salary. During the Term, the Limited Partnership shall pay
Employee, and Employee hereby agrees to accept, as compensation for all services
rendered hereunder and for Employee's covenant not to compete as provided for in
Section 9 hereof, a base salary (the "Base Salary") at an annual rate as
follows:
(i) $105,000 through December 31, 1996;
(ii) $115,000 from January 1, 1997 through December 31,
1997;
(iii) $128,000 from January 1, 1998 through December 31,
1998; and
(iv) $144,000 from January 1, 1999 through June 30, 1999.
Payment of the Base Salary shall be made in the same manner as the Limited
Partnership routinely pays its other executive employees. All applicable
income, social security and other taxes and charges which are required by law
to be withheld by the Limited Partnership or which are requested to be withheld
by Employee, shall be deducted from the Base Salary in accordance with the
Limited Partnership's normal payroll practice for its salaried executives from
time to time in effect.
(b) Incentive Bonus. The Limited Partnership shall pay to
Employee an incentive bonus for each of calendar years 1996, 1997, 1998 and
1999. Such incentive bonus shall be calculated as the lesser of:
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(A) net income before taxes for the year(1) (as
determined by the independent auditors of the
Limited Partnership in accordance with Generally
Accepted Accounting Principles consistently
applied) divided by $7,000,000 for 1996;
$12,400,000 for 1997; $19,600,000 for 1998; and
$34,000,000 for 1999, with the resulting fraction
multiplied by $52,500 for 1996; $57,500 for 1997;
$64,000 for 1998; $72,000 for 1999 or
(B) 1996 - $52,500.00
1997 - 57,500.00
1998 - 64,000.00
1999 - 72,000.00
Such incentive bonus earned for calendar years 1996, 1997,
1998 and 1999 shall be paid on or before March 31 of the next succeeding year.
5. Stock Option Plan. In the event that the Limited Partnership or any
successor entity adopts a stock option plan, in the event any stock option plan
is offered to the Limited Partnership or successor entity employees by a parent
organization (within the meaning of Rule 12 b-2 under the Securities Exchange
Act of 1934), Employee shall be entitled to participate in such stock option
plan.
6. Benefits and Expenses.
(a) Benefits. Employee shall be entitled to participate in such
benefit plans and programs, including pension, hospitalization, medical and
dental insurance, life and disability insurance, and vacation, as are made
available to the executive employees of the Limited Partnership from time to
time during the Term.
(b) Expenses. Employee shall be reimbursed by the Limited
Partnership for all reasonable out-of-pocket expenses, including travel and
entertainment expenses, incurred by him in furtherance of the performance of his
duties and responsibilities
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(1) In determining net income before taxes independent auditors shall exclude
any deductions to net income attributable either to intercompany management fees
(other than reimbursement for actual expenses including the net of pocket
expenses for such affiliate) or to any bonus payable to Employee.
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hereunder upon submission to the Limited Partnership of receipts supporting
such expenses.
(c) Automobile. The Limited Partnership will provide Employee with
a car allowance of Five Hundred Dollars ($500.00) per month and reimburse
Employee for gasoline and oil expenses for his automobile upon submission to the
Limited Partnership of receipts supporting such expenses.
7. Confidentiality.
(a) Non-Disclosure. Employee recognizes and acknowledges that the
Proprietary Information (as hereinafter defined) of the Limited Partnership is a
valuable, special and unique asset of the Limited Partnership. As a result, both
during the Term and thereafter, Employee shall not, without the prior written
consent of the Limited Partnership, for any reason, either directly or
indirectly, divulge to any third party or use for Employee's own benefit, or for
any purpose other than the exclusive benefit of the Limited Partnership, any and
all confidential, proprietary, business or technical information, or trade
secrets of the Limited Partnership which are revealed, obtained or developed in
the course of Employee's employment with the Limited Partnership (the
"Proprietary Information"). Such Proprietary Information shall include, but
shall not be limited to, marketing and development plans and efforts, cost
information, pricing information, marketing methods and plans, identities of the
Limited Partnership's dealers, the Limited Partnership's relationship with or
potential its dealers, and any other confidential information relating to the
business of the Limited Partnership; provided, however, that nothing herein
contained shall restrict Employee's ability to make such disclosures during the
course of his employment as may be necessary or appropriate to the effective and
efficient discharge of his duties or as such disclosures may be required by law;
and further provided, that nothing herein contained shall restrict Employee from
divulging or using for his own benefit or for any other purpose any Proprietary
Information which is readily available to the general public so long as such
information did not become available to the general public as a direct or
indirect result of Employee's breach of this Section 7.
(b) Inventions, Designs and Product Developments. All inventions,
discoveries, concepts, improvements, formulas, processes, devices, methods,
innovations, designs, ideas and product developments (collectively, the
"Developments"), developed or conceived by Employee, solely or jointly with
others, whether or not patentable or copyrightable, at any time
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during the Term or within one (1) year after the termination of this Agreement
and which relate to the actual or planned business activities of the Limited
Partnership and all of the Employee's right, title and interest therein, shall
be the exclusive property of the Limited Partnership. The Employee hereby
assigns, transfers and conveys to the Limited Partnership all of his right,
title and interest in and to any and all such Developments. Employee shall
disclose fully, as soon as practicable and in writing, all Developments to the
Chairman, Chief Executive Officer or President of the Limited Partnership. At
any time and from time to time, upon the request of the Limited Partnership,
the Employee shall execute and deliver to the Limited Partnership any and all
instruments, documents and papers, give evidence and do any and all other acts
which, in the opinion of counsel for the Limited Partnership, are or may be
necessary or desirable to document such transfer or to enable the Limited
Partnership to file and prosecute applications for and to acquire, maintain and
enforce any and all patents, trademarks registrations or copyrights under
United States or foreign law with respect to any such Developments or to obtain
any extension, validation, reissue, continuance or renewal of any such patent,
trademark or copyright. The Limited Partnership will, at its expense, be
responsible for the preparation of any such instruments, documents and papers
and for the prosecution of any such proceedings and will reimburse the Employee
for all reasonable expenses the Employee incurs in connection therewith upon
submission to the Limited Partnership of invoices with respect thereto.
8. Property of Limited Partnership. All Proprietary Information and
Developments shall be and remain the sole property of the Limited Partnership.
During the Term of this Agreement, Employee shall not remove from the Limited
Partnership's offices or premises any documents, records, notebooks, files,
correspondence, reports, memoranda or similar materials containing information
of the type identified in Section 7 hereof, or other materials or property of
any kind unless necessary or appropriate in accordance with his duties and
responsibilities and, in the event that such materials or property are removed,
all of the foregoing shall be returned to their proper files or places of
safekeeping as promptly as possible after the removal shall serve its specific
purpose. Employee shall not make, retain, remove and/or distribute any copies
of any of the foregoing for any reason whatsoever except as may be necessary in
the discharge of his assigned duties and shall not divulge to any third person
the nature of and/or the contents of any of the foregoing or of any other oral
or written information to which he may have access or with which for any
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reason he may become familiar, except as disclosure shall be necessary in the
performance of his duties; and upon the termination of his employment with the
Limited Partnership, he shall leave with or return to the Limited Partnership,
all originals and copies of the foregoing then in his possession, whether
prepared by Employee or by others.
9. Covenant Not to Compete.
(a) Employee shall not, during the Term, anywhere within the United
States of America or in any other location where the activities of Employee
would, in the judgment of the Board of Directors of the General Partner, be
competitive with the automotive finance business of the Limited Partnership, do
any of the following, directly or indirectly, without the prior written consent
of the Limited Partnership:
(1) solicit, either directly or indirectly, business from any
dealer with whom the Limited Partnership shall have dealt at any time;
(2) influence or attempt to influence any dealer with whom the
Limited Partnership shall have dealt at any time or potential dealer of
the Limited Partnership to terminate or modify any written or oral
agreement, arrangement or course of dealing with the Limited
Partnership; or
(3) influence or attempt to influence any person to either (i)
terminate or modify his employment, consulting, agency, distributorship
or other arrangement with the Limited Partnership, or (ii) employ or
retain, or arrange to have any other person or entity employ or retain,
any person who has been employed or retained by the Limited Partnership
as an employee, salesman, consultant or agent of the Limited
Partnership at any time during the one (1) year period immediately
preceding the effective date of Employee's termination if the actions
enumerated in clauses (i) and (ii) would negatively affect the business
and/or operations of the Limited Partnership or the General partner for
a period of one (1) year following the effective date of Employee's
termination.
(b) The Limited Partnership shall have the right, but not the
obligation, to require Employee, for a six month period of time following the
termination of Employee's employment (for whatever reason), anywhere within the
United States of America or in any other location where the activities of
Employee would, in the judgment of the Board of Directors of the General
Partner, be
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competitive with the automotive finance business of the Limited Partnership,
not to engage in the conduct proscribed by Section 9(a)(1), (2) and (3) by
payment to Employee, over the extended covenant period, of fifty percent (50%)
of the amount paid to Employee (as reflected in Employee's W-2) by the Limited
Partnership in the full calendar year immediately preceding Employee's
termination. Any payments required by this Section 9(b) shall be paid by check
in the same time intervals as the Limited Partnership routinely pays its
executive employees. The Limited Partnership's option to extend Employee's
covenant not to compete may be exercised only by providing Employee a minimum
of one hundred twenty (120) days written notice. Any exercise of the option
shall be irrevocable.
(c) If the employment of Employee shall either expire pursuant to
Section 1 hereof, or shall be terminated pursuant to Section 10 of this
Agreement, Employee shall not, for a one (1) year period of time following such
termination, employ or retain, or arrange to have any other person or entity
employ or retain, any person who has been employed or retained by the Limited
Partnership any time during the one (1) year period immediately preceding the
effective date of Employee's termination.
10. Termination. This Agreement may be terminated during the Term
upon the occurrence of any of the events described in this Section 10. Upon
termination, Employee shall be entitled to such compensation and benefits as are
described in this Section 10.
10.1 Termination for Disability.
(a) In the event of the disability of the Employee such that
Employee is unable to perform his duties and responsibilities hereunder to the
full extent required by this Agreement by reason of illness, injury or
incapacity for a period of more than one hundred twenty (120) consecutive days
or for a cumulative period of one hundred twenty (120) days within a twelve (12)
month period ("Disability" or "Disabled"), this Agreement may be terminated by
the Limited Partnership.
(b) In the event of a termination of Employee's employment
pursuant to Section 10.1(a), Employee will be entitled to receive (i) all
accrued but unpaid (as of the date of such termination) Base Salary and Benefits
and other forms of compensation and benefits payable or provided in accordance
with the terms of any then existing Limited Partnership compensation or benefit
plan or arrangement, including payments prescribed under any disability benefit
or life insurance plan or
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arrangement in which Employee is a participant or to which Employee is a party
as an employee of the Limited Partnership ("Other Compensation"), and (ii) an
amount equal to Employee's Base Salary for a three (3) month period (at the
rate then in effect at the time of such termination). Except as specifically
set forth in this Section 10.1(b), the Limited Partnership shall have no
liability or obligation to Employee for compensation or benefits hereunder by
reason of such termination.
(c) For purposes of this Section 10.1, except as hereinafter
provided, the determination as to whether Employee is Disabled shall be made by
a licensed physician selected by Employee and shall be based upon a full
physical examination and good faith opinion by such physician. In the event that
the Board of Directors of the General Partner disagrees with such physician's
conclusion, the Board of Directors of the General Partner may require that
Employee submit to a full physical examination by another licensed physician
selected by Employee and approved by the Board of Directors of the General
Partner. If the two opinions shall be inconsistent, a third opinion shall be
obtained after full physical examination by a third licensed physician selected
by Employee and approved by the Board of Directors of the General Partner. The
majority of the three opinions shall be conclusive.
10.2 Termination by Death. In the event that Employee dies
during the Term, Employee's employment shall be terminated thereby and the
Limited Partnership shall pay to Employee's executors, legal representatives or
administrators an amount equal to all accrued but unpaid (as of the date of such
termination) Base Salary, Benefits and Other Compensation. Except as
specifically set forth in this Section 10.2, the Limited Partnership shall have
no liability or obligation hereunder to Employee's executors, legal
representatives, administrators, heirs or assigns or to any other person
claiming under or through him by reason of Employee's death.
10.3 Termination for Cause.
(a) The Limited Partnership may terminate this Agreement at
any time for "cause" upon written notice to Employee, which termination shall
become effective on the date specified in such notice. For purposes of this
Agreement, "cause" shall mean: (i) any material breach by Employee of any of his
obligations under Sections 7, 8 or 9 of this Agreement; (ii) failure by Employee
to perform satisfactorily the duties assigned to him pursuant to this Agreement;
(iii) other conduct of Employee involving gross disloyalty or willful misconduct
with
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respect to the Limited Partnership, including, without limitation, fraud,
embezzlement, theft or proven dishonesty in the course of his employment, or
conviction of a felony; (iv) Employee's willful engagement in conduct
materially injurious to the economic interests or reputation of the Limited
Partnership; or (v) Employee's other gross misconduct or insubordination.
(b) In the event of a termination of Employee's employment
pursuant to clauses (i) or (iii) of Section 10.3(a), Employee shall be entitled
to receive all accrued but unpaid (as of the date of such termination) Base
Salary, Benefits and Other Compensation, and all Base Salary, Benefits and Other
Compensation shall then cease at the time of such termination.
(c) In the event of a termination of Employee's employment
pursuant to clause (ii) of Section 10.3(a), Employee shall be entitled to
receive all accrued but unpaid (as of the date of such termination) Base Salary,
Benefits and Other Compensation. Employee shall also be entitled to receive an
amount equal to his Base Salary (at the rate then in effect at the time of such
termination) for a twelve (12) month period, such amount to be paid over the
applicable period at times corresponding to the Limited Partnership's normal
payroll periods for executive officers as if no such termination had occurred.
Except as specifically set forth in this Section 10.3(c), all Base Salary,
Benefits and Other Compensation shall then cease at the time of such
termination.
10.4 Termination By Employee For Good Reason.
(a) Employee may terminate this Agreement at any time for Good
Reason (as defined below) effective upon the date designated by Employee in
written notice of his termination of employment pursuant to this Section
10.4(a); provided, that the effective date of such termination shall not be less
than ninety (90) days after such notice is given, unless the Board of Directors
of the General Partner declares such effective date to be earlier than that
designated by Employee, which such Board shall be entitled to do (but not
earlier than the date such notice is received). For purposes of this Agreement,
Good Reason shall mean a material breach by the Limited Partnership of its
obligations under this Agreement, including, but not limited to, the following:
(i) the failure by the Limited Partnership to pay Base Salary or any other
material form of compensation or material benefit to be paid or provided to
Employee hereunder, which failure is not cured by the Limited Partnership within
ten (10) days after the Limited Partnership's receipt of written notification
from Employee of such failure; and (ii) any material
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breach, not encompassed within clause (i) of this Section 10.4(a), of the
obligations of the Limited Partnership under this Agreement which breach is not
cured within thirty (30) days after the Limited Partnership's receipt of
written notification from the Employee of such material breach.
(b) In the event of a termination of Employee's employment
pursuant to Section 10.4(a), Employee shall be entitled to receive all accrued
but unpaid (as of the date of such termination) Base Salary, Benefits and Other
Compensation. Employee shall also be entitled to receive an amount equal to his
Base Salary at the time of termination for a six (6) month period, such amount
to be paid over the applicable period at times corresponding to the Limited
Partnership's normal payroll periods for executive officers as if no such
termination had occurred. Except as specifically set forth in this Section
10.4(b), all Base Salary, Benefits and Other Compensation shall then cease at
the time of such termination.
10.5 Successor Party.
The Limited Partnership shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Limited Partnership, by
agreement in form and substance satisfactory to Employee, to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Limited Partnership would be required to perform it. If no such
agreement prior to or simultaneously with the effectiveness of any such
succession is executed and delivered to Employee, such failure shall constitute
a material breach of this Agreement.
11. Survival of Provisions. The rights and obligations of
Employee pursuant to Sections 7, 8, 9, 10 and 14 of this Agreement shall survive
the termination of Employee's employment hereunder.
12. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Limited Partnership and Employee and their
respective successors, executors, administrators, heirs and/or permitted
assigns; provided, however, that neither Employee nor the Limited Partnership
may make any assignment of this Agreement or any interest herein, by operation
of law or otherwise, without the prior written consent of the other parties
hereto, except that, without such consent, the Limited Partnership may assign
this Agreement to any successor to all or substantially all of its assets and
business
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by means of liquidation, dissolution, merger, consolidation, transfer of
assets, or otherwise, provided that such successor assumes in writing all of
the obligations of the Limited Partnership under this Agreement.
