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Exhibit 10.3
EARLY RETIREMENT AGREEMENT, WAIVER
AND RELEASE OF CLAIMS
This Early Retirement Agreement, Waiver and Release of Claims ("Agreement") is
made as of September 30, 1996, by and between TFC ENTERPRISES, INC., THE
FINANCE COMPANY ("Employer") and XXXXXX X. XXXXX ("Employee").
R E C I T A T I O N S
A. Employee has been employed by Employer pursuant to a written
Employment Agreement made as of January 1, 1995, as amended ("Employment
Agreement"), and has most recently held the position of Senior Executive
Vice President and Chief Marketing Officer.
B. The employment relationship between the parties will be ending
pursuant to Employee's retirement effective September 30, 1996.
C. The parties desire a smooth transition and severance of the employment
relationship consistent with the terms of this Agreement.
D. Employer is in the business of purchasing motor vehicle retail
installment sales contracts, individually and in portfolios, on a third- party
basis from its customers.
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A G R E E M E N T
NOW, THEREFORE, and in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the sufficiency of
which is hereby acknowledged, Employee and Employer agree as follows:
1. a. Employee shall continue to perform his regular duties and receive
his regular salary and benefits through September 30, 1996, provided however
that notwithstanding paragraph 11 hereof, the termination provisions of the
first and second sentences of paragraph 10 of the Employment Agreement shall
continue in effect. The Company may, at any time prior to September 30, 1996,
decide to relieve Employee of the obligation to perform his duties through
September 30, 1996, by providing written notice to Employee to that effect.
b. Employer agrees that provided seven (7) days have passed since Employee
signed this Agreement, Employer shall immediately forward to Employee, as a
severance payment, the sum of $300,000 less mandatory withholdings as required
by federal and state law. The parties agree that no FICA need be withheld
because of Employee's satisfaction of this requirement through earlier 1996
withholding and also under Revenue Rulings 55-520 and 58-301.
c. Employee shall retain all such stock options in the TFC Enterprises,
Inc. 1995 Long-Term Incentive Plan ("Plan") as are vested as of September 30,
1996, but no further stock options in the Plan shall vest. Pursuant to the
Plan and that certain Stock Option Award Agreement dated as of October 27,
1994, by and between TFC Enterprises, Inc., and Employee, Employee's separation
shall be a retirement and thus such options as are
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vested shall be exercisable on or before December 31, 1999, and offers to
retire on the effective date of this Agreement.
d. The principal and interest amount remaining to be paid on Employee's
promissory note to Employer on his final day of his employment shall be
forgiven by Employer. The parties acknowledge that certain amounts
provisionally credited to Employee from his 1996 bonus earnings have been
applied to reduce his remaining repayment obligation under his promissory note.
The parties agree that in the event the Company's year-end accounting shall
determine that such amounts as were provisionally credited were not actually
earned resulting in a 1996 bonus overpayment, the Company shall also forgive
such 1996 bonus overpayment and treat the amount provisionally credited as if
fully earned.
e. Employee agrees to and hereby does resign all directorships and offices
he holds in the following companies: TFC Enterprises, Inc., First Community
Finance, Inc., The Finance Company, TFC Receivables Corporation, and The
Insurance Agency, Inc. ("affiliated or related companies").
2. Employee shall have the opportunity to continue in Employer's group
health insurance plan, at his own expense, up to eighteen (18) months pursuant
to C.O.B.R.A.
3. Employee shall not be entitled to any compensation or benefits other than
those described in the above paragraphs.
4. a. Employee recognizes and acknowledges that the identities of
Employer's customers, business or financial contacts, agreements, techniques,
practices,
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business plans or other trade secrets, which are not of public record or
generally known otherwise, (hereinafter collectively "Trade Secrets"),
as such may exist from time to time, are a valuable, special and unique
asset of Employer's business. Employee hereby agrees that following the
end of his employment he will not disclose Employer's Trade Secrets or
any part thereof, to any person, firm, corporation, association or other
entity without Employer's prior consent unless such disclosure is
required by law or governmental regulations. Employee hereby further
agrees that for a period of two (2) years after the effective date of
this Agreement, he will not use any of Employer's Trade Secrets,
directly or indirectly, for his or any third party's benefit or use in
any business endeavor not affiliated with Employer. In the event of a
breach or threatened breach by Employee of the provisions of this
Section, Employer shall be entitled to an injunction restraining
Employee from disclosing, in whole or in part, Employer's Trade Secrets,
or from utilizing them for his benefit or that of any unaffiliated
person, firm, corporation, association or other entity to whom such
information, in whole or in part, has been disclosed or is threatened to
be disclosed. Nothing herein shall be construed as prohibiting Employer
from pursuing any other remedies available to it for such breach or
threatened breach, including the recovery of damages.
b. Employee acknowledges that during the course of his employment he
acquired confidential information of the types described in subparagraph 4(a)
above and also that he had contacts with and was responsible for developing,
increasing and maintaining relationships with Employer's customers.
