Document:

Exhibit 10.1

 

ADVISORY
SERVICES AGREEMENT

 

THIS
ADVISORY SERVICES AGREEMENT (this “Agreement”) is entered into as of
April 30, 2004, by and between Edwards Capital, LLC, an Illinois limited
liability company (“Advisor”), and First Acceptance Corporation (f/k/a
Liberté Investors Inc.), a Delaware corporation (the “Company”).  The Company and Advisor are sometimes
collectively referred to herein as the “Parties” and individually as a “Party.”

 

WHEREAS, Donald J. Edwards, the sole and
managing member of Advisor (“Edwards”), has been an employee, officer,
director and stockholder of the Company and, as such, possesses special
knowledge, abilities and experience regarding the business of the Company;

 

WHEREAS, the Company, USAH Merger Sub, Inc., a
Delaware corporation and direct wholly-owned subsidiary of the Company (“Merger
Sub”), USAuto Holdings, Inc., a Delaware corporation (“USAuto”), and
the stockholders of USAuto are parties to the Agreement and Plan of Merger,
dated as of December 15, 2003 (the “Merger Agreement”), pursuant to
which USAuto will merge with and into Merger Sub upon the terms and subject to
the conditions set forth therein (the “Merger”);

 

WHEREAS, upon the Merger becoming effective,
Edwards’ employment as an employee and officer of the Company will terminate;
and

 

WHEREAS, upon the Merger becoming effective, the
Company desires to obtain the services of Advisor to provide the financial
advisory services described herein as an independent contractor for the
Company, and Advisor desires to provide such services to the Company upon the
terms and conditions set forth in this Agreement.

 

NOW,
THEREFORE, in
consideration of the mutual covenants and agreements set forth herein, the
Parties agree as follows:

 

1.                                       Financial Advisory Services. 
The Company hereby engages Advisor as an independent contractor to
render the Advisory Services (as defined below) to the Company as hereinafter
provided, and Advisor hereby accepts such engagement, for a period commencing
on the Closing Date (as defined in the Merger Agreement) and, unless otherwise
earlier terminated in accordance with the provisions hereof, terminating on the
fourth anniversary of the Closing Date, unless extended by the mutual written
consent of Advisor and the Company (the “Advisory Period”).  During the Advisory Period, Advisor shall
render such reasonable financial advisory services (the “Advisory Services”)
to the Company in connection with financings, mergers and acquisitions and
related matters involving the Company as the Company’s Chairman or Chief
Executive Officer from time to time reasonably requests; provided that, the
total number of hours that Advisor will be required to spend providing the
Advisory Services to the Company shall not exceed 100 hours in any twelve-month
period occurring during the Advisory Period. 
Unless otherwise consented to by the Company, substantially all of the
financial advisory services to be rendered hereunder shall be rendered by
Edwards.

 

 

2.                                       Compensation for Advisory Services.

 

(a)                                  In consideration of the Advisory Services
to be provided by Advisor as contemplated herein, during the Advisory Period,
the Company shall pay to Advisor an advisory fee of $250,000 per annum (the “Advisory
Fee”).  The Advisory Fee shall be
payable in advance in equal quarterly installments beginning on April 1,
2004 and then on each July 1, October 1, January 1 and
April 1 thereafter during the term of this Agreement; provided that, the
pro rata portion of the Advisory Fee owed to Advisor for the period beginning
on the Closing Date and ending on March 31, 2004 shall be payable in
advance on the Closing Date; provided, further, that any quarterly installment
paid or payable hereunder shall be pro rated in the event this Agreement is
terminated prior to the expiration of the four (4)-year Advisory Period
contemplated hereby.  In the event that
the Advisory Period is terminated prior to the expiration of the four (4)-year
Advisory Period during a calendar quarter for which a quarterly installment of
the Advisory Fees has been paid to Advisor, Advisor shall refund a pro rata
portion of such quarterly payment based on the number of days remaining in such
quarter following the effective date of the termination of the Advisory
Services.

