1
EXHIBIT 10.49
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS AGREEMENT is entered into effective as of June 2, 1997, between
▇▇▇▇▇ ▇▇▇▇▇ (herein referred to as "Employee") and T & W FINANCIAL CORPORATION,
a Washington corporation (herein referred to as "T&W").
In consideration of the mutual covenants herein contained, the parties
agree as follows:
1. EMPLOYMENT.
T&W employs Employee and Employee accepts employment effective as of
the effective date of this Agreement upon the following terms and conditions.
2. TERM OF EMPLOYMENT.
Employment under this Agreement shall be for a period of six (6) years
commencing on the effective date of this Agreement and terminating on the
earlier to occur of the following:
(a) June 1, 2003;
(b) Employee's death;
(c) at the option of T&W upon thirty (30) days prior written
notice to Employee in the event of the inability of Employee
to perform his duties hereunder by reason of injury or illness
incapacitating Employee for a continuous period exceeding one
hundred eighty (180) days;
(d) upon the termination of Employee's employment by the Board of
Directors of T&W for cause in accordance with Section 10.1; or
(e) upon Employee voluntarily terminating employment in accordance
with Section 10.2.
At the expiration of the initial term of this Agreement, this Agreement
shall be automatically renewed for two (2) succeeding terms of two (2) years
each, unless either party
Employment and
Noncompetition Agreement Page l
2
shall, at least sixty (60) days prior to the expiration of the initial term, or
any extended term give written notice of that party's intention not to renew
this Agreement.
2.2 T&W's Personnel Policies. T&W has implemented and adopted a Policy
and Procedure Manual which contains general policies regarding dress and
grooming, attendance and work rules and regulations. Employee acknowledges that
he has received a copy of T&W's Policy and Procedure Manual and agrees to follow
all rules therein pertaining to Employee's employment at T&W. HOWEVER, THE
POLICY AND PROCEDURE MANUAL MAY BE MODIFIED BY T&W AT ANY TIME WITHOUT NOTICE
AND ANYTHING CONTAINED IN THE MANUAL, OR ANY MODIFICATION TO THE MANUAL, SHALL
NOT CONSTITUTE A MODIFICATION OF THIS AGREEMENT. In the event of a conflict
between this Agreement and the Policy and Procedure Manual, this Agreement
controls.
3. DUTIES AND EXTENT OF SERVICES.
3.1 Employee's principal duties on behalf of T&W at the effective date
of this Agreement shall be to perform sales and marketing services at T&W's
Prairie Village location.
3.2 Employee will devote substantially his entire time and attention to
the business of T&W, and shall not, during such employment, engage in any other
business activity which interferes with Employee's duties and responsibilities
under this Agreement. Employee shall not directly or indirectly engage or
participate in any activities at any time during the term of this Agreement in
conflict with the best interest of T&W.
4. COMPENSATION.
In addition to other benefits referred to herein, T&W shall pay
Employee for all services rendered by Employee under this Agreement a salary of
$14,583.33 per month. Employee's salary shall be paid in semi-monthly
installments on the 15th and last day of each month, commencing on June 15, 1997
and shall be subject to normal payroll withholding. Unless changed by agreement
of the parties, the annual salary to Employee shall remain the same as provided
herein. Employee's annual salary shall be subject to annual review and may be
increased but shall not be decreased.
Employment and
Noncompetition Agreement Page 2
3
5. STOCK OPTIONS.
In consideration for entering into this Agreement, and in the event
that T&W completes an initial public offering of its common stock, T&W shall
grant Employee an option to purchase shares of common stock of T&W in an amount
equal to one percent (1%) of the issued and outstanding shares of stock in T&W
as of the effective date of the initial public offering at a per share price
equal to the initial public offering price. Under the terms of such option, the
option shall vest ratably over a five-year period (i.e., at the rate of twenty
percent (20%) per year), so that the option shall be fully exercisable five (5)
years from the date of the grant. The other terms and conditions of the option
shall be set forth in a Stock Option Plan to be adopted by T&W prior to the
completion of the initial public offering.
