EXHIBIT 10.11
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") made and entered into as of
the 18th day of May, 1998, by and among NATIONWIDE CREDIT, INC. ("Employer") and
Xxxxxxx Xxxx who resides at XXX Xxx 00, Under the Xxxxxxxx Xxxx, Xxxxx
Xxxxxxxxxxx, Xxxxxxx 00000 ("Executive").
W I T N E S S E T H:
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WHEREAS, Employer desires to employ Executive and Executive desires to
accept employment with Employer upon the terms and conditions hereinafter set
forth;
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, and intending to be legally bound hereby, it is
hereby agreed as follows:
I. Employment Term. Employer agrees to employ Executive, and
Executive agrees to be so employed, in the capacity of Chief Financial Officer
of Employer, for a term commencing on the date hereof and ending on the third
anniversary of the date hereof (the "Initial Term"); provided, however, that,
notwithstanding anything to the contrary set forth in this Agreement, this
Agreement may be earlier terminated pursuant to Section 7 hereof. The term of
this Agreement will automatically extend past the Initial Term for succeeding
periods of one year each unless either party in its discretion shall terminate
this Agreement as of the end of the Initial Term, or as of the end of any
subsequent one-year period (in either case, the "Termination Date") by
delivering notice to the other party specifying the applicable Termination Date
not later than one hundred and twenty (120) days prior to the date so specified.
II. Time and Efforts; Place of Performance. Executive shall
diligently and conscientiously devote his full business time, attention, energy,
skill and best efforts to the business of Employer and the discharge of his
duties hereunder. Executive's duties under this Agreement shall be to serve as
Chief Financial Officer of Employer, with the responsibilities, rights,
authority and duties customarily pertaining to such office as may be established
from time to time by or under the direction of the Board of Directors of
Employer (the "Board") and Executive shall report to the Chief Executive
Officer. In the event Executive is elected to the Board, Executive shall serve
as a director without further compensation, other than as provided in this
Agreement. Executive shall also act as an officer and/or director of such
subsidiaries of Employer as may be designated by the Board, commensurate with
Executive's office, all without further compensation other than as provided in
this Agreement.
III. Base Salary; Signing Bonus; Options. In partial consideration of
the services of Executive during the term of this Agreement, Employer shall pay
to Executive a base salary compensation at an annual rate of $200,000 (the "Base
Salary"), in equal installments in accordance with the Employer's payroll
practices in effect from time to time for executive officers, but in no event
less frequently than monthly. The Base Salary may be adjusted upward annually
in the discretion of the Board, or an authorized committee thereof. In
addition, Employer shall pay Executive a one-time signing bonus in the amount of
$25,000, payable in a single installment within thirty (30) days of the date
hereof. Furthermore, in connection with the execution of this Agreement,
Executive has entered into an Option Agreement, dated as of May 18, 1998, with
NCI Acquisition Corporation (the "Option Agreement") with respect to the grant
of certain options to purchase common stock of NCI Acquisition Corporation.
IV. Annual Bonus. After the Company has received its audited
financial statements for each year end during the term of this Agreement,
Executive will have the potential to receive an annual bonus for such year,
comprised of (i) an amount (for calendar year 1998 and 1999) that is not subject
to any criteria (such amount, the "Guaranteed Bonus") and (ii) an amount to be
determined based upon qualitative criteria and the attainment of certain
quantitative financial goals established annually by the Board (such amount, the
"Performance Bonus"), as set forth in greater detail below:
A. For the calendar year 1998, (i) Executive shall receive a
Guaranteed Bonus of $50,000 and (ii) Executive will have the potential to
receive a Performance Bonus which would range from $0 to $70,000. In the event
annual EBITDA (as hereinafter defined) based upon the Company's audited
financial statements for such year is $26 million or less, $0 of the Performance
Bonus will be earned. In the event annual EBITDA for such year equals or
exceeds $28 million, $49,000 of the Performance Bonus will be earned. For
annual EBITDA levels for the calendar year 1998 between $26 million and $28
million, the amount of the Performance Bonus will be apportioned between $0 and
$49,000 by linear interpolation. Payment of $21,000 of the 1998 Performance
Bonus shall be based on the attainment of certain qualitative criteria
established by the Board.
