EXHIBIT 10.5
EXECUTION
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EMPLOYMENT AGREEMENT
by and among
ASSET ACCEPTANCE HOLDINGS LLC
and
PREMIUM ASSET RECOVERY CORP.
and
XXXX X. XXXXXXXXX
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Dated as of April 28, 2006
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TABLE OF CONTENTS
PAGE
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1. Employment; Term................................................. 1
2. Position and Duties.............................................. 1
3. Compensation; Benefits........................................... 2
4. Exclusivity...................................................... 4
5. Reimbursement for Expenses....................................... 4
6. Termination...................................................... 4
7. Confidentiality and Non Competition. ........................... 4
8. Remedies......................................................... 4
9. Deductions from Compensation..................................... 4
10. Termination Benefits............................................. 4
11. Extension of Restricted Periods.................................. 4
12. Successors; Binding Agreement.................................... 4
13. Waiver and Modification.......................................... 4
14. Severability..................................................... 4
15. Submission to Jurisdiction; Venue................................ 4
16. WAIVER OF JURY TRIAL............................................. 4
17. Blue Pencilling.................................................. 4
18. Notices.:........................................................ 4
19. Captions and Paragraph Headings.................................. 4
20. Entire Agreement................................................. 4
21. Counterparts..................................................... 4
22. Acknowledgment and Independent Legal Advice...................... 4
23. Governing Law.................................................... 4
24. Tax Matters...................................................... 4
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as
of this 28th day of April, 2006, by and among Asset Acceptance Holdings LLC, a
Delaware limited liability company (the "Company"), Premium Asset Recovery
Corp., a Florida corporation ("PARC"), and Xxxx X. Xxxxxxxxx (the "Executive").
BACKGROUND
A. The Company acquired 100% of the issued and outstanding shares of the
capital stock of PARC, pursuant to a certain Stock Purchase Agreement dated as
of April 26, 2006, among the Company, the Executive, and PARC's other
stockholders (the "Stock Purchase Agreement").
B. The Executive is currently a stockholder and has served PARC
continuously during the past five (5) years as its senior vice president of
medical business development and the Executive's services have constituted a
material factor in the successful growth and development of PARC.
C. The Company desires to retain the unique experience, ability and
services of the Executive and to prevent any other competitive business from
securing his services and utilizing his experience, background and know-how.
D. The execution and delivery of this Agreement is a condition to the
consummation of the transactions contemplated by the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows.
AGREEMENT
1. EMPLOYMENT; TERM. PARC hereby agrees to employ the Executive and the
Executive hereby accepts employment with PARC, on the terms and subject to the
conditions set forth in this Agreement. The Executive's employment hereunder
shall commence on the date hereof and shall end on the third anniversary of the
date hereof unless otherwise terminated or extended pursuant to the terms of
this Agreement (the "Employment Period"). In the event the Executive continues
to be employed after the expiration of the Employment Period, the Executive
shall be an "at-will" employee of PARC who may terminate his employment with
PARC at any time, or the Executive may be terminated by PARC or the Company, at
any time, with or without Cause (as hereinafter defined).
2. POSITION AND DUTIES. Subject to the terms and conditions contained
herein, the Executive shall serve as Sr. Vice President - Business Development
of PARC and, in such capacity, shall provide such services and perform such
functions, consistent with the nature of such position, as shall be determined
from time to time by, or pursuant to authority of, the board of directors of
PARC (the "Board of Directors") and such other reasonable duties as are from
time to time designated by the President of PARC. The Executive shall be
authorized to make purchases related to charged off consumer receivables in the
healthcare industry ("Medical
Purchases") pursuant to PARC's policies and procedures governing the purchase of
receivables as determined by the Company's Board of Directors, from time to
time, which policies and procedures may be subject to the approval of Asset
Acceptance Capital Corp.'s ("AACC") Board of Directors. The Executive shall
observe all directives, rules, policies, regulations, customs and practices now
or hereafter established by PARC or the Company for the conduct of its business
to the extent the foregoing are not materially inconsistent with the terms of
this Agreement. The Executive understands and agrees that he may be required to
undertake normal business travel from time to time.
3. COMPENSATION; BENEFITS.
(a) As compensation for the performance of the Executive's services
hereunder, PARC shall pay to the Executive an annual salary (the "Regular
Base Salary") of $65,000 (less deductions required by law) payable in
arrears on a bi-weekly basis. So long as this Agreement is in effect, the
Regular Base Salary shall be subject to annual review, but shall not be
reduced below $65,000.
(b) In addition to the Regular Base Salary, beginning May 1, 2006
and subject to subsection (d), the Executive shall be entitled to a
monthly commission (the "Commission") equal to 10% of all contingency fees
received by PARC for all existing clients, whose names are set forth on
Schedule 1, and for all future clients for which the Executive is solely
responsible for negotiating and obtaining the accounts on which PARC
receives a contingent fee, without the assistance or involvement of
independent sales consultants, current sales employees of PARC or
non-employees.
