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EXHIBIT 10.3
May 14, 1998
Mr. Gregory R. Ciccolini
6249 East Gelding Drive
Scottsdale, Arizona 85254
Re: Terms of Employment
Dear Greg:
I am pleased that you have accepted the offer of employment made by
Cygnet Financial Corporation ("Cygnet"). The purpose of this letter is to
confirm the terms and conditions under which you will be employed.
POSITION: You will serve as Chief Information Officer of Cygnet. As Chief
Information Officer you will be responsible for the operation and
use of all technology and information systems employed by Cygnet.
You will also manage all personnel involved in these systems. You
will report to the Chief Executive Officer of Cygnet. You will be
employed on a full-time basis and will devote all of your working
time and efforts exclusively to Cygnet. Your position is an
executive position and, therefore, you are exempt from the
minimum wage and overtime provisions of the Fair Labor Standards
Act.
LOCATION: Your office will be located at 2525 East Camelback Road, Phoenix,
Arizona 85016. The location of your office may be changed from
time to time. Also, you may be required to provide services from
time to time at other Cygnet locations. You may also be required
to travel in the performance of services.
SALARY: You will receive a salary at the rate of $120,000.00 per year.
Your salary will be reviewed annually in December and may be
adjusted at the discretion of the Board of Directors of Cygnet.
BENEFITS: Enclosed is a summary of the employee benefits of Ugly Duckling
Corporation. Cygnet is expected to have similar benefits. You
will be entitled to the current benefits of Ugly Duckling
Corporation as an employee of Cygnet.
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Mr. Gregory R. Ciccolini
May 12, 1998
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STOCK OPTIONS: You will receive a nonqualified option to purchase 20,000 shares
of common stock of Cygnet (the "Stock Options") upon completion
of the "spin-off" of Cygnet from Ugly Duckling Corporation (the
"Spin-Off"). The exercise price of the Stock Options will be the
price that Ugly Duckling Corporation shareholders must pay to
acquire common stock of Cygnet in the Spin-Off (the "Spin-Off
Price"). The Stock Options will vest over five years from the
date of grant and be subject to other usual and customary terms
and conditions. The Stock Options are granted to provide you an
incentive to work in a manner that adds as much value as possible
to Cygnet. However, Cygnet makes no representations or warranties
as to, and, shall have no liability for, the value of the Stock
Options or the price of common stock of Cygnet at any time. You
acknowledge that the issuance and/or exercise of the Stock
Options may constitute compensation to you and you shall be
responsible for paying all income taxes assessed on said
compensation.
STOCK GRANT: As a signing bonus, you will receive the right to be issued that
number of shares of common stock of Cygnet at the Spin-Off Price
equal to $50,000 (the "Restricted Stock"). The Restricted Stock
will vest and be issued to you on June 1, 2002, provided you are
then employed by Cygnet. The Restricted Stock is granted to
induce you to bear all risk of terminating your current
employment and accepting employment with Cygnet under the terms
of this letter. However, Cygnet makes no representations or
warranties as to, and, shall have no liability for, the value or
price of the Restricted Stock at any time. You acknowledge that
the issuance of the Restricted Stock will constitute compensation
to you and you shall be responsible for paying all income taxes
assessed on said compensation. You authorize Cygnet to withhold
from the Restricted Stock at the time of issuance that number of
shares with a value equal to the withholdings required by
applicable law. If any withholdings are required prior to the
issuance of the Restricted Stock you authorize Cygnet to make the
withholdings from your Salary. The Restricted Stock will not be
registered under the Securities Act of 1933 and will be subject
to transfer restrictions under Rule 144 of the Securities Act of
1933.
TERM: Your employment will commence on June 1, 1998. There is no
minimum term for your employment. You are employed at will and
your employment may be terminated at any time for any lawful
reason, all at the discretion and will of Cygnet. However, if
your employment is terminated by Cygnet without cause prior to
June 1, 1999, then your Salary, but not any other benefits, will
be continued for six months. If your employment is terminated (a)
by Cygnet without cause after June 1, 1999; (b) by Cygnet at any
time for cause; or (c) by you at any time, then your Salary will
not be continued after the termination. The continuation of your
Salary, if required, will be a severance benefit (the "Severance
Benefit") and the Severance Benefit will be your exclusive
benefit and remedy for the termination of your employment by
Cygnet.
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Mr. Gregory R. Ciccolini
May 12, 1998
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without cause. For purposes of this letter and the
termination of your employment by Cygnet without
cause, "without cause" shall mean termination for
any reason other than your (a) illegal conduct;
(b) gross negligence or intentional misconduct;
(c) willful failure to perform your duties after
receipt of written demand for performance of your
duties; or (d) conduct that harms or threatens to
harm any employee of Cygnet or any employee of any
organization that does business with Cygnet.
CHANGE OF CONTROL: If a change in control of Cygnet occurs during the
term of your employment and your employment by
Cygnet is either (a) terminated by you within 12
months after the change of control; (b) terminated
by Cygnet without cause within 90 days prior to
the change of control; or (c) terminated by Cygnet
without cause within 12 months after the change of
control, then in any such event all Stock Options
and Restricted Stock granted to you pursuant to
this letter that are not yet vested at the time of
the change of control shall automatically be fully
vested, subject to approval of the Board of
Directors of Cygnet. If the vesting of your Stock
Options and Restricted Stock is accelerated due to
the termination of your employment in connection
with a change of control then no Severance Benefit
shall be payable to you. For purposes of this
letter, change of control shall be defined by the
Long Term Incentive Stock Option Plan of Ugly
Duckling Corporation but shall include the removal
and/or resignation of Ernest C. Garcia II as the
Chairman of the Board of Directors of Cygnet.
OTHER TERMS: There are no material terms and conditions of your
employment other than as stated in this letter.
This letter constitutes a legally binding and
enforceable contract under Arizona law. You
acknowledge that you have received the advice of
independent legal counsel prior to signing this
letter.
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Mr. Gregory R. Ciccolini
May 12, 1998
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If these terms and conditions of employment are acceptable to you, then
please acknowledge your acceptance by signing this letter and returning it to
me. If you have any questions or comments regarding these terms and conditions
of your employment, please contact me or Ernie Garcia.
I look forward to working with you.
Cordially,
/s/ STEVEN P. JOHNSON
Steven P. Johnson
General Counsel
SPJ:ag
Accepted this 18 day of May, 1998.
/s/ GREGORY R. CICCOLINI
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Gregory R. Ciccolini
Social Security No. ________________