Exhibit 10.3

 

EXECUTION VERSION

 

February 15, 2012

 

JAMES A. OVENDEN

135 NORTH CHURCH STREET

SPARTANBURG, SC 29306

 

Re: Modification to Change of Control Agreement

 

Dear Jim:

 

As you know, Eagle U.S. Sub, Inc., a Delaware corporation (“Eagle U.S. Sub”),
Eagle U.S. Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary
of Eagle U.S. Sub (“Merger Sub”), and Advance America, Cash Advance
Centers, Inc., a Delaware corporation (the “Company”), have entered into an
Agreement and Plan of Merger, dated as of February 15, 2012 (the “Merger
Agreement”), pursuant to which Merger Sub will merge with and into the Company,
and the Company will become a wholly owned subsidiary of Eagle U.S. Sub (the
“Merger”).  Each of Eagle U.S. Sub, the Company and you are referred to herein
collectively as the “Parties.”

 

This Modification to Change of Control Agreement (“Agreement”) amends your
Change of Control Agreement with the Company, dated and effective as of May 23,
2011 (the “Change of Control Agreement”), pursuant to Section 15(a) of the
Change of Control Agreement, to become effective upon the consummation of the
Merger.  Capitalized terms used in this Agreement and not otherwise defined
shall have the respective meanings assigned to them in the Change of Control
Agreement.  Absent this Agreement, the consummation of the transactions
contemplated by the Merger Agreement would provide you Good Reason to terminate
employment.  In order to provide you with appropriate incentives to remain with
the combined company following the Merger, to provide the Company with certain
covenants regarding your conduct during and following your employment and to
otherwise meet the Company’s needs, the Parties have determined to enter into
this Agreement.

 

Accordingly, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereby agree and confirm as follows,
subject to and effective upon the consummation of the Merger:

 

1.  Eagle U.S. Sub and the Company acknowledge that, upon the consummation of
the transactions contemplated by the Merger Agreement, a Change of Control will
occur during the Effective Period, and the Severance Provisions will become
effective on the Change of Control Date.

 

2.  Eagle U.S. Sub shall cause the Company to, and the Company shall, honor the
provisions (including the Severance Provisions and related protections) of the
Change of Control Agreement, as modified hereby.  The Change of Control Period
shall be increased so that it shall expire on the expiration of the 30-month
period immediately following the Change of Control Date.

 

3.  Immediately following the consummation of the Merger, your target annual
cash bonus shall remain equal to 75% of your annual base salary.  Following
consummation of the Merger, Eagle U.S. Sub intends to cause the Company to
maintain the same general format of your annual cash bonus for 2012 (and
subsequent years), but will substitute budgeted EBITDA (as adjusted for one-time
effects associated

 

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with the Merger in 2012) for EPS; and in evaluating the discretionary component
for 2012, to place the greatest consideration on your individual contribution to
the Company’s performance, your results in maintaining continuity of the
business, and your results in integrating the Company with Grupo Elektra S.A. de
C.V.

 

4.             (a)  In lieu of severance payments or benefits under Sections
4(a)(ii) and (iii), 4(b) and 4(c) of the Change of Control Agreement, the
Company shall establish as of the Effective Time (as defined in the Merger
Agreement) an account (the “Retention Account”) in an amount equal to the sum of
(A) the product of (1) 2.0 multiplied by (2) the total of your base salary and
Target Bonus immediately prior to the Effective Time plus (B) the Pro Rata Bonus
that would have been payable under Section 4(a)(ii) of the Change of Control
Agreement if you had experienced an Involuntary Termination immediately after
the Effective Time.  The Retention Account shall be adjusted for interest from
and after the Effective Time through the applicable payment date at the rate
publicly announced by Citibank, N.A. as its prime rate, on the first Business
Day (as defined in the Merger Agreement) following the date on which the
Effective Time occurs (the “Prime Rate”).  The Retention Account, as adjusted
for interest, shall be payable to you (subject to the provisions of Section 8
and Section 9 of the Change of Control Agreement) after the earlier of (i) the
first anniversary of the Effective Time or (ii) your termination of employment
with the Company for any reason, including due to your death or Disability;
provided, however, that if (x) you voluntarily terminate your employment without
Good Reason (as modified by paragraph 5 below) or (y) your employment is
terminated by the Company for Cause, in either case prior to the first
anniversary of the Effective Time, the Retention Account shall be forfeited. 
Payment shall be made in a single cash payment within fifteen days after the
first anniversary of the Effective Time or, if payable due to a termination of
your employment before the first anniversary of the Effective Time as
contemplated above, on the 60th day after such termination of employment,
provided that, in all cases payment is expressly conditioned on you (or in the
case of your death, the executor of your estate) providing the Company with a
Waiver and Release that has become irrevocable in accordance with its terms
prior to the designated payment date.  The form of such Waiver and Release shall
be adjusted as set forth on Annex A attached hereto in the event it is being
delivered at a time while you are still employed or in connection with your
death, and shall in no event be effective to waive any claims that arise after
the date the Waiver and Release is signed.  In case of death, payment of the
Retention Account will be made to your surviving spouse, or if you do not have a
surviving spouse, to your estate.

 

(b)  The provisions of Sections 4(a)(i), (iv) and (v) of the Change of Control
Agreement, as modified by this Agreement, shall remain in effect and shall be
payable upon an Involuntary Termination during the Change of Control Period.

 

5.             You acknowledge and agree that you shall not have Good Reason to
terminate your employment as a result of (i) the consummation of the
transactions contemplated by the Merger Agreement, (ii) the Company ceasing to
be an independent publicly traded corporation and becoming a private company and
subsidiary of Eagle U.S. Sub, (iii) the change in your duties and
responsibilities arising solely from the foregoing and (iv) the treatment of
your outstanding Restricted Stock (as defined in the Merger Agreement) as
contemplated by the Merger Agreement and this Agreement.  For the sake of
clarity, nothing in this Agreement shall affect your ability to claim Good
Reason as a result of affirmative actions to modify your duties and
responsibilities or reduce your compensation or benefits taken by Eagle U.S. Sub
or the Company following the Merger.  Eagle U.S. Sub and the Company consent to
you serving as a non-employee director of each of Flagstar Bankcorp, Inc.,
Haights Cross Communications, Inc., and one additional publicly traded company
(provided that such activities are not in competition with the Company and do
not conflict or unreasonably interfere with the performance of your duties for
the Company) and that your serving in accordance therewith in such capacity
shall not constitute Cause.

 

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6.             (a)  Notwithstanding Section 2.4 of the Merger Agreement, and
notwithstanding the provisions of the Change of Control Agreement, you agree
that (i) the vesting of 50% of any Restricted Stock granted to you during 2012
shall accelerate as a result of the consummation of the Merger, and the amounts
otherwise payable to you in respect of such Restricted Stock shall be payable at
the same times and in the same manner as are payments in respect of Single
Trigger Restricted Stock (as defined in the Merger Agreement) pursuant to
Section 2.4 of the Merger Agreement, (ii) the vesting of the remaining 50% of
such Restricted Stock shall not accelerate as a result of the consummation of
the Merger, and (iii) the amounts otherwise payable to you in respect of such
non-accelerated Restricted Stock pursuant to Section 2.4 of the Merger Agreement
(the “Non-Accelerated Equity Amount”) shall be paid (subject to the provisions
of Section 8 and Section 9 of the Change of Control Agreement) on the first
anniversary of the date on which the Effective Time occurs, adjusted for
interest from the date on which the Effective Time occurs through such payment
date at the Prime Rate; provided, however, that if (x) you voluntarily terminate
your employment without Good Reason (as modified by paragraph 5) or (y) your
employment is terminated by the Company for Cause, in either case prior to the
first anniversary of the Effective Time, the Non-Accelerated Equity Amount under
this clause (iii) shall be forfeited.  Payment of the Non-Accelerated Equity
Amount shall be made in a single cash payment within fifteen days after the
first anniversary of the Effective Time or such earlier termination of
employment, as applicable.  In case of your death, payment of the
Non-Accelerated Equity Amount will be made to your surviving spouse, or if you
do not have a surviving spouse, to your estate.

 

(b)  You agree and confirm that effective upon the consummation of the Merger,
all of your outstanding Company equity awards (both vested and un-vested) under
the Company’s 2004 Omnibus Stock Plan shall be cancelled in exchange for the
right to receive the consideration described in Section 2.4 of the Merger
Agreement as modified by this Agreement.

 

7.  You acknowledge that the Protective Covenant Agreement, dated as of May, 23,
2011, between you and Advance America, Inc. remains in full force and effect and
that you remain bound by the obligations set forth in the Protective Covenant
Agreement.

 

8.  The Company currently intends to develop during 2012 and implement during
2013 (with the timing of initial awards consistent with the Company’s past
practice for timing of equity-based award grants) a long term cash incentive
plan in which you and other senior level executives of the Company shall be
eligible to participate.

 

9.  In light of the importance to Eagle U.S. Sub of (a) obtaining clarity with
respect to the application of the Change of Control Agreement and the treatment
of outstanding Restricted Stock in connection with the consummation of the
Merger, and (b) securing confirmation of the continuing binding effect of the
Protective Covenant Agreement, you specifically acknowledge for such purposes
that your agreement to enter into this Agreement is a material inducement to the
willingness of Eagle U.S. Sub to enter into the Merger Agreement, and that Eagle
U.S. Sub would not otherwise enter into the Merger Agreement in the absence of
your execution of this Agreement.

 

Except as expressly amended or modified in this Agreement, the provisions of the
Change of Control Agreement are and shall remain in full force and effect and
are hereby ratified and confirmed.  To the extent that a provision of this
Agreement conflicts with or differs from a provision of the Change of Control
Agreement, such provision of this Agreement shall govern.  This Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware, without giving effect to any choice of law or conflict of law
provision or rule that would cause the application of the laws of any
jurisdiction other than the State of Delaware.  This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.

 

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This Agreement will automatically terminate without any action on the part of
any person or entity and be void ab initio if the Merger Agreement is terminated
in accordance with its terms, and neither the Company, Eagle U.S. Sub nor any
other person or entity shall have any liability to you under this Agreement if
the Merger is not consummated.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties as of
the date first written above.

 

 

 

EAGLE U.S. SUB, INC.

 

 

 

 

 

 

 

By:

/s/ Rodrigo Pliego

 

Name: Rodrigo Pliego

 

Title: President

 

 

 

By:

/s/ Gabriel Roqueñí

 

Name: Gabriel Roqueñí

 

Title: Secretary

 

 

 

 

 

ADVANCE AMERICA, CASH ADVANCE CENTERS, INC.

 

 

 

 

 

 

 

By:

/s/ J. Patrick O’Shaughnessy

 

Name: J. Patrick O’Shaughnessy

 

Title: President and Chief Executive Officer

 

 

 

 

 

 

 

/s/ James A. Ovenden

 

JAMES A. OVENDEN

 

Signature Page to Modification to Change of Control Agreement

 

 

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