Document:

Exhibit 10.2

 

 

July 27, 2012

 

Alexander E. Mandel

Chief Financial Officer

 

Dear Alex:

 

This letter is to notify you of a valuable additional benefit for certain employees of Tree.com, Inc. (“Company”) that was recently adopted by the Compensation Committee of our Board of Directors in the event there is a Change of Control at the Company.

 

Should a Change of Control occur, all Tree.com, Inc. equity issued to you would immediately fully vest.  There is no action you need to take – the accelerated vesting would automatically occur upon a Change of Control.

 

In addition, if there is a Change of Control and you (a) resign for Good Reason or (b) your employment is terminated without Cause and for reasons unrelated to performance (and other than as a result of your death or disability), during the twelve (12) month period following the Change of Control, you will receive a severance payment of two (2) years of base salary.  For the purposes of a Change of Control, this severance payment would replace any payment under the Company’s general severance plan or other arrangement to which you would otherwise be entitled.  There is no requirement to mitigate this severance payment.

 

The severance payment described above is contingent upon your signing a general release of claims in favor of the Company and such release of claims becoming irrevocable prior to the date of payment.  Such release will contain restrictive covenants (substantially in the form attached) in effect for one year following your termination date including a non-compete provision and restrictions on solicitation of employees and customers.

 

This letter does not create an employment contract or affect the right of the Company to terminate your employment, or change the terms and conditions of such employment, at any time and without notice.

 

	
Sincerely,
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Claudette Hampton
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Claudette   Hampton
    	
 
    	
 
    
	
Senior   Vice President, Human Resources & Administration
    	
 
    	
 
    

 

 

Definitions

 

For the purposes of this letter, the following definitions apply:

 

“Cause” means gross negligence in carrying out your duties for the Company or any breach of fiduciary duties to the Company, conviction of, or plea of guilty or no contest to any felony, any act of fraud or embezzlement, material violation of a Company policy or any unauthorized use or disclosure of confidential information or trade secrets of the Company or its affiliates, or failure to cooperate in any Company investigation. Neither bad judgment nor mere negligence nor an act of omission reasonably believed by you to have been in, or not opposed to, the interests of the Company, shall constitute examples of gross negligence.

 

“Change of Control” results when: (i) any person or entity who is not a controlling shareholder as of the date of this letter becomes a beneficial owner, directly or indirectly, of securities of the Company representing fifty percent or more of the total voting power of all of the Company’s then outstanding voting securities, (ii) a merger or consolidation of the Company in which the Company’s voting securities immediately prior to the merger or consolidation do not represent, or are not converted into securities that represent, a majority of the voting power of all voting securities of the surviving entity immediately after the merger or consolidation, or (iii) a sale of all or substantially all of the assets of the Company or a liquidation or dissolution of the Company.  For purposes of defining Change of Control, “Company” refers to Tree.com, Inc. as a whole and does not apply to events only affecting specific businesses or subsidiaries of Tree.com, Inc.

 

“Good Reason” means the occurrence of any of the following without your written consent: (i) a material adverse change in your title, duties, operational authorities or reporting responsibilities from those in effect immediately prior to the Change in Control, excluding for this purpose any such change that is an isolated and inadvertent action not taken in bad faith and that is remedied by the Company promptly after receipt of notice thereof and further excluding a change in your reporting officer due to internal restructuring, realignment, or the resignation, promotion, demotion, or a reorganization of managers within the Company, (ii) a material reduction in your annual base salary, or (iii) a relocation of your principal place of business more than 50 miles from your current office.

 

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Restrictive Covenants

 

In consideration of the compensation and other consideration given to you pursuant to the provisions of this letter, you understand and agree that the purpose of these covenants is to protect legitimate business interests of the Company, and is not intended to eliminate your post-employment competition with the Company per se, nor is it intended to impair or infringe upon your right to work, earn a living, or acquire and possess property from the fruits of your labor. You hereby acknowledge that the post-employment restrictions set forth herein are reasonable and that they do not, and will not, unduly impair your ability to earn a living after the termination of your employment with Company. You shall be subject to and agree to abide by the restrictions set forth in this Section.

