CONFIDENTIAL SEPARATION AGREEMENT,
WAIVER AND RELEASE OF CLAIMS
This Confidential Separation Agreement, Waiver and Release of Claims
("Agreement") is entered into on this 5th day of December, 1996, by and between
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, residing at ▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter "▇▇▇▇▇▇▇▇") and USA Finance, Inc., formerly known as "LMI
Acquisition Corp.," a Delaware corporation, with its principal place of business
located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and its
subsidiaries, National-Wide Premium Finance Corp., Gold Coast Finance, Inc. and
Contract Funding Corp. (hereinafter collectively referred to as "Company").
WHEREAS, ▇▇▇▇▇▇▇▇ entered into an employment agreement to be Chief
Operating Officer of Company, and
WHEREAS, certain disputes have arisen between ▇▇▇▇▇▇▇▇ and the Company,
and
WHEREAS, by mutual agreement of the parties hereto, ▇▇▇▇▇▇▇▇ desires to
voluntarily resign from employment with Company, terminate the employment
agreement dated March 28, 1996, resign all offices and directorships he holds
with Company, and modify the Stockholders Agreement dated March 28, 1996,
effective with the date of this Agreement, and
WHEREAS, the parties to this agreement desire to reach a mutually
satisfactory understanding to execute mutual releases and to fully and finally
resolve any and all existing controversies and claims between them:
NOW, THEREFORE, with the intent to be legally bound, and in
consideration for the provisions and mutual undertakings herein contained, plus
other good and valuable consideration, the parties agree as follows:
1. The above recitals, including the recital of consideration, are true
and correct and are incorporated into the substantive provisions of this
agreement.
2. ▇▇▇▇▇▇▇▇' employment will terminate effective with the close of
business on the date he signs this Agreement. At that time, ▇▇▇▇▇▇▇▇ shall
resign his position as Chief Operating Officer of Company and resign from all
corporate offices, committee positions and directorships he holds with Company
and any parent, subsidiary or affiliate of Company.
3. ▇▇▇▇▇▇▇▇ shall receive, as consideration for the covenants not to
compete or solicit contained in paragraph 10 of this agreement, six payments of
$7,666, payable on the first working day of each month commencing on January 3,
1997, and continuing for the period through and including June 2, 1997. ▇▇▇▇▇▇▇▇
shall receive fully paid group medical benefits (also covering his wife) on the
same basis as if he remained actively employed with the Company through December
31, 1997, at which time ▇▇▇▇▇▇▇▇ shall be advised of his rights to continue said
group medical insurance benefits pursuant to the Consolidated Omnibus Budget
Reconciliation Act (COBRA).
4. Upon the execution of this Agreement, ▇▇▇▇▇▇▇▇ acknowledges that the
Stockholders' Agreement dated March 28, l996 has been terminated and that he and
the other parties to that Agreement shall enter into an Amended and Restated
Stockholders' Agreement subject to the terms contained in Exhibit "A" attached
hereto and made a part hereof.
5. Upon the execution of this Agreement by the parties, ▇▇▇▇▇▇▇▇ will
be repaid the $25,000 he previously loaned to the Company.
6.a Upon the execution of this Agreement, ▇▇▇▇▇▇▇▇ acknowledges that
all of his rights to stock options under the Employment Agreement dated March
28, 1996 have terminated. The Company shall grant to ▇▇▇▇▇▇▇▇ the option to
purchase 100,000 shares of its Common Stock
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(the "Option Shares") subject to the terms of the Option Agreement attached
hereto and made a part hereof as Exhibit "B".
6.b ▇▇▇▇▇▇▇▇ acknowledges that as of the date of this Agreement he is
the beneficial and record owner of 460,000 shares of common stock (the "Common
Shares"), as well as shares of the Company's Series B $3.00 Convertible
Preferred Stock (the "Series B Preferred Stock") which convert into 66,667
shares of the Company's common stock pursuant to the terms of a Certificate of
Designation of Series B $3.00 Convertible Preferred Stock of LMI Acquisition
Corp. filed with the State of Delaware, Secretary of State on March 20, 1996
(the "Certificate of Designation") and those Common Stock Purchase Options to
purchase 100,000 shares of the Company's Common Stock (the "Options") as
identified in paragraph 6(a) above. With the exception of the Common Shares,
Series B Preferred Stock and Options granted herein, ▇▇▇▇▇▇▇▇ represents and
warrants that he neither owns nor has the right to acquire any additional
securities of the Company from the Company or from any third party.
6.c The Company is in the process of preparing a Registration Statement
on Form SB-2 (the "Registration Statement") to file with the Securities and
Exchange Commission for the purpose of, among other things, registering for
resale purposes shares held by certain existing security holders of the Company.
The Company has agreed to grant registration rights to ▇▇▇▇▇▇▇▇ in connection
with the resale of shares of common stock issuable upon conversion of the Series
B Preferred Stock in the manner set forth hereafter:
i. The Company has agreed to include the resale of the shares
issuable upon the conversion of the Series B Preferred Stock (the
"Shares") in accordance with the Registration Statement identified
above. The Company's obligation in this regard shall
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extend only to the inclusion of the Shares in a Registration Statement
filed under the Securities Act of 1933, as amended (the "Act") with the
Securities and Exchange Commission ("SEC"). The Company shall have no
obligation to assure the terms and conditions of distribution, to
obtain a commitment from an underwriter relative to the sale of the
Shares or to otherwise assume any responsibility for the manner, price
or terms of the distribution or sale of the Shares under the Act.
ii. All expenses incurred by the Company in connection with
preparing and filing the Registration Statement shall be borne by the
Company. Fees and expenses associated with the sale of the Shares shall
be borne by ▇▇▇▇▇▇▇▇.
iii. In connection with the Registration Statement filed
hereunder, ▇▇▇▇▇▇▇▇ will furnish to the Company in writing such
information with respect to the securities held by him, and the
proposed distribution by him as shall be reasonably requested by the
Company in order to assure compliance with federal and applicable state
securities laws, as a condition precedent to including his Shares in
the Registration Statement. ▇▇▇▇▇▇▇▇ also shall agree to promptly
notify the Company of any changes in such information included in the
Registration Statement or prospectus as a result of which there is an
untrue statement of material fact or an omission to state any material
fact required or necessary to be stated therein in order to make the
statements contained therein not materially misleading in light of the
circumstances then existing. ▇▇▇▇▇▇▇▇ shall indemnify and hold harmless
the Company from and against any and all losses, claims, damages and
liabilities caused by any untrue statement of a material fact contained
in the Registration Statement or prospectus or any omission to state in
such Registration Statement or prospectus a
4
material fact that is required to be stated therein or that is
necessary to make any statement contained therein not materially
misleading in light of the circumstances under which they were made,
that is based upon information furnished to the Company by ▇▇▇▇▇▇▇▇ or
on ▇▇▇▇▇▇▇▇' behalf for use in such Registration Statement or
prospectus.
iv. In connection with such registration, ▇▇▇▇▇▇▇▇ agrees not
to effect sales thereof until notified by the Company of the
effectiveness of the Registration Statement, and thereafter will
suspend such sales after receipt of telegraphic or written notice from
the Company to suspend sales to permit the Company to correct or update
a prospectus. At the end of any period during which the Company is
obligated to keep a registration statement current, ▇▇▇▇▇▇▇▇ shall
discontinue sales of Shares pursuant to such registration statement
upon receipt of notice from the Company of its intention to remove from
registration the Shares covered by such Registration Statement which
remain unsold, and ▇▇▇▇▇▇▇▇ shall notify the Company of the number of
shares registered which remain unsold immediately upon receipt of such
notice from the Company.
7. In consideration for the stock options granted herein, continued
medical insurance benefits, release of claims and modification of the
non-competition convenants previously entered into by ▇▇▇▇▇▇▇▇, the adequacy of
which he acknowledges, ▇▇▇▇▇▇▇▇, on behalf of himself, his family, his heirs,
representatives, estate, successors and assigns, does hereby irrevocably and
unconditionally remise, release and forever discharge Company, and its parents,
subsidiaries, affiliates, directors, officers, agents, employees and any
employee benefit plans sponsored by Company or its subsidiaries or affiliates
(hereinafter severally and collective referred to as "Releasees") from any and
all liabilities, demands, acts, causes of action, damages or claims,
5
known or unknown, that ▇▇▇▇▇▇▇▇ has or may have against any of the Releasees for
any actions up to and including the date of this Agreement, and the continuing
effects thereof, it being the intention of ▇▇▇▇▇▇▇▇ to affect a general release
of all such claims except those relative to any alleged breach of this Agreement
or the exhibits hereto by Company. This release pertains but is not limited to
any and all claims which were asserted, or could have been asserted by Margolis
or on his behalf, arising out of his employment and directorship with the
Company or any subsidiary or affiliate, or termination thereof, including but
not limited to, claims arising under federal, state, and/or local laws
prohibiting employment discrimination, including but not limited to Title VII of
the Civil Rights Act of 1964, as amended; Age Discrimination In Employment Act,
as amended; the Florida Civil Rights Act; the Metropolitan Dade County Ordinance
on Human Relations; the Employee Retirement Income Security Act of 1974 as
amended; the Americans with Disabilities Act; and all state or federal common
law or statutory law governing contract, torts and any claims for attorneys'
fees under these acts or any other law.
8. Company, its parents, subsidiaries, affiliates, directors, officers,
agents and employees do hereby irrevocably and unconditionally remise, release
and forever discharge Margolis from any and all liabilities, demands, acts,
causes of action, damages or claims, known or unknown, that they have or may
have against ▇▇▇▇▇▇▇▇ for any and all liabilities, demands, acts, causes of
action, damages or claims which the Company may have against ▇▇▇▇▇▇▇▇ for any
actions up to and including the date of this Agreement, and the continuing
effects thereof, it being the intention of the Company to affect a general
release of all such claims except those relating to any alleged breach of
▇▇▇▇▇▇▇▇' obligations under this Agreement, including but not limited to those
contained in paragraphs 9, 10 and 11.
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9. ▇▇▇▇▇▇▇▇ acknowledges that during his association with Company he
has been brought into contact with business plans, methods of operation,
advertising, sales and marketing materials, marketing strategies, records,
product development plans, strategic plans, trade secrets, customer sales
analysis, invoices, price list information or samples (collectively referred to
as "confidential information") regarding Company which have been disclosed to
him and known to him as a consequence of his employment relationship with
Company. ▇▇▇▇▇▇▇▇ agrees that he shall not in any manner, directly or
indirectly, use, for his benefit or the benefit of others, any confidential
information nor will he disclose to any third party whatsoever, or use for any
purpose, any such confidential information. Further, ▇▇▇▇▇▇▇▇ agrees that he
will not disparage or comment negatively upon the Company, its parent,
subsidiaries or affiliates, or any officer, employee, shareholder, director or
agent of any of these organizations. Nothing contained in this paragraph is
intended to restrict or limit ▇▇▇▇▇▇▇▇' use of general knowledge or information
in the public domain, or knowledge or information he possessed prior to his
employment with Company.
10. For a period of six (6) months from the date of the last payment,
as described in Paragraph 3 herein, ▇▇▇▇▇▇▇▇ shall not under any circumstances,
directly or indirectly solicit any employee of the Company, or indirectly induce
or attempt to influence any employee of Company to leave the employ of the
Company. For a period of six (6) months from the date of the last payment, as
described in Paragraph 3 herein, ▇▇▇▇▇▇▇▇ shall not under any circumstances,
directly or indirectly, solicit any customers of the Company to do business with
any other business involved in insurance premium financing. ▇▇▇▇▇▇▇▇ further
acknowledges that while employed with the Company he was exposed to trade
secrets, valuable confidential business information, had substantial
relationships with specific existing and prospective customers of the Company,
7
and that in order to protect the legitimate business interests of the Company,
it is necessary for him to enter into the following restrictive covenant:
▇▇▇▇▇▇▇▇ agrees that for a period of six (6) months from the date of the last
payment, as described in Paragraph 3 herein, ▇▇▇▇▇▇▇▇ will not become engaged in
either as a principal, partner, director, officer, agent, employee, consultant,
or independent contractor, perform any services for remuneration or otherwise be
financially interested in any business located within the United States that is
primarily involved in insurance premium financing. However, nothing contained in
this Agreement shall prevent ▇▇▇▇▇▇▇▇ from holding for investment no more than
five (5%) percent of any class of equity securities of a company whose
securities are traded on a national security exchange. ▇▇▇▇▇▇▇▇ warrants and
represents that, based upon his prior experience with the Company and in the
financial services industry, the restrictive covenant which he has entered into
is reasonably necessary to protect the legitimate business interests of the
Company and that, as of the date in which he has entered into this Agreement, he
has not done any acts nor has he any current intentions and has made no plans to
do anything that are proscribed by the non-competition and non-solicitation
provisions contained above.
11. ▇▇▇▇▇▇▇▇ agrees that the terms set forth in this Agreement are
confidential and that he is not to disclose the terms and amounts paid to him
under this Agreement to any person with the exception of his attorneys,
accountants and immediate family members.
12. ▇▇▇▇▇▇▇▇ acknowledges that a breach of or a violation of the
covenants contained in Paragraphs 9, 10 and 11 above will have an irreparable,
material and adverse effect upon the Company, that damages arising from any such
breach or violation may be difficult to ascertain and that the Company will lack
an adequate remedy at law. Therefore, ▇▇▇▇▇▇▇▇ acknowledges that
8
the Company will be entitled to obtain an injunction from any court having
jurisdiction over him and the Company to enjoin ▇▇▇▇▇▇▇▇ from any further
violation of this Agreement and to enforce his specific performance of the
covenants contained herein. In the event of a proven breach, ▇▇▇▇▇▇▇▇ agrees to
the entry of such an injunction or order for specific performance and to pay all
reasonable attorneys' fees and costs incurred by the Company in obtaining said
injunction.
13. ▇▇▇▇▇▇▇▇ further agrees, promises and covenants that neither he,
nor any person, organization or any other entity acting on his behalf or with
his consent, will charge, claim, ▇▇▇ or cause or permit to be filed, charged, or
claim, any action for damages or other relief (including injunctive,
declaratory, monetary relief or other) against Company, except for a default or
breach of this Agreement and the exhibits thereto, nor will ▇▇▇▇▇▇▇▇ voluntary
assist others in bringing such actions against Company, involving any matter
occurring in the past up to the date of this Agreement, whether or not it is
related to his employment with Company or involving and based upon any claims,
demands, causes of action, obligations, damages or liabilities which are the
subject of this Agreement. In the event ▇▇▇▇▇▇▇▇ breaches or files any lawsuit
or administrative action contrary to the release contained in Paragraph 4
herein, such conduct will constitute a breach of this Agreement, thereby
terminating any further duty of Company to make the severance payments and
continuation of insurance as set forth in Paragraph 3 herein, and shall obligate
▇▇▇▇▇▇▇▇ to repay any monies paid to him (including all severance payments) and
the value of any fringe benefits paid to him under this Agreement.
14. ▇▇▇▇▇▇▇▇ agrees to make himself readily available, upon reasonable
notice to him, to assist the Company in matters requiring his experience and
expertise or to answer questions regarding matters occurring during his tenure
at the Company. ▇▇▇▇▇▇▇▇ agrees that he will,
9
through June 30, 1997, make himself available on the above-stated basis to the
Company without any additional compensation.
15. ▇▇▇▇▇▇▇▇ acknowledges and agrees that the terms of this Agreement
were reached after extensive negotiations with his attorney, ▇▇▇▇ ▇▇▇▇▇▇▇, that
he has had a full and complete opportunity to discuss this Agreement with an
attorney of his own choosing, that in executing this Agreement he does not rely
and has not relied upon any statement or representation made by or on behalf of
the Company by any of its officers, agents, employees or attorneys, and that he
is acting on his own free will. ▇▇▇▇▇▇▇▇ further acknowledges and agrees that he
has entered into this Release knowingly and voluntarily, intending to be legally
bound, having had a full and complete opportunity to consider the terms thereof.
16. ▇▇▇▇▇▇▇▇ acknowledges that he has received this Separation
Agreement on December 5, 1996, and that he understands that he has twenty-one
(21) days after the foregoing date within which to consider this Release of
Claims before signing it. If ▇▇▇▇▇▇▇▇ signs and returns this document prior to
the twenty-first day, he does so voluntarily, waiving his right to the full
twenty-one (21) day period. ▇▇▇▇▇▇▇▇ acknowledges that he has been advised to
consult with an attorney of his choosing and that he has in fact consulted with
attorney ▇▇▇▇ ▇▇▇▇▇▇▇ before signing this Release of Claims. ▇▇▇▇▇▇▇▇
acknowledges and understands that for a period of seven (7) days after he signs
this Agreement that he may revoke or cancel it by written notification to ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ at the Company, and that this Release of Claims will not become
effective until that seven (7) day period has passed.
10
17. ▇▇▇▇▇▇▇▇ acknowledges and agrees that his full-time employment and
directorship with Company has ended, that he waives all claims to be reinstated,
that he will never knowingly apply for employment with Company and that he will
not be so employed.
18. This Agreement shall not in any way be construed as an admission by
either party of any acts of wrong doing whatsoever against the other party or
any other person on the part of itself, its owners, managers, employees or
agents.
19. ▇▇▇▇▇▇▇▇ acknowledges that the amounts, benefits and
representations set forth in this Agreement constitute a full and complete
satisfaction of any and all claims by him of any kind and nature whatsoever from
the Company or any parent, affiliate or subsidiary, and that neither the Company
nor any parent, affiliate, subsidiary or successor will be obligated in any way
to provide his with future employment, compensation, benefits stock rights or
stock options other than those specifically provided herein.
20. If any provision of this Agreement is construed to be invalid,
illegal or unenforceable in any respect, the remainder of the Agreement shall
not be effected, and the remaining provisions of this Agreement shall be given
full force and effect without regard to the invalid, illegal or unenforceable
portions.
21. This Agreement shall be governed in all respects by the laws of the
State of Florida. Venue for all legal actions resulting from this Agreement, or
an alleged breach thereof, shall be in Dade County, Florida.
22. In any action for breech of this Agreement, the prevailing party
shall be entitled to recover its reasonable attorney's fees and costs.
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IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇ and the Company have executed this
Agreement intending to be legally bound hereby.
WARNING: THIS DOCUMENT CONTAINS A RELEASE OF ALL CLAIMS KNOWN AND UNKNOWN.
Witness:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Date: December 5, 1996
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Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ USA FINANCE, INC.
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By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Signature ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------
Title: CEO
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Date: 12/5/96
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Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ NATIONAL-WIDE PREMIUM FINANCE CORP.
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By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Signature ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------
Title: CEO
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Date: 12/5/96
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Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ GOLD COAST FINANCE, INC.
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By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Signature ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------
Title: V.P.
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Date: 12/5/96
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Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ CONTRACT FUNDING CORP.
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By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Signature ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------
Title: V.P.
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Date: 12/5/96
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