 

(b)                                 The Company shall reimburse Advisor for
all reasonable expenses incurred by Advisor or any of its employees, officers,
managers or members (including Edwards) in the course of performing services
under this Agreement, subject to the Company’s normal requirements with respect
to reporting and documentation of such expenses.

 

3.                                       No Agency Created. 
Advisor is providing services solely as a consultant and not as an
employee of the Company.  Advisor shall
be responsible for the payment of all income, social security and other
self-employment taxes relating to its services and the services of its
employees pursuant to this Agreement. 
Nothing contained in this Agreement shall be construed to constitute
Advisor, its agents or employees, as the agent, employee or the legal
representative of the Company for any purpose. 
Nothing contained in this Agreement shall be construed to authorize
Advisor to, nor shall Advisor without other valid authorization from the
Company, hold itself as having, any right or authority to assume or create an
obligation or responsibility, express or implied, on behalf of or in the name
of the Company, or bind the Company in any manner.

 

4.                                       Representation and Warranty.

 

(a)                                  Advisor represents and warrants to the
Company that (i) Advisor is duly organized, validly existing and in good standing
under the laws of the State of Delaware, (ii) the execution, delivery and
performance of this Agreement have been duly authorized by all necessary
company action on the part of Advisor, (iii) upon the execution and delivery of
this Agreement by the parties hereto, this Agreement will constitute the legal,
valid and binding obligations of Advisor, enforceable in accordance with its
terms, and (iv) the execution and delivery by Advisor of this Agreement and its
performance of its obligations hereunder will not violate, contravene or
conflict with any employment agreement, consulting agreement, confidentiality
agreement, non-competition agreement or other agreement or contract to which it
is a party or by which it may be bound.

 

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(b)                                 The Company represents and warrants to
Advisor that (i) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary company action on the part of the
Company, and (ii) upon the execution and delivery of this Agreement by the
parties hereto, this Agreement will constitute the legal, valid and binding
obligations of the Company, enforceable in accordance with its terms.

 

5.                                       Confidential Information. 
Advisor acknowledges that the information, observations and data
(including trade secrets) obtained by it while performing the Advisory Services
hereunder concerning the business or affairs of the Company and/or its
subsidiaries (“Confidential Information”) are the property of the
Company and its subsidiaries. 
Therefore, Advisor agrees that it shall not disclose to any person,
other than in the course of the performance of the Advisory Services, or use
for its own purposes, any Confidential Information, unless and to the extent
that (i) the Confidential Information becomes generally known to and available
for use by the public other than as a result of Advisor’s acts or omissions or
(ii) such disclosure or use is authorized by the Company’s Board of Directors.  Advisor shall deliver to the Company at the
termination of the Advisory Period, or at any other time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
embodying or relating to the Confidential Information, Work Product (as defined
below) or the business of the Company or any of its subsidiaries which Advisor
may then possess or have under its control.

 

6.                                       Inventions, Patents and Other
Intellectual Property.  Advisor acknowledges that all
discoveries, concepts, ideas, inventions, innovations, improvements,
developments, methods, designs, analyses, drawings, reports, patent
applications, copyrightable work and mask work (whether or not including any
Confidential Information) and all registrations or applications related
thereto, and all other proprietary information and all similar or related
information (whether or not patentable) which relate to the Company’s or any of
its subsidiaries’ actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Advisor (whether alone or jointly with others) while performing the
Advisory Services (“Work Product”), belong to the Company or such
subsidiary.  Advisor shall promptly
disclose such Work Product to the Board of Directors of the Company and, at the
Company’s expense, perform all actions reasonably requested by the Company’s
Board of Directors (whether during or after the Advisory Period) to establish
and confirm such ownership (including, without limitation, assignments,
consents, powers of attorney and other instruments).

 

7.                                       Liability.  Neither
Advisor nor any of its employees, officers, managers, members, affiliates,
agents or representatives (including Edwards) shall be liable to the Company or
its subsidiaries or affiliates for any loss, liability, damage or expense
arising out of or in connection with the performance of services contemplated
by this Agreement, unless such loss, liability, damage or expense shall be
proven to result directly from the gross negligence or intentional wrongdoing
of Advisor or any of its employees, officers, managers, members, affiliates,
agents or representatives (including Edwards).

 

8.                                       Indemnification. 
The Company agrees to indemnify and hold harmless Advisor and its
employees, officers, managers, members, affiliates, agents and representatives

 

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(including Edwards)
against and from any and all loss, liability, suits, claims, costs, damages and
expenses (including attorneys’ fees) arising from or related to the performance
of services hereunder, except as a result of Advisor’s gross negligence or
intentional wrongdoing or the gross negligence or intentional wrongdoing of any
of its employees, officers, managers, members, affiliates, agents and
representatives (including Edwards).

 

9.                                       Tax Returns. 
The Company and Advisor shall file all tax returns and reports required
to be filed by them on the basis that Advisor is an independent contractor,
rather than an employee, as defined in Treasury Regulation §31.3121(d)-1(c)(2).

 

10.                                 Successors and Assigns. 
This Agreement shall be binding upon and inure to the benefit of the
Company and its affiliates, successors and assigns and shall be binding upon
and inure to the benefit of Advisor and its legal representatives and assigns;
provided that in no event shall Advisor’s obligations to perform future
services for the Company be delegated or transferred by Advisor, nor shall
Advisor assign this Agreement without the prior written consent of the Company.

 

11.                                 Modification or Waiver. 
No amendment, modification or waiver of this Agreement shall be binding
or effective for any purpose unless it is made in a writing signed by the Party
against whom enforcement of such amendment, modification or waiver is
sought.  No course of dealing between
the Parties to this Agreement shall be deemed to affect or to modify, amend or
discharge any provision or term of this Agreement.  No delay on the part of the Company or Advisor in the exercise of
any of their respective rights or remedies shall operate as a waiver thereof,
and no single or partial exercise by the Company or Advisor of any such right
or remedy shall preclude other or further exercises thereof.  A waiver of right or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right or
remedy on any other occasion.

 

12.                                 Termination.

 

(a)                                  This Agreement may be terminated by the
Company (i) if Advisor (including, but not limited to, Edwards) (A) without
reasonable cause, refuses to attend to the performance of the Advisory
Services, (B) is unable properly to perform the Advisory Services through
illness or any other cause for a period or periods exceeding three months in any
calendar year or for any period of three consecutive calendar months, or (C) do
any act or fail to do any act which results in an indictment for or conviction
of a felony or similarly serious offense; or (ii) upon the written agreement of
Advisor.

 

(b)                                 This Agreement may be terminated by
Advisor (i) upon the written agreement of the Company; or (ii) if the Company
is in material breach of its obligations hereunder.

 

13.                                 Governing Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Illinois, without giving effect to any choice of law or

 

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conflict
of law rules or provisions (whether of the State of Illinois or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Illinois.

 

14.                                 Severability. 
Whenever possible each provision and term of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited
by or invalid under such applicable law, then such provision or term shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement.

 

15.                                 No Strict Construction. 
The language used in this Agreement shall be deemed to be the language
chosen by the Parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any Party.

 

16.                                 Notice.  All notices
and other communications hereunder shall be in writing and shall be deemed duly
given (a) on the date of delivery if delivered personally, or upon confirmation
of receipt if delivered by telecopy or facsimile (but only if a copy of such
telecopy or facsimile is delivered to the recipient by a recognized next-day
courier service), (b) on the first business day following the date of dispatch
if delivered by a recognized next-day courier service or (c) on the fifth
business day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid.  All notices hereunder shall be delivered as
set forth below, or pursuant to such other instructions as have been previously
designated in writing to the party sending such notice by the party to receive
such notice:

 

	
  The Company:

  
	
   

  
	
  First Acceptance Corporation

  3813 Green Hills Village Drive

  Nashville, Tennessee 37215 Fax:

  (615) 844-2898

  Attention:  Stephen J. Harrison

  
	
   

  
	
  Advisor:

  
	
   

  
	
  Edwards Capital, LLC

  676 North Michigan Avenue,

  Suite 3300

  Chicago, Illinois 60611

  Fax: (312) 327-4525

  

 

17.                                 Captions.  The captions
used in this Agreement are for convenience of reference only and do not
constitute a part of this Agreement and shall not be deemed to limit,
characterize or in any way affect any provision of this Agreement, and all
provisions of this Agreement shall be enforced and construed as if no caption
had been used in this Agreement.

