1
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This agreement, made effective as of September 7, 1998, is by and between
PawnMart, Inc., hereinafter referred to collectively as the "Company", with its
principal office at 000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxxx, Xxxxx 00000,
and Xxxxxxx X. Record, hereinafter referred to as "Executive".
Whereas Company wishes to assure itself of the services of Executive and
Executive is willing to serve in the employ of the Company on a full-time basis
and upon the other terms and conditions hereinafter provided; therefore, in
consideration of the mutual covenants herein contained, the parties hereby agree
as follows:
1. EMPLOYMENT
The Company agrees to employ Executive, and Executive agrees to enter the employ
of the Company, upon the terms and conditions provided herein.
2. POSITION AND RESPONSIBILITIES
During the term of this Agreement, the Executive shall serve as President of the
Company. Executive shall perform in a professional manner all assigned duties
relating to store operations and such other reasonable duties and
responsibilities as the Chief Executive Officer of the Company may assign to the
Executive from time to time, but not limited to, the following:
A. The Executive shall abide by and comply with the operating and human
resources policies of the Company in accordance with this Agreement;
and
B. The Executive shall avoid any actions that might damage, harm or
discredit the reputation of the Company, its shareholders, or Board of
Directors.
3. TERM OF EMPLOYMENT
Executive's employment under this Agreement shall commence as of September 8,
1998.
4. COMPENSATION
A. Salary
Executive shall be paid a gross salary of $10,000 per month, in equal
bi-weekly installments for services of the Executive.
B. Annual Review
Salary is subject to review and adjustment at the beginning of FY
1999, and is also subject to review and adjustment at the beginning of
each Fiscal year thereafter. All salary adjustments shall be
consistent with the Company's salary policy as of the time of review.
C. Bonuses and Incentive Compensation
Executive shall receive a $30,000.00 signing bonus to be paid over a
period of six (6) months in thirteen (13) equal bi-weekly installments
of $2,307.69.
Executive shall be eligible to participate in Company's Bonus Plan
upon Company's achievement of an acceptable level of profitability and
the development of the Bonus Plan.
2
D. Stock Options
Executive shall receive an initial grant of 125,000 stock options,
with an exercise price of $3.00 per share. Of the initial grant,
33,300 will be considered ISO's. The grant of stock options will vest
as follows:
33,300 options immediately vested, with the remaining 91,700
options vesting over a four (4) year period at 22,925 options per
year. No additional option grants will be planned until the
beginning of FY 2000.
All salary, bonus, and other payments are subject to applicable FIT and FICA
withholding taxes.
5. REIMBURSEMENT OF EXPENSES
The Company shall pay or reimburse Executive for all reasonable and customary
travel and other expenses incurred by him in performing his obligations under
this Agreement. All expense reimbursements will require the approval of the Vice
President - Finance.
6. BENEFIT PLANS
Executive shall be eligible to participate in all Company sponsored benefit
programs as described in the Company's human resources policies and procedures
and related summary plan descriptions.
7. CHANGE OF CONTROL
A change of control event shall occur when:
A. The ownership of the Company changes by an amount of 50% or more in a
twelve (12) month period of time; or
B. The composition of the Board of Directors changes by 50% or more
during a twelve (12) month period of time.
8. TERMINATION
This Agreement shall terminate upon either of the following events:
A. Executive Voluntary Termination
1. Thirty (30) days after written notice of resignation to the Chief
Executive Officer by Executive or sooner than thirty (30) days if
waived by the Chief Executive Officer; or
2. Executive's retirement;
B. Executive Involuntary Termination "for cause"
1. Executive's termination "for cause" shall mean
X. Xxxxx, habitual or willful failure to comply with Company
policies and procedures, or failure to perform duties and
such performance is not corrected within thirty (30) days
after written notice by the Company or the Chief Executive
Officer; or
B. Misconduct, including but not limited to conviction of a
crime or entry of a plea of nolo contendre with regard to a
crime involving moral turpitude or dishonesty, repeated
insubordination or refusal to comply with any reasonable
requests of the Board relating to the scope or performance
of duties, or conduct that in the good
3
faith and reasonable determination of the Board demonstrates
gross unfitness to serve.
2. Employment with the Company may be terminated "for cause" at any
time by the Company upon no more than two (2) weeks notice.
3. If employment is terminated "for cause" the Company will make no
further salary payments except those earned, up to and including
the date of termination.
9. SEVERANCE PROVISION
Upon termination of this Agreement, Executive shall be entitled to the following
severance benefits:
A. Voluntary Resignation
No severance will be paid.
B. Involuntary termination "without cause"
Executive's termination from the Company "without cause" prior to
December 31, 2000, will result in Company paying to Executive an
amount equal to one-half (1/2) of Executive's annual base salary.
Executive shall receive one-half (1/2) of his annual base salary
compensation at the time of a change in control event as a severance
payment.
Executive's heirs, estate or assigns shall receive one-twelfth (1/12)
of his annual base salary compensation at the time of his death.
Executive shall receive one-fourth (1/4) of his annual base salary
compensation following ninety (90) days of continuous disability and
upon certification by a licensed medical doctor that Executive can no
longer perform his occupation.
Executive shall receive a pro rata distribution of any performance
bonus payment that would have otherwise been paid to Executive
following the completion of the Company's fiscal year.
C. Involuntary termination "for cause"
If Executive's employment is terminated for cause, Company will make
no further salary payments except those earned up to and including the
date of termination.
10. METHOD OF SEVERANCE PAYMENT
Severance payments due hereunder shall be in either one lump sum amount or equal
bi-weekly payments, less taxes, as determined by the Company. For the receipt of
this severance payment, Executive shall acknowledge and sign a Separation and
Release of All Claims document.
11. ARBITRATION
Should any dispute about terms and conditions of this contract arise and the
employment thereunder, at the election of either party said dispute shall be
resolved by binding and non-appealable arbitration utilizing the rules of the
American Arbitration Society and applicable Texas statutes. Notice for demand or
arbitration shall be in writing by certified mail within 10 days of event giving
rise for set arbitration. Cost of arbitration will be determined by arbitrators.
4
12. MISCELLANEOUS
Any notices to be given herewith by either party to the other may be effected
either by personal delivery in writing or by mail, registered or certified,
postage prepaid with return receipt requested. Notices delivered personally
shall be considered communicated as of the actual receipt; mail notices shall be
considered communicated as of two (2) days after mailing.
This Agreement represents the entire agreement between the parties and
supersedes any and all other agreements, either oral or written, between the
parties hereto with respect to employment of the Executive and the Company. This
Agreement contains all of the covenants and agreements between the parties with
respect to such employment in any manner whatsoever. This Agreement shall be
binding upon the successors and assigns of the parties hereto.
Each party to this Agreement acknowledges that no representations have been made
or shall be made which are not contained herewith and that any other agreement,
assurance or statement shall be invalid and not binding. This Agreement may not
be amended orally and may only be modified in writing, signed by both Executive
and the Company.
This Agreement shall be binding upon and shall enure to the benefit of the
Executive and the Company and their respective heirs, successors and assigns.
Should any provision of this Agreement be held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remaining provisions
shall nevertheless continue in full force and effect without being impaired or
invalidated in any way.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
above written.
PAWNMART, INC.
BY: /s/ Xxxxxxx X. Record BY: /s/ Xxxxxx X. Xxxxxxxx
September 7, 1998 September 7, 1998
----------------------------- -----------------------------
Date Date