(c) Subject to subsection (d) below, the Executive shall also be
entitled to receive a monthly bonus (the "Monthly Bonus") equal to 3.5% of
the aggregate collections with regard to each Medical Purchase owned by
PARC as of the date of this Agreement (as set forth on Schedule 2) and
each additional Medical Purchase acquired by PARC from and after the date
hereof, to the extent that the aggregate collections for each such Medical
Purchase exceed the actual purchase price for each such Medical Purchase.
In any month in which the aggregate collections by PARC with respect to
particular Medical Purchase owned by PARC do not exceed the actual
purchase price of such Medical Purchase, the Executive shall not be
entitled to receive the Monthly Bonus for such Medical Purchase.
Notwithstanding the foregoing, the Monthly Bonus shall only be applicable
to those Medical Purchases negotiated and obtained solely by the Executive
that did not require or include the involvement of independent sales
consultants, current sales employees of PARC or any other non-employee.
(d) For purposes of this Agreement, the term "Sales Deduction" shall
mean (i) for any month in which the Executive receives two Regular Base
Salary payments, $5,000, and (ii) for any month in which the Executive
receives three Regular Base Salary payments, $7,500. The amount of the
Commission payment plus the Monthly Bonus payment, if any, for each month
shall be reduced by the applicable Sales Deduction for each month;
provided, however, that the aggregate amount of the Commission and
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Monthly Bonus shall in no event be reduced below $0. Notwithstanding the
foregoing, the Sales Deduction shall be subject to appropriate adjustment
by PARC should the Regular Base Salary be converted to bi-monthly
payments.
(e) The Executive shall be entitled to receive a percentage of the
actual purchase price of Medical Purchases made by PARC (the "Sales
Incentive"). The Sales Incentive shall be determined and paid as follows.
(i) 1% of the actual purchase price for all Medical Purchases
by PARC negotiated and obtained by the Executive that required and
included the involvement of independent sales consultants, current
sales employees of PARC or non-employees.
(ii) 2.5% of the actual purchase price for all Medical
Purchases by PARC negotiated and obtained by the Executive that did
not require or include the involvement of independent sales
consultants, current sales employees or non-employees.
(iii) In the event that aggregate buybacks relating to
particular Medical Purchases in this subsection (e) exceed 2% of the
actual purchase price of such Medical Purchase (the "Buyback
Amount"), the total Sales Incentive paid by PARC to the Executive
relating to the Buyback Amount of such Medical Purchases shall be
credited against subsequent Sales Incentive payments owed to the
Executive.
(iv) The Sales Incentive shall be payable upon the closing of
each new Medical Purchase and shall not be subject to the Sales
Deduction. Each Medical Purchase under any forward flow agreement or
arrangement for monthly Medical Purchases, shall constitute a
separate and individual Medical Purchase in which the Executive
shall be entitled to receive the appropriate Sales Incentive as set
forth in Sections 3(c)(i) and (ii).
(f) Upon termination of employment, all rights to receive any
Commission, Sales Incentive or Monthly Bonus for any period shall also
terminate; provided that, if the Executive's employment is terminated
under the circumstances contemplated by Section 6(d), the Executive shall
be entitled to receive the Commission, Sales Incentive or Monthly Bonus,
if any, until the third anniversary of the date hereof that would have
been paid to the Executive pursuant to this Section 3 at the time the
Commission, Sales Incentive or Bonus would have been paid had the
Executive's employment not been terminated under the circumstances
contemplated by Section 6(d).
(g) During the Employment Period, the Executive shall be entitled to
receive such other benefits and conditions of employment, including,
without limitation, participation in such group health, life and
disability plans provided by PARC (such benefits collectively, the
"Welfare Benefits"), as are generally afforded from time to time hereafter
to the other senior executives of PARC. The Executive acknowledges and
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agrees that neither the Company nor PARC guarantees the adoption of any
particular employee benefit plan or program or other fringe benefit during
the Employment Period, and participation by the Executive in any such plan
or program shall be subject to the rules and regulations applicable
thereto.
(h) During the Employment Period the Executive shall be entitled to
four (4) weeks' paid vacation during each full calendar year to be
scheduled at the mutual convenience of the Executive and the Company. Any
vacation not taken during a calendar year shall be forfeited. For 2006,
the Executive's four (4) weeks of paid vacation shall include paid
vacation time taken in 2006 prior to the date hereof.
(i) The monthly bonuses and commissions payable to Executive
hereunder shall be payable within thirty (30) days after the end of each
month with respect to amounts earned during the prior calendar month and
shall be accompanied by a written report, prepared by the Board of
Directors, substantiating the amounts due (the "Monthly Bonus Reports").
The Executive shall review the Monthly Bonus Report and shall have thirty
(30) days to provide the Board of Directors with written notice of any
objections to the Monthly Bonus Report, which notice shall specify the
disputed portions of the Monthly Bonus Reports (the "Disputed Bonus
Amounts") and shall state the basis of the objection (the "Objection
Notice"). If the Executive fails to deliver the Objection Notice to PARC
during such thirty day period, then the Executive shall be deemed to have
accepted the Monthly Bonus Report in full and such report shall not be
subject to further adjustment.
(j) If the Executive timely delivers an Objection Notice to the
Board of Directors, then the Board of Directors shall have thirty (30)
days to review such notice and attempt to resolve the Disputed Bonus
Amounts with the Executive. If the Board of Directors and Executive fail
to resolve all of the Dispute Bonus Amounts before the end of such thirty
(30) day period, then the Executive shall have the right, one (1) time per
calendar year while this Agreement is in effect, to request that a
nationally or regionally recognized accounting firm, independent of, and
approved by, PARC, the Company, and the Executive (which approval shall
not be unreasonably withheld or delayed) (the "Independent Accountants"),
review PARC's books and records with regard to the Disputed Bonus Amounts
and determine whether the Monthly Bonus Report accurately reflects the
amount of the monthly bonuses and commissions due to the Executive for
such month pursuant to the terms of this Agreement. If the Independent
Accountants determine that any Disputed Bonus Amounts are due to the
Executive pursuant to the terms of this Agreement, PARC shall promptly pay
to the Executive any and all such Disputed Bonus Amounts. If the Disputed
Bonus Amounts as finally determined result in (i) PARC being required to
make a payment to the Executive in an amount greater than $2,500, then
PARC shall pay all fees and expenses of the Independent Accountants with
respect to such review and such review shall not be counted as the
Executive's one review permitted per calendar year, and (ii) PARC being
required to make a payment to the Executive in an amount equal to or less
than $2,500, then the Executive shall pay all
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fees and expenses of the Independent Accountants with respect to such
review. In any event, any determination as to the Disputed Bonus Amounts
made by the Independent Accountants shall be final, binding and conclusive
on the parties, and shall not be subject to any appeal by any party.
4. EXCLUSIVITY. During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive shall
devote his full attention and time during normal business hours to the business
and affairs of PARC, and at all times use his best efforts to carry out such
responsibilities faithfully and efficiently and to advance the business of PARC
and the Company. During the Employment Period, the Executive will not be engaged
in any other business activity which, in the reasonable judgment of the Board of
Directors or its designee, conflicts with the duties of the Executive hereunder,
whether or not such activity is pursued for gain, profit or other pecuniary
advantage. It shall not be considered a violation of the foregoing for the
Executive to (a) serve on civic or charitable boards or committees, or (b)
manage personal investments, so long as such activities do not (i) compete with
or are not provided to or for any entity that competes with or intends to
compete with PARC, the Company or any of their subsidiaries and affiliates, or
(ii) interfere in any material respect with the performance of the Executive's
responsibilities as an employee of PARC in accordance with this Agreement.
5. REIMBURSEMENT FOR EXPENSES. Upon the presentation of itemized vouchers
and receipts to the reasonable satisfaction of PARC, PARC shall reimburse the
Executive for travel, meals, entertainment and other expenses reasonably
incurred by the Executive in the performance of his duties under this Agreement
in accordance with PARC's expense reimbursement policy as the same may be
modified by PARC from time to time without prejudice to any rights of the
Executive which may have accrued prior to such notification.
6. TERMINATION.
(a) PARC shall be entitled to terminate this Agreement and the
employment relationship established hereby immediately for "Cause" by
giving written notice of termination to the Executive. As used in this
Agreement, the term "Cause" shall mean any of the following events:
(i) continual or deliberate neglect by the Executive in the
performance of his material duties under this Agreement;
(ii) failure by the Executive to devote substantially all of
his working time to the business of PARC in accordance with Section
4;
(iii) the Executive's willful failure to follow the lawful
directives of the Board of Directors in any material respect;
provided that, such directives are not materially inconsistent with
the terms of this Agreement;
(iv) the Executive's engaging willfully in misconduct in
connection with the performance of any of his duties hereunder which
is reasonably likely to result, in the Board of Director's good
faith judgment, in material injury to the
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reputation of the Company, PARC or any of their respective
subsidiaries, including, without limitation, the misappropriation of
funds or determinations of discrimination or harassment;
(v) the Executive's breach of the provisions of Section 7 or
any other noncompetition, noninterference, nondisclosure,
confidentiality or other similar agreement executed by the Executive
with the Company, PARC or any of their respective subsidiaries; or
(vi) the commission by the Executive of a felony, fraud,
embezzlement or other crime involving moral turpitude;
provided that, with respect to the events set forth in clauses (i) through
(iii), upon the delivery of written notice to the Executive setting forth the
act, omission or event constituting Cause, the Executive shall have thirty (30)
days in which to cure such act, omission or event after the delivery of such
written notice. If the Executive's employment is terminated under the provisions
of this clause (a), all rights of the Executive to compensation and benefits
pursuant to Section 3 shall cease as of the effective date of such termination,
except for amounts due to the Executive hereunder as of such effective date, or
amounts or benefits to which the Executive may be entitled to under the terms of
any employee benefit plan of the Company or PARC.