 

1.              Definitions.

 

The following capitalized terms shall have the meanings assigned to them below:

 

i.             “Competitive Services” means Internet-based loan origination, Internet-based loan brokerage, Internet-based real estate brokerage services, or any other services that Company is engaged in as of the Determination Date.

 

ii.          “Determination Date” means the date of termination of your employment with the Company for any reason whatsoever or any earlier date (during your employment) of an alleged breach of the Restrictive Covenants by you.

 

iii.       “Person” means any individual or any corporation, partnership, joint venture, limited liability company, association or other entity or enterprise.

 

iv.      “Principal Or Representative” means a principal, owner, partner, shareholder, joint venturer, investor, member, trustee, director, officer, manager, employee, agent, representative or consultant.

 

v.         “Protected Customers” means any Person to whom the Company has sold its services or solicited to sell its services during the twelve (12) months prior to the Determination Date; provided, however, that Protected Customer shall not include any Person with which you can reasonably demonstrate that you had a pre-existing professional relationship prior to the commencement of your employment with the Company.

 

vi.      “Protected Employees” means employees of the Company who were employed by the Company at any time within six months prior to the Determination Date and with whom you had direct, personal and continuing dealings on behalf of the Company or whom you directly supervised.

 

vii.   “Restricted Period” means the period of your employment with Company and a period extending one year from the termination of your employment with Company.

 

2.              Non-solicitation of Protected Employees. You understand and agree that the relationship between the Company and each of its Protected Employees constitutes a valuable asset of the Company and may not be converted to your own use. Accordingly, you hereby agree that during the Restricted Period you shall not directly or indirectly on your own behalf or as a Principal or Representative of any Person or otherwise solicit or induce any Protected Employee to terminate his or her employment relationship with the Company or to enter into employment with any other Person.

 

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3.              Restriction on Relationships with Protected Customers. You understand and agree that the relationship between the Company and each of its Protected Customers constitutes a valuable asset of the Company and may not be converted to your own use. Accordingly, you hereby agree that, during the Restricted Period, you shall not, without the prior written consent of the Company, directly or indirectly, on your own behalf or as a Principal or Representative of any Person, solicit, divert, take away or attempt to solicit, divert or take away a Protected Customer for the purpose of providing or selling Competitive Services; provided, however, that the prohibition of this covenant shall apply only to Protected Customers with whom you had Material Contact on the Company’s behalf during the twelve (12) months immediately preceding the Determination Date. For purposes of this Section, you had “Material Contact” with a Protected Customer if (a) you had direct business dealings with the Protected Customer on the Company’s behalf or (b) you were responsible for supervising or coordinating the dealings between the Company and the Protected Customer.

 

4.              Covenant not to Compete.  You agree and covenant that during the Restrictive Period you will not, without Company’s prior written consent, which may be granted or withheld in the sole discretion of the Company, directly or indirectly, (i) for yourself; (ii) as a consultant, manager, supervisor, employee or owner; or (iii) as an independent contractor, engage in activities related to Competitive Services for any Person which markets, sells or otherwise provides Competitive Services in the geographical areas in which the Company does business; provided, however, that the ownership by you of not more than five percent (5%) of the shares of any publicly traded class of stock of any corporation shall not be deemed, in and of itself, to violate the foregoing prohibitions.

 

5.              ENFORCEMENT OF RESTRICTED COVENANTS.

 

i.             Rights and Remedies upon Breach. In the event you breach, or threaten to commit a breach of, any of the provisions of the Restrictive Covenants, the Company shall have the right and remedy to enjoin, preliminarily and permanently, you from violating or threatening to violate the Restrictive Covenants and to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company. Such right and remedy shall be in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity. In addition, the Restricted Period shall be extended for the period of any such breach or threatened breach.