6. ADDITIONAL BENEFITS.
T&W agrees at all times during Employee's employment to provide and
maintain for Employee, and Employee shall be entitled to participate in, all
fringe benefits in effect which are available for salaried employees of the T&W
or as introduced by T&W during Employee's employment. To the extent that it has
the right to do so with its other salaried employees, T&W reserves the right to
modify, suspend or discontinue any or all of such benefits at any time. In
addition to the compensation provided in Section 4, Employee shall have the
following additional benefits during the term herein.
6.1 QUARTERLY BONUS. In addition to the salary described above, Employee
shall be entitled to receive a bonus through participation in T&W's return on
equity ("▇▇▇") incentive program (the "▇▇▇ Program"). Employee shall receive
twenty-five percent (25%) of any ▇▇▇ in excess of twenty-five percent (25%) on
an annual pre-tax basis relative to beginning acquisition equity of $_________.
The operation of the ▇▇▇ Program is illustrated on the attached Exhibit "A." The
bonus shall be paid to Employee every April 30, July 30, October 30, and January
30 during the term of this Agreement. The bonus payable on July 30, 1997 shall
be calculated for the initial period beginning January 1, 1997, but prorated as
of June 1, 1997. In the event that a major recapitalization of T&W occurs, the
▇▇▇ Program will be restructured to produce a basically equivalent incentive
bonus program.
Employment and
Noncompetition Agreement Page 3
4
6.2 EXPENSES. T&W will reimburse Employee for or pay for Employee all
reasonable and necessary business related expenses incurred by him in carrying
out his duties and responsibilities under this Agreement. The Employee shall
present to T&W from time to time an itemized account of such expenses in such
form as may be required by T&W.
6.3 CLUB DUES. T&W will reimburse Employee for or pay for Employee
social or athletic club dues as it relates to business purposes of T&W.
7. NONCOMPETITION/NONDISCLOSURE.
As a condition of employment with T&W, and in consideration of
continuing employment, the compensation of Employee by T&W during the term of
this Agreement, the use and enjoyment by Employee of T&W's facilities and
equipment, the ongoing disclosure to Employee of T&W's confidential and
proprietary information, the opportunity for Employee to serve T&W's customers,
and the mutual covenants contained herein, T&W and Employee recognize and agree
as follows:
(a) Confidential Information. Employee recognizes and
acknowledges that during the course of his employment hereunder, he will have
access to certain information not generally known to the public, relating to
products, sales, services or business of T&W, which may include without
limitation data, programs, customer or contact lists, contact with T&W's
customers, acquisition of information as to the nature and character of the
business and the names and requirements of the customers, prospects or
projections, techniques, processes, research, work in process, intellectual
property, including but not limited to any patents, trademarks, service marks,
copyrights, ideas, creations, and properties invented, created, written,
developed, furnished, produced, or disclosed by Employee, in the course of
rendering services to T&W except for items in the public domain or items
obtained by Employee from third parties not affiliated with T&W (collectively
the "Confidential Information").
(b) Possession. Employee agrees that upon request by T&W, and
in any event upon termination of employment, except for items in the public
domain or items obtained by Employee from third parties not affiliated with T&W,
Employee shall turn over to T&W all documents, notes, papers, data, files,
customer lists, office supplies or other materials or work product in Employee's
possession or under his control which were created pursuant to,
Employment and
Noncompetition Agreement Page 4
5
or connected with or derived from Employee's services to T&W, or which are
related in any manner to T&W's business activities, whether or not such
materials are at the date of this Agreement in Employee's possession.
(c) Non-Disclosure of Confidential Information. Employee
agrees that for and during the entire time he is employed by T&W, any
Confidential Information shall be considered and kept as private and privileged
records of T&W and will not be divulged to any person or entity. Further, upon
termination of this Agreement for any reason, Employee agrees that he will
continue to treat as private and privileged any Confidential Information and
will not release any such Confidential Information to any person or entity,
either by statement, disposition, or as a witness, except upon the issuance of a
proper subpoena from a court of competent jurisdiction, and T&W shall be
entitled to an injunction by any competent court to enjoin and restrain the
unauthorized disclosure of such information. Employee hereby agrees to notify
T&W of any request for such information, whether by subpoena or otherwise.
(d) Covenant Not to Divulge Confidential Information. Employee
further recognizes and acknowledges that because the goodwill of T&W's business
is a valuable asset, and because the solicitation of T&W's customers by Employee
after Employee has ceased to be employed by or associated with T&W will cause
irreparable harm to the goodwill of T&W, T&W would not offer employment to
Employee unless Employee assures that such solicitation would not occur.
Employee therefore agrees and covenants that during Employee's employment by T&W
and for a period of thirty-six (36) months after termination of such employment
for any reason, Employee shall not disclose any Confidential Information about
the business of T&W as presently conducted, or as it may evolve in the ordinary
course of business between the date of this Agreement and the expiration of this
covenant.
(e) Non-Competition Agreement. Employee hereby agrees that,
during the term of employment with T&W and for a period of thirty-six (36)
months thereafter, Employee shall not, directly or indirectly, provide any
competitor or potential competitor of T&W doing or planning to do business in
the same business as T&W with any information relating in any way to T&W's
Confidential Information. Employee agrees that he shall not, whether as an
employee, agent, proprietor, partner, officer, director, member, shareholder,
independent contractor, or in any other capacity whatsoever, and in any fashion
in which he is
Employment and
Noncompetition Agreement Page 5
6
beneficially interested, render any services or engage in any activities in the
United States and Canada in the business of equipment leasing and related
financial services, or in any business then competitive with the business of
T&W, or any of its affiliated companies (collectively, the "Business"), during
the term of employment with T&W and for a period of thirty-six (36) months after
Employee leaves T&W's employment for any reason. Ownership of a state chartered
or national bank is not prohibited. The period of time during which Employee is
prohibited from engaging in certain activities pursuant to the terms of this
section shall be extended by the length of time during which any such party is
in breach of the terms of this section. Provided, however, if T&W defaults in
payment of the Notice evidencing T&W payment obligations to Seller, Shareholders
or Employee given as part of the consideration under that certain Asset Purchase
Agreement dated as of June 2, 1997 between T&W as "Purchaser" and Commercial
Capital Corporation as "Seller," and at that time, Employee is no longer
employed by T&W, then this Covenant Not-to-Compete shall be void and of no force
or effect whatsoever.
(f) Because of the difficulty in determining the magnitude of damages
or potential damages to T&W in the event of solicitation of an existing customer
of T&W, or competition in violation of this Agreement, Employee will pay to T&W
liquidated damages equal to the net income Employee derives in noncompliance
with this noncompetition provision. Such liquidated damages shall be due
immediately upon the rendering of the prohibited activity or services and shall
bear interest at the rate of twelve percent (12%) per annum thereafter.
8. REASONABLENESS OF RESTRICTIONS.
8.1 T&W and Employee agree and stipulate that the agreements and
covenants contained in this Agreement, including the covenant not to divulge
Confidential Information, is fair and reasonable for the protection of T&W's
Confidential Information, goodwill and other protectable interests, in light of
all the facts and circumstances of the relationship between Employee and T&W. In
the event a court of competent jurisdiction should decline to enforce any
provision of this Agreement, such provision shall be deemed to be modified or
eliminated as required by the court's order, but all remaining provisions shall
remain in full force and effect.
8.2 Employee further acknowledges, agrees and stipulates that, in the
event of the termination of employment with T&W,
Employment and
Noncompetition Agreement Page 6
7
Employee's experience and capabilities are such that Employee can obtain
employment in business activities which are of a different and non-competing
nature with his activities as an employee of T&W, and that the enforcement of a
remedy hereunder by way of injunction shall not prevent Employee from earning a
reasonable livelihood.
9. INJUNCTIVE RELIEF.
Employee acknowledges that disclosure of any Confidential Information
or breach or threatened breach of any of the covenants or other agreements
contained herein would give rise to irreparable injury to T&W or customers of
T&W, which injury would be inadequately compensable in monetary damages.
Accordingly, T&W may seek and obtain injunctive relief from the breach or
threatened breach of any provision, requirement, or covenant of this Agreement,
in addition to and not in limitation of any other legal remedies which may be
available. Employee further acknowledges, agrees and stipulates that the
covenants and agreements contained herein are necessary for the protection of
T&W's legitimate business interests and are reasonable in scope and content. Any
breach by Employee of this Agreement (specifically including the covenant not to
compete) may cause irreparable injury to T&W. Upon breach or threatened breach,
T&W may obtain temporary restraining orders, injunctions, or other equitable
relief from a court in addition to, and not in lieu of, damages and any other
available remedy.
10. TERMINATION.
10.1 Termination by T&W for Cause. Without limiting in any way other
provisions of this Agreement, Employee may be terminated for cause upon ten (10)
days' prior written notice. In such event, Employee shall be entitled to
compensation only to the date of such termination. For purposes of this
Agreement, cause is defined as:
(a) Conviction of Employee for any felony involving moral
turpitude, or the charging of Employee with any
felony involving moral turpitude which results in a
suspended sentence or deferred prosecution;
(b) Fraud, embezzlement or conversion of T&W's property;
(c) Employee's sexual harassment of T&W's employees if
admitted by Employee in writing or determined by
Employment and
Noncompetition Agreement Page 7
8
arbitration as provided below;
(d) Engaging in competition with T&W during the period of
Employee's employment with T&W;
(e) Material breach of this Agreement by Employee, if
Employee fails to cease and desist from such conduct
within the ten (10) day notice period provided above;
or
(f) Divulging T&W trade secrets or other breach of
confidentiality.
In the event T&W terminates Employee's employment for cause as provided
for in this Section 10, and Employee disagrees with the T&W's determination that
just cause for termination exists, then the Employee and T&W agree to seek a
fair and prompt negotiated resolution. However, if this is not successful, the
dispute shall be resolved by binding arbitration in accordance with arbitration
procedures agreed to by Employee and T&W or, if they are unable to agree, by a
court of competent jurisdiction.
10.2 Termination by Employee Without Cause. Employee may terminate his
employment by giving at least ninety (90) days' written notice to T&W.
10.3 Termination by Employee With Cause. In the event that T&W defaults
in any of its obligations to Employee under this Employment and Noncompetition
Agreement, and T&W fails to cure such default within ten (10) days after
receiving written notice thereof, Employee may terminate his employment and seek
any damages available to Employee at law or in equity as a result of such breach
with it being specifically understood and agreed that Employee shall be relieved
from the non-competition provisions hereof.
11. MISCELLANEOUS.
11.1 Assignment. This Agreement shall not be assignable by Employee.
11.2 Amendment and/or Modification. Neither this Agreement nor any term
or provision hereof, may be changed, waived, discharged, amended, modified or
terminated orally, or in any manner other than by an instrument in writing
signed by the parties hereto.
Employment and
Noncompetition Agreement Page 8
9
11.3 Binding Effect. Subject to the restrictions on assignment
described above, this Agreement shall be binding upon and inure to the benefit
of the respective parties, their successors and assigns and Employee's heirs and
personal representative.
11.4 Section Headings. The section headings are for convenience only
and in no way define, limit, extend or interpret the scope of this Agreement or
of any particular paragraph hereof.
11.5 Interpretation and Fair Construction of Contract. This Agreement
has been reviewed and approved by each of the parties. Both T&W and Employee
have received independent legal advice in connection with the negotiation,
execution and performance of their respective obligations under this Agreement.
In the event a court of competent jurisdiction determines that any provision of
this Agreement is ambiguous, the language in all parts of this Agreement shall
be construed as a whole according to its fair meaning and not strictly construed
for nor against either party.
11.6 Validity. If any term of this Agreement shall be determined by a
court of competent jurisdiction to be invalid, illegal, or unenforceable, in
whole or in part, the validity of any of the other terms of this Agreement shall
not, in any way, be affected thereby.
11.7 Variations in Pronouns. All pronouns include the masculine,
feminine, neuter, singular and plural as the identification of persons, places
or entities and the context may require.
11.8 Waiver or Breach. Either party's failure to insist upon strict
performance of any of the covenants and agreements herein contained, or to
exercise any option or right herein conferred, in any one or more instances,
shall not be construed to be a waiver or relinquishment of any such option or
right, or of any other covenants or agreements, but the same shall be and remain
in full force and effect.
11.9 Notices. To be effective, any notice hereunder shall be in
writing, delivered in person or mailed by certified or registered mail, postage
prepaid, to the appropriate party or parties at the addresses set forth below
their signature hereto, or to such other address as the parties may hereinafter
designate.
Employment and
Noncompetition Agreement Page 9
10
11.10 Entire Agreement. This Agreement contains the entire agreement
and understanding of the parties with respect to the entire subject matter
hereof, and there are no representations, inducements, promises or agreements,
oral or otherwise, not embodied herein. Any and all prior discussions,
negotiations, commitments and understandings relating to the subject matter
hereof are merged herein. There are no conditions precedent to the effectiveness
of this Agreement other than as stated herein, and there are no related
collateral agreement existing between the parties that are not referenced
herein.
11.11 Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Washington, regardless of
the fact that Employee is now a resident of a different state. Venue of any
dispute involving the interpretation or enforcement of this Agreement shall be
in ▇▇▇▇▇▇▇ County, Kansas.
EMPLOYEE:
/s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Address: ▇▇▇▇▇ ▇. ▇▇▇
[ ], KS 66461
T&W:
T & W FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Address: ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Employment and
Noncompetition Agreement Page 10
11
EXHIBIT "A" (TYPICAL CALCULATION)
Sample Beginning Acquisition Equity $5,500,000
Calculation of Pre-tax ▇▇▇:
Sample Income Statement:
Contract Income xxxx
Residual Income xxxx
*Gain on Sale of Portfolio
(Up to $20 Million Origination Dollars) xxxx
Less: Operating Expenses
------------------------
Direct Costs, Including Commissions (Initial Direct Costs) xxxx
Provision for Bad Debts (1% of Equipment Originations) xxxx
Servicing Costs on Non-sold Portfolio (After 20 Million at .75%
of Equipment Originations) xxxx
Interest Expense on Non-sold Portfolio (After 20 Million) xxxx
Net Income Before Income Taxes(A) xxxx
* Currently discounted at 9.25 if it comes to T&W, otherwise actual discounting
income
(A) Net Income Before Income Taxes
Beginning Acquisition Equity x 4 = y If y is 30% less 25% (Base Pre-tax ▇▇▇)=5% x
Beginning Acquisition Equity divided by 4 x .50
x .50 is the Appropriate Bonus for ▇▇▇ or ▇▇▇▇▇
Note:
-----
Each Quarter, pre-tax income is added to beginning equity and the reference
point changes, likewise average pre-tax equity.
12
Illustration of the calculation for the Return on Equity ("▇▇▇") quarterly
incentive bonus.
1992-1996 ▇▇▇ AVERAGE CALCULATION
---------------------------------
1992 39.2%
1993 26.0%
1994 36.4% AVERAGE: 40.29%
1995 41.1% ---------------
1996 58.7% (Unaudited)
1997 FIRST QUARTER EXAMPLE - EST. AVERAGE ▇▇▇ = 58.7 (1996 AVERAGE)
-------------------------------------------------------------------
OVERAGE/(UNDERAGE) CALCULATION
------------------------------
1997 Example First Quarter 58.70%
Previous 5 Years 40.29%
------
Difference 18.41%
BONUS CALCULATION
-----------------
Average Equity First Quarter 1997 11,047,000
----------
Multiplied by Difference 18.41%
2,033,753
Divided by 4 4
----------
508,438
Multiplied by Bonus Percentage 1%
----------
BONUS AMOUNT $5,084.38
----------------------
THE ABOVE EXAMPLE IS FOR ILLUSTRATION PURPOSES ONLY.