EXHIBIT 10.1
MCM CAPITAL GROUP, INC.
0000 XXXXXX XXXXX
XXX XXXXX, XXXXXXXXXX 00000
As of May 22, 2000
Xx. Xxxx X. Xxxxxxx III
Dear Xx. Xxxxxxx:
It is with great pleasure that we hereby confirm your employment as
President and Chief Executive Officer of MCM Capital Group, Inc. (the
"Company"), on the terms and conditions set forth in this letter and in the
attached "Employment Term Sheet." This letter and the Employment Term Sheet are
collectively referred to as this "Agreement". Capitalized terms that are not
defined herein shall have the meaning set forth in the Employment Term Sheet.
1. During the term of your employment with the Company, you shall also
serve as President of Midland Credit Management, Inc. and may also serve as an
officer and/or director of certain other subsidiaries of the Company.
2. This Agreement contains the entire agreement between the parties with
respect to the matters covered herein and supersedes all prior agreements,
written or oral, with respect thereto. This Agreement may only be amended,
superseded or canceled and the terms hereof waived, by a written instrument
signed by you and the Company, or in the case of a waiver, by the party waiving
compliance.
3. You will report to the Board of Directors of the Company (the "Board")
and your duties will be performed primarily at the Company's offices in the San
Diego, California area. The Company shall furnish sufficient facilities,
services, staffing and assistance to enable you to perform your duties
hereunder. The term of your employment shall continue through May 22, 2002,
provided that such term shall be automatically extended for successive one (l)
year periods unless either you or the Company gives written notice to the other,
at least ninety (90) calendar days before such extension is to (or would) take
effect, that they do not wish to extend (the "Term"). Your employment may be
terminated prior to the expiration of the Term: (i) in the event that you shall
die; (ii) in the event that you shall become Disabled (for purposes of this
clause (ii), "Disabled" shall mean that you shall have failed, due to illness or
other physical or
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mental incapacity, to render services of the character contemplated by this
Agreement for an aggregate of more than ninety (90) calendar days during any
twelve (12) month period); (iii) for "Cause" (as hereinafter defined); or (iv)
in the event that you give written notice to the Company of your resignation.
4. For purposes of this Agreement, "Cause" means: (i) commission of any
act of fraud or gross negligence by you in the course of your employment
hereunder which, in the case of gross negligence, has a material adverse effect
on the business or condition (financial or otherwise) of the Company; (ii)
willful material misrepresentation at any time by you to the Board or the
Chairman of the Board; (iii) willful failure or refusal to comply with any of
your obligations hereunder or with the reasonable and lawful instructions of the
Board; (iv) engagement by you in any conduct or the commission by you of any act
which is in the reasonable opinion of the Board, materially injurious or
detrimental to the substantial interest of the Company or any of its material
subsidiaries or affiliates; (v) conviction of or pleading guilty to any felony,
whether of the United States or any state thereof or any similar foreign law to
which you may be subject; (vi) any failure to substantially comply with any
written lawful rules, regulations, policies or procedures of the Company
furnished to you which, if not complied with, could reasonably be expected to
have a material adverse effect on the business of the Company or any of its
material subsidiaries or affiliates; or (vii) any willful failure to comply with
the Company's, or any of its subsidiaries' or affiliates' policies regarding
xxxxxxx xxxxxxx; provided, however, that in the case of clause (vi) of the
definition of "Cause" set forth in this section, if your failure or refusal
referred to therein is curable by you, then "Cause" shall not be deemed to exist
unless you fail to so cure within five (5) business days of your receipt from
the Company of a written request for such cure and such request to cure is the
first such request delivered under this section with respect to such failure.