 

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18.                                 Counterparts. 
This Agreement may be executed in counterparts, any one of which need
not contain the signatures of more than one Party, but all such counterparts
taken together shall constitute one and the same instrument.

 

19.                                 Tax Disclosures. 
Notwithstanding anything herein to the contrary, the Company and Advisor
and each other party to the transaction contemplated hereby (and each affiliate
and person acting on behalf of any such party) agree that each party (and each
employee, representative and other agent of such party) may disclose to any and
all persons, without limitation of any kind, the tax treatment and tax
structure of the transaction and all materials of any kind (including opinions
or other tax analyses) that are provided to such party or such person relating
to such tax treatment and tax structure, except to the extent necessary to
comply with any applicable federal or state securities laws.  This authorization is not
intended to permit disclosure of any other information, including (without
limitation) (i) any portion of any materials to the extent not related to
the tax treatment or tax structure of the transaction, (ii) the identities
of participants or potential participants in the transaction, (iii) the
existence or status of any negotiations, (iv) any pricing or financial
information (except to the extent such pricing or financial information is
related to the tax treatment or tax structure of the transaction) or
(v) any other term or detail not relevant to the tax treatment or the tax
structure of the transaction.

 

*    *    *    *

 

6

 

IN WITNESS
WHEREOF, the undersigned have executed this Advisory Services Agreement as of
the date first above written.

 

 

	
   

  	
  FIRST ACCEPTANCE CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Ellen V. Billings

  
	
   

  	
  By:

  	
  Ellen V. Billings

  
	
   

  	
  Its:

  	
  Vice President and Controller,

  Secretary and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EDWARDS CAPITAL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Donald J. Edwards

  
	
   

  	
  By:

  	
  Donald J. Edwards

  
	
   

  	
  Its:

  	
  Managing Member

  

 

7Exhibit 10.2

 

SEPARATION
AGREEMENT

 

THIS
SEPARATION AGREEMENT
(this “Agreement”) is entered into as of April 30, 2004, by and
between Donald J. Edwards (“Edwards”) and First Acceptance Corporation
(f/k/a Liberté Investors Inc.), a Delaware corporation (the “Company”).  The Company and Edwards are sometimes
collectively referred to herein as the “Parties” and individually as a “Party.”

 

WHEREAS, Edwards and the Company are parties to
the Employment Agreement, dated as of July 1, 2002 (the “Employment
Agreement”), which sets forth the terms and conditions of Edwards’
employment as President and Chief Executive Officer of the Company;

 

WHEREAS, the Company granted Edwards options
(the “Options”) to purchase 2,573,678 shares of its common stock, par
value $.01 per share (“Common Stock”), pursuant to the Nonqualified
Stock Option Grant Agreement, dated July 9, 2003 (the “Option Grant
Agreement”);

 

WHEREAS, the Company, USAH Merger Sub, Inc., a
Delaware corporation and direct wholly-owned subsidiary of the Company (“Merger
Sub”), USAuto Holdings, Inc., a Delaware corporation (“USAuto”), and
the stockholders of USAuto are parties to the Agreement and Plan of Merger,
dated as of December 15, 2003 (the “Merger Agreement”), pursuant to
which USAuto will merge with and into Merger Sub upon the terms and subject to
the conditions set forth therein (the “Merger”); and

 

WHEREAS, upon the Merger becoming effective and
pursuant to the terms and conditions set forth in this Agreement, Edwards’
employment as an employee and officer of the Company will terminate.

