EMPLOYMENT AGREEMENT
This Agreement is made as of the 4th day of June, 1999 between
Outsourcing Solutions Inc., a Delaware corporation, with offices at 000 Xxxxx
Xxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxx 00000 (the "Company"), and
Xxxxx Xxxxxxx, an individual residing in the State of Georgia (the "Employee").
RECITALS
WHEREAS, the Company desires to secure the services and
employment of the Employee on behalf of the Company, and the Employee desires to
enter into employment with the Company, upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, the parties hereto, each intending to be legally
bound hereby, agree as follows:
1. Employment. The Company hereby employs the Employee as
Division President, Portfolio Services of the Company, and the Employee accepts
such employment for the term of the employment specified in Section 3 below.
During the Employment Term (as defined below), the Employee shall serve as the
Division President, Portfolio Services of the Company, performing such duties as
shall be reasonably required of such an employee of the Company, and shall have
such other powers and perform such other additional executive duties as may from
time to time be assigned to him by the Board of Directors of the Company. The
Employee's primary place of employment shall be Atlanta, Georgia.
2. Performance. The Employee will serve the Company faithfully
and to the best of his ability and will devote substantially all of his time,
energy, experience and talents during regular business hours and as otherwise
reasonably necessary to such employment, to the exclusion of all other business
activities.
3. Employment Term. The employment term shall begin on the date
of this Agreement and continue until December 31, 1999, unless earlier
terminated pursuant to Section 7 below (the "Employment Term"); provided, that
on December 31, 1999 and on each anniversary thereafter, the Employment Term
shall be automatically extended for an additional twelve month period unless 30
days prior to such anniversary date either the Company or the Employee shall
give written notice of termination of the Agreement, in which case the Agreement
will terminate at the end of the then existing Employment Term.
4. Compensation.
(a) Salary. During the Employment Term, the Company shall pay the
Employee a base salary, payable in equal semimonthly installments, subject to
withholding and other applicable taxes, at an annual rate of no less than Two
Hundred Ten Thousand Dollars ($210,000.00).
(b) Bonus. Commencing on January 1, 1999, the Employee shall be
eligible for a target annual bonus of 50% of his base salary. Annual bonuses
shall be based on the satisfaction of performance targets established by the
Board of Directors on or before March 31 of each year for such year.
(c) Medical and Dental Health, Life and Disability Insurance
Benefits. During the Employment Term, the Employee shall be entitled to medical
and dental health, life insurance and disability insurance benefits in
accordance with the Company's established practices with respect to its key
employees.
(d) Vacation; Sick Leave. During the Employment Term, the
Employee shall be entitled to vacation and sick leave in accordance with the
Company's established practices with respect to its key employees.
5. Expenses. The Employee shall be reimbursed by the Company
for all reasonable expenses incurred by him in connection with the performance
of his duties hereunder in accordance with policies established by the Board
from time to time and upon receipt of appropriate documentation.
6. Secret Processes and Confidential Information. For the
Employment Term and thereafter, (a) the Employee will not divulge, transmit or
otherwise disclose (except as legally compelled by court order, and then only to
the extent required, after prompt notice to the Company of any such order),
directly or indirectly, other than in the regular and proper course of business
of the Company, any confidential knowledge or information with respect to the
operations or finances of the Company or with respect to confidential or secret
processes, services, techniques, customers or plans with respect to the Company
and (b) the Employee will not use, directly or indirectly, any confidential
information for the benefit of anyone other than the Company; provided, however,
that the Employee has no obligation, express or implied, to refrain from using
or disclosing to others any such knowledge or information which is or hereafter
shall become available to the public other than through disclosure by the
Employee. All new processes, techniques, know-how, inventions, plans, products,
patents and devices developed, made or invented by the Employee, alone or with
others, while an employee of the Company, shall be and become the sole property
of the Company, unless released in writing by the Company, and the Employee
hereby assigns any and all rights therein or thereto to the Company.
During the term of this Agreement and thereafter, Employee shall
not take any action to disparage or criticize to any third parties any of the
services of the Company or to commit any other action that injures or hinders
the business relationships of the Company.