Accordingly:
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(1) Upon the separation from employment contemplated herein and for a
period of two years thereafter, Employee will not, directly or indirectly, for
his own or any third party's benefit, solicit the business of any of Employer's
present or former customers listed on Exhibit A attached hereto for business
similar to that which the customer did with Employer.
(2) Employee agrees that the prohibition on soliciting the business of
Employer's customers and former customers listed on Exhibit A shall include,
but not be limited to, doing so either as an individual, a partner, a joint
venturer, an employee, a consultant, an agent or in any other business capacity
whatsoever.
(3) Employer and Employee have examined in detail this non-solicitation of
business covenant and agree that the restraint imposed upon Employee is
reasonable in light of the legitimate interests of Employer, and it is not
unduly harsh upon employee's ability to earn a living.
(4) In the event of a breach or threatened breach of this non-solicitation
of business covenant, Employer shall be entitled to an injunction restraining
Employee's actions in violation hereof in addition to any other remedy which
may be available including the recovery of damages.
(5) This non-solicitation provision is of the essence of this Agreement.
It shall be construed as independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Employee against Employer,
whether
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based upon this Agreement or not, shall not constitute a defense to enforcement
of the non-solicitation provision hereof.
5. Employee hereby releases and discharges TFC Enterprises, Inc., Employer,
any affiliated or related companies, and their officers, stockholders,
directors, employees and agents and their successors, heirs and assigns, of and
from all claims, causes of action or demands of every kind or character
whatsoever, whether presently known or unknown, suspected or unsuspected,
existing at the time hereof, under state or federal laws. Specifically
included in this release are any claims, causes of action or demands in
connection with Employee's Employment Agreement and the past employment
relationship between the parties, including, but not limited to, claims, causes
of action or demands due to alleged breach of contract, libel, slander,
wrongful discharge, intentional infliction of emotional harm, or any other
tort, Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, and/or any other federal or state laws relating to employment
rights. The parties recognize, however, that nothing contained in this release
shall prohibit either party from instituting legal action to enforce any of
the provisions of this Agreement.
6. Employee agrees that he will not, in any way, do or say anything at any
time to harm the business interests of Employer, or any related or affiliated
companies, or any of their employees, officers, directors, shareholders or
agents, unless required to do so by legal process.
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7. Employee represents and warrants that he has chosen to execute this
Agreement of his own volition after fully reviewing the Agreement and seeking
the advice of an attorney or if not, anyone else he determines to be
appropriate in this regard.
8. The parties represent and warrant that by this writing Employer has
advised Employee that he may wish to consult an attorney before signing this
Agreement and that Employer has given Employee a period of at least twenty-one
(21) days within which to consider this Agreement, which period may be waived
at Employee's option.
9. The parties agree that Employee shall have seven (7) days after his
execution of this Agreement within which to revoke his signature and consent to
this Agreement. This Agreement will not become effective and enforceable until
seven (7) days after Employee has signed this Agreement.
10. This Agreement and the obligations of Employer hereunder in no way
constitute an admission, agreement, consent, statement, acquiescence or
declaration on the part of Employer as to any wrongdoing, breach of contract,
or violation of any law.
11. The parties hereto anticipate that Employer and Employee will be entering
an Independent Contractor Agreement ("Contractor Agreement") anticipated to be
effective as of October 1, 1996. Such Contractor Agreement shall establish a
new relationship between the Employer and Employee which shall in no way be
regarded as employment. Should there be any conflict between this Agreement
and the Contractor Agreement (assuming execution of the Contractor Agreement)
the terms of this Agreement shall control. Subject to the
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provisions of subparagraph 1(a) hereof, this Agreement and the
Contractor Agreement constitute the entire agreement between the parties
pertaining to the matters with which they deal, and supersede all prior
agreements pertaining to those matters. No prior agreement or
understanding, in writing or otherwise, shall be valid or of any force
or effect, and the obligations of the parties thereunder and hereunder
may not be altered or modified in any respect except by a writing duly
executed by the parties to be bound.