(b) In the event that the Executive resigns, other than upon
Retirement or for Substantial Breach (as those terms are hereinafter
defined), this Agreement and the employment relationship established
hereby shall terminate immediately upon the receipt by the Company and
PARC of written notice of the Executive's resignation. After the effective
date of termination under this Section 6(b), neither the Company nor PARC
shall be obligated to make any further payments under this Agreement,
except for amounts due the Executive hereunder as of such effective date
or for amounts or benefits to which the Executive may be entitled under
the terms of any employee benefit plan of the Company or PARC.
(c) In the event that the Executive dies, Retires (as hereinafter
defined) or becomes Disabled (as hereinafter defined) during the term of
this Agreement, this Agreement and the employment relationship established
hereby shall terminate immediately upon the date on which the Executive
dies, Retires or becomes Disabled, as the case may be. After the effective
date of termination under this Section 6(c), PARC shall not be obligated
to make any further payments under this Agreement, other than payment to
the Executive or the Executive's heirs, devisees, executors,
administrators, legal representatives or the trustee of a revocable trust
of which the Executive is the grantor, as the case may be, of (i) all
amounts due the Executive hereunder as of such effective date, including
any amounts or benefits to which the Executive may be entitled under the
terms of any employee benefit plan of the Company or PARC, as in effect on
the effective date of such termination, and (ii) the amount of any Sales
Incentive or Monthly Bonus, if any, due to the Executive in accordance
with Sections 3(c) and (d).
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For purposes of this Section 6(c), "Retires" or "Retirement" shall mean
the voluntary termination of employment by the Executive after the
Executive attains age 65 and "Disabled" shall mean, as of any date, the
inability of the Executive to perform his essential duties hereunder with
or without reasonable accommodation for a period of six (6) months as
determined in the good faith judgment of the Board of Directors.
(d) In the event that (i) PARC elects to terminate the employment of
the Executive prior to the expiration of the Employment Period (other than
pursuant to paragraphs (a) through (c) of this Section 6), or (ii) the
Executive resigns from his employment hereunder following a Substantial
Breach, as defined in this Section 6(d) (such Substantial Breach having
not been corrected by PARC within thirty (30) days of a receipt of written
notice from the Executive of the occurrence of such Substantial Breach,
which notice shall specifically set forth the nature of the Substantial
Breach which is the reason for such resignation), then, in either such
event, PARC shall continue to pay the Executive as provided in Section 10.
"Substantial Breach" shall mean any material breach by PARC of its
obligations under this Agreement including, without limitation (i) the
assignment of the Executive to a position or duties materially
inconsistent with those normally assigned to a senior sales manager or
director of the Company, (ii) a reduction in the Executive's Regular Base
Salary below $65,000, (iii) the failure by PARC to allow the Executive to
participate in PARC's employee benefit plans or incentive compensation
plans generally available from time to time to senior executives of PARC
in comparable positions, or (iv) any requirement that Executive relocate
his principal office or residence, or principal situs for duties, outside
of metropolitan San Antonio, Texas, without Executive's consent; provided
that, the term "Substantial Breach" shall not include (A) an immaterial
breach by PARC of any provisions of this Agreement, or (B) a termination
for Cause under paragraph (a) of this Section 6.
The date of termination of employment by the Company or PARC under
this Section 6(d) (the "Section 6(d) Termination Date") shall, as the case
may be, be the later of the date, if any, specified in a written notice of
termination to the Executive or the date on which such notice is given to
the Executive. The date of resignation under this Section 6(d) shall be
thirty (30) days after receipt by PARC and the Company of written notice
of resignation; provided that, the Substantial Breach specified in such
notice shall not have been corrected by the Company during such 30-day
period.
(e) Notwithstanding anything in this Section 6 to the contrary, but
subject to the consequences set forth in this Section 6, (i) the Company
or PARC may terminate the Executive's employment at any time with or
without Cause, (ii) the Executive may terminate his employment at any time
whether or not there has been a Substantial Breach, and (iii) the
Executive's rights in any employee benefit plans offered by PARC shall be
governed by the rules of such plans as well as by applicable law.
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(f) Notwithstanding anything in this Section 6 to the contrary, the
provisions of Sections 7 and 8 shall survive termination of this
Agreement.
