EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
November 13, 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 XXXXXXX XXXXX, who resides at 000 Xxxxxx-
Xxxxxxx Xxxx, Xxxxxxxxx, XX 00000 (the "Executive").
W I T N E S S E T H :
WHEREAS, Employer and Executive are parties to a certain Employment
Agreement, dated as of August 8, 1996 (the "Prior Agreement");
WHEREAS, certain subsequent events, including a Recapitalization of
Holdings and a Merger of Holdings with DFG Acquisition, Inc. (the "Merger"),
make a termination of the Prior Agreement appropriate as of the first business
day immediately subsequent to the consummation of the Merger (the "Effective
Date");
WHEREAS, Employer and Executive mutually agree to terminate the Prior
Agreement, effective as of the Effective Date;
WHEREAS, in the event the Merger is not consummated, the Prior Agreement
shall remain effective and this Agreement will be considered null and void
without liability or obligation to any party hereto;
WHEREAS, Employer desires to continue to employ Executive and Executive
desires to accept employment by Employer upon the terms and conditions
hereinafter set forth; and
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. Effective Date and Termination of Prior Agreement. The Prior Agreement is
hereby terminated effective as of the Effective Date and superseded by this
Agreement. In the event that the Merger is not consummated, this Agreement
shall be deemed null and void without liability or obligation to any party
hereto and the Prior Agreement shall remain effective without any
modifications thereto. The Executive shall be entitled to his accrued salary
and bonus under the Prior Agreement, prorated to the Effective Date. Except
as set forth in this paragraph 1, as of the Effective Date, Employer and
Executive shall have no further obligations under the Prior Agreement.
2. Employment.
a. Employer agrees to employ Executive, and Executive agrees to be so
employed, in the capacity of Chief Executive Officer of each of Holdings
and DFG, for the Term (as defined herein), unless earlier terminated in
accordance with the provisions of this Agreement.
b. Each of Holdings and DFG agrees to use its commercially reasonable
efforts, subject to stockholder vote, to nominate Executive to the
boards of directors of both DFG and Holdings, and further to nominate
Executive as Chairman of such boards for so long as he is employed by
Employer in the capacity of Chief Executive Officer.
c. Executive's employment hereunder shall be principally based in the
Berwyn, Pennsylvania area or within reasonable commuting distance of
Villanova, Pennsylvania.
3. Term and Termination.
a. The term of Executive's employment hereunder shall be for a period of
five (5) years, commencing on the Effective Date (the "Term").
b. Upon Executive's decision to terminate his employment, Employer shall
have no further obligation to Executive, except as otherwise expressly
provided herein.
c. Notwithstanding any other provisions herein, Executive's employment
under this Agreement may be terminated by the Employer without further
obligation to Executive, at any time for Cause (defined, for purposes of
this Agreement, as (i) Executive's failure to cure or remedy any
material mismanagement or negligence in the management of Employer's
business within fifteen (15) days after written notice by Employer of
such mismanagement or negligence; (ii) Executive's willful refusal,
after written notice by Employer, to cure within a period of fifteen
(15) days any material breach of this Agreement or failure to perform
any material obligation set forth herein; (iii) an act of fraud, theft,
dishonesty or deceit committed against the Employer, including any
intentional material misrepresentation to the board of directors of
either Holdings or DFG; or (iv) a final non-appealable adjudication in a
criminal or civil proceeding (including any settlement or plea of nolo
contendere) that Executive has committed a fraud, dishonest act, an act
of moral turpitude or any other felony or misdemeanor relating to or
adversely affecting Executive's employment, the business of the Employer
or the ability of Executive to perform his obligations herein).
d. In the event that Executive is terminated by the Employer, other than
for Cause, in relation to a Change of Control (as defined herein),
Executive shall have the right to demand payment in full, discounted to
present value at the prime rate of interest charged by the Employer's
primary lender, of any unpaid Base Salary for the Term, without
mitigation (the "Severance Benefit").
e. In the event Executive is terminated by the Employer, other than for
Cause, under any circumstances not related to a Change of Control,
Executive shall be paid his Base Salary in equal installments in
accordance with past payroll practices of Employer for the remainder of
the Term. Executive shall not be
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required to seek alternative employment following the payment to him of
any such Base Salary pursuant to this paragraph 3(e); however, any
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compensation earned or amounts paid to Executive in any such alternate
employment shall serve to mitigate Employer's severance obligations to
Executive hereunder. Notwithstanding the foregoing, Employer shall be
responsible for not less than the lesser of one (1) year's Base Salary
or the Base Salary remaining unpaid for the Term, regardless of
mitigation offsets.
f. For purposes of this Agreement, a Change of Control shall be deemed to
have occurred if and when:
i) a person or entity other than Green Equity Investors II, L.P., or
any affiliate, related party or entity controlled by Xxxxxxx Xxxxx
& Partners, L.P., or sponsored fund thereof (collectively "GEI
II") owns equity securities having at least 51% of the voting
power of Holdings (or any successor or surviving entity);
ii) either DFG or Holdings becomes a subsidiary of an entity
unaffiliated with GEI II or shall be merged or consolidated into
another entity and the voting power of the surviving entity is
owned at least 51% by a person or entity other than GEI II; or
iii) all or substantially all of the assets of either DFG or Holdings
shall have been sold to a party or parties the equity of which is
owned at least 51% by a person or entity other than GEI II.
g. Except as otherwise required by law, (i) in the event of Executive's
termination with Cause, the benefits payable to Executive pursuant to
paragraph 6 of this Agreement shall cease effective as of the date of
termination and (ii) in the event of Executive's termination without
Cause, Employer shall maintain the health benefits provided to Executive
by Employer at the time of termination for the remainder of the Term,
subject to mitigation offset.
4. Time and Efforts.
a. Executive shall diligently and conscientiously devote substantially all
of his business time and attention and best efforts to the business
affairs of Employer and the discharge of his duties hereunder.
b. Notwithstanding the foregoing, Employer acknowledges and agrees that
Executive may:
i) maintain current board memberships in companies that do not
compete against Employer or any subsidiaries (including, without
limitation, Avalon Investment Partners, LLC, NCI Acquisition
Corporation and Cloverdale Press, Inc.). Executive must obtain
prior consent of Employer to engage in additional board
memberships, which consent shall not be unreasonably withheld or
delayed; and
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ii) reasonably maintain or add to current personal investments;
provided, however, any involvement or additional activities allowed
under this paragraph 4(b), including any investment holdings or
activities, shall not be competitive or detrimental to Employer or
otherwise interfere in any manner with Executive's performance of his
duties under this Agreement.
5. 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 Five Hundred Thousand Dollars ($500,000) (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
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 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 Three Hundred Fifty Thousand Dollars ($350,000) (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 the Term shall be based
on a
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formula similar to that used in FY1999, with adjustments made in
good faith by the board of directors of Holdings. Any annual
bonuses 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 2.5% of the incremental
FY1999 EBITDA above $36 million to the Executive, subject to the
limitations of paragraph 5(c). The annual incentive compensation
for subsequent fiscal years during the Term shall be based on
EBITDA targets established by the board of directors pursuant to
subparagraph (i) above, subject to the limitations in paragraph
5(c), with adjustments made in good faith by the board of
directors of Holdings, and shall be paid pro rata for the period
during which Executive is employed by Employer hereunder.
iv) Bonus, incentive compensation and termination. Notwithstanding
anything to the contrary in this Agreement: (i) in the event
Executive's employment is terminated by reason of Cause, or by
Executive's decision to terminate his employment, no bonus or
incentive compensation for the year in which termination or
resignation occurs shall be payable; and (ii) if Executive's
employment terminates for any other reason, Executive's bonus and
incentive compensation 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 Executive's
bonus and incentive compensation shall be pro rated based upon the
number of days in such year in which he was employed by Employer.
v) 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 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
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paid if such 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 5, 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 6, shall not exceed One Million Two
Hundred Thousand Dollars ($1,200,000).
6. Benefits. Executive shall be entitled to full benefits as historically
provided to Executive by Employer, subject to compliance with all applicable
laws. Executive
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shall be eligible to participate in all fringe benefit programs of Employer
offered from time to time to its senior management employees including:
i) auto allowance at present rate;
ii) club memberships at present rate;
iii) appropriate class of travel;
iv) $35,000 annually for Executive to purchase his own life insurance
and disability insurance (the "Executive Insurance Policy");
v) reimbursement of tax and financial planning costs, not to exceed
$10,000 annually;
vi) uninsured medical and dental costs, not to exceed $15,000
annually;
vii) participation in any non-discriminatory profit-sharing or ERISA
pension, 401(k) and related plans as they are or may be in
effect; and
viii) one month paid vacation.
7. 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.
8. Equity Obligations and Rights.
a. During the Term, except in a transaction expressly permitted in this
Agreement or a transaction described in Sections 2.4, 3.1 and 4.3 of the
Stockholder's Agreement (as defined below), Executive agrees not to,
directly or indirectly, sell, transfer or otherwise dispose of (the
"Sale") any of the equity securities of Holdings now owned or hereafter
acquired by Executive, unless: (i) such Sale is to the spouse or minor
child of Executive or any trust in which Executive has voting control
and established for estate planning purposes (provided such spouse,
minor child or trust is subject to the pledge of shares, restrictions on
transfer and the repurchase rights and obligations set forth herein);
(ii) such Sale is part of a transaction in which GEI II sells at least
five percent (5%) of the then outstanding equity securities of Holdings
to a third party (subject to such terms and conditions as may be
determined by GEI II) or (iii) the board of directors of Holdings
approves of such Sale by Executive.
b. On the closing date of the Merger, Executive shall have the right (the
"Initial Right") to purchase 1335.9908 shares of Class A Common Stock of
Holdings (the "Shares") on the same economic terms with the common
equity investment in Holdings of GEI II, but subject to repurchase and
other terms as described herein. If GEI II makes any additional equity
investment in Holdings after the closing date of the Merger, Executive
shall have the right (together with the Initial Right, the "Rights") to
purchase the same equity securities in Holdings on the same economic
terms as GEI II (the "Additional
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Shares"), in an amount sufficient to enable Executive to maintain the
6.29% equity investment in Holdings represented by the Shares on a fully
diluted basis, after Executive and GEI II have been diluted pro-rata by
the issuance of any equity securities at the closing of the Merger as
set forth in Schedule 1 attached hereto or subsequent to the Merger
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(including options, warrants and other convertible securities) to
unaffiliated third parties and by the grant and exercise of any
management options as set forth on Schedule 1 attached hereto and
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provided for in a management option plan to be adopted by Holdings at
the closing of the Merger or shortly thereafter.
c. Employer will make available to Executive an interest free loan or loans
(the "Equity Loan") equal to the aggregate purchase price of the Shares
and Additional Shares (if any). Such Equity Loan shall be repayable on
the date that is one (1) year after the end of the Term; provided,
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however, subject to the rights of the Employer (or GEI II) to repurchase
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the Shares or Additional Shares, the Equity Loan shall be repayable
immediately in the event that Executive is terminated, Executive
terminates his employment or Executive dies or becomes disabled;
provided, further, however, in the event of a termination by Employer
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not for Cause or the death or disability of Executive, such acceleration
and repayment obligation shall be reasonably held in abeyance (not to
exceed 150 days) if the Executive or his legal representative requires
such additional 150 days to liquidate the equity securities in order to
repay such Executive Loan. For purposes of this Agreement, "disabled" or
"disability" shall mean Executive's inability to perform substantially
all of his duties and responsibilities to the Employer by reason of a
physical or mental illness, injury, infirmity or condition for a
continuous period of one hundred eighty (180) days or one or more
periods aggregating one hundred eighty (180) days in any twelve (12)
month period or at such earlier time as Executive or Employer submits
medical evidence in the form of a physician's certification that
Executive has a physical or mental illness, injury, infirmity or
condition that will likely prevent Executive from substantially
performing all of his duties and responsibilities for one hundred eighty
(180) days or longer. Such Equity Loan will be collateralized by a
pledge of the Shares, the Additional Shares and 400.85 shares of Class A
Common Stock of Holdings previously owned by Executive (collectively,
the "Collateral"). The recourse of the Employer to collect upon the
Equity Loan shall be limited to the Collateral and Employer shall have
no further recourse against Executive in order to collect any such
amounts. In the event that Employer forecloses upon the Collateral,
Executive shall retain the benefit of the amount by which the value of
the Collateral (as determined in accordance with paragraph 8(d)(i)
below) exceeds the principal due on the Equity Loan. If Holdings shall
exercise a right, or have an obligation hereunder or under the
Stockholder's Agreement to repurchase from the Executive any equity
securities in Holdings, the outstanding principal balance of the Equity
Loan shall be applied against the purchase price of such repurchase
rights or obligations. Subject to compliance with this Agreement and the
Stockholder's Agreement, in the event of a Sale of the Collateral by
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Executive, the proceeds of such Sale shall first be applied to
immediately repay the Equity Loan, regardless of the maturity date of
the Equity Loan.
d. The Shares and Additional Shares shall be subject to the following terms
and provisions:
i) In the event Executive's employment is terminated by Employer for
Cause or by Executive's decision to terminate his employment, or
in the event of Executive's death or disability, then Employer (or
GEI II) shall have the option to repurchase from Executive the
Shares and the Additional Shares. The repurchase price of such
Shares and Additional Shares shall be determined as set forth
herein. A certain number of Shares and Additional Shares shall be
repurchased at the purchase price paid by Executive (the "Purchase
Price Shares"), which number shall be determined in the following
manner: (A) for the Shares, by multiplying the number of Shares
purchased by Executive by a fraction, the numerator of which is
the number of months remaining in the Term, and the denominator of
which is 60; and (B) for the Additional Shares, if any, by (i)
multiplying the number of Additional Shares purchased on any
specific date by a fraction, the numerator of which is the number
of whole months remaining from the date of termination to the date
that is 60 months from the specific purchase date (the "Additional
Term(s)") of such Additional Shares and the denominator of which
is 60, and (ii) aggregating the number of Additional Shares
determined pursuant to the foregoing clause (i) for each specific
purchase date (the number of shares determined by subparagraphs
(A) and (B) above shall be referred to as the "Repurchase
Number"); provided, however, in the event that: (i) GEI II shall
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sell, transfer, or otherwise dispose of for profit (including
through a merger or public offering) any of its equity securities
of Holdings to a third party during the Term (any such sale,
transfer or disposition being referred to as a "GEI II Sale"), the
number of Purchase Price Shares shall be limited to a number which
is the lesser of (I) the Repurchase Number or (II) the amount
determined by multiplying the total number of Shares and
Additional Shares by a fraction the numerator of which shall be
the total number of equity securities then held by GEI II and the
denominator of which shall be the total number of equity
securities that would have been held by GEI II, if no GEI II Sale
had theretofore occurred; or (ii) a death or disability of the
Executive shall occur during the Term, the number of months
remaining in the Term or the Additional Term(s) shall be rounded
down to the nearest 12 month increment. Any equity securities of
Holdings that do not constitute Purchase Price Shares shall be
repurchased at the then fair market value as determined in good
faith by the board of directors of Holdings in accordance with
Schedule 2 attached hereto. The purchase price to be paid by
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Employer shall be applied against the outstanding balance of the
Equity Loan.
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ii) Subject to the provisions of paragraph 8(e) below, in the event of
Executive's death or disability during the Term, at the election
of the Executive or his legal representative, the Employer shall
be obligated to repurchase the Shares and Additional Shares with
the purchase price being applied against the outstanding balance
of the Equity Loan (the "D&D Put"). The repurchase price of the
Shares and Additional Shares subject to the D&D Put shall be
determined in accordance with the provision of paragraph 8(d)(i)
above. The repurchase obligation of the Employer pursuant to the
D&D Put is limited to the outstanding balance of the Equity Loan.
The obligation of Employer to repurchase the Shares or Additional
Shares is subject to Employer's compliance with certain covenants
and other obligations under its credit agreements, indentures and
other debt instruments. The Shares and Additional Shares subject
to repurchase shall be free and clear of any and all liens,
claims, charges and encumbrances other than the pledge of such
shares to secure the Equity Loan.
iii) In the event that the repurchase of the equity securities of
Holdings would result in a violation of applicable law or of any
contract of Holdings (including, without limitation, a violation
of any covenants in an indenture, credit agreement or other debt
instrument) such repurchase right or obligation shall be tolled
for up to six (6) months to allow Holdings to take reasonable
actions to avoid or cure such violation. If Holdings is unable to
avoid or cure such violation within the six (6) month period, the
repurchase right or obligation shall terminate and expire without
affecting the nonrecourse status of the Equity Loan.
e. During the Term of this Agreement, the Employer shall use commercially
reasonable efforts to maintain the two key man insurance policies on the
life and disability of the Executive for coverage equal to an aggregate
of Ten Million Dollars ($10,000,000) (the "Key Man Policy") that are
currently in place as of the date hereof. Holdings or DFG shall own the
Key Man Policy and Holdings shall be the beneficiary thereunder.
