EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
December 18, 1998, by and among DOLLAR FINANCIAL GROUP, INC., a New York
corporation ("DFG"), DFG HOLDINGS, INC., a Delaware corporation ("Holdings" and,
together with DFG, the "Employer") and XXXXXX X. XXXXXXXX, XX., who resides at
000 Xxxxxxx Xxxx, Xxxx Xxxx, XX 00000 (the "Executive").
W I T N E S S E T H :
WHEREAS, in connection with that certain Recapitalization of Holdings and a
Merger of DFG Acquisition, Inc. ("Acquisition") with Holdings (the "Merger"),
pursuant to the Agreement and Plan of Merger, dated as of November 13, 1998,
among Holdings, Acquisition and certain stockholders of Holdings (the "Merger
Agreement"), Employer desires to employ Executive and Executive desires to
accept employment by Employer upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, and intending to be legally bound hereby, the parties
hereby agree as follows:
1. Employment.
a. Employer agrees to employ Executive, and Executive agrees to be so
employed, in the capacity of President of each of Holdings and DFG.
b. Executive's employment hereunder shall be principally based in the
Berwyn, Pennsylvania area or within reasonable commuting distance of
Bryn Mawr, Pennsylvania. Reasonable travel in the normal course of
business may be required of Executive.
2. Term and Termination.
a. Executive's employment with Employer shall be for a term of two (2)
years, beginning on the date hereof and expiring on the second
anniversary of the date hereof (the "Term"). Upon expiration of the
Term, Executive shall immediately and automatically, with no notice
required, continue his employment "at will" and this Agreement shall
become an "at will" agreement which may thereafter be terminated by
either Executive or Employer at any time and for any reason.
b. Notwithstanding anything to the contrary in this Agreement, in the event
of Executive's decision to terminate his employment, Employer shall have
no further obligation to Executive, and no bonus or incentive
compensation for the year in which termination or resignation occurs
shall be payable.
c. In the event Executive's employment is terminated for Cause (defined as
willful misconduct, dishonesty, or the final, non-appealable
adjudication in a criminal or civil proceeding that Executive has
committed a criminal act), or
Executive resigns, Employer shall have no further obligation to
Executive, and no bonus or incentive compensation for the year in which
termination or resignation occurs shall be payable.
d. In the event Employer terminates Executive for any reason other than for
Cause: (i) during the first 12 months of the Term, Employer shall pay to
Executive severance payments, payable over a period of 12 months
consistent with Employer's normal payroll policies, equal in the
aggregate to the Base Salary and (ii) after the completion of the
initial 12 month period, Employer shall pay to Executive severance
payments payable over a period of 12 months, equal in the aggregate to
fifty percent (50%) of the Base Salary. In addition, in the event
Employer terminates Executive for any reason other than for Cause,
Executive's bonus for the year in which termination occurs shall be
calculated on the basis of the EBITDA results for the full fiscal year
in which termination occurs, but shall be pro rated based on the number
of days in such year in which Executive was employed by Employer.
e. In the event that Executive is terminated without Cause during the first
year, Executive shall not be required to seek alternative employment
which would serve to mitigate the payment to him of any severance
payment hereunder. In the event that Executive is terminated without
Cause during the term of this Agreement after the first year, Executive
shall be required to undertake good faith efforts to seek alternative
employment, and any compensation earned or amounts paid to Executive in
any such alternative employment shall serve to mitigate Employer's
severance payments to Executive hereunder.
3. Time and Efforts. Executive shall diligently and conscientiously devote
substantially his full business time and attention and best efforts to the
business of Employer and the discharge of his duties hereunder. It is
understood that Executive may serve as an outside director of one or more
corporations, without violating the terms hereof, provided that such
entities are not principally engaged in a business directly competitive with
Employer and subject to approval by the Board of Directors of Holdings.
4. Compensation.
a. Base Salary. In consideration of the services of the Executive, Holdings
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shall pay or cause one of its subsidiaries to pay to Executive a salary
at an annual rate of Two Hundred Twenty Five Thousand Dollars ($225,000)
(the "Base Salary"), in equal installments in accordance with the past
payroll practices of Employer, but in no event less frequently than
monthly. The Base Salary will be reviewed bi-annually by the board of
directors of Holdings in good faith and may be increased in the
discretion of the board of directors of Holdings, or a committee
thereof.
b. Bonus and Incentive Compensation. As additional compensation for the
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services of Executive, Holdings shall pay or cause one of its
subsidiaries to pay to Executive a cash bonus with respect to each
fiscal year, payable within
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thirty (30) days after the conclusion of the financial audit of the
relevant fiscal year.
i) Determination based on EBITDA. The actual bonus due under clause
(ii) below and all actual incentive compensation due under clause
(iii) below for the fiscal year ended June 30, 1999 ("FY1999") and
for any subsequent fiscal year shall be determined based upon the
achievement by the Employer of target annual income before income
taxes, depreciation, amortization and management fees ("EBITDA").
EBITDA for any fiscal year shall be based on the financial data as
reported in the audited annual financial statements of Holdings and
its subsidiaries for such year. The EBITDA target for FY1999 shall
be $36 million. EBITDA targets for fiscal years subsequent to FY
1999 shall be determined in good faith by the board of directors of
Holdings, or a committee thereof. EBITDA targets for a given fiscal
year shall be adjusted in the good faith determination of the board
of directors of Holdings for any acquisitions or dispositions made
in such fiscal year taking into consideration the impact of such
acquisition or disposition on EBITDA in such fiscal year.
ii) Annual bonus. For FY1999, Executive shall receive a maximum annual
bonus of One Hundred Thirty Five Thousand Dollars ($135,000) (pro
rated accordingly) for the period employed based upon achieving an
EBITDA of $36 million; provided, however, that the annual bonus
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shall be reduced ratably as EBITDA drops below $36 million and shall
be zero ($0), if EBITDA is $32.5 million or less. The annual bonus
for subsequent fiscal years during Executive's employment with
Employer shall be based on a formula similar to that used in FY1999,
with adjustments made in good faith by the board of directors of
Holdings. Any annual bonuses for FY 1999 hereunder shall be paid pro
rata for the period during which Executive is employed by Employer
hereunder.
iii) Annual incentive compensation. For FY1999, Holdings shall pay or
cause one of its subsidiaries to pay 1.3% of the incremental FY1999
EBITDA above $36 million to the Executive, subject to the
limitations of paragraph 4(c). The annual incentive compensation for
subsequent fiscal years during Executive's employment with Employer
shall be based on EBITDA targets established by the board of
directors pursuant to subparagraph (i) above, subject to the
limitations in paragraph 4(c), with adjustments made in good faith
by the board of directors of Holdings. Incentive compensation for FY
1999 shall be paid pro rata for the period during which Executive is
employed by Employer hereunder.
iv) Compliance with debt payment obligations. Regardless of whether an
EBITDA target is achieved, no bonus or incentive compensation will
be paid or payable to Executive if the Employer has defaulted or is
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not current on its debt payment obligations under any of its then
outstanding credit facilities, indentures or other debt instruments;
provided, that such withheld compensation shall be paid if such
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default is of a technical and nonsubstantive nature and is cured
within thirty (30) days of notice thereof.
c. Total compensation. Notwithstanding the foregoing provisions of this
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paragraph 4, the total compensation paid or caused to be paid to
Executive by Employer with respect to any fiscal year, including salary,
bonuses and annual incentive compensation but excluding the value of the
benefits set forth in paragraph 5, shall not exceed Four Hundred Ninety
Five Thousand ($495,000).
5. Benefits. Executive shall be entitled to full benefits as historically
provided to its senior management employees by Employer, subject to
compliance with all applicable laws. Executive shall also be eligible to
participate in all fringe benefit programs of Employer offered from time to
time to its senior management employees including, without limitation, auto
allowance, life insurance, disability insurance, dental and medical
coverage, profit sharing, pension, 401(k), and vacation.
6. Expenses. Employer will reimburse Executive for all reasonable, ordinary
and necessary expenses (including travel, business entertainment and
business development) incurred by him in carrying out his duties under this
Agreement. Executive shall present Employer with an itemized statement of
such expenses in such form as the Employer may request or consistent with
policies of the Employer. The availability of such reimbursements from the
Employer is subject to compliance with all applicable laws.
7. Equity Obligations and Rights.
a. On the closing date of the Merger, Executive shall become entitled to
receive options to purchase up to 399.4319 shares (representing
approximately two percent (2%)) of the Class A Common Stock of Holdings
(the "Options") and such Options shall vest over a five (5) year period
in equal monthly installments and shall not be entitled to any
preemptive rights. The Options shall be subject to dilution pro-rata by
the issuance of any equity securities at the closing of the Merger or
subsequent to the Merger (including options, warrants and other
convertible securities) to unaffiliated third parties and by the grant
and exercise of any management options. In the event that Executive's
employment shall terminate for any reason, any unvested Options issued
to Executive shall terminate and be cancelled, and Executive shall have
sixty (60) days to exercise any vested portion of the Options which
shall terminate and be cancelled if unexercised within such sixty (60)
day period.
b. The shares issuable pursuant to the Options are subject to equitable
adjustment to take into account stock dividends, stock splits,
recapitalizations
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and other dilutive events, all as reasonably determined in good faith by
the board of directors of Holdings.
8. Corporate Opportunities. If Executive receives notice of or otherwise
obtains information regarding potential acquisitions and other corporate
opportunities within Employer's then current and prospective lines of
business, Executive agrees to offer such acquisitions and other corporate
opportunities first to Employer and second to GEI II or its affiliates,
after which Executive shall be free to proceed independently to exploit such
acquisitions and other corporate opportunities, subject to the provisions of
paragraph 3 hereof.
9. Covenant Not to Compete. In consideration of the compensation and other
benefits to be paid to Executive pursuant to this Agreement, Executive
agrees that he will not, without prior written consent of the board of
directors of Holdings, for a period the greater of: (i) two (2) years
following the termination of Executive's employment with Employer for any
reason whatsoever or (ii) one (1) year beyond any payment or repurchase made
pursuant to this Agreement by Employer (or to such lesser extent and for
such lesser period as may be deemed enforceable by a court of competent
jurisdiction, it being the intention of the parties that this paragraph 9
shall be so enforced):
a. directly or indirectly engage in the United States, Canada or any other
country in which the Employer now or hereafter conducts business, in any
business in direct competition with the business conducted by Employer
at the time of termination or any business that Employer has a bona fide
plan to commence or enter into, either as an officer, director,
employee, independent contractor or as a 2% or greater owner, partner,
or stockholder in a publicly traded entity;
b. directly or indirectly cause or request a curtailment or cancellation of
any significant business relationship that Employer has with a current
or prospective vendor, business partner, supplier or other service or
goods provider that would have a material adverse impact on the business
of Employer; or
c. directly or indirectly induce or attempt to influence any employee of
Employer to terminate his or her employment with Employer.
d. In addition to and without limiting the foregoing, upon the termination
of the Executive's employment by the Employer for any reason, Executive
shall not at any time directly or indirectly disclose, use, transfer or
sell to any person, firm or other entity any trade, technical or
technological secrets, any details of organization or business affairs,
or any confidential or proprietary information of Employer. For the
purposes of this paragraph 9, the term Employer shall be deemed to
include Employer and all of its subsidiaries.
10. Inventions. All patents, trademarks, trade names, copyrights, inventions,
discoveries, financial models, computer software, graphics products,
advertising
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products, promotional materials, market studies and business plans
(collectively, the "Intellectual Property") relating to Employer's business
that Executive may make, conceive or learn during his employment by the
Employer (whether during working hours or otherwise, or within six (6)
months following the termination of his employment for any reason) shall be
the exclusive property of Employer. Executive agrees to disclose any such
Intellectual Property to the board of directors of Holdings and to do at
Employer's expense all lawful things necessary or useful to assist Employer
in securing their full enjoyment and protection. In the event of any breach
or threatened breach of the provisions of this paragraph 10 or the preceding
paragraph 8, Employer may apply to any court of competent jurisdiction to
enjoin such breach. Any such remedy shall be in addition to Employer's
remedies at law under such circumstances.