During the term of this Agreement and for two years thereafter,
Employee shall not employ, solicit for employment or otherwise contract for the
services of any employee of the Company or any of its Affiliates (as defined
below) at the time of this Agreement or who shall subsequently become an
employee of the Company or any of its Affiliates, provided that Employee shall
not be prohibited from such solicitation or employment if such employee (a)
initiated discussions with Employee without any direct or indirect solicitation
from Employee, (b) responded to a general public solicitation, or (c) has
terminated employment with the Company prior to commencement of discussions with
Employee.
All files, records, documents, memorandums, notes or other
documents relating to the business of Company, whether prepared by Employee or
otherwise coming into his possession in the course of the performance of his
services under this Agreement, shall be the exclusive property of Company and
shall be delivered to Company and not retained by Employee upon termination of
this Agreement for any reason whatsoever.
7. Termination. The employment of the Employee hereunder may be
terminated at any time by the Company with or without "cause". For purposes of
this Agreement, "cause" shall mean: (i) embezzlement, theft or other
misappropriation of any property of the Company or any subsidiary, (ii) gross or
willful misconduct resulting in substantial loss to the Company or any
subsidiary or substantial damage to the reputation of the Company or any
subsidiary, (iii) any act involving moral turpitude which results in a
conviction for a felony involving moral turpitude, fraud or misrepresentation,
(iv) gross neglect of his assigned duties to the Company or any subsidiary, (v)
gross breach of his fiduciary obligations to the Company or any subsidiary, or
(vi) any chemical dependence which materially affects the performance of his
duties and responsibilities to the Company or any subsidiary; provided that in
the case of the misconduct set forth in clauses (iv) and (vi) above, such
misconduct shall continue for a period of 30 days following written notice
thereof by the Company to the Employee.
8. Severance.
(a) If (i) Employee's employment is terminated by the Company without
"cause," (ii) the Company does not agree to extend the Employment Term upon the
expiration thereof, (iii) Employee terminates his employment because the Company
reduces his responsibilities or compensation in a manner which is tantamount to
termination of Employee's employment, or (iv) within two years following a Sale
of the Company (as defined in Section 9 of this Agreement), the Employee gives
notice to the Company of his resignation for "Good Reason" (as defined in
Section 8(b) hereof) setting forth in reasonable detail the circumstances
claimed to constitute Good Reason and stating that it constitutes notice
pursuant to this Section 8(a), and the stated basis for Good Reason has not been
fully corrected within sixty (60) days from the date of such notice, the
Employee shall be entitled to (x) receive an amount equal to his total cash
compensation (base salary plus bonus, excluding, however, any Change in Control
Bonus paid pursuant to Section 9 hereof) for the year preceding the date of the
Employee's termination or the date on which the Employment Term expires, as the
case may be, such amount to be payable in a lump sum on the date of termination
or the date on which the Employment Term expires, as the case may be, and (y)
continue to receive the benefits referred to in Section 4(c) during the one year
period following the date of termination or expiration (the "Severance Period");
provided, however, if any such event occurs prior to the extension of the
initial Employment Term, the Employee shall be entitled to (A) an amount equal
to his then current salary, payable in a lump sum on the date of termination,
(B) an amount equal to his target annual bonus, payable in a lump sum on the
date of termination, and (C) continue to receive the benefits referred to in
Section 4(c) during the Severance Period. If the Employee's employment is
terminated by the Company "for cause", the Employee shall not be entitled to
severance compensation. The Employee covenants and agrees that he will not,
during the one year period following the termination of the Employee's
employment by the Company, within any jurisdiction or marketing area in which
the Company or any of its Affiliates (as defined below) is doing business or is
qualified to do business, directly or indirectly own, manage, operate, control,
be employed by or participate in the ownership, management, operation or control
of, or be connected in any manner with, any business of the type and character
engaged in and competitive with that conducted by the Company or any of its
Affiliates at the time of such termination; provided, however, that ownership of
securities of 2% or less of any class of securities of a public company shall
not be considered to be competition with the Company or any of its Affiliates.
For the purposes of this Agreement, the term "Affiliate" shall mean, with
respect to the Company, any person or entity which, