EXHIBIT 10.1
MCM CAPITAL GROUP, INC.
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July 19, 1999
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Dear Mr. Koe:
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 term sheet (the "Term Sheet"). During the term of your employment with
the Company, you shall also serve as President and Chief Executive Officer of
Midland Credit Management, Inc. and Midland Financial Services, Inc., wholly
owned subsidiaries of the Company.
This letter agreement, which includes the Annex hereto, 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 This letter agreement may only be amended, superseded, canceled,
extended or renewed and the terms hereof waived, only by a written instrument
signed by the parties hereto, or in the case of a waiver, by the party waiving
compliance.
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
Phoenix, Arizona. You acknowledge that the Company's principal executive offices
are currently located in Hutchinson, Kansas and that you may need to spend time
at such offices in performance of your duties hereunder. 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 the third anniversary of the date hereof, provided that such term shall
be automatically extended for successive one year periods unless either you or
the Company gives written notice to the other, at least one-hundred eighty (180)
calendar days before such extension is to take effect, that they do not wish the
term to be extended. This Agreement may be terminated prior to the expiration of
the original term, or any extension thereof: (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 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 hereafter defined); or (iv) in the event that you give written
notice to the Company of your resignation.
For purposes of this letter 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 materially
adverse effect on the business or condition (financial or otherwise) of the
Company or any of its subsidiaries or affiliates; (ii) willful material
misrepresentation at any time by you to the Board, or any of Triarc Companies,
Inc., C.P. International Investments Limited or their affiliates (collectively,
the "Principal Stockholders"); (iii) willful failure or refusal to comply with
any of your material obligations hereunder or to comply with a reasonable and
lawful instruction 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 any of the
Principal Stockholders, or the Company; (v) indictment for any felony involving
fraud or moral turpitude, or conviction of 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 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 subsidiaries or affiliates;
or (vii) any willful failure to comply with the Company's, or any of its
subsidiaries' or affiliates' policies regarding ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇; provided,
however, that in the case of clause (vi) of the definition of "Cause" set forth
in this paragraph, if your failure or refusal referred to therein is curable by
you, then "Cause" shall not be deemed to exist unless you fail or refuse to so
cure within three (3) business days of your receipt from the Company of a
request for such cure and such request to cure is the first such request
delivered under this paragraph. A decision by the Company to deliver the notice
referred to in the fourth sentence of the third paragraph of this letter
agreement shall not constitute "Cause".
In the event of termination of your employment by the Company for
reasons other than: (i) those set forth in clauses (i) - (iv) of the third
paragraph of this letter agreement, or (ii) a decision by the Company not to
deliver the notice referred to in the third sentence of the third paragraph of
this letter agreement, the Company shall pay to you a sum equal to your annual
base rate of salary in effect as of the effective date of such termination,
payable in semi-monthly installments commencing with the month after such
termination until the earlier of (x) the end of the then effective term of this
letter agreement or (y) the first anniversary of such termination. In addition,
in such event, you will be entitled, (i) to receive 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, and (ii) at your election, to
continue your coverage under all health and medical insurance policies, pursuant
to Section 4980B of the Internal Revenue Code, as amended, or under Part 6 of
Title I of the Employee Retirement Income Security Act of 1974, as amended,
maintained by the Company, the cost of such coverage to be allocated between you
and the Company in a manner consistent with the allocation of health and medical
coverage costs applicable to other active executive officers of 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 A 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, such as credit cards, computers,
cellular phones, files, etc.
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 operations, industrial
relations, operations and acquisitions. 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, for a period of two (2) years
following the termination of your employment with the Company or the expiration
of the then current term of this letter agreement, as the case may be, you will
not engage or be engaged in any capacity, directly or indirectly, including, but
not limited to, as an employee, agent, consultant, manager, executive, owner or
stockholder (except as a passive investor owning less than one percent (1%)
interest in a publicly held company) in (i) any business or entity that is
engaged in the business of purchasing defaulted or charged-off retail
installment contracts, retail revolving contracts or other promissory notes (and
related security agreements) or other unsecured loan accounts in the auto
deficiency, consumer loan, credit card and student product lines, and managing,
restructuring, reselling and/or liquidating such accounts for itself as the
owner of such accounts, or (ii) any other business that the Company may be
engaged in during the term of this letter agreement. Notwithstanding clause (ii)
above, if this letter agreement is assigned by the Company as provided herein,
the terms of this paragraph 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.
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, 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 letter
agreement, that you will refrain from engaging in any conduct or making any
statement, written or oral, which is detrimental to the Company, its
subsidiaries or affiliated companies or any of their respective affiliates,
members, shareholders, officers, employees or directors.
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 preceding
two paragraphs, (b) you will indemnify and hold each of the Company, its
subsidiaries and either of the Principal Stockholders harmless from and against
any and all damages or loss incurred by either of the Principal Stockholders,
the Company or any of their affiliates (including reasonable attorneys' fees and
expenses; provided, however, that you shall not in connection with any one
action or separate but substantially similar action arising out of the same
allegation, be liable for the fees and expenses of more than one separate firm
of attorneys at any time for all indemnified parties hereunder, except to the
extent that local counsel, in addition to its regular counsel, is required in
order to effectively pursue such claim, or to the extent that any conflict or
potential conflict exists among the indemnified parties that would make separate
representation advisable) as a direct result of any willful or reckless
violation of such provisions; and (c) 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 and any earned but unpaid vacation or
except as may be required by law) as a result of any willful or reckless
violation of such provisions.
The provisions of the sixth, seventh and eighth paragraphs of
this letter agreement shall specifically survive any termination of this letter
agreement.
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 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, together with
any interest imposed by such taxing authority on such amount, within ninety (90)
days of notice to you of such determination.
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 date of receipt, (i) if to the Company, to the attention
of the Chairman of the Board at the address first written above, with a copy to
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This letter agreement and your rights and obligations hereunder
may not be assigned by you. 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.
This letter agreement shall be governed by the laws of the State
of Arizona applicable to agreements made and to be performed entirely within
such State.
You acknowledge that this letter agreement shall be valid and
binding against you upon execution by the Company and you. You also acknowledge
that this letter agreement shall not be binding against the Company until it has
been approved by the Company's Board of Directors.
If this agreement is not so approved by July 31, 1999, this letter agreement
shall be null and void and of no further force and effect.
If you agree with the terms outlined above and in the Term Sheet,
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/▇▇▇▇ ▇. ▇▇▇▇▇
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Chairman of the Board
Agreed and Accepted this 19th day of July, 1999:
/s/▇▇▇▇▇▇ ▇. ▇▇▇
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PRESIDENT AND CHIEF EXECUTIVE OFFICER
OF
MCM CAPITAL GROUP, INC.
MIDLAND CREDIT MANAGEMENT, INC. AND
MIDLAND FINANCIAL SERVICES, INC.
EMPLOYMENT TERM SHEET
PROVISION TERM COMMENTS
CONTRACT Three years, subject Automatic one year extensions,
TERM to automatic renewal. unless the Company or executive
gives 180 days' notice of
non-renewal.
BASE $225,000/year, to be
SALARY paid on a regular basis
by the Company in
accordance with the
Company's payroll
procedures and policies.
ANNUAL The executive shall be Any annual cash incentive bonus
CASH eligible to receive payable hereunder shall be paid to
INCENTIVE annual incentive cash the executive not later than 15
BONUS bonuses of up to 100% business days following the delivery
of Base Salary based on of the Company's audited financial
the Company and individual statements for the fiscal year with
performance assessed for respect to which such bonus is
each fiscal year relative payable.
to objectives agreed to
in advance between the
executive and the Board.
The executive shall be
eligible to receive an
incentive cash bonus on
a pro rata basis for 1999.
STOCK 100,000 options to be Further performance based grants to
OPTIONS granted promptly following be considered by the Board,
approval of agreement by
Company's Board of Directors.
Such options will have an
exercise price equal to fair
market value on the date of
grant and will vest 1/3 each
year on the first, second and
third anniversaries of the
date of grant
BENEFITS Benefits as are generally
made available to other
executives of the Company,
including participation
in the Company's health/medical
and insurance programs.
VACATION 4 weeks per year.
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.
Annex A
GENERAL RELEASE
AND COVENANT NOT TO ▇▇▇
TO ALL WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW that:
▇▇▇▇▇▇ ▇. ▇▇▇ (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 July 19, 1999 (the "Employment
Agreement") between Executive and MCM Capital Group, Inc. (the "Company"), does
hereby covenant not to ▇▇▇ 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, 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 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 ▇▇▇ 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 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 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 current
executive officer of the Company or any subsidiary or other affiliate thereof,
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
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 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 advise or support
that the Company or any affiliate thereof may request of the Executive in
connection with such claims.
This General Release shall be governed by and construed in accordance with
the laws of the State of Arizona, applicable to agreements made and to be
performed entirely within such State.
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__.
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MCM CAPITAL GROUP, INC.
By:______________________________
Name:
Title:
