EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into and effective this 19th day of
October, 1995 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 XXXXX X. XXXXXXXXX,
with an address at 0000 X.X. 000xx Xxx, Xxxxx Xxxxxxx, XX 00000 (hereinafter
referred to as the "Employee").
WITNESSETH
WHEREAS, the Limited Partnership currently employs
Employee as its Chief Operating Officer;
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 its Chief Operating Officer. The term of such employment shall
begin on the effective date hereof and end on December 31, 1998, unless sooner
terminated as provided in Section 10 herein (the "Term").
2. Duties. During the Term, Employee shall in his capacity as
Chief Operating Officer-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 such
position, including, without limitation, the supervision of the 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, if
any, of National Auto Finance Corporation, the general partner of the
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Limited Partnership (the "General Partner"), or by the Chairman, Chief
Executive Officer and/or President, if any, 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, and to the Chairman,
Chief Executive Officer and President, if any, 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:
(1) $88,000 through December 31, 1995;
(2) $103,000 from January 1, 1996 through
December 31, 1996;
(3) $116,000 from January 1, 1997 through
December 31, 1997; and
(4) $126,000 from January 1, 1998 through
December 31, 1998.
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.
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(b) Incentive Bonus. The Limited Partnership may, at the
discretion of the Board of Directors of the General Partner, pay to Employee an
incentive bonus based upon the achievement of certain performance goals with
respect to calendar year ending December 31, 1995. Such incentive bonus if any,
shall be paid on or before March 31, 1996. For each of calendar years 1996,
1997 and 1998, Employee shall also be paid an incentive bonus. Such incentive
bonus shall be calculated as the lesser of:
(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 $6,200,000
for 1996; $10,500,000 for 1997; and
$15,000,000 for 1998, with the resulting
fraction multiplied by $51,500 for 1996,
$58,000 for 1997 and $63,000 for 1998; or
(B) 1996 - $51,500
1997 - $58,000
1998 - $63,000
Such incentive bonus earned for calendar years 1996, 1997, or 1998 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 (other than the
current 1994 Award Units Plan), or 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.
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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 out-of-pocket
expenses for such affiliate), payment of fees or bonuses to National Financial
Corporation shareholders or to any annual bonus payable to Employee or other
employees of the Limited Partnership.
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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 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
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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 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 Corporation. 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
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materials containing information of the type identified in Section 6 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 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
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Partnership as an employee, salesman, consultant
or agent of the Limited Partnership at any time.
(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 competitive with the automotive finance business ~f 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 internals 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.
(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 910.
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
fill 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.
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(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 arrangement in which Employee is a
participant or to which Employee is a party as an employee of tile 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 fun 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.
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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, or (iii) other conduct of Employee involving gross disloyalty or
willful misconduct with 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.
(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 than 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
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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 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 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
10.4(b), all Base Salary, Benefits and Other Compensation shall then cease at
the time of such termination.
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 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.
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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 June 24, 1994 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:
Xxxxx X. XxXxxxxx
0000 X.X. 000xx Xxx
Xxxxx Xxxxxxx, XX 00000
If to the Limited Partnership:
National Auto Finance Company L.P.
000 X.X. 00xx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
16. 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
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Agreement may not be changed or modified, except by an agreement m 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 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
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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. New Auto Finance Entities. If National Financial
Corporation, National Auto Finance Company L.P. or National Auto Finance
Corporation or any successor entities thereto, not including successor entities
of third party acquirors, form, during the Term, one or more entities intended
to engage either in the business of "D" grade automobile financing or
substandard automobile financing utilizing primarily referrals from financial
institutions, and Employee wishes to participate in any such entities, Employee
shall be offered without charge, one percent (1%) of any such entities.
24. 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 Raton, Florida.
25. Notice of Renewal. The Limited Partnership shall send
written notice within 120 days of the end of the Term to the Employee of its
intent to enter into negotiations with the Employee for the possible renewal
("Renewal") of this Agreement. If within 90 days prior to the end of the Term,
the terms of Renewal have not been committed to writing then this Agreement
shall expire at the end of the Term.
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IN WITNESS WHEREOF, the parties hereto have executed or
caused this Agreement to be duly executed on the date first above written.
WITNESS: EMPLOYEE:
/s/ Xxxxx X. XxxXxxxxx
---------------------- -------------------------------------
Xxxxx X. XxxXxxxxx
ATTEST: LIMITED PARTNERSHIP:
NATIONAL AUTO FINANCE
COMPANY L.P.
By: /s/ Xxxx X. Xxxxxxx
---------------------- ----------------------------------
Xxxx X. Xxxxxxx
Chief Executive Officer
National Auto Finance Corporation
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