11. Notices. Any notice given hereunder shall be in writing and delivered or
mailed by certified mail or overnight courier service (with proof of
delivery) and addressed to the appropriate party at the address set forth
below or at such other address as the party shall designate from time to
time in a notice.
If to Executive:
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Xxxxxx X. Xxxxxxxx, Xx.
000 Xxxxxxx Xxxx
Xxxx Xxxx, XX 00000
Telephone: (000) 000-0000
If to Employer:
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DFG Holdings, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
With a copy to:
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Green Equity Investors II, L.P.
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx Annick
Telephone: (000) 000-0000
12. Binding Effect. This Agreement shall inure to the benefit of and be binding
upon Employer, and its successors and assigns. Executive acknowledges that
these services are unique and personal. Accordingly, Executive may not
assign any of his rights or delegate any of his duties or obligations under
this Agreement.
13. Waiver. Failure to insist in any one or more instances on strict compliance
with the terms of this Agreement shall not be deemed a waiver. Waiver of a
breach of any
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provision of this Agreement shall not be construed as a waiver of any
subsequent breach.
14. Governing Law; Disputes. This Agreement is made and delivered in, and shall
be construed in accordance with the substantive laws of, the Commonwealth of
Pennsylvania and the United States of America without regard to conflict of
law principles. Any claims, controversies, demands, disputes or differences
between or among the parties hereto arising out of, or by virtue of, or in
connection with, or otherwise relating to this Agreement shall be submitted
to and settled by arbitration conducted in Philadelphia, Pennsylvania before
three arbitrators, each of whom shall be knowledgeable in the field of
employment law. Such arbitration shall otherwise be conducted in accordance
with the rules then obtaining of the American Arbitration Association. The
parties hereto agree to share equally the responsibility for all fees of the
arbitrators, abide by any decision rendered as final and binding, and waive
the right to appeal the decision or otherwise submit the dispute to a court
of law for a jury or non-jury trial. The parties hereto specifically agree
that neither party may appeal or subject the award or decision of any such
arbitrator to appeal or review in any court of law or in equity or by any
other tribunal, arbitration system or otherwise. Judgment upon any award
granted by such an arbitrator may be enforced in any court having
jurisdiction thereof.
15. Severability. In the event that any provision of this Agreement shall be
determined to be invalid by a court of competent jurisdiction, such
determination shall in no way affect the validity or enforceability of any
other provisions hereof.
16. Entire Agreement; Miscellaneous. The parties acknowledge and agree that they
are not relying on any representations, oral or written, other than those
expressly contained herein. This Agreement supersedes all proposals, oral or
written, all negotiations, conversations or discussions between the parties
and all course of dealing. All prior understandings and agreements between
the parties regarding employment matters are hereby merged in this
Agreement, which alone is the complete and exclusive statement of their
understanding as to employment. No waiver or modification of this Agreement
shall be valid unless the same shall be in writing and signed by the party
sought to be charged therewith. Time is of the essence in this Agreement and
each and every provision hereof. This is a personal services agreement; no
agency, partnership, joint venture or other joint relationship is created
hereby. The parties acknowledge that they each participated in drafting this
Agreement, and there shall be no presumption against any party on the ground
that such party was responsible for preparing this Agreement or any part
hereof. Paragraph headings are for convenience of reference only and are not
intended to create substantive rights or obligations.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
undersigned as of the day and year first above written.
DFG HOLDINGS, INC. DOLLAR FINANCIAL GROUP, INC.
By: __________________________ By: ________________________
(Employer) (Employer)
__________________________
Xxxxxx X. Xxxxxxxx, Xx.
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