12. This Agreement and the rights granted to the parties herein are
contingent upon presentation to and approval by any of Employer's lenders which
hold covenants restricting or limiting any of Employer's obligations herein.
In the event that such approvals or modification of covenants as may be
necessary to permit Employer's performance of its obligations hereunder are not
obtained prior to September 30, 1996, no party shall have any obligation
hereunder.
13. If any clause or provision of this Agreement is illegal, invalid, or
unenforceable under present or future laws, then the remainder of this
Agreement shall not be affected thereby, and in lieu of each clause or
provision of this Agreement which is illegal, invalid, or unenforceable, there
shall be added, as part of this Agreement, a clause or provision as similar in
terms to such illegal, invalid or unenforceable clause or provision as may be
possible and as may be legal, valid and enforceable.
14. This Agreement shall be binding upon and inure to the benefit of any
successor or assigns of the parties hereto.
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15. a. The contents of this Agreement shall remain confidential. Employee
shall not disclose any term or condition hereof to anyone other than his
spouse, attorney, insurance agent and/or accountant without Employer's prior
written consent. Moreover, Employee shall obtain written assurance from anyone
to whom he makes a disclosure that he or she will make no further disclosure.
Any disclosure by Employee other than those permitted herein, or further
disclosure by a person permitted to receive a disclosure hereunder shall be a
breach of this Agreement which may result in injunctive relief to address any
harm resulting from such breach and damages. If Employer prevails in any
action based upon a violation of this paragraph 15, it shall be entitled to its
costs and reasonable attorneys' fees.
b. In the event Employee seeks new employment in any period during which he
is restricted from soliciting by this Agreement and a potential employer
initiates inquiry as to whether Employer has any restriction on his ability to
sell or solicit, Employee may respond that certain restrictions do exist and
may request Employer to consent to the disclosure of any restrictions and such
consent shall not be unreasonably withheld.
16. This Agreement shall be governed by and construed in accordance with the
laws of Virginia. The parties hereby agree that the Circuit Court of the City
of Norfolk, Virginia, shall have jurisdiction and be an appropriate venue to
determine any rights or claims arising hereunder.
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THE UNDERSIGNED HAVE CAREFULLY READ THE FOREGOING EARLY RETIREMENT AGREEMENT,
WAIVER AND RELEASE OF CLAIMS, UNDERSTAND THE CONTENTS, FREELY AND VOLUNTARILY
AGREE TO ALL THE TERMS AND CONDITIONS AND SIGN THIS AGREEMENT ON THEIR OWN
VOLITION.
WITNESS the following signatures:
______________________________ _______________________________
Date XXXXXX X. XXXXX
THE FINANCE COMPANY
______________________________ By_____________________________
Date
TFC ENTERPRISES, INC.
______________________________ By_____________________________
Date
I am aware that I have the right to consider this Early Retirement Agreement,
Waiver and Release of Claims for twenty-one (21) days before making my
decision. I have considered this right and choose to waive it as indicated by
my signature below.
______________________________ _______________________________
Date XXXXXX X. XXXXX
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EXHIBIT A
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INDEPENDENT CONTRACTOR AGREEMENT
THIS INDEPENDENT CONTRACTOR AGREEMENT ("Agreement") is entered into as
of October 1, 1996, by and between THE FINANCE COMPANY, a Virginia corporation
(hereinafter referred to as "TFC") and Xxxxxx X. Xxxxx (hereinafter referred to
as "Contractor").
I. RECITALS
A. Contractor has certain skills and abilities that may be useful to TFC
from time to time.
B. TFC, having been organized for the primary purpose of financing motor
vehicle purchases and other commercial transactions, is willing to enter into
this Agreement with Contractor as an independent contractor to assist in the
fulfillment of its business purposes.
C. Contractor has offered to perform contractual services for TFC.
II. TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereby agree as follows:
A. GENERAL
1. VIRGINIA AND FEDERAL LAW. The parties agree that this Agreement shall
be governed by the laws of the Commonwealth of Virginia. Contractor agrees to
conduct all his activities and services under this Agreement in accordance to
all applicable federal and state laws.
2. INTEGRATION OF AGREEMENTS. This Agreement shall be read together with
that certain Early Retirement Agreement, Waiver and Release of Claims entered
into between TFC Enterprises, Inc., TFC and Contractor as of September 30, 1996
("Early Retirement Agreement"). This Agreement and the Early Retirement
Agreement contain the entire agreement of the parties hereto and supersede all
prior and contemporaneous agreements, negotiations and understandings relating
to the subject matter thereof and hereof. There are no other understandings,
promises or inducements contrary to the terms of the Early Retirement Agreement
or this Agreement. Should there be any conflict between the terms of the Early
Retirement Agreement and this Agreement, the terms of the Early Retirement
Agreement shall control.