13. No Conflicting Agreements. Employee represents to the
Limited Partnership that (i) Employee is not currently under contract to
provide services to any other party or entity; (ii) the execution, delivery and
performance of this Agreement by Employee will not conflict with any other
agreement to which Employee is bound or to which Employee is a party; (iii)
Employee is not currently bound by any form of restrictive covenant which would
restrict or limit the performance of his duties pursuant to this Agreement.
Upon the execution and delivery of this Agreement by each of the parties
hereto, that certain Offer of Employment Letter dated December 6, 1995 between
Employee and the Limited Partnership shall be superseded and of no further
force or effect.
14. Employee Benefits. This Agreement shall not be construed
to be in lieu of or to the exclusion of any other rights, benefits and
privileges to which Employee may be entitled as an employee of the Limited
Partnership under any retirement, pension, profit-sharing, insurance, hospital
or other plans or benefits which may now be in effect or which may hereafter be
adopted.
15. Notice. Any notice or communication required or permitted
under this Agreement shall be made in writing and sent by certified or
registered mail, return receipt requested, or hand delivery, addressed as
follows or to such other address as any party may from time to time duly
specify by notice given to the other party in the manner specified above:
If to Employee:
Xxxxxxx X. Xxxxx
00000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
If to the Limited Partnership:
Auto Credit Clearinghouse L.P.
000 X.X. 00xx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
00
00. Entire Agreement; Amendments. This Agreement contains the
entire Agreement and understanding of the parties hereto relating to the
subject matter hereof, and merges and supersedes all prior discussions,
agreements and understandings of every nature between the parties hereto
relating to the employment of Employee with the Limited Partnership. This
Agreement may not be changed or modified, except by an agreement in writing
signed by both of the parties hereto.
17. Waiver. The waiver of the breach of any term or
provision of this Agreement shall not operate as or be construed to be a waiver
of any other or subsequent breach of this Agreement.
18. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Florida, excluding its
choice of law provisions.
19. Invalidity. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the validity of any other provision of this
Agreement, and such provision(s) shall be deemed modified to the extent
necessary to make it enforceable.
20. Section Headings. The section headings in this
Agreement are for convenience only. They form no part of this
Agreement and shall not affect its interpretation.
21. Number of Days. In computing the number of days for
purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and legal holidays; provided, however, that if the final day of any
time period falls on a Saturday, Sunday or day which is a holiday in the State
of Florida, then such final day shall be deemed to be the next day which is not
a Saturday, Sunday or legal holiday.
22. Specific Enforcement. Employee acknowledges that the
restrictions contained in Sections 7, 8, and 9 hereof are reasonable and
necessary to protect the legitimate interests of the Limited Partnership and
its affiliates and that the Limited Partnership would not have entered into
this Agreement in the absence of such restrictions. Employee also acknowledges
that the nature of both his services to the Limited Partnership and the
obligations undertaken by Employee in Sections 7, 8, and 9 hereof are unique
and that any breach by him of Sections 7, 8, and 9 hereof will cause continuing
and irreparable injury to the
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Limited Partnership for which monetary damages would not be adequate remedy. In
the event of such breach by Employee, the Limited Partnership shall have the
right to specific enforcement of the provisions of Sections 7, 8, and 9 of this
Agreement, or injunctive or other relief in any court, and this Agreement shall
not in any way limit remedies of law or in equity otherwise available to the
Limited Partnership. In the event that the provisions of Sections 7, 8, and 9
hereof should ever be adjudicated to exceed the time, geographic, or other
limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, or other limitations permitted by applicable law.
23. Arbitration. Any controversy or claim arising out of or
relating to Section 10 hereof, or the breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
Arbitration may be entered into any court having jurisdiction thereof. The
arbitration shall be heard by a single Arbitrator, and shall be conducted in
Boca Baton, Florida.
REST OF THE PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties hereto have executed o
caused this Agreement to be duly executed on the date first above written.
WITNESS: EMPLOYEE:
/s/ Xxxxxxx X. Xxxxx
----------------------- --------------------------------
Xxxxxxx X. Xxxxx
ATTEST: LIMITED PARTNERSHIP:
AUTO CREDIT CLEARINGHOUSE
L.P.
By: /s/ Xxxx X. Xxxxxxx
------------------------ ------------------------------
Xxxx X. Xxxxxxx
Chairman
National Auto
Finance
Corporation
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