7. CONFIDENTIALITY AND NON COMPETITION. The Executive acknowledges that
(i) the agreements and covenants contained herein are essential to protect the
Company's and PARC's business and assets, and (ii) by virtue of his past and
continued association with PARC, the Executive had access to and has obtained
and will continue to have access to and obtain such knowledge, know-how,
proprietary information, training and experience, which is known only to the
directors, officers or managers of PARC or any employees, former employees,
consultants or others in a confidential relationship with the Company, PARC or
their respective affiliates or subsidiaries, and there is a substantial
probability that such knowledge, know-how, proprietary information, training and
experience could be used to the substantial advantage of a competitor of the
Company or PARC and to the Company's or PARC's substantial detriment.
(a) COVENANT NOT TO COMPETE.
(i) The Executive agrees that, for the period beginning on the
date of this Agreement and ending on the later of (A) the fifth
anniversary of the date of this Agreement, and (B) the third
anniversary of the effective date of the termination of the
Executive's employment with PARC (regardless of the reason for the
Executive's termination) (the "Restricted Period"), the Executive
shall not, in the Territory (hereinafter defined), directly or
indirectly, either for himself or for, with or through any other
Person (as defined herein), own, manage, operate, control, be
employed by, participate in, loan money to or be connected in any
manner with, or permit his name to be used by, any business which is
engaged in the business of purchasing and collecting consumer
accounts receivable of any type that have been charged off by the
original creditor ("Charged Off Accounts") and financing sales of
consumer product retailers or any other business whose products or
activities compete in whole or in part with the Company or PARC.
Subject to the provisions of Section 7(c), nothing contained in this
Agreement shall be deemed to restrict or prohibit Executive, during
the period from the effective date of the termination of the
Executive's employment with PARC until the end of the Restricted
Period, from:
(A) owning, participating in, or providing services to
any provider of healthcare services or products so long as such
provider is not primarily or substantially engaged in the accounts
receivable management industry, including the business of purchasing
or collecting Charged Off Accounts; or
(B) providing consulting or advisory or similar services
to any originator of Charged Off Accounts (but not to any business
or entity that is primarily or substantially engaged in the accounts
receivable management industry, including the business of purchasing
or collecting Charged Off Accounts), provided that if the Executive
provides brokering or sales services to
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such an originator with respect to Charged Off Account, then the
Executive shall give PARC a reasonable opportunity to make a
proposal to purchase such accounts, unless the particular originator
specifically prohibits the Executive from providing PARC with such
opportunity.
In no event shall the Executive have any right to engage in any of
the activities contemplated by subsections (A) and (B) above while
the Executive is employed by PARC or the Company.
(ii) For purposes of this Agreement, the term "participate"
includes any direct or indirect interest, whether as an officer,
director, employee, partner, sole proprietor, trustee, beneficiary,
agent, representative, independent contractor, consultant, advisor,
provider of personal services, creditor or owner (other than by
ownership of less than five (5) percent of the stock of a
corporation that has a class of equity securities registered under
the Securities Exchange Act of 1934). Territory means North America,
South America, Europe and Asia.
(iii) The Executive and the Company acknowledge and agree that
the restrictions contained in this Section 7(a) are reasonable for
the purpose of preserving the Company and PARC and their respective
goodwill, proprietary rights and going concern value.
(b) NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
(i) The Executive shall not, whether during or after the
Employment Period, disclose to any person or other entity or use,
for his own purposes or for the benefit of any person or other
entity (except PARC or the Company), any information relating to
PARC or its customers or the Company, not in the public domain, in
any form, acquired by the Executive while he was employed or
associated with the Company or PARC or, if acquired following the
termination of such association, such information which, to the
Executive's knowledge, has been acquired, directly or indirectly,
from any Person owing a duty of confidentiality to the Company or
PARC (the "Confidential Information"). Confidential Information
includes, but is not limited to, trade secrets, Charged Off Accounts
supplier lists, collection methods, information regarding bulk
purchases of Charged Off Accounts, all credit and financial data
concerning Charged Off Accounts, employee compensation arrangements,
business practices, plans, policies, secret inventions, processes
and compilations of information, records and specifications, as well
as information related to the management policies and plans for the
Company or PARC. Confidential Information shall not include
Executive's Know-How (as defined below).
(ii) Notwithstanding the foregoing, the restrictions in
subsection (b)(i) of this Section 7 are not applicable to the
disclosure or use of Confidential Information in connection with the
following: (A) in the course of faithfully performing the
Executive's duties as an employee of PARC; (B) with the
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Company's or PARC's express written consent; (C) to the extent that
any such Confidential Information is in the public domain other than
as a result of the Executive's breach of any of his obligations
hereunder; or (D) where required to be disclosed by court order,
subpoena or other governmental process. In the event that the
Executive shall be required to make disclosure pursuant to the
provisions of clause (D) of the preceding sentence, the Executive
promptly (but in no event more than five (5) business days after
learning of such subpoena, court order or other governmental
process) shall notify the Company and PARC in writing, by personal
delivery or by facsimile, confirmed by mail or by certified mail,
return receipt requested.