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3. TERMINATION. TFC or Contractor may terminate this Agreement at any
time by giving written notice to the other party, with or without cause, and
such termination will not constitute a breach of this Agreement.
a. If terminated by TFC:
(1) Contractor will be paid for contracts purchased from point of
sale dealers, if brought to TFC by Contractor at least 60 days
prior to termination, for a period of 180 days after date of
termination.
(2) Contractor will be paid for contracts purchased from point of
sale dealers, if brought to TFC by Contractor within 60 days of
termination date, for a period of 30 days after date of
termination.
(3) Contractor will be paid for contracts purchased under TFC's
portfolio acquisition program, from dealers brought to TFC by
Contractor, for a period of 90 days from date of termination.
b. If terminated by Contractor:
Contractor will not be paid on any contracts approved by TFC after
date of termination.
c. Termination due to low sales:
If contractor fails to provide any new dealer sign ups in any two
consecutive calendar months, this may, at TFC's sole option, be
considered and treated as termination. Under such circumstances,
Contractor would not be paid on any contracts approved by TFC after
the date of termination.
4. OFFSET. Any monies due TFC from Contractor may be offset by TFC
against any contract fees or pre-approved expenses due Contractor from TFC.
5. NOTICES. All notices given under this Agreement will be sent via hand
delivery or certified mail, return receipt requested, to the addresses below
unless otherwise directed:
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a. If to TFC:
Xxxxxx X. Xxxxx, Xx., Chairman
The Finance Company
0000 Xxxxx Xxxx Xxxx, Xxxxx 000 B
Norfolk, VA 2353
b. If to Contractor:
His residence address reflected in TFC's
records or the most recent address
provided by Contractor in writing to TFC.
6. AMENDMENTS. No supplement, modification or amendment of any term,
provision or condition of this Agreement shall be binding or enforceable unless
executed in writing by the parties hereto.
7. SEVERABILITY. If any clause or provision of this Agreement is illegal,
invalid or unenforceable under present or future law, such clause or provision
shall be severable and all other provisions shall remain in full force and
effect.
8. ENFORCEMENT OF AGREEMENT. Contractor shall pay, indemnify and save TFC
harmless against all costs and expenses, including reasonable attorney's fees,
incurred by TFC with respect to enforcement of TFC's rights under this
Agreement.
9. ASSIGNMENT. TFC is relying upon Contractor's special skills in
performance hereunder. Accordingly this Agreement shall not be assigned by
Contractor without TFC's prior written consent but is assignable by TFC.
10. NO WAIVERS. The waiver by either party hereto of a breach of any
provision of this Agreement by the other shall not operate or be construed as a
waiver of any subsequent breach of the same or any other provision of this
Agreement. Any failure by TFC to enforce similar provisions in an agreement
with other independent contractors shall also not create or be construed as a
waiver of any rights which may be enforced hereunder.
B. DUTIES OF CONTRACTOR
1. SERVICES AND RESTRICTIONS. Contractor shall devote such time,
attention and energies to the performance of the contract as is required.
Contractor shall not be precluded from engaging in other business activity,
whether or not such business activity is pursued for gain, profit, or other
pecuniary advantage; provided however that Contractor shall observe the
non-solicitation provisions of that certain Early Retirement Agreement, Waiver
and Release of Claims entered into by him with TFC Enterprises, Inc. and TFC as
of September
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30, 1996, which terms are incorporated herein by this reference as if fully set
forth herein, and provided further that for the duration of this Agreement,
Contractor shall not hire or attempt to hire TFC's employees or former
employees, on behalf of himself or any other person or business entity. For
purposes of this section IIBI, former employees of TFC shall mean persons who
were employed by TFC within 90 days of any hiring or attempt to hire by
Contractor. Contractor also agrees that he shall not provide any other person
or business entity with information regarding the operations of TFC, including,
without limitation TFC's contracts, customers and employees.
2. EXPENSES. Contractor is not authorized to incur expenses of any kind
unless pre-approved by a senior vice president or higher authority of TFC on
behalf of TFC. Contractor is responsible for all of his own expenses and for
all compensation or expenses of any kind of any subcontractor, employee, or
associate engaged by Contractor to assist in the performance of services for
TFC under this Agreement.
3 . STATUS OF CONTRACTOR. Neither Contractor nor any of his employees,
associates, or agents shall be deemed or referred to as an employee and no such
reference, whether inadvertent, intended or otherwise, shall alter Contractor's
status as an independent contractor. Contractor agrees that he shall not
represent himself or any of his employees as an employee of TFC.
4. INDEMNIFICATION. TFC shall not be responsible for, nor have any
liability to third parties, based upon the tortious conduct of Contractor
and/or his employees, associates or agents. In the event that TFC is finally
held liable by a court of competent jurisdiction because of Contractor's acts
or omissions, then, in that event, Contractor shall have the duty to indemnify
and hold harmless TFC from any and all such liability. Such indemnity shall
include TFC's reasonable legal expenses incurred in defense of any such action.
5. TAXES. Throughout the performance of the contract period, Contractor
shall have the obligation to comply, on and for his own behalf, with such
requirements as may be imposed by the Internal Revenue Service, Virginia
Department of Taxation, Social Security Administration, state workers'
compensation agency, state unemployment compensation agency, and any such other
incidents of employment as may pertain, none of which shall be the
responsibility of TFC.
6. INSURANCE. Contractor shall not be covered by workers' compensation,
unemployment compensation, or any other policy of insurance maintained by TFC
unless specifically named therein.
7. IDENTIFICATION OF DEALERS. Contractor agrees to use TFC's Dealer
Source Identification Acknowledgement forms, or a form of his own making with
equivalent information, and to identify; on these forms prospective dealers,
which Contractor is
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submitting to TFC as a dealer who wishes to do business with TFC through
Contractor's efforts. Contractor acknowledges that TFC employs its own
marketing personnel and that Contractor and TFC marketing personnel could
independently be seeking the same referral from a dealer. In such cases, TFC
shall determine, in its sole and absolute discretion, the role Contractor
played in a qualified dealer entering into a business relationship with TFC and
prorate Contractor's contract fees accordingly, if warranted. TFC shall notify
Contractor in writing of any such prorated fees.
C. DUTIES OF TFC
1. MARKETING SUPPLIES. TFC will provide such available marketing
materials describing TFC's current purchasing programs as TFC determines is
necessary or advisable for Contractor to perform the services required under
this contract.
2. TRAINING. If requested, TFC will assist in training Contractor and/or
Contractor's employees, with regard to certain benefits of TFC's financial
services and programs and required documentation needed for qualified dealers
to enter into a business relationship with TFC.
3. CONTRACT FEES. TFC agrees to pay Contractor based on qualified
contracts due to efforts of Contractor. The Regional Service Center General
Manager, LPO Manager, or higher TFC authority must approve all qualified fees
generated in the following manner:
a. POINT OF SALE CONTRACTS: Contractor will be paid $50 for each
contract purchased by TFC from dealers developed by Contractor
until termination of agreement, when Section IIA3a(1) and (2) or
IIA3b will apply.
b. PORTFOLIO ACQUISITIONS: Contractor will be paid $25 per contract
purchased by TFC from dealers developed by Contractor until
termination of agreement, when Section IIA3a(3) or IIA3b will
apply.
c. TIMING OF PAYMENTS: The contract fees earned will be paid to
Contractor as follows:
Contract fees earned for all qualified transactions identified in
Section IIC3a and b in any calendar month will be paid within 30
days of the end of the calendar month during which the contract
fees were earned by the Contractor.
4. CONTRACTOR STATUS. TFC acknowledges and agrees that Contractor has
been retained in reliance upon his particular skills, training and experience
and that throughout the performance of the contractual duties under this
Agreement, Contractor shall be free from the
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direction and control of TFC. Further, Contractor shall be free to determine
the methods, means, and work schedule of Contractor's performance, but shall,
at all times, remain accountable for the proper and timely completion of the
contractual services specified herein and as may be further agreed upon from
time to time, but the sole remedy of TFC shall be termination of this Agreement
under the provisions related thereto.
5. CONTRACTOR'S BUSINESS AND LICENSE. TFC and Contractor agree that in
the performance of his duties hereunder, Contractor shall be engaging in his
own independently established business and that Contractor has obtained or will
obtain any business licenses necessary thereto.
6. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or any breach thereof, shall be settled by arbitration in
accordance with the rules then pertaining of the American Arbitration
Association or other alternative dispute resolution means the parties may then
agree upon, and judgment upon the award rendered may be entered in any court
having jurisdiction hereof.
INDEPENDENT CONTRACTOR:
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Date
SS#: or
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Fed I.D. #:
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THE FINANCE COMPANY
By:
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Date
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