 

NOW,
THEREFORE, in
consideration of the mutual covenants and agreements set forth herein, the
Parties agree as follows:

 

1.                                       Separation Agreements.

 

(a)                                  Subject to the terms and conditions set
forth in this Agreement, Edwards hereby resigns, and the Company accepts
Edwards’ resignation, from his position as President and Chief Executive
Officer of the Company (the “Separation”).  Such Separation shall be deemed effective as of the Closing Date
(the “Separation Date”).

 

(b)                                 In connection with the Separation, and in
consideration for the execution, delivery and effectiveness of the General
Release attached as Exhibit A hereto by Edwards, the Company shall
promptly pay to Edwards all of the compensation contemplated by Section 5(d)
of the Employment Agreement, which compensation consists of the following: (i)
any unpaid Base Salary (as defined in the Employment Agreement) due to Edwards
for all periods prior to the Separation Date; (ii) Edwards’ accrued PTO (as
defined in the Employment Agreement); and

 

 

(iii) a lump sum amount
equal to (x) the present value (based on a rate of 4.75% per annum) of all
remaining Base Salary obligations through the end of the term of the Employment
Agreement plus (y) an amount equal to the higher of Edwards’ most recent annual
bonus or target bonus agreed upon by the Company’s Board of Directors for the
year in which the Separation occurs. 
The Company and Edwards agree that the amount described in clause (iii)
of the immediately preceding sentence shall be $1,659,000.  In addition, during the period beginning on
the date hereof and ending on July 1, 2007, the Company shall provide
Edwards with medical and dental insurance coverage for himself and for his
family on terms and in amounts consistent with the medical and dental insurance
coverage made available to the Company’s senior management.

 

(c)                                  As a condition to the Separation, the
Company hereby assigns and transfers to Edwards Capital, LLC (the “New
Edwards Entity”), subject to obtaining the landlord’s consent, all of the
Company’s rights, title and interest in and under the lease for the office
space located at 676 North Michigan Avenue, Suite 3300, Chicago, Illinois 60611
(the “Chicago Lease”) and all furniture, fixtures and other personal property
located therein, which transfer of furniture, fixtures and other personal
property shall be made pursuant to a customary bill of sale, and the New
Edwards Entity hereby assumes all of the Company’s obligations under the
Chicago Lease and becomes entitled to all of the Company’s rights
thereunder.  In further consideration of
the Separation and, for the benefit of the Company, the execution and delivery
by Edwards, and the effectiveness of, the General Release attached as Exhibit
A hereto, the Company shall reimburse the New Edwards Entity for all
obligations and expenses incurred by the New Edwards Entity under the Chicago
Lease (as in effect on the Closing Date), including the obligations to make
rental payments thereunder and pay the expenses and real estate taxes specified
therein (collectively, the “Lease Obligations”), as and when such Lease
Obligations are incurred by the New Edwards Entity through the end of the term
of the Chicago Lease (as in effect on the Closing Date).  The Company shall reimburse the New Edwards
Entity for payment of the Lease Obligations within 5 business days of receipt
of written notice from the New Edwards Entity requesting such reimbursement,
which notice shall include evidence of payment by the New Edwards Entity of the
Lease Obligations with respect to which the New Edwards Entity is requesting
reimbursement.

 

(d)                                 Notwithstanding anything to the contrary
contained in the Option Grant Agreement, the Company and Edwards agree that,
effective as of the Separation Date, all of the Options granted to Edwards
pursuant to the Option Grant Agreement, including any additional Options issued
to Edwards pursuant to Section 12 of the Option Grant Agreement in
connection with the consummation of the Rights Offering (as defined below),
shall become fully vested and exercisable for all purposes under the Option
Grant Agreement.  In addition, the
Company and Edwards agree that, notwithstanding anything to the contrary
contained in the Option Grant Agreement, Edwards shall be entitled to exercise
the Options at any time prior to 5 p.m. on July 9, 2012.  The Company and Edwards further agree that
effective immediately following the consummation of the Rights Offering and the
issuance of additional Options to Edwards pursuant to Section 12 of the
Option Grant Agreement in connection therewith, Section 12 of the Option
Grant Agreement shall be of no further force or effect, the Option Grant
Agreement shall be amended by deleting Section 12 therefrom in its
entirety and Edwards shall no longer be entitled to issuances of additional
Options in connection with future offerings of the Company’s equity
securities.  The term “Rights
Offering” as used herein means the grant by the Company to its

 

2

 

stockholders of the right
to acquire up to 12,500,000 shares of its Common Stock, at an offering price
per share that will result in the Company realizing at least $50,000,000 in
gross proceeds from such offering and the issuance of such Common Stock pursuant
thereto in order to finance a portion of consideration to be paid in connection
with the Merger and any transactions or other actions taken in furtherance or a
result thereof.

 

(e)                                  In consideration of the agreements set
forth in this Section 1, Edwards agrees to execute the General
Release attached as Exhibit A hereto.

 

2.                                       Successors and Assigns. 
This Agreement shall be binding upon and inure to the benefit of the
Company and its affiliates, successors and assigns and shall be binding upon
and inure to the benefit of Edwards and his legal representatives and assigns.

 

3.                                       Modification or Waiver. 
No amendment, modification or waiver of this Agreement shall be binding
or effective for any purpose unless it is made in a writing signed by the Party
against whom enforcement of such amendment, modification or waiver is
sought.  No course of dealing between
the Parties to this Agreement shall be deemed to affect or to modify, amend or
discharge any provision or term of this Agreement.  No delay on the part of the Company or Edwards in the exercise of
any of their respective rights or remedies shall operate as a waiver thereof,
and no single or partial exercise by the Company or Edwards of any such right
or remedy shall preclude other or further exercises thereof.  A waiver of right or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right or
remedy on any other occasion.

 

4.                                       Governing Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Illinois, without giving effect to any choice of law or conflict of law rules
or provisions (whether of the State of Illinois or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the
State of Illinois.

 

5.                                       Severability. 
Whenever possible each provision and term of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited
by or invalid under such applicable law, then such provision or term shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement.

 

6.                                       No Strict Construction. 
The language used in this Agreement shall be deemed to be the language
chosen by the Parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any Party.

 

7.                                       Notice.  All notices
and other communications hereunder shall be in writing and shall be deemed duly
given (a) on the date of delivery if delivered personally, or upon confirmation
of receipt if delivered by telecopy or facsimile (but only if a copy of such
telecopy or facsimile is delivered to the recipient by a recognized next-day
courier service), (b) on the first business day following the date of dispatch
if delivered by a recognized next-day

 

3

 

courier service or (c) on
the fifth business day following the date of mailing if delivered by registered
or certified mail, return receipt requested, postage prepaid.  All notices hereunder shall be delivered as
set forth below, or pursuant to such other instructions as have been previously
designated in writing to the party sending such notice by the party to receive
such notice:

 

	
  The Company:

  
	
   

  
	
  First Acceptance Corporation

  3813 Green Hills Village Drive

  Nashville, Tennessee 37215 Fax:

  (615) 844-2898

  Attention:  Stephen J. Harrison

  
	
   

  
	
  Edwards:

  
	
   

  
	
  Donald J. Edwards

  676 North Michigan Avenue,

  Suite 3300

  Chicago, Illinois 60611

  Fax: (312) 327-4525

  

 

8.                                       Captions.  The captions
used in this Agreement are for convenience of reference only and do not
constitute a part of this Agreement and shall not be deemed to limit,
characterize or in any way affect any provision of this Agreement, and all
provisions of this Agreement shall be enforced and construed as if no caption
had been used in this Agreement.

 

9.                                       Counterparts. 
This Agreement may be executed in counterparts, any one of which need
not contain the signatures of more than one Party, but all such counterparts
taken together shall constitute one and the same instrument.