(iii) The Executive agrees and acknowledges that all of such
Confidential Information in any form, and copies and extracts
thereof, are and shall remain the sole and exclusive property of the
Company or PARC, as applicable, and the Executive shall, upon
request, return to the Company the originals and all copies of any
such Confidential Information provided to or acquired by the
Executive in connection with his association with PARC or the
Company, and shall return to the Company all files, correspondence
and/or other communications received, maintained and/or originated
by the Executive during the course of such association.
(iv) Subject to Sections 7(a) and (c), nothing in this
Agreement shall be deemed or construed to prohibit or restrict the
Executive from utilizing his Executive Know-How. "Executive
Know-How" means methods, techniques, concepts or know-how generally
relating to the collection of accounts receivable or Charged Off
Accounts or the business of collecting accounts receivable or
Charged Off Accounts, currently known or becoming known to
Executive, currently or formerly utilized by Executive, or developed
by Executive during the term of this Agreement or thereafter, except
to the extent that such methods, techniques, concepts or know-how
are proprietary to PARC.
(c) NO INTERFERENCE. During the Restricted Period, the Executive
shall not, directly or indirectly through any other individual, legal
entity, business enterprise, governmental body or unit, including any
corporation, partnership, limited partnership or limited liability company
("Person"): (i) solicit, induce or attempt to induce any employee of the
Company, PARC or any of their respective subsidiaries, to leave the employ
of the Company, PARC or any of their respective subsidiaries, or in any
way interfere with the relationship between the Company, PARC or any of
their respective subsidiaries, and its subsidiaries and any employee or
independent contractor thereof; (ii) hire or retain or attempt to hire or
retain any Person who was an employee or independent contractor of the
Company, PARC or any of their respective subsidiaries while the Executive
was employed by PARC; (iii) cause, induce or attempt to cause or induce
any supplier of Charged Off Accounts, licensee, licensor, franchisee,
employee, consultant or other business relation of the Company, PARC or
any of their respective subsidiaries to
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cease doing business with the Company, PARC or any of their respective
subsidiaries, to deal with any competitor of the Company, PARC or any of
their respective subsidiaries, or in any way interfere with its
relationship with the Company, PARC or any of their respective
subsidiaries; or (iv) acquire Charged Off Accounts from any Person that
was a seller of Charged Off Accounts to the Company, PARC or any of their
respective subsidiaries.
8. REMEDIES.
(a) The Executive hereby acknowledges that the Executive's covenants
and obligations hereunder are of special, unique, unusual, extraordinary
and intellectual character, which gives them a peculiar value, the actual
or threatened breach of which shall result in substantial injuries and
damages, for which monetary relief may fail to provide an adequate remedy
at law. Accordingly, the Executive agrees that the Company and PARC shall
be entitled, in the event of an actual or threatened breach of this
Agreement, to seek remedies including but not necessarily limited to (i)
temporary or permanent injunctive relief restraining the Executive from
engaging in activities prohibited by Section 7 or such other relief as may
be required to specifically enforce any of the covenants in Section 7,
(ii) specific performance, and (iii) monetary relief, to the extent that
monetary relief may constitute an adequate remedy in whole or in part;
provided that, the Executive does not waive the right to oppose relief on
the grounds that no breach or threatened breach has occurred. The
Executive hereby agrees and consents that such injunctive relief may be
sought in any state or federal court, in the state in which such violation
may occur, or in any other court having jurisdiction, at the election of
the Company or PARC.
(b) If any proceeding for injunctive relief and/or specific
performance is brought by the Company or PARC to enforce the terms of this
Agreement, the Executive shall be deemed to have waived, and shall not
assert, any claim or defense that the Company or PARC has an adequate
remedy at law or that such a remedy at law exists.
(c) If any action at law or in equity is brought to enforce or
interpret the terms of this Agreement, the party that prevails in such
action, shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief which a court of
competent jurisdiction may order.
9. DEDUCTIONS FROM COMPENSATION. The Executive agrees that PARC shall be
entitled to deduct and withhold from any compensation payable to the Executive
hereunder any taxes in respect of the Executive that PARC is required to deduct
and withhold under federal, state or local law whether arising from compensation
hereunder or otherwise. In the event that the Executive is no longer employed by
PARC at a time when PARC otherwise would be entitled to deduct and withhold any
amount pursuant to the preceding sentence, the Executive shall remit such amount
to PARC within five (5) days after the receipt of notice from PARC specifying
such amount or otherwise in accordance with the Executive's obligations with
respect thereto.
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10. TERMINATION BENEFITS. If the Executive's employment with PARC is
terminated pursuant to Section 6(d), the Executive shall be entitled to receive,
as his sole and exclusive remedy, the termination benefits provided under this
Section 10.
(a) COMPENSATION-REGULAR BASE SALARY AND BONUSES. In lieu of notice,
if any, required under applicable law which may be in force from time to
time, upon the Section 6(d) Termination Date occurring prior to the third
anniversary of the date hereof, (i) the Executive shall be paid bi-weekly,
his Regular Base Salary at the rate in effect on the Section 6(d)
Termination Date, up to the third anniversary of the date hereof, and (ii)
the Executive shall be paid any Commission, Sales Incentive or Monthly
Bonus due, if any, for the period ending on the third anniversary of the
date hereof, as if his employment had continued. The Employment Period
shall end upon the third anniversary of the date hereof, unless otherwise
terminated, after which time the Executive shall be deemed to be an
at-will employee and shall be entitled to severance pursuant to PARC's
policy then in effect and required by applicable law. The Executive shall
not be entitled to any further notice, severance pay, pay in lieu of
notice or any compensation whatsoever, except any amounts owed to the
Executive under this Agreement. The Executive agrees that the foregoing
notice is deemed conclusively to be reasonable notice of termination at
common law and the Executive is not entitled to any additional notice or
pay in lieu of notice or severance pay. The Executive acknowledges that
the Company and PARC has drawn his attention to the provisions contained
herein prior to executing this Agreement.
(b) WELFARE BENEFITS, ETC. If, after receiving timely notice from
PARC or the Company, the Executive timely makes the appropriate COBRA
election, PARC or the Company shall pay the costs necessary to continue
the Executive's participation pursuant to COBRA for a period of eighteen
(18) months following the Section 6(d) Termination Date (including
dependent coverage) in any life, disability, group health and dental
benefit plans provided by PARC, in effect immediately prior to the Section
6(d) Termination Date. Following the Section 6(d) Termination Date, PARC
shall not be obligated to (i) provide business accident insurance covering
the Executive, and (ii) make contributions in respect of the Executive to
any qualified retirement and pension plans or profit sharing plans.
(c) TIMING RESTRICTIONS. Notwithstanding the foregoing or any
provisions of this Agreement to the contrary, in the event that the
Executive is determined, by the Board of Directors in its good faith
judgment, to be a "specified employee" within the meaning of Internal
Revenue Code Section 409A, none of the termination benefits contemplated
by this Section 10 shall be paid or provided to the Executive prior to the
first day of the seventh month after the Executive's termination of
employment, at which time such benefits shall commence; provided that all
benefits accumulated from the date of the Executive's termination of
employment to which Executive is entitled under this Agreement and which
were not paid or provided sooner because of this provision, also will
immediately become payable at that time. Subject to PARC's obligations to
timely
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pay the amounts due to the Executive as set forth in the preceding
sentence, with respect to the amounts payable to the Executive pursuant to
Section 10(a), any Regular Base Salary amounts shall be paid no later than
the end of the calendar year to which such salary amounts relate
(determined by dividing the Executive's annual Regular Base Salary by
twelve and allocating such salary to each month following the Executive's
termination of employment), and any Commission, Sales Incentive or Monthly
Bonus or other bonus amount shall be paid no later than 2-1/2 months after
the end of the calendar year to which such amount relates.
11. EXTENSION OF RESTRICTED PERIODS. In addition to the remedies the
Company or PARC may seek and obtain pursuant to Section 8, the Restricted
Period, set forth therein, shall be extended by any and all periods during which
the Executive shall be found by a court to have been in violation of the
covenants contained in Section 7.
12. SUCCESSORS; BINDING AGREEMENT. This Agreement is personal to the
Executive and, without the prior written consent of the Company and PARC, shall
not be assignable by the Executive otherwise than by will, the laws of descent
and distribution or the terms of a revocable trust of which the Executive is the
grantor. This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives. This Agreement shall inure to the benefit of
and be binding upon the Company, PARC and their respective successors and
assigns.
13. WAIVER AND MODIFICATION. Any waiver, alteration or modification of any
of the terms of this Agreement shall be valid only if made in writing and signed
by the parties hereto; provided that, any such waiver, alteration or
modification is consented to on the Company's and PARC's behalf by their
respective Boards of Directors. No waiver by any of the parties hereto of their
rights hereunder shall be deemed to constitute a waiver with respect to any
subsequent occurrences or transactions hereunder unless such waiver specifically
states that it is to be construed as a continuing waiver.
14. SEVERABILITY. The Executive acknowledges and agrees that the covenants
set forth in Section 7 are reasonable and valid in geographical and temporal
scope and in all other respects. If any of such covenants or other provisions of
this Agreement are found to be invalid or unenforceable by a final determination
of a court of competent jurisdiction (i) the remaining terms and provisions
hereof shall be unimpaired, and (ii) the invalid or unenforceable term or
provision shall be deemed replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision.
15. SUBMISSION TO JURISDICTION; VENUE.
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY TRANSACTIONS CONTEMPLATED HEREBY SHALL BE BROUGHT IN THE COURTS OF THE
STATE OF TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF TEXAS SITTING IN SAN ANTONIO, TEXAS, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY ACCEPTS FOR
HIMSELF, OR ITSELF AND IN RESPECT OF HIS OR ITS PROPERTY GENERALLY AND
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UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS.
EACH OF THE PARTIES IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO SUCH PARTY AT HIS OR ITS ADDRESS AS PROVIDED IN SECTION 18. NOTHING IN
THIS PARAGRAPH (a) SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS IN ANY
OTHER JURISDICTION.
(b) EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTIONS WHICH HE OR
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN PARAGRAPH (a) OF THIS
SECTION 15 AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH OF THE
PARTIES TO THIS AGREEMENT AGREES THAT, AT THE TIME OF ANY SUCH ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED
HEREBY, EACH OF THE PARTIES WILL EXECUTE SUCH INSTRUMENTS AND OTHER
DOCUMENTS AS MAY BE NECESSARY TO CONSENT TO AND WAIVE ANY OBJECTION TO
VENUE AND JURISDICTION IN THE COURTS IDENTIFIED IN SUBSECTIONS (a) AND (b)
ABOVE.
16. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
17. BLUE PENCILLING. In the event that, notwithstanding the first sentence
of Section 14, any of the provisions of Section 7 relating to the geographic or
temporal scope of the covenants contained therein or the nature of the business
restricted thereby shall be declared by a court of competent jurisdiction to
exceed the maximum restrictiveness such court deems enforceable, such provision
shall be deemed to be replaced herein by the maximum restriction deemed
enforceable by such court.
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18. NOTICES. All notices required to be given hereunder shall be in
writing and shall be deemed to have been given if (a) delivered personally or by
documented courier or delivery service, (b) transmitted by facsimile, or (c)
mailed by registered or certified mail (return receipt requested and postage
prepaid) to the following listed persons at the addresses and facsimile numbers
specified below, or to such other persons, addresses or facsimile numbers as a
party entitled to notice shall give, in the manner hereinabove described, to the
others entitled to notice:
In the case of the Company:
Asset Acceptance Holdings LLC
00000 Xxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxx XX
Facsimile No.: 000-000-0000
In the case of the Executive:
Xxxx X. Xxxxxxxxx
000 Xxx Xxx
Xxx Xxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Notice pursuant hereto shall be deemed given (i) if delivered personally, when
so delivered, (ii) if given by facsimile, when transmitted to the facsimile
number set forth above, when so transmitted if transmitted during normal
business hours at the location to which it is transmitted or upon the opening of
business on the next Business Day if transmitted other than during normal
business hours at the location to which it is transmitted and (iii) if given by
mail, on the third business day following the day on which it was posted.
19. CAPTIONS AND SECTION HEADINGS. Captions and section headings in this
Agreement are for convenience only, are not a part hereof and shall not be used
in construing this Agreement. Unless otherwise specified in this Agreement, all
references to sections in this Agreement shall mean sections of this Agreement.
20. ENTIRE AGREEMENT. This Agreement, including the Schedules hereto,
constitutes the entire understanding and agreement of the parties hereto
regarding the employment of the Executive, and supersedes all prior agreements
and understandings between the parties.
21. COUNTERPARTS. This Agreement may be executed in counterparts
(including by facsimile or electronic transmittal copy), each of which shall be
deemed an original, but all of
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which taken together shall constitute one and the same instrument.
22. ACKNOWLEDGMENT AND INDEPENDENT LEGAL ADVICE. The Executive
acknowledges that he has read and understands this Agreement and that the
Company and PARC have advised him that the foregoing alters and supersedes his
common law rights. The Executive acknowledges that the Company and PARC have
advised him to seek legal advice prior to executing this Agreement and that he
has obtained such advice.
23. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Michigan, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Michigan or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Michigan.
24. TAX MATTERS. Notwithstanding any other provision of this Agreement,
the parties to this Agreement agree to take all actions (including adopting
amendments to this Agreement) as are required to comply with or to minimize any
potential interest charges and/or additional taxes as may be imposed under
Internal Revenue Code Section 409A with respect to any payment or benefit due to
Executive under this Agreement (including a delay in payment until six months
after the date of termination of Executive's employment hereunder, in the event
Executive is a "specified employee" within the meaning of Code Section 409A).
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The parties hereto have executed this Employment Agreement as of the day
and year first above written.
ASSET ACCEPTANCE HOLDINGS LLC
By: /s/ Xxxxxxxxx X. Xxxxxxx XX
-----------------------------------
Xxxxxxxxx X. Xxxxxxx XX, Manager
PREMIUM ASSET RECOVERY CORP.
By: ________________________________
Name: __________________________
Title: ________________________
EXECUTIVE
/s/ Xxxx X. Xxxxxxxxx
-----------------------------------------
Xxxx X. Xxxxxxxxx
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SCHEDULE 1
CLIENT LIST
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SCHEDULE 2
XXXXXXXXX MEDICAL PURCHASES
19