B. For the calendar year 1999, (i) Executive shall receive a
Guaranteed Bonus of $25,000 and (ii) Executive will have the potential to
receive a Performance Bonus which would range from $0 to $95,000. Executive
will have the potential to earn up to $66,500 of the 1999 Performance Bonus in
the event annual EBITDA (as hereinafter defined)
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based upon the Company's audited financial statements for fiscal 1999 reach the
levels to be established by the Board in connection with the Company's budget
for fiscal 1999. Payment of $28,500 of the 1999 Performance Bonus shall be
based on the attainment of certain qualitative criteria established by the
Board.
C. For calendar years after 1998 and 1999, the amount of the
Guaranteed Bonus (if any) and the potential Performance Bonus and the criteria
therefore will be set by the Board in good faith and provided to Executive prior
to commencement of the year, provided, that the potential Performance Bonus
amount for each subsequent year will be not less than the potential Performance
Bonus amount for the immediately preceding year, so long as the budgeted EBITDA
levels for the upcoming year are greater than the EBITDA levels for the
immediately preceding year. Executive's bonus, to the extent earned, shall be
payable no later than thirty (30) days after the Board has received the
Company's audited financial statements for the applicable year.
D. For purposes hereof, "EBITDA" has the meaning ascribed to such
term in the Agreement and Plan of Merger, dated as of December 31, 1997, between
NCI Acquisition Corporation, Employer, NCI Merger Corporation, First Financial
Management Corporation and First Data Corporation. EBITDA shall be determined
based on the audited financial statements of the Company. Notwithstanding the
provisions of Sections 4(b) and 4(c) hereof, the EBITDA targets for any
Performance Bonus period shall be subject to modification in the reasonable
discretion of the Board in the event of any material acquisitions or
dispositions during the applicable period.
E. In the event Executive's employment is terminated by reason of
Cause (as herein defined) or the Executive's resignation, no bonus (Guaranteed
Bonus or Performance Bonus) for the calendar year in which such termination or
resignation occurs shall be payable to Executive. If Executive's employment
terminates for any other reason (including expiration of this Agreement),
Executive's bonus for the year in which termination occurs shall be payable to
the extent earned in accordance with the criteria set forth in this Section 4 as
determined in the reasonable discretion of the Board, but shall be prorated
based upon the number of days in such year that Executive was employed by
Employer. Executive's prorated bonus, to the extent earned, shall be payable no
later than thirty (30) days after the Board has received the Company's audited
financial statements for the applicable year.
V. Benefits. Executive shall be eligible to participate in all
employee benefit programs of Employer offered from time to time during the term
of Executive's employment hereunder by Employer to employees or executives of
Executive's rank, to the extent that Executive qualifies under the eligibility
provisions of such plan or plans, in each case
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consistent with Employer's current practice as approved by the Board prior to
the date hereof, and provided that Employer shall not be required to incur
expenses in connection with any such benefits in excess of the expenses for such
benefits incurred in accordance with such current practice. In addition,
Executive shall be eligible to receive relocation expenses in accordance with
the terms of the Company's relocation policy attached hereto as Exhibit A.
VI. Expenses. To the extent that Executive's reasonable and
necessary expenditures for travel, entertainment and similar items made in
furtherance of Executive's duties under this Agreement comply with Employer's
expense reimbursement policy, are deductible by Employer for federal income tax
purposes pursuant to the Internal Revenue Code of 1986, as amended and are
documented and substantiated by Executive as required by the Internal Revenue
Service and the policies of Employer, Employer shall reimburse the Executive for
such expenditures.
VII. Termination.
A. Executive's employment under this Agreement may be
terminated by Employer at any time for Cause. Upon termination of Executive's
employment for Cause, upon payment by Employer of any Base Salary, amounts
payable under any employee benefit program of Employer in which Employee
participated, or reimbursement for expenses, in each case, for amounts that have
accrued and are unpaid to the date of such termination, Employer shall have no
further liability to Executive for any additional amounts including, without
limitation, any Base Salary or bonus. "Cause" as used in this Agreement shall
mean (i) the gross negligence or wilful misconduct of Executive in carrying out
his obligations and duties, (ii) any other breach by Executive of any other
provision of this Agreement which has not been cured within five (5) days after
delivery of notice by Employer to Executive of such breach (or such shorter
period if such breach adversely affects Employer's ability to conduct debt
collection activities in any jurisdiction), including, without limitation,
Executive's insubordination, chronic absences from work or alcoholism or drug
dependency, (iii) Executive shall have committed an act of fraud, theft or
dishonesty against NCI or any of its subsidiary or affiliated companies, or (iv)
Executive shall be indicted for or convicted of (or plead nolo contendre to) any
felony or be convicted of (or plead nolo contendre to) any misdemeanor involving
fraud, dishonesty or moral turpitude or any other misdemeanor that might, in the
reasonable opinion of the Board of Directors, adversely affect such Executive's
ability to perform Executive's obligations or duties to Employer in any material
respect or adversely affect the Employer's ability to conduct debt collection
activities in any jurisdiction.