 

*    *    *    *

 

4

 

IN WITNESS
WHEREOF, the undersigned have executed this Separation Agreement as of the date
first above written.

 

 

	
   

  	
  FIRST ACCEPTANCE CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Ellen V. Billings

  
	
   

  	
  By:

  	
  Ellen V. Billings

  
	
   

  	
  Its:

  	
  Vice President and Controller,

  Secretary and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Donald J. Edwards

  
	
   

  	
  Donald J. Edwards

  

 

 

Exhibit A

 

GENERAL RELEASE

 

I, Donald J.
Edwards, in consideration of and subject to the performance by First Acceptance
Corporation, a Delaware corporation (together with its Subsidiaries, the “Company”),
of its material obligations under the Separation Agreement, dated as of
April 30, 2004 (the “Agreement”), do hereby release and forever
discharge as of the date hereof the Company and all present and former
directors, officers, agents, representatives, employees, successors and assigns
of the Company and its direct or indirect owners (collectively, the “Released
Parties”) to the extent provided below.

 

1.                                       I
understand that any payments or benefits paid or granted to me under
Section 1 of the Agreement represent, in part, consideration for signing
this General Release and are not salary, wages or benefits to which I was
already entitled. I understand and agree that I will not receive the payments
and benefits specified in Section 1 of the Agreement unless I execute this
General Release and do not revoke this General Release within the time period
permitted hereafter or breach this General Release.

 

2.                                       Except as
provided in paragraph 4 below and except for any Claims (as defined below)
arising out of the Agreement, I knowingly and voluntarily release and forever
discharge the Company and the other Released Parties from any and all claims,
controversies, actions, causes of action, cross-claims, counter-claims,
demands, debts, compensatory damages, liquidated damages, punitive or exemplary
damages, other damages, claims for costs and attorneys’ fees, or liabilities of
any nature whatsoever in law and in equity, both past and present (through the
date of this General Release) and whether known or unknown, suspected, or
claimed against the Company or any of the Released Parties which I, my spouse,
or any of my heirs, executors, administrators or assigns, may have, which arise
out of or are connected with my employment with, or my separation from, the
Company (including, but not limited to, any allegation, claim or violation,
arising under: Title VII of the Civil Rights Act of 1964, as amended; the Civil
Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as
amended (including the Older Workers Benefit Protection Act); the Equal Pay Act
of 1963, as amended; the Americans with Disabilities Act of 1990; the Family
and Medical Leave Act of 1993; the Civil Rights Act of 1866, as amended; the
Worker Adjustment Retraining and Notification Act; the Employee Retirement
Income Security Act of 1974; any applicable Executive Order Programs; the Fair
Labor Standards Act; or their state or local counterparts; or under any other
federal, state or local civil or human rights law, or under any other local,
state, or federal law, regulation or ordinance; or under any public policy,
contract or tort, or under common law; or arising under any policies, practices
or procedures of the Company; or any claim for wrongful discharge, breach of
contract, infliction of emotional distress, defamation; or any claim for costs,
fees, or other expenses, including attorneys’ fees incurred in these matters)
(all of the foregoing collectively referred to herein as the “Claims”).

 

 

3.                                       I represent that
I have made no assignment or transfer of any right, claim, demand, cause of
action or other matter covered by paragraph 2 above.

 

4.                                       I agree that
this General Release does not waive or release any rights or claims that I may
have under the Age Discrimination in Employment Act of 1967 which arise after
the date I execute this General Release. 
I acknowledge and agree that my separation from employment with the
Company in compliance with the terms of the Agreement shall not serve as the
basis for any claim or action (including, without limitation, any claim under
the Age Discrimination in Employment Act of 1967).

 

5.                                       In signing this
General Release, I acknowledge and intend that it shall be effective as a bar
to each and every one of the Claims hereinabove mentioned or implied.  I expressly consent that this General
Release shall be given full force and effect according to each and all of its
express terms and provisions, including those relating to unknown and
unsuspected Claims (notwithstanding any state statute that expressly limits the
effectiveness of a general release of unknown, unsuspected and unanticipated
Claims), if any, as well as those relating to any other Claims hereinabove
mentioned or implied.  I acknowledge and
agree that this waiver is an essential and material term of this General
Release and that without such waiver the Company would not have agreed to the
terms of the Agreement.  I further agree
that in the event I should bring a Claim seeking damages against the Company,
or in the event I should seek to recover against the Company in any Claim
brought by a governmental agency on my behalf, this General Release shall serve
as a complete defense to such Claims.  I
further agree that I am not aware of any pending charge or complaint of the
type described in paragraph 2 hereof as of the execution of this General
Release.

 

6.                                       I agree that
neither this General Release, nor the furnishing of the consideration for this
General Release, shall be deemed or construed at any time to be an admission by
the Company, any Released Party or myself of any improper or unlawful conduct.

 

7.                                       I agree that I
will forfeit all amounts payable by the Company pursuant to Section 1 of
the Agreement if I challenge the validity of this General Release. I also agree
that if I violate this General Release by suing the Company or the other
Released Parties, I will pay all costs and expenses of defending against the
suit incurred by the Released Parties, including reasonable attorneys’ fees,
and return all payments received by me pursuant to Section 1 the
Agreement.

 

8.                                       I agree to
reasonably cooperate with the Company in any internal investigation or
administrative, regulatory or judicial proceeding.  I understand and agree that my cooperation may include, but not
be limited to, making myself available to the Company upon reasonable notice
for interviews and factual investigations; appearing at the Company’s request to
give testimony without requiring service of a subpoena or other legal process;
volunteering to the Company pertinent information; and turning over to the
Company all relevant documents which are or may come into my possession all at
times and on schedules that are reasonably consistent with my other permitted
activities and commitments. I understand that in the event the Company asks for
my cooperation in

 

2

 

accordance with this provision, the Company will reimburse me solely
for reasonable travel expenses, including lodging and meals, upon my submission
of receipts.

 

9.                                       Notwithstanding
anything in this General Release to the contrary, this General Release shall
not relinquish, diminish, or in any way affect any rights or claims arising out
of any breach by the Company or by any Released Party of the Agreement.

 

10.                                 Whenever possible,
each provision of this General Release shall be interpreted in, such manner as
to be effective and valid under applicable law, but if any provision of this
General Release is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provision or any
other jurisdiction, but this General Release shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.

 

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

 

1.                                      I HAVE READ IT
CAREFULLY;

 

2.                                      I UNDERSTAND ALL
OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING BUT NOT
LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS
AMENDED; TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY
ACT OF 1963; THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

 

3.                                      I VOLUNTARILY
CONSENT TO EVERYTHING IN IT;

 

4.                                      I HAVE BEEN
ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND HAVE DONE SO, OR,
AFTER CAREFUL READING AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN
VOLITION;

 

5.                                      I HAVE HAD AT
LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE SUBSTANTIALLY IN ITS
FINAL FORM ON APRIL 8, 2004 TO CONSIDER IT AND THE CHANGES MADE SINCE THE
APRIL 8, 2004 VERSION OF THIS RELEASE ARE NOT MATERIAL AND WILL NOT
RESTART THE REQUIRED 21-DAY PERIOD;

 

6.                                      THE CHANGES TO
THE AGREEMENT SINCE APRIL 8, 2004 EITHER ARE NOT MATERIAL OR WERE MADE AT
MY REQUEST;

 

7.                                      I UNDERSTAND THAT
I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT
THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION
PERIOD HAS EXPIRED;

 

3

 

8.                                      I HAVE SIGNED
THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY
COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

 

9.                                      I AGREE THAT THE
PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR
MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED
REPRESENTATIVE OF THE COMPANY AND BY ME.

 

 

	
  DATE: April 30, 2004

  	
  /s/ Donald J. Edwards

  
	
   

  	
  Donald J. Edwards

  

 

4

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