- 8 -
and expense reimbursements. There is no evidence in the record as
to the payment of any fees to Shirk under the commission-based
consulting agreement, and it appears that his consulting services
to FAMC were essentially discontinued by April 1989.
At about that time, Leste and Moore entered into discussions
with Silbernagel, who had previously offered to provide consulting
services to FAMC.2 As the founder of VALC, and ultimately FAMC
itself, and with his numerous contacts in the loan servicing
industry, it was anticipated that Silbernagel would "add some
muscle" to FAMC's marketing effort and help restore the company's
declining loan pool balances. On May 1, 1989, Silbernagel entered
into a consulting and noncompetition agreement with FAMC. Under
that agreement, Silbernagel's primary duty was to attract new
business through direct sales and other marketing efforts designed
to promote FAMC's loan servicing business. Silbernagel was
required to refer all loan servicing opportunities made known to
him to FAMC, and he agreed not to compete with FAMC by directly or
indirectly assisting FAMC's competitors. The consulting and
noncompetition agreement with Silbernagel was incorporated into a
multiyear contract commencing on May 1, 1989, and extending to
April 1, 2002. During the first 7 years of the agreement,
Silbernagel was to be paid the lesser of $300,000 per year or 25
percent of FAMC's after-tax profits; in conjunction therewith, FAMC
2 A consulting agreement with Silbernagel was previously
proposed, but not executed, in August 1988. At that time, Leste
and Moore decided to give Shirk a little more time to see how
much new business he could bring in.
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