 

ii.          Severability of Covenants. You acknowledge and agree that the Restrictive Covenants are reasonable and valid in time and scope and in all other respects. The covenants set forth in this Section shall be considered and construed as separate and independent covenants. Should any part or provision of any covenant be held invalid, void or unenforceable in any court of competent jurisdiction, such invalidity, voidness or unenforceability shall not render invalid, void or unenforceable any other part or provision contained herein. If any portion of the foregoing provisions is found to be invalid or unenforceable by a court of competent jurisdiction because its duration, the territory, the definition of activities or the definition of information covered is considered to be invalid or unreasonable in scope, the

 

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invalid or unreasonable term shall be redefined, or a new enforceable term provided, such that the intent of the Company and you in agreeing to the provisions of this Agreement will not be impaired and the provision in question shall be enforceable to the fullest extent of the applicable laws.

 

6.              Confidentiality.  You agree to keep secret and retain in strictest confidence, and shall not use for the benefit of yourself or others or disclose to others, any confidential and proprietary information of the Company, including but not limited to information and materials relating to the internal operations of the Company, its processes and procedures, trade “know-how”, sales, marketing and distribution methods and strategies, suppliers, customers, prospective customers, services, terms of contracts, pricing policies, business plans, research and development projects and any and all other business affairs of the Company (collectively, “Confidential Information”).  Confidential Information does not include any information or material generally available to the public. You agree that the existence of and the terms and provisions of this Agreement shall remain and be kept strictly confidential.  This confidentiality provision applies to and expressly prohibits all communications to any person or entity, including, without limitation, communications to any present, former or future Company employee.

 

4Exhibit 10.1

 

 

July 9, 2012 

 

Phil Mazzini 

51 Prospect Road

Atlantic Highlands, NJ  07716 

 

Dear Phil:

 

I am pleased to confirm our offer of employment to join TMX Finance LLC, and its wholly-owned subsidiaries (the “Company”). 

 

Your responsibilities have been outlined during your discussions with us.  In making this offer, we express not only our recognition of your credentials and accomplishments but also our enthusiasm of you joining the Company. The following information explains the provisions of our offer of employment:

 

EMPLOYMENT TERMS

 

Position:                                              President

 

Status:                                                        Exempt

 

Manager:                                        Chief Executive Officer

 

Start Date:                                 Employment to begin no later than July 11, 2012

 

Base Salary:                        Your initial starting salary for this position will be $23,076.92 per pay period ($600,000.00 if calculated on an annualized basis), to be paid in accordance with the Company’s regular payroll practices.  The Company currently pays on a bi-weekly basis.  Your base salary will increase at an annualized rate of $25,000.00 per year on each anniversary of your start date, up to and including the fifth anniversary of your start date, provided that you remain employed by the Company on each such date.  Following your fifth year of employment, if applicable, you and the Company will meet and review your base salary.

 

Monthly Bonus:      Beginning January 1, 2013, you will be eligible to receive a monthly bonus if, as determined by the CEO in his sole and absolute discretion, your performance meets the standards established by the CEO for your position (the “Bonus”).  The Bonus, if any, will be calculated as a fixed percentage of the Company’s EBITDA for the immediately prior calendar month, as determined in the Company’s sole and absolute discretion.  For purposes of calculating the Bonus, the fixed percentage will equal 0.25% for up to the first five (5) years of your employment, if applicable.  Following your fifth year of employment, if applicable, you and the Company will meet and review your bonus percentage.  “EBITDA” means the Company’s consolidated earnings before interest, taxes, depreciation, and amortization as determined by the Company in its sole and absolute discretion.  You will not receive any Bonus if, for any reason, you are not employed on the last day of the calendar month for which the Bonus is to be paid.  The Bonus, if any, will be subject to all applicable withholdings, and paid on the second Company payroll date of the month following the month for which the Bonus is to be paid.

 

Long-Term Bonus:  You will be eligible to receive a long-term bonus if, as determined by the CEO in his sole and absolute discretion, your performance meets the standards established by the CEO for your position (the “Long-Term Bonus”).  The Long-Term Bonus, if any, will be calculated as a fixed percentage of the Company’s EBITDA for the then current calendar year, as determined in the Company’s sole and absolute discretion.  For purposes of calculating the Long-Term Bonus, the fixed percentage will equal 0.45% for each calendar year beginning January 1, 2013 through December 31, 2017.  You must be employed on the last business day of each applicable year to be eligible to receive credit for the Long-Term Bonus for such calendar year, and you must be employed on the last business day of the years specified below in order to receive payment of the applicable portion of the Long-Term Bonus as set forth below. The total Long-Term Bonus calculated for the period of January 1, 2013 through December 31, 2017 shall be paid as follows:

 

(a)         50% of the Long-Term Bonus shall be paid on December 31, 2017 provided you are employed on the last business day of 2017;

(b)         25% of the Long-Term Bonus shall be paid on December 31, 2018 provided you are employed on the last business day of 2018; and

(c)          25% of the Long-Term Bonus shall be paid on December 31, 2019 provided you are employed on the last business day of 2019.

 

The Long-Term Bonus, if any, will be subject to all applicable withholdings.

 

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Separation Pay:

 

(1) If your employment is terminated by the Company Without Cause before December 31, 2013, the Company will pay you, following your separation from service, a separation payment equal to twelve  (12) months of your base salary, divided and paid in bi-weekly installments over twelve (12) months in accordance with the Company’s current payroll schedule, beginning with the first Company payroll date that is at least sixty (60) days following the date of your termination, provided that you have complied with the Conditions (defined below); or

 

(2) If your employment is terminated by the Company Without Cause, on or after December 31, 2013, the Company will pay you, following your separation from service, a separation payment that is equal to any Long-Term Bonus calculated for any years of service where (a) you were employed as of last business day of such year and (b) you were entitled to a Long-Term Bonus calculation for such year in accordance with the above Long-Term Bonus section (“Eligible Long-Term Bonus”).   If your employment is voluntarily terminated by you for any reason on or after December 31, 2014, the Company will pay you, following your separation from service, a separation payment that is equal to 25% of any Eligible Long-Term Bonus.  In such instance, you would forfeit the remaining 75% of the Eligible Long-Term Bonus. The separation payment shall be divided and paid in separate monthly installments over a period of twenty four (24) months on the first business day of each month, beginning with the first such date that is at least sixty (60) days after the date of your termination, provided you have complied with the Conditions (defined below).

 

The Company’s obligation to provide any of the separation payments described above in this letter shall be conditioned upon: (i) your execution and non-revocation of a Separation & Release Agreement in a form prepared by the Company, and which has become irrevocable and includes, but is not limited to, your release of the Company from any and all liability and claims of any kind; and (ii) your compliance with all of your post-termination obligations to the Company, including, but not limited to, the obligations set forth in the Employment Covenants Agreement executed by you upon commencement of your employment with the Company ((i) and (ii) collectively, the “Conditions”). If you do not execute an effective Separation & Release Agreement, and such agreement has not become irrevocable as of the date any of your separation payments would be required to be made as set forth above, the Company shall not be obligated to provide any such payments to you pursuant to this letter, and such payments shall be considered forfeited. If you do not comply with your Separation & Release Agreement, the Company’s obligation to provide any payments or benefits to you pursuant to this letter or otherwise.  The Company’s obligation to provide you with any of the separation payments set forth above shall terminate immediately upon any breach by you of any post-termination obligations to which you are subject.