B. Subject to the terms of subsection (c) hereof, Employer may
terminate Executive's employment hereunder at any time other than for Cause (as
defined in
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Section 7(a) above) upon notice to Executive. In the event of any such
termination, in consideration for the obligations of Executive under Section 8
hereof, the Employer shall pay to Executive a severance benefit (the "Severance
Benefit"), payable over a period of 12 months consistent with Employer's past
payroll practices, in an amount equal to 12 months of Base Salary at the then
current rate less the amount of any compensation, income or benefits earned or
paid to Executive as an employee or consultant from an employer or company other
than Employer during the last six (6) months of the period during which the
Severance Benefit shall be payable as provided above. In the event that there
is (i) a material change in Executive's duties or responsibilities, or a
material change in Executive's reporting relationships, either of which results
in or reflects a material diminution of the scope or importance of Executive's
duties or responsibilities, or (ii) a material reduction in the level of
benefits offered under the Employer's employee benefit plans (other than any
company-wide reduction in the level of benefits that is applicable to all
employees or executives of Executive's rank), which are made available to
Executive during the term of Executive's employment, including but not limited
to, annual and long-term incentive and stock-based plans and programs, which is
not cured within a period of ten (10) days following notice to Employer by
Executive, then Executive may by notice to the Board, deem a constructive
termination to have occurred, whereupon Executive shall be entitled to the
compensation set forth herein as if Executive had been terminated without Cause
as of the date of such notice to the Board. Upon termination of Executive under
this Section 7(b) for any reason (other than as a result of death), Executive
shall in good faith seek to obtain alternative employment and to otherwise
mitigate the amount of Severance Benefit payable by Employer.
C. If Executive dies, this Agreement shall automatically
terminate. If Executive becomes permanently disabled during the term of this
Agreement, then at Employer's option, this Agreement will immediately terminate.
In each such case, upon payment by Employer of any Base Salary that has accrued
and is unpaid to the date of such termination, Employer shall have no further
obligations to Executive, his spouse or estate. Executive shall be deemed to be
permanently disabled if, during the term of this Agreement, he shall have been
unable or unwilling or shall have failed to perform his duties under this
Agreement (whether due to ill health, physical or mental incapacity or
disability, or for causes beyond his control) for a period of one-hundred and
eighty (180) days, whether consecutive or not. Any refusal by Executive to
submit to a medical examination for the purpose of certifying disability under
this Section 7(c) shall be deemed to constitute conclusive evidence of
Executive's permanent disability. Upon receipt of certifications from two
physicians that the Executive's disability is more likely than not to continue
for a continuous period of one-hundred and eighty (180) days or for shorter
periods aggregating one-hundred and eighty (180) days, Employer may immediately
terminate this Agreement without waiting for accrual of such one-hundred and
eighty (180) day period. In the event of Executive's death during the term of
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this Agreement, any accrued and unpaid compensation due to Executive shall be
paid to his estate.
D. Subject to the terms of subsections (a) and (c) hereof,
payment of the Severance Benefit shall be Executive's sole remedy in the event
of the Employer's termination of this Agreement for any reason. Executive will
cooperate in order to allow Employer to purchase disability insurance regarding
Executive in order to fund its obligation hereunder.
E. The terms of Sections 8 and 9 of this Agreement shall
survive and be binding upon Executive upon the termination of this Agreement.
F. If Executive unilaterally terminates his employment with
Employer, other than under the conditions set forth in Section 7(b) hereof,
during the term of this Agreement, Employer shall have no further obligation to
make any payments under this Agreement and Executive shall forfeit any right to
such payments.
VIII. Restrictive Covenants. A. In consideration of Employer's
grant under the Option Agreement of options to purchase shares of common stock
of NCI Acquisition Corporation pursuant to NCI Acquisition Corporation's 1997
Management Performance Option Plan to Executive and its covenant to pay,
pursuant to the terms of Section 7, a Severance Benefit, without prior written
consent of the Board, Executive agrees that he will not for a period of twelve
(12) months (except in the case of clause (iii) below, which will continue for a
period of eighteen (18) months) following the termination of Executive's
employment with Employer for any reason whatsoever (or to such lesser extent and
for such lesser period as may be deemed enforceable by a court of competent
jurisdiction, it being the intention of the parties that this Section 8 shall be
so enforced): (i) directly or indirectly engage, participate or make any
financial investment in or become employed by or render any services (whether as
an employee, independent contractor, five (5%) percent or greater owner,
partner, lender, stockholder or otherwise) to or for any person or company in
competition with the credit reporting, collection or accounts receivable
management business conducted by Employer or any of its subsidiaries, or any
similar business (the "Business"), within any area in which Employer is doing
business at such time; (ii) directly or indirectly raid, entice, induce,
solicit, canvass, or accept any business (of the type conducted by Employer) for
any other person or company from any past, present or future (as defined below)
customer of Employer; (iii) directly or indirectly raid, entice, induce or
attempt to cause any current or future (as defined below) employee or other
advisor of Employer to terminate his employment by or engagement with Employer;
(iv) directly or indirectly request any present or future ("future", as used
herein, shall mean at or prior to the time of termination of Executive's
employment)
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entities with whom Employer has business relationships to curtail or cancel
their business with Employer or (v) directly or indirectly authorize or assist
any other person or company in taking any of the foregoing actions.
B. Executive acknowledges and agrees that during the course of his
performance of services for the Employer he will acquire knowledge with respect
to information, technology or other matters which the Employer maintains and
preserves on a confidential basis concerning the Employer's business operations,
including, by way of illustration, such information concerning the Employer's
trade secrets, business and financial methods or practices, plans, pricing,
customer, vendor and sales information and other confidential or proprietary
information and any other information, documents or materials owned, developed
or possessed by the Employer, the confidentiality of which the Employer takes
reasonable steps to protect (any and all of which being hereinafter referred to
as "Confidential Information").
C. Executive agrees that he will not, while he is employed by the
Employer or at any time thereafter, divulge to any person, directly or
indirectly, except to the Employer or its directors, officers and agents as
reasonably required in connection with his duties on behalf of the Employer
during his employment, or use the Confidential Information in any manner or for
any purpose in contravention of the Employer's policies or procedures,
inconsistent with the Employer's measures to protect its interest therein or
otherwise to the detriment of the Employer. Executive further agrees that he
will not, at any time after his employment with the Employer has ended, divulge
to any person or utilize for commercial or any other purpose not authorized in
writing by the Employer, directly or indirectly, any Confidential Information.
Executive further agrees that, if Executive's relationship with the Employer is
terminated (for whatever reason) he shall not take with him but will leave with
the Employer all records, papers and computer data and any copies thereof
relating to the Confidential Information (or if such papers, records, computer
data or copies are not on the premises of the Employer, Executive agrees to
return such papers, records and computer data as soon as practicable after his
termination). Executive acknowledges that all such papers, records, computer
data or copies thereof, are and remain the property of Employer.
D. Executive acknowledges that (i) the Confidential Information is
commercially and competitively valuable to the Employer; (ii) the unauthorized
use or disclosure of the Confidential Information would cause irreparable harm
to Employer; (iii) the Employer has taken and is taking all reasonable measures
to protect its legitimate interest in its Confidential Information, including,
without limitation, affirmative action to safeguard the confidentiality of such
Confidential Information; (iv) the restrictions on the activities in which
Executive may engage set forth in this Agreement, and the periods of time for
which such
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restrictions apply, are reasonably necessary in order to protect the Employer's
legitimate interests in its Confidential Information; and (v) nothing herein
shall prohibit the Employer from pursuing any remedies, whether in law or
equity, available to the Employer for breach or threatened breach of this
Agreement, including the recovery of damages from Executive.
E. For the purposes of this Section 8, the term "Employer" shall be
deemed to include Employer and all of its subsidiaries engaged in the Business.
IX. Inventions. All inventions, discoveries, improvements,
processes, formulae and data relating to Employer's business that Executive may
make, conceive or learn during the term of his employment by the Employer
(whether before, during or after the term of this Agreement, whether during
working hours or otherwise) shall be the exclusive property of Employer.
Executive agrees to make prompt disclosure to the Board of all such inventions,
etc., and to do all things necessary or useful to assist Employer in securing
their full enjoyment and protection.
X. No Conflicts. Executive represents and warrants that the
execution, delivery and performance of this Agreement by Executive will not
violate and agreement, undertaking or covenant to which Executive is party or is
otherwise bound.
XI. Notices. Any notice given hereunder shall be in writing and
delivered or mailed by certified mail or overnight courier service (with proof
of delivery) and addressed to the appropriate party at the address set forth
below or at such other address as the party shall designate from time to time in
a notice:
If to Employer:
Nationwide Credit, Inc.
0000 Xxxxxx Xxxxx Xxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
If to Executive:
Xxxxxxx Xxxx
XXX Xxx 00
Under the Xxxxxxxx Xxxx
Xxxxx Xxxxxxxxxxx, Xxxxxxx 00000
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XII. Binding Effect. This Agreement shall inure to the benefit of
and be binding upon Employer, its successors and assigns. Executive
acknowledges that these services are unique and personal. Accordingly,
Executive may not assign any of his rights or delegate any of his duties or
obligations under this Agreement.
XIII. Waiver. Failure to insist in any one or more instances on
strict compliance with the terms of this Agreement shall not be deemed a waiver.
Waiver of a breach of any provision of this Agreement shall not be construed as
a waiver of any subsequent breach.
XIV. Governing Law; Injunctive Relief. This Agreement is made and
delivered in, and shall be construed in accordance with the substantive laws of,
the State of New York and the United States of America without regard to
conflict of law principles. Executive acknowledges that the services to be
rendered by him are of a special, unique and extraordinary character and, in
connection with such services, Executive will have access to confidential
information vital to Employer's and its subsidiary and affiliated companies'
businesses. By reason of this, Executive consents and agrees that if he
violates any of the provisions set forth in Section 8 of this Agreement,
Employer and its subsidiary and affiliated companies would sustain irreparable
harm and, therefore, in addition to any other remedies which Employer may have
under this Agreement or otherwise, Employer shall be entitled to an injunction
from any court of competent jurisdiction restraining Employer from committing or
continuing any such violation of this Agreement.
XV. Severability. In the event that any provision of this Agreement
shall be determined to be invalid by a court of competent jurisdiction, such
determination shall in no way affect the validity or enforceability of any other
provisions hereof.
XVI. Entire Agreement; Miscellaneous. The parties acknowledge and
agree that they are not relying on any representations, oral or written, other
than those expressly contained herein. This Agreement supersedes all proposals,
oral or written, all negotiations, conversations or discussions between the
parties and all course of dealing. All prior understandings and agreements
between the parties regarding employment matters are hereby merged in this
Agreement, which alone is the complete and exclusive statement of their
understanding as to employment. No waiver or modification of this Agreement
shall be valid unless the same shall be in writing and signed by the party
sought to be charged therewith. Time is of the essence in this Agreement and
each and every provision hereof. This is a personal services agreement; no
agency, partnership, joint venture or other joint relationship is created
hereby. The parties acknowledge that they each participated in drafting this
Agreement, and there shall be not presumption against any party on the ground
that such party
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was responsible for preparing this Agreement or any part hereof. Paragraph
headings are for convenience of reference only and are not intended to create
substantive rights or obligations.
XVII. Attorney's Fees and Costs. Employer agrees to pay the
reasonable costs and expenses of Sharfman, Siviglia, Poret, Kook, Xxxx &
Shanman, P.C. with respect to its representation of Executive, up to a maximum
of $5,000 (including costs and disbursements) in the aggregate for Executive.
XVIII. D&O Insurance. During the term of this Agreement, Employer
shall maintain in effect a valid directors and officers insurance policy
covering Executive, which policy will have a coverage amount as determined in
the reasonable discretion of the Board from time to time.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
undersigned as of the day and year first above written.
NATIONWIDE CREDIT, INC.
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: President and Chief Executive Officer
EXECUTIVE
By: /s/ Xxxxxxx Xxxx
------------------------------------
Name: Xxxxxxx Xxxx
Title: Chief Financial Officer
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