Provided that Employer is able to maintain such insurance, in the event
of Executive's death or disability, the Executive or his legal
representative shall have the right to put (the "Put") any equity
securities of Holdings (including the Shares and Additional Shares) held
by Executive or his legal representative to Holdings for up to the full
amount of the net proceeds actually received by Holdings under the Key
Man Policy; provided, however, if any Shares, Additional Shares or other
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equity securities are subject to the Equity Loan, the Executive Loan or
any other indebtedness to the Employer, any outstanding balance of such
loans shall be repaid first before any payments are made by Holdings
from the proceeds of the Key Man Policy. The repurchase price of the
Shares and Additional Shares shall be determined in accordance with the
provisions set forth in paragraph 8(d)(i) above. The aggregate amount of
the Put shall not exceed the aggregate value of: (i) the outstanding
balances of the Equity
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Loan, the Executive Loan and any other indebtedness of the Executive to
the Employer and (ii) the net proceeds actually received by Holdings
pursuant to the Key Man Policy. If properly exercised, the Put shall be
settled first by the cancellation of any outstanding balance under the
Equity Loan, the Executive Loan and any other indebtedness of Executive
to Employer, and then in cash promptly following receipt of the
insurance proceeds by Holdings. The Put shall be exercised, if at all,
by written notice from the Executive or his legal representative to
Holdings within sixty (60) days following Executive's death or
disability. To the extent that the Key Man Policy is not available on
commercially reasonable terms or an exclusion from coverage is
applicable, the obligations of Holdings to repurchase equity securities
pursuant to the Put shall be limited to a total amount of One Million
Dollars ($1,000,000) in cash, in addition to any repurchase of equity
securities for up to the full amount of any outstanding indebtedness of
Executive to Holdings. The obligation of Holdings to repurchase the
equity securities pursuant to the Put is subject to Employer's
compliance with certain covenants and other obligations in its credit
agreements, indentures and other debt instruments. The equity securities
in Holdings owned by the Executive subject to the Put shall be free and
clear of any and all liens, claims, charges and encumbrances other than
the pledge of such shares to Holdings.
f. In the event that Executive terminates his employment (including a death
or disability of Executive) or Employer terminates Executives employment
for Cause, the Employer (or GEI II) shall have the option and right to
repurchase all of the equity securities of Holdings (other than the
Shares and Additional Shares which are governed by paragraph 8(d)(i))
(the "Call Option"), then owned, directly or indirectly, by Executive.
The repurchase price of such equity securities shall be determined in
good faith by the board of directors of Holding in accordance with
Schedule 2 attached hereto. The repurchase price paid to Executive shall
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be applied against any outstanding balances of the Equity Loan, the
Executive Loan or any other indebtedness of Executive to Employer, in
the case of the Equity Loan, to the extent that the shares covered by
such repurchase are the subject of a pledge securing the Equity Loan.
g. On the date hereof, GEI II, Holdings and its stockholders have executed
a Stockholder's Agreement (the "Stockholder's Agreement"). All equity
securities now owned or subsequently acquired by Executive shall be
subject to the terms of the Stockholder's Agreement. The Rights are
personal to the Executive and are non-transferable.
h. The repurchase price and the number of shares subject to the repurchase
rights or obligations of Holdings are subject to equitable adjustment to
take into account stock dividends, stock splits, recapitalizations and
other dilutive events, all as reasonably determined in good faith by the
board of directors of Holdings.
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9. Executive Loan. In addition to the Equity Loan, Employer shall make
available to Executive an interest free loan for up to Two Million Dollars
($2,000,000) (the "Executive Loan"). The Executive Loan will be secured by
310.0775 shares of Class A Common Stock of Holdings that are not already
subject to the Equity Loan. The Executive Loan shall be repayable on the
date that is one (1) year from the end of the Term; provided, however,
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subject to the rights of the Employer (or GEI II) to repurchase the equity
securities of Executive, the Executive Loan shall be repayable immediately
in the event that Executive is terminated, Executive terminates his
employment or Executive dies or becomes disabled; provided, further,
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however, in the event of a termination by Employer not for Cause or the
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death or disability of Executive, such acceleration and repayment obligation
shall be reasonably held in abeyance (not to exceed 150 days) if the
Executive or his legal representative requires such additional 150 days to
liquidate the equity securities in order to repay such Executive Loan. The
shares pledged in connection with the Executive Loan will be valued at the
then current fair market value, in accordance with Schedule 2 attached
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hereto for purposes hereof and in the event of foreclosure. Subject to
compliance with this Agreement and the Stockholder's Agreement, in the event
of a Sale by the Executive of the equity securities pledged pursuant to the
Equity Loan, the proceeds of such Sale shall first be applied to immediately
repay the Executive Loan, regardless of the maturity date of the Executive
Loan.