 

As an at-will employee, your employment may be terminated at any time and for any reason, including any one of the following events:  (1) mutual agreement between you and the Company; (2) your death; (3) you are unable to perform the essential functions of your job even with reasonable accommodation, as determined in the Company’s sole and absolute discretion; (4) For Cause, which means a termination of your employment by the Company because of any one of the following: (i) your failure or refusal to follow the lawful direction of the CEO; (ii) your breach of your fiduciary duty to the Company; (iii) your failure or refusal to perform your duties to the Company; (iii) any act or omission by You which injures, or is likely to injure, the Company or the business reputation of the Company; (iv) your dishonesty, fraud, negligence, or misconduct; (v) your failure to abide by the policies, procedures, and rules of the Company; (vi) your failure to abide by laws applicable to you in your capacity as an employee, executive, or officer of the Company; (vii) your arrest, indictment for, conviction of, or entry of a plea of guilty or no contest to (1) a felony, or (2) a crime involving moral turpitude; or (viii) your breach of any agreement with the Company, including, but not limited to, a breach of the Employment Covenants Agreement executed by you upon commencement of your employment; (5) your resignation; and (6) termination by the Company Without Cause, which means any termination of employment by the Company which is not defined in subclauses (1) through (5) above.

 

Section 409A:  This letter is intended to be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is exempt from, or, if that is not possible, then compliant with the requirements of Section 409A of the Internal Revenue Code (the “Code”) and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder (and any applicable transition relief under Section 409A of the Code).  Nevertheless, the tax treatment of the benefits provided pursuant to this letter is not warranted or guaranteed.  Neither the Company nor its managers, officers, employees or advisers shall be held liable for any taxes, interest, penalties, or other monetary amounts owed by you as a result of the application of Section 409A of the Code. Any right to a series of installment payments pursuant to this letter shall, for purposes of Section 409A of the Code, be treated as a right to a series of separate payments.

 

All reimbursements and in-kind benefits provided under this letter that are includible in your federal gross taxable income shall be made or provided in accordance with the requirements of Section 409A of the Code, including the requirement that (i) any reimbursement is for expenses incurred during your lifetime (or during a shorter period of time specified in this letter), (ii) the amount of expenses eligible for reimbursement or in-kind benefit provided during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense was incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

Additionally, notwithstanding anything in this letter to the contrary, any separation payments set forth in this letter (to the extent that they constitute “deferred compensation” under Section 409A of the Code and applicable regulations), and any other amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code and that would

 

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otherwise be payable or distributable hereunder by reason of the termination of your employment, will not be payable or distributable to you by reason of such circumstance unless the circumstances giving rise to such termination of employment meet any description or definition of “separation from service” in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition).  If this provision prevents the payment or distribution of any amount or benefit, such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “separation from service.”

 

In the event that you are a “specified employee” (as described in Code Section 409A), and any payment or benefit payable pursuant to this letter constitutes deferred compensation under Code Section 409A and would otherwise be payable upon your “separation from service” (as described in Code Section 409A), then no such payment or benefit shall be made before the date that is six (6) months after your “separation from service” (or, if earlier, the date of your death). Any payment or benefit delayed by reason of the prior sentence (the “Delayed Payment”) shall be paid out or provided in a single lump sum at the end of such required delay period in order to catch up to the original payment schedule.

 

Paid Time Off:  Pursuant to current Company policy, you will begin to accrue 4.62 hours of Paid Time Off (PTO) per pay period upon commencement of employment for a total of 15 days per year.

 

Health Insurance:  You will be eligible to participate in the Company group benefits plan in accordance with the terms and conditions of such plan. Your benefit coverage will be effective on the first day of the month following three (3) months of continuous employment.  You will receive additional enrollment information prior to your start date.

 

401k Plan:  All employees are currently eligible to participate in the 401k plan during the first open enrollment held six months after your start date.  Open enrollments are held four times per year.  If you are a participant in the plan, after one (1) full year of service, the Company will match 50% up to 6% of your earnings.   You must be an active employee on December 31st of the plan year for which the match is calculated.

 

Initial Three (3) Years of Employment:  You will commute from Atlantic Highlands, New Jersey to the corporate headquarters in Savannah, Georgia for the initial three (3) years of your employment.  During such 3-year time period, you will spend a substantial portion of your time either at the corporate headquarters or the field stores. Company will pay for your reasonable commuting expenses during this 3-year timeframe, to the extent the Company is able to lawfully deduct such expenses on its federal income tax return.  After the initial 3-year period of employment, you will relocate to the Savannah, Georgia area.

 

Non-Competition: On your first day of employment, and as a condition of your employment with the Company, you will be required to sign the attached Employment Covenants Agreement.  Any payments due hereunder would be contingent upon your remaining in compliance with the Employment Covenants Agreement.

 

I-9 Form: On your first day of employment and as a condition of employment with the Company, you will be required to satisfactorily complete an I-9 form and provide documentation that you are authorized to work in the United States.

 

Set Off:  If you have any outstanding obligations to the Company upon termination of your employment for any reason, this letter confirms that you authorize the Company to deduct any amounts owed to the Company from your paychecks, bonuses, final paycheck, and/or any amounts that would otherwise be due to you, except to the extent such amounts constitute “deferred compensation” under Internal Revenue Code Section 409A.  Nothing in this paragraph will limit the Company’s right to pursue means other than or in addition to deduction to recover the full amount of any outstanding obligations to the Company.

 

The Company’s policies and plan documents govern benefits provided to employees and should be consulted for the details of the plan. The benefits described in this letter are provided for informational purposes only.  At the Company’s discretion, policies and benefits may be changed at any time, and this letter does not establish any vested rights in benefits. This letter does not create a contract of employment or a contract for benefits.

 

Your employment relationship with the Company is at the will of either party, meaning that your employment with the Company will continue until the employment relationship is terminated by the Company or you. You may terminate your employment at any time and for any reason whatsoever simply by notifying the Company.  Likewise, the Company may terminate your employment at any time with or without cause or advance notice.  This at-will employment relationship between the Company and you cannot be changed except in writing signed by the Company’s Chief Executive Officer.  Nothing contained in this offer of employment shall be construed as guaranteeing employment for a specific period of time or for future employment.  Your employment is subject to all policies and procedures of the Company.

 

As with all employment offers, this offer is contingent upon your completion of the Company’s complete application process, including, but not limited to satisfactory completion of a background check.

 

It is the Company’s policy not to infringe upon the proprietary information, trade secrets, or confidential information of third parties. In addition, it is the Company’s policy not to interfere with their parties contractual or business relations.  Therefore, I also write to

 

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confirm that you have represented and warranted that you are not subject to any agreement that would prevent you from performing your duties for the Company, and that you are not subject to or in breach of any non-disclosure agreement, including any agreement concerning trade secrets or confidential information owned by any other party.  Please notify the undersigned immediately if you are subject to a confidentiality, non-compete, or non-solicitation agreement that may restrict your activities at the Company.  Finally, I write to confirm that, during your employment with the Company, you will not use, disclose, or reverse engineer (i) any confidential information or trade secrets of any former employee or third party, or (ii) any works of authorship developed in whole or in part by you during any former employment or for any other party, unless authorized in writing by the former employer or third party.

 

The laws of the State of Georgia shall govern this letter.  If Georgia’s conflict of law rules would apply another state’s laws, you and the Company agree that Georgia law shall still govern. You agree that any and all claims arising out of or relating to this letter shall be brought in a state or federal court of competent jurisdiction in Georgia.  You consent to the personal jurisdiction of the state and/or federal courts located in Georgia.  You waive (a) any objection to jurisdiction or venue, or (b) any defense claiming lack of jurisdiction or improper venue, in any action brought in such courts.

 

This document supersedes all prior verbal and written compensation discussions and agreements.  This document may not be amended or modified except in writing signed by both you and the Company’s CEO.

 

Formalities aside, I am very pleased to offer you this position, and I look forward to you becoming part of our Team.  Please don’t hesitate to give me a call if you have any questions on any of the above.

 

	
 
    	
Sincerely,
    	
 
    	
Acknowledged and agreed:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
/s/ Phil Mazzini
    
	
 
    	
 
    	
 
    	
Phil Mazzini
    
	
 
    	
/s/ Tracy Young
    	
 
    	
 
    
	
 
    	
Tracy Young
    	
 
    	
 
    
	
 
    	
Chief Executive Officer
    	
 
    	
Date: July 11, 2012
    

 

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