Exhibit 10.26
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated this 2nd day of
May, 1998 to be effective as of the first (1st) day of the Term (as hereinafter
defined) is made and entered into by and between NCO FINANCIAL SYSTEMS, INC., a
Pennsylvania corporation, with its principal offices at 000 Xxxxxxxxxxxx Xxxxxx,
Xxxx Xxxxxxxxxx, XX 00000 (the "Company") and XXXX X. XXXXXXX, XX., an
individual, residing at 000 Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx (the
"Employee").
1. Employment. The Company hereby employs the Employee as a Senior Vice
President in the Company's mergers and acquisitions division and/or such other
divisions of the Company as the Company shall reasonably determine from time to
time. Employee hereby accepts such employment in accordance with the terms and
conditions of this Agreement.
2. Duties of the Employee. In connection with his employment, as Senior
Vice President of the Company's mergers and acquisitions divisions, the
Employee's duties shall include, but shall not be limited to, exploring and
negotiating potential acquisitions which are acceptable to the Company, and such
other services of a similar nature as may be reasonably required of him or
assigned to him by the Company, as well as the promotion of the business and
interests of the Company and of its corporate subsidiaries or divisions. The
Employee shall, at all times, be subject to the supervision of and report to the
Chief Executive Officer and Board of Directors of the Company.
3. Term of Employment. The term of employment shall begin upon
completion of the acquisition of the capital stock and collection business of
MedSource, Inc. ("MedSource") by the Company and continue for a term of three
(3) years (the "Term").
1
The Company shall have the option, subject to the Employee's acceptance, to
extend the Term for two (2) additional one (1) year periods as it may determine.
4. Other Employment. The Employee shall not, during his employment by
the Company, act in or otherwise perform any other work for or accept employment
with any other person or entity without the prior written consent of the
Company.
5. Compensation of the Employee. As full compensation for the services
rendered by the Employee pursuant to this Agreement, the Company agrees to pay
and the Employee shall be entitled to the compensation set forth on the attached
Exhibit "A".
6. Employee Benefits and Business Expenses.
A. Benefits. The Employee shall participate in the Company's medical
and dental insurance plan and shall be otherwise entitled to participate in all
benefits available to other similarly situated employees of the Company. The
Employee shall be entitled to four (4) weeks paid vacation on a per annum basis
during the Term and any extension thereof in accordance with policies of the
Company for similarly situated employees. The Employee shall schedule such
vacations in accordance with the reasonable needs of the Company. Unused
vacation or personal/sick days hereunder in any year shall not be cumulative and
may not be carried forward into each ensuing year. In addition, the Employee
shall receive a monthly car allowance of $1000 in connection with his
Employment.
B. Business Expenses. The Company will pay, or reimburse the
Employee for, all ordinary and reasonable out-of-pocket business expenses,
including lodging, tolls, beeper, reasonable cell phone expenses related to
business of the Company, meals, transportation for business purposes and client
entertainment, incurred
2
by the Employee in connection with his performance of services hereunder during
the Term in accordance with the Company's expense authorization and approval
procedures then in effect upon presentation to the Company of an itemized
account and written proof of such expenses. The Company shall also reimburse the
Employee for reasonable expenses incurred in connection with professional
education classes and seminars and professional CPA license fees.
7. Death or Total Disability of the Employee.
A. Death. In the event of the death of the Employee during the Term
or any extension thereof, this Agreement shall terminate effective as of the
date of Employee's death, and the Company shall not have any further obligation
or liability hereunder except that the Company shall pay to the Employee's
designated beneficiary or, if none, his estate, the portion, if any, of his
compensation due for the period up to the Employee's date of death which remains
unpaid.
B. Total Disability. In the event of the Total Disability (as that
term is hereinafter defined) of the Employee, the Company shall have the right
to terminate the Employee's employment hereunder by giving the Employee ten (10)
days' written notice thereof and, upon expiration of such ten (10) day period,
the Company shall not have any further obligation or liability under this
Agreement except that the Company shall pay to the Employee the portion, if any,
of his compensation due to the Employee for the period up to the date of
termination which remains unpaid, provided that if the Employee, during any
period of disability, receives any periodic payments representing lost
compensation under any health and accident policy or under any salary
continuation insurance policy, the premiums for which have been paid by the
Company, the amount of the compensation, if
3
any, that the Employee would be entitled to receive from the Company during such
period of disability shall be decreased by the amounts of such payments. Subject
to the provisions of the Company's Stock Option Plan, all stock options shall
vest and remain exercisable for a period of one (1) year after such termination.
The term "Total Disability," when used herein, shall mean a mental,
emotional or physical condition which rendered the Employee for a period of
ninety (90) consecutive days, during the Term of this Agreement, unable or
incompetent to carry out, on the basis set forth herein, the job
responsibilities he held or tasks that he was assigned at the time the
disability was incurred. The Employee agrees, in the event of any dispute as to
the determination made pursuant to this paragraph, to submit to a physical or
other examination by a licensed physician selected jointly by the Company and
the Employee, the cost of which examination shall be paid by the Company.
8. Termination of Employment.
(a) In addition to termination pursuant to paragraph 7, the Company,
following prior written notice to the Employee, may discharge the Employee and
thereby terminate his employment hereunder for cause as follows: (i) habitual
intoxication; (ii) drug addiction; (iii) conviction of a felony; (iv)
adjudication as an incompetent; (v) violation of any reasonable rule or
regulation that may be established by the Company from time to time for the
conduct of the Company's business, as set forth in the Company's employee
handbook after thirty (30) days notice and opportunity to cure; (vi)
misappropriation of Company funds or fraudulent acts; or (vii) the Employee's
breach of this Agreement in any material or respect after thirty (30) days
notice and opportunity to cure.
4
In the event that the Company shall discharge the Employee pursuant to
this paragraph 8, the Company shall not have any further obligations or
liability under this Agreement, except that the Company shall pay to Employee
the portion, if any, of the Employee's compensation due to the Employee for the
period up to the date of termination which remains unpaid.
(b) If termination by the Company is without cause, the Company
shall pay the Employee the Base Salary for the remaining term of this Agreement
in a lump sum payment, options shall be extended for one (1) year, insurance
coverage shall be made available to the Employee under COBRA, at the Employee's
expense, and the Employee shall be released from the restrictions set forth in
paragraph 10A, it being understood that the restrictions of paragraph 10B and
any other restriction or covenant in this Agreement shall remain in full force
and effect.
(c) The Employee shall have the right, upon ninety (90) days prior
written notice to the Company, to terminate this Agreement. Upon such
termination the Company shall have no further obligations to the Employee, any
unvested options shall terminate upon delivery of the foregoing notice and this
Agreement shall, except for the covenants and restrictions set forth in Sections
9 and 10 and elsewhere in this Agreement which shall survive such termination,
terminate.
9. Non-Disclosure. The Employee recognizes and acknowledges that he
will have access to certain confidential information of the Company and that
such information constitutes valuable, special and unique property of the
Company. The Employee agrees that he will not, for any reason or purpose
whatsoever, during or after the Term of his employment and any extension
thereof, disclose any of such confidential information to
5
any party without express authorization of the Company, except as necessary in
the ordinary course of performing his duties hereunder.
10. Restrictions.
A. Non-Competition. The Employee shall not, unless acting with the
prior written consent of the Board of Directors, the Chief Executive Officer or
President of the Company, directly or indirectly:
(a) During the Term and any extension thereof, and for a period
of three (3) years thereafter (the "Covenant Term"),
(i) own, manage, operate, finance, join, control or
participate in the ownership, management, operation, financing or control of, or
be connected as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with any business or enterprise engaged
in the business of the MedSource division or any other business engaged in by
the Company or any of its subsidiaries if the Employee provided any services for
the same in all those geographic areas in which the Company has an office; or
(ii) use or permit his name to be used in connection with any
business or enterprise engaged in the business of the MedSource division or any
other business engaged in by the Company or any of its subsidiaries if the
Employee provided any services for the same in all those geographic areas in
which the Company has an office; and
B. Non-Interference. The Employee agrees that during the Term and
any extension thereof, during the Covenant Term and for a period of three (3)
years after the Covenant Term, the Employee shall not, unless acting with the
prior written consent of
6
the Board of Directors, the Chief Executive Officer or the President of the
Company, directly or indirectly:
(a) solicit business from or perform services for, any person,
company or other entity which at any time during the Employee's employment by
the Company was a client or customer of the Company if such business or services
are of the same general character as those engaged in or performed by the
MedSource division or any other business engaged in by the Company or any of its
subsidiaries if the Employee provided any services for the same;
(b) solicit for or employment or hire any of the employees of the
Company; or
(c) use the name of the Company or any name similar thereto, but
nothing in this clause shall be deemed, by implication, to authorize or permit
use of such name after expiration of the period covered by this paragraph.
In the event that any provisions of this paragraph should ever be
adjudicated to exceed the time, geographic, service or product limitations
permitted by applicable law in any jurisdiction, then such provisions shall be
deemed reformed in such jurisdiction to the maximum time, geographic, service or
product limitations permitted to applicable law.
11. Equitable Relief; Survival.
(a) The Employee acknowledges that the restrictions contained in
paragraphs 9 and 10 hereof are, in view of the nature of the business of the
Company, reasonable and necessary to protect the legitimate interests of the
Company, and that any violation of any provisions of such paragraphs will result
in irreparable injury to the Company. The Employee also acknowledges that the
Company shall be entitled to
7
temporary and permanent injunctive relief, without the necessity of proving
actual damages, and to an equitable accounting of all earnings, profits and
other benefits arising from any such violation, which rights shall be cumulative
and in addition to any other rights or remedies to which the Company may be
entitled. In the event of any such violation, the Company shall be entitled to
commence and action for temporary and permanent injunctive relief and other
equitable relief in any court of competent jurisdiction. Effective service of
process may be made upon the Employee by mail under the notice provisions
contained in paragraph 15 hereof.
(b) Survival of Covenants. The provisions of paragraphs 9, 10 and 12
shall survive the termination of this Agreement other than as a result of a
material breach by the Company which breach shall not be cured by the Company
within thirty (30) days after written notice of such breach from the Employee or
the termination of the Employee by the Company without cause.
12. Representation by the Employee. The Employee hereby warrants and
represents to the Company that he is not bound by or subject to any sort of
restriction which would prohibit him from accepting employment with the Company,
such as a restrictive covenant, non-interference or non-competition agreement
related to his previous employment position or positions.
13. Remedies Cumulative; No Waiver. No remedy conferred upon the
Company by this Agreement is intended to be exclusive of any other remedy, and
each and every such remedy shall be cumulative and shall be in addition to any
other remedy given hereunder or now or hereafter existing at law or in equity.
No delay or omission by the Company in exercising any right, remedy or power
hereunder or existing at law or in equity
8
shall be construed as a waiver thereof, and any such right, remedy or power may
be exercised by the Company from time to time and as often as it deems expedient
or necessary.
14. Enforceability. If any provision of this Agreement shall be invalid
or unenforceable, in whole or in part, then such provision shall be deemed to be
modified or restricted to the extent and in the manner necessary to render the
same valid and enforceable, or shall be deemed excised from this Agreement, as
the case may require, and this Agreement shall be construed and enforced to the
maximum extent permitted by law, as if such provision had been originally
incorporated herein as so modified or restricted, or as if such provision had
not been originally incorporated herein, as the case may be.
15. Notices. All notices, request, demands, claims and other
communications hereunder will be in writing. Any notices, requests, demands,
claims or communications hereunder shall be deemed fully given if such are sent
by registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to the Company: 000 Xxxxxxxxxxxx Xxxxxx
Xxxx Xxxxxxxxxx, XX 00000
with copy to: Xxxxxx Xxxxxx, Esquire
Xxxxxxx & Xxxxxx
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
If to the Employee: 000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
with copy to: Xxxxx X. Xxxxxxx, Esquire
Pepper, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
9
Any party hereto may give any notice, request, demand, claim or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any party hereto
may change its address for the foregoing purposes by giving the other parties
hereto notice in the manner herein set forth.
16. Governing Law. This Agreement shall be deemed to have been executed
in the Commonwealth of Pennsylvania and shall, therefore, be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
17. Contents of Contract; Amendment and Assignment. This Agreement sets
forth the entire understanding between the parties hereto with respect to the
subject matter hereof and supersedes and is instead of all other employment
arrangement between the Employee and the Company. This Agreement cannot be
changed, modified or terminated except upon written amendment duly executed by
the parties hereto. All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of the Employee hereunder are of a personal
nature and shall not be assignable in whole or in part by the Employee. The
Company may assign its rights hereunder to any of its wholly owned subsidiaries
without
10
the Employee's consent, provided, however, that the Company shall not relocate
the primary work place of the Employee, Philadelphia metropolitan area.
18. Prior Employment Agreements. The Employee and the Company hereby
acknowledge that this Agreement shall supersede any existing employment
agreement that the Employee has with MedSource and the provisions of the
Non-Compete and Non-Solicitation Agreement between MedSource and the Employee.
IN WITNESS WHEREOF, this Agreement has been executed by the parties on
the date first above written.
Attest: NCO Financial Systems, Inc.
___________________________[SEAL] BY:_______________________________
Witness:
___________________________ _______________________________
Xxxx X. Xxxxxxx, Xx.
11
EXHIBIT "A"
EMPLOYEE COMPENSATION
XXXX XXXXXXX
A. Base Salary: The Employee shall, during the Term, be paid an annual base
salary (the "Base Salary") of One Hundred Fifity Thousand Dollars
($150,000). The Base Salary shall be payable in installments, in arrears, in
accordance with the Company's regular payroll practices, but not less often
than monthly.
B. Bonus: The Employee shall also be entitled to an annual bonus (the "Bonus")
of up to Seventy Five Thousand Dollars ($75,000) based upon certain
performance goals and a mergers and acquisitions formula determined by the
Company.
C. Stock Option Plan: As additional compensation, the Employee shall receive an
option to purchase up to 10,000 shares of the common stock of the Company in
accordance with the terms of the Company's Stock Option Plan at a price of
Twenty Two Dollars ($21.50) per share. The Company may, at its election,
issue additional shares to the Employee from time to time.
THE COMPANY AND THE EMPLOYEE AGREE AND ACKNOWLEDGE THAT THIS EMPLOYMENT
AGREEMENT AND THE COMPANY'S OBLIGATION TO HIRE THE EMPLOYEE, ARE CONDITIONED
UPON THE COMPANY COMPLETING THE CLOSING ON THE COMPANY'S ACQUISITION OF THE
CAPITAL STOCK OF MEDSOURCE.
12