10. 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, after which Executive
shall be free to proceed independently to exploit such acquisitions and
other corporate opportunities, subject to the provisions of paragraph 4
hereof.
11. 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 11
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;
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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, whether
before or after the expiration of the Term, 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 11, the term Employer shall be deemed to include Employer
and all of its subsidiaries.
12. Inventions. All patents, trademarks, trade names, copyrights, inventions,
discoveries, financial models, computer software, graphics products,
advertising 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 the term of his
employment by the Employer (whether before, during or after the Term,
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 12 or the preceding
paragraph 11, 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.
13. 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.
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If to Executive:
---------------
Xxxxxxx Xxxxx
000 Xxxxxx-Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
With a copy to:
--------------
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP
000 Xxxxx 00xx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
If to Employer:
--------------
DFG Holdings, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
With a copy to:
--------------
Green Equity Investors II, L.P.
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx Annick
Telephone: (000) 000-0000
14. 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.
15. 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 provision of this Agreement shall not be construed as a waiver
of any subsequent breach.
16. 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
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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.
17. 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.
18. 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.
-14-
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)
------------------------
Xxxxxxx X. Xxxxx
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Schedule 1
----------
Stockholder Number of Shares
----------- ----------------
GS Mezzanine Partners, L.P. 522.6861
GS Mezzanine Partners Offshore, L.P. 280.6742
Stone Street Fund 1998, L.P. 22.3748
Bridge Street Fund 1998, L.P. 6.7531
Ares Leveraged Investment Fund, L.P. 104.0610
Ares Leveraged Investment Fund II, L.P. 104.0610
New Mgmt Option Plan 1,413.3186
-16-
Schedule 2
----------
Fair market value of the Class A Common Stock, par value $.001 (the "Common
Stock"), of DFG Holdings, Inc. (the "Company") shall be determined as follows:
(a) for the purposes of the Agreement, the "fair market value" of each
of the shares of the Common Stock of the Company shall be determined on the
basis of the fair market value of the entire common equity of the Company
as of the date of valuation, less an appropriate discount for lack of
liquidity and minority interest; provided however, such discount for lack
-------- -------
of liquidity and minority interest shall not apply in the event such
stockholder owns on the closing date of the Merger at least ten percent
(10%) of the entire common equity of the Company;
(b) during the 60 day period following the date of termination or the
date on which an option or other repurchase event occurs or a repurchase
right is exercised (as the case may be), the Executive with respect to whom
such event occurred or such right was exercised (as the case may be), or
his personal representative, on the one hand, and the Board of Directors of
the Company (the "Board of Directors") (following consultations with GEI
II, if GEI II other than the Company is exercising a repurchase right), on
the other hand, shall attempt, reasonably and in good faith, to agree upon
the fair market value;
(c) in the event the Executive (or his personal representative, as the
case may be) and the Board of Directors are unable to so agree, than within
ten (10) business days after the expiration of said sixty (60) day period,
the Board of Directors and such Executive (or his personal representative,
as the case may be) shall mutually agree upon, and retain, a nationally
recognized independent appraiser of closely held businesses (the
"Appraiser"). The Executive (or his personal representative, as the case
may be), on the one hand, and the Board of Directors, on the other hand,
shall each submit to the Appraiser such parties' respective opinions as to
the fair market value, together with such supporting data as such party
deems relevant. The Appraiser shall then conduct its own evaluation of
such opinions and such data, and shall conduct such independent procedures
and investigation as the Appraiser shall deem necessary in order to form an
opinion as to the fair market value. However, the Appraiser shall be
limited to selecting, as the fair market value, either (x) the opinion of
the Executive (or his personal representative, as the case may be), or (y)
the opinion of the Board of Directors. The Appraiser shall give written
notice of its determination to the Executive (or his personal
representative, as the case may be) and the Company. The fair market value
as determined by the Board of Directors shall be the "Board Fair Market
Value" and the fair market value as determined by the Executive (or his
personal representative) shall be the "Executive Fair Market Value". If
the Appraiser shall select the Board Fair Market Value, the fees and costs
of the Appraiser shall be paid by the Executive (or his personal
representative, as the case may be). If the Appraiser shall select the
Executive Fair Market Value, the fees and costs of the Appraiser shall be
paid by the Company.
-17-