5. If either (i) your employment is terminated "Without Cause" by the
Company (as hereinafter defined) or (ii) there is a "Control Event," (as
hereinafter defined) then in either event the Company shall pay to you a sum
equal to your Base Salary in effect as of the effective date of such termination
for the longer of (A) the then remaining effective Term, or (B) 18 months from
the date of the termination of your employment, payable in semi-monthly
installments commencing with the month after such termination; provided,
however, that if you have secured full-time employment prior to or during the
last six (6) months of such eighteen (18) month period (or such longer period),
such semi-monthly payments required to be made during such six month period
after you begin receiving payments from your new employer will be offset by the
base salary you earn from such new employer during such six (6) month period. In
addition, in the event of either of the foregoing, you will be entitled (i) to
receive (A) payment of all accrued and unpaid vacation days and other benefits
and reimbursements, and (B) within 30 days of such termination, a pro rata
portion of your annual bonus for the portion of the calendar year that you
worked for the Company prior to such termination of employment computed using
the amount of your bonus for the prior calendar year, and (ii) at your election,
to continue for a period of 18 months your coverage under all health, medical,
disability and other similar insurance policies, pursuant to Section 4980B of
the Internal Revenue Code, as amended, or under Part 6 of Title I of the
Employment Retirement Income Security Act of 1974, as amended, provided to you
by the Company, the cost of such coverage to be allocated between you and the
Company in a manner consistent with the allocation of the costs thereof
applicable prior to the termination of
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your employment. Terminated "Without Cause" shall mean (i) the termination of
your employment for any reason other than (A) as set forth in clauses (i) - (iv)
of Section 3 or (B) a decision by you to deliver the written notice referred to
in the third sentence of Section 3, (ii) a substantial and material reduction of
your responsibilities as President and Chief Executive Officer, (iii) a
reduction in your Base Salary, (iv) a requirement that you relocate outside the
San Diego, California metropolitan area without your consent, or (v) a decision
by the Company to deliver the written notice referred to in the third sentence
of Section 3. "Control Event" shall mean the occurrence of both (i) a "Change of
Control" as defined on Annex A hereto, and (ii) within 12 months thereof, one of
the events described in clauses (ii), (iii) or (iv) of the definition of
"Without Cause" shall have occurred and within such twelve (12) month time
period you shall have resigned from the Company. In consideration of the monies
to be paid and the benefits to be provided to you, you agree to execute and
deliver to the Company on or before any payment by the Company a release
substantially in the form of Annex B hereto, failing which, except to the extent
required by law, the Company shall be relieved of all of its obligations
hereunder. Upon any termination of your employment with the Company, you will
return to the Company, all Company/or its subsidiary-owned property, including,
without limitation, credit cards, computers, cellular phones, files, etc.
6. You acknowledge that as the Company's President and Chief Executive
Officer you will be involved, at the highest level, in the development,
implementation, and management of the Company's and its subsidiaries'
businesses, strategies and plans, including those which involve the Company's
and its subsidiaries' finances, marketing, industrial relations, operations,
acquisitions, business models and programs. By virtue of your unique and
sensitive position, your employment by a competitor of the Company or its
subsidiaries represents a serious competitive danger to the Company and its
subsidiaries and the use of your talent, knowledge, and information about the
Company's and its subsidiaries' businesses, strategies, and plans can and would
constitute a valuable competitive advantage over the Company and its
subsidiaries. In view of the foregoing, you covenant and agree that during the
term of your employment and, for the period during which you are receiving any
payments pursuant to Section 5, you will not engage or be engaged in a similar
capacity or responsibility as you served or performed for the Company, directly
or indirectly, including, but not limited to, as an employee, agent, consultant,
manager, executive, owner, financing source or stockholder (except as a passive
investor owning less than one percent (1%) interest in a publicly held company)
in the Collection Business. For purposes of this Section 6, "Collection
Business" shall be defined as the business of purchasing and/or collecting
charged off consumer debt. Notwithstanding the foregoing, if this Agreement is
assigned by the Company as provided herein, the terms of this section shall not
apply to any business engaged in by the assignee that is not related or similar
to any business engaged in (or contemplated to be engaged in) by the Company at
the time of such assignment.
7. You agree to treat as confidential and not to disclose to anyone other
than the Company, its subsidiaries and affiliated companies, and you agree that
you will not at any time during your employment and at any time thereafter,
without the prior written consent of the Company, divulge, furnish, or make
known or accessible to, or use for the benefit of anyone other than the Company,
its subsidiaries and affiliated companies, any information of a confidential
nature relating in any way to the business of the Company, its subsidiaries or
affiliated companies, or any of their respective affiliates, members,
shareholders, officers,
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employees or directors, or any other Person having a direct business
relationship with the Company or its subsidiaries, unless (i) you are required
to disclose such information by requirements of law, (ii) such information is in
the public domain through no fault of yours, or (iii) such information has been
lawfully acquired by you from other sources unless you know that such
information was obtained in violation of an agreement of confidentiality. You
further agree, that in consideration of this Agreement, that you will refrain
from engaging in any conduct or making any statement, written or oral, which are
detrimental to the Company, its subsidiaries or affiliated companies or any of
their respective affiliates, members, shareholders, officers, employees or
directors, other than statements to the Chairman of the Board of the Company or
the Board of Directors of the Company, or any member thereof.
8. You agree that in addition to any other remedy provided at law or in
equity (a) the Company shall be entitled to a temporary restraining order, and
both preliminary and permanent injunctive relief restraining you from violating
the provisions of the Paragraphs 6 and 7; and (b) the Company's remaining
obligations under this letter agreement, if any, shall cease (other than payment
of your base salary through the date of such violation, plus $100.00 and any
earned but unpaid vacation or except as may be required by law) as a result of
any willful or reckless material violation of such provisions.
9. The provisions of the Sections 6, 7, 8, 10 and 13 of this Agreement
shall specifically survive any termination of this Agreement.
10. You agree that the Company may withhold from any amounts payable to
you hereunder all federal, state, local or other taxes that the Company
determines are required to be withheld pursuant to any applicable law or
regulation. You further agree that if the Internal Revenue Service or other
taxing authority (each, a Taxing Authority) asserts a liability against the
Company for failure to withhold taxes on any payment hereunder, you will pay to
the Company the amount determined by such taxing authority that had not been
withheld within ninety (90) days of notice to you of such determination. Such
notice shall include a copy of any correspondence received from a Taxing
Authority with respect to such withholding.
11. Any notice or other communication required or permitted under this
Agreement shall be in writing and shall be delivered personally, or sent by
certified, registered or express mail, postage prepaid, return receipt
requested. Any such notice shall be deemed given when so delivered personally,
or, if mailed, on the earlier of actual receipt or the third (3rd) business day
after the date of such mailing, (i) if to the Company, to the attention of the
General Counsel at the address first written above (with a copy to Xxxxx &
Xxxxxx, Xxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, Attention: Xxxxxx X.
Xxxxxxx, Esq.), and (ii) if to you, at the address first written above.
12. This Agreement and your rights and obligations hereunder may not be
assigned by you, provided that upon death your rights hereunder shall survive
and may be assigned, or conveyed by will, trust or operation of law, including
without limitation, intestate succession. The Company may assign this letter
agreement and its rights, together with its obligations, hereunder in connection
with any sale, transfer or other disposition of all or substantially all of its
assets or business, whether by merger, consolidation or otherwise.
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13. This letter agreement constitutes the entire agreement between you and
Company with respect to the matters referred to herein and supersedes all prior
agreements, whether written or oral with respect hereto, other than the
Indemnification Agreement dated December 6, 2000 between the Company and you.
This letter agreement shall be governed by the laws of the State of California,
without regard to principles of conflicts of laws of such State. Each party
agrees to reimburse the other for any reasonable attorneys' fees and expenses
expended by it to enforce its rights hereunder if the other party willfully or
recklessly breaches its obligations hereunder.
If you agree with the terms of this Agreement, please date and sign the
copy of this letter enclosed for that purpose and return it to me.
Sincerely,
MCM CAPITAL GROUP, INC.
By: /s/ Xxxx X. Xxxxx
-----------------
Xxxx X. Xxxxx
Agreed and Accepted:
/s/ Xxxx X. Xxxxxxx, III
------------------------
Xxxx X. Xxxxxxx, III
Date: March 20, 2002
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XXXX X. XXXXXXX III
PRESIDENT
OF
MCM CAPITAL GROUP, INC.
MIDLAND CREDIT MANAGEMENT, INC.
EMPLOYMENT TERM SHEET
PROVISION TERM COMMENTS
--------- ---- --------
CONTRACT TERM Initial Term through May Automatic one (1) year
22, 2002 extensions granted at the
end of such initial term and
each annual anniversary
thereafter, unless the
executive or the Company
gives notice ninety (90)
calendar days before such
extension is or would take
effect.
BASE SALARY $350,000/year, to be paid Subject to annual review
("Base Salary") on a regular basis by the during January of each year
Company in accordance with commencing in 2002.
the Company's payroll
procedures and policies.
ANNUAL CASH The executive shall be
INCENTIVE BONUS eligible to receive annual
cash bonuses based on the
Company and individual
performance assessed for
each fiscal year relative to
objectives agreed to in
advance between the
executive and the Board;
provided that with respect
to the year ended December
31, 2001, the executive's
cash bonus shall be no less
than $175,000.
Executive's bonus target
shall be 100% of his Base
Salary.
STOCK OPTIONS 300,000 options with an Additional grants to be
exercise price of considered annually.
$1.00/share.
50% will vest: The grant, vesting and
1/3 on May 23, 2000, exercising of options shall
1/3 on May 23, 2001, and be governed by the Company's
1/3 on May 23, 2002. Equity Participation Plan,
25% will vest on May 23, as it may be amended or
2003. restated from time to time
25% will vest on May 23, and any Stock Option
2004. Agreement between
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the executive and the Company.
Options will vest on change
of control (as defined in
Annex A)
BENEFITS Benefits as are generally
made available to other
executives of the Company,
including participation in
the Company's
health/medical and
insurance programs, or at
the executive's election,
the continuation of the
executive's existing
health/medical/disability
or similar insurance.
VACATION 4 weeks per year. Can carry forward any unused
days in accordance with
Company policy.
EXPENSES Reasonable and necessary
out-of-pocket expenses
incurred in the performance
of duties shall be
reimbursed by the Company
in accordance with its
policies.
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Annex A
For purposes of this Agreement, the term "Change of Control" shall mean and
include any one or more of the following events:
(i) the Company is merged into or consolidated with another corporation,
in a transaction in which, upon completion, the Company's stockholders
beneficially own (within the meaning of Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), less than 50% of the total voting
securities entitled to vote generally in the election of directors of the
surviving or resulting company outstanding;
(ii) all or substantially all of the assets of the Company are
acquired by another corporation;
(iii) any person (as such term is used in Section 13(d) and 14(d)(2) of
the Exchange Act), other than any employee benefit plan of the Company or any
subsidiary of the Company or any entity holding shares of capital stock of the
Company for or pursuant to the terms of any such employee benefit plan in its
role as an agent or trustee for such plan, shall acquire 50% or more of the
Company's outstanding voting stock entitled to vote generally in the election of
directors; or
(iv) a majority of the Directors of the Company being Individuals not
nominated by the Board of Directors.
Notwithstanding the foregoing, the events described above shall not be
deemed to be a "Change of Control" if they occur as a result of (i) a
transaction involving any person (as defined in clause (iii) above) which is the
beneficial owner (as defined in clause (i) above) as of the date of this
Agreement, of more than 5% of the Company's outstanding voting stock entitled to
vote generally in the election of directors or any "associate" or "affiliate" of
such person (as such terms are defined in Rule 405 promulgated under the
Securities Act of 1933, as amended) or (ii) in the case of clause (iii) above, a
person acquiring such 50% ownership position as a result of the acquisition by
the Company of its voting stock which reduces the number of outstanding shares
of voting stock of the Company.
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Annex B
GENERAL RELEASE
AND COVENANT NOT TO XXX
TO ALL WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW that:
Xxxx X. Xxxxxxx III (the "Executive"), on his own behalf and on behalf of
his descendants, dependents, heirs, executors and administrators and permitted
assigns, past and present, in consideration for the amounts payable to the
undersigned under that Letter Agreement dated as of May 22, 2000 (the
"Employment Agreement") between Executive and MCM Capital Group, Inc. (the
"Company"), does hereby covenant not to xxx or pursue any litigation (or file
any charge or otherwise correspond with any Federal, state or local
administrative agency) against, and waives, releases and discharges the Company,
and its respective assigns, affiliates, subsidiaries, parents, predecessors and
successors, and the past and present shareholders, employees, officers,
directors, representatives and agents or any of them (collectively, the "Company
Group"), from any and all claims, demands, rights, judgments, defenses, actions,
charges or causes of action whatsoever, of any and every kind and description,
whether known or unknown, accrued or not accrued, that Executive ever had, now
has or shall or may have or assert as of the date of this General Release
against any of them, including, without limiting the generality of the
foregoing, any claims, demands, rights, judgments, defenses, actions, charges or
causes of action related to employment or termination of employment or that
arise out of or relate in any way to the Age Discrimination in Employment Act of
1967 ("ADEA), as amended, the Older Workers Benefit Protection Act, Title VII of
the Civil Rights Act of 1964, as amended, and other Federal, state and local
laws relating to discrimination on the basis of age, sex or other protected
class, all claims under Federal, state or local laws for express or implied
breach of contract, wrongful discharge, defamation, intentional infliction of
emotional distress, and any related claims for attorneys' fees and costs;
provided, however, that nothing herein shall release any member of the Company
Group from any of its obligations under the Employment Agreement or any rights
to indemnification under any charter or by-laws (or similar documents) of any
member of the Company Group. The Executive further agrees that this General
Release and Covenant to Xxx xxx be pleaded as a full defense to any action, suit
or other proceeding covered by the terms hereof which is or may be initiated,
prosecuted or maintained by the Executive, his heirs or assigns. Notwithstanding
the foregoing, the Executive understands and confirms that he is executing this
General Release and Covenant Not to Xxx voluntarily and knowingly, and this
Covenant Not to Xxx shall not affect the Executive's right to claim otherwise
under ADEA. In addition, the Executive shall not be precluded by this Covenant
from filing a charge with any relevant Federal, State or local administrative
agency, but the Executive agrees not to participate in, and agrees to waive his
rights with respect to any monetary or other financial relief arising from any
such administrative proceeding.
The Company, on its own behalf and on behalf of its assigns, affiliates,
subsidiaries, parents, predecessors and successors, and its past and present
shareholders, employees, officers, directors, representatives and agents or any
of them, does hereby covenant not to xxx or pursue
9
any litigation (or file any charge or otherwise correspond with any Federal,
state or local administrative agency) against, and waives, releases and
discharges Executive and his heirs, successors and assigns, descendants,
dependents, executors and administrators, past and present, and any of his
affiliates and each of them (collectively, the "Executive Releasees") from any
and all claims, demands, rights, judgments, defenses, actions, charges or causes
of action whatsoever, of any and every kind and description, whether known or
unknown, accrued or not accrued, that the Company or any of its subsidiaries
ever had, now has or shall or may have or assert as of the date of this General
Release against any of them, based on facts known to any executive officer of
the Company as of the date of this General Release and Covenant Not to Xxx
(other than the Executive), including specifically, but not exclusively and
without limiting the generality of the foregoing, any and all claims, demands,
agreements, obligations and causes of action arising out of or in any way
connected with any transaction, occurrence, act or omission related to
Executive's employment by the Company or any of its subsidiaries or the
termination of that employment; provided, however, that nothing herein shall
release the Executive Releasees from any obligations arising out of or related
in any way to Executive's obligations under the Employment Agreement or any
agreement governing the terms of any stock options granted to the Executive or
impair the right or ability of the Company to enforce the terms thereof.
In consideration for the amounts payable to the Executive under the
Employment Agreement, the Executive agrees to cooperate, at the expense of the
Company Group, with the members of the Company Group in connection with all
litigation relating to the activities of the Company and its affiliates during
the period of the Executive's employment with the Company including, without
limitation, being available to take depositions and to be a witness at trial,
help in preparation of any legal documentation and providing affidavits and any
advice or support that the Company or any affiliate thereof may request of the
Executive in connection with such claims.
In furtherance of their respective agreements set forth above, each of the
Executive and the Company hereby expressly waives and relinquishes any and all
rights under any applicable statute, doctrine or principle of law restricting
the right of any person to release claims which such person does not know or
suspect to exist at the time of executing a release, which claims, if known, may
have materially affected such person's decision to give such a release. In
connection with such waiver and relinquishment, each of the Executive and the
Company acknowledges that it is aware that it may hereafter discover claims
presently unknown or unsuspected, or facts in addition to or different from
those which it now knows or believes to be true, with respect to the matters
released herein. Nevertheless, it is the intention of each of the Executive and
the Company to fully, finally and forever release all such matters, and all
claims relative thereto which now exist, may exist or theretofore have existed,
as specifically provided herein. The parties hereto acknowledge and agree that
this waiver shall be an essential and material term of the release contained
above. In addition, and not by way of limitation to the foregoing, each of the
Executive and the Company fully understands and knowingly and expressly waives
its rights and benefits under Section 1542 of the California Civil Code or under
any similar provision of law. Section 1542 of the California Civil Code states
that:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of
10
executing the release, which if known by him must have materially
affected his settlement with the debtor."
Nothing in this paragraph is intended to expand the scope of the release as
specified herein.
This General Release shall be governed by and construed in accordance with
the laws of the State of California, applicable to agreements made and to be
performed entirely within such State.
To the extent that the Executive is forty (40) years of age or older, this
paragraph shall apply. The Executive acknowledges that he has been offered a
period of time of at least twenty-one (21) days to consider whether to sign this
General Release, which he has waived, and the Company agrees that the Executive
may cancel this General Release at any time during the seven (7) days following
the date on which this General Release has been signed by all parties to this
General Release. In order to cancel or revoke this General Release, the
Executive must deliver to the General Counsel of the Company written notice
stating that the Executive is canceling or revoking this General Release. If
this General Release is timely cancelled or revoked, none of the provisions of
this General Release shall be effective or enforceable and the Company shall not
be obligated to make the payments to the Executive or to provide the Executive
with the other benefits described in this General Release and all contracts and
provisions modified, relinquished or rescinded hereunder shall be reinstated to
the extent in effect immediately prior hereto.
Each party agrees that as part of the consideration for this General
Release, they will not make disparaging or derogatory remarks, whether oral or
written, about the other party or its representatives.
Each of the Executive and the Company acknowledge that they have entered
into this General Release knowingly and willingly and has had ample opportunity
to consider the terms and provisions of this General Release.
IN WITNESS WHEREOF, the parties hereto have caused this General Release to
be executed on this _____ day of __________________, 200__.
______________________________________
Xxxx X. Xxxxxxx III
MCM CAPITAL GROUP, INC.
By:___________________________________
Name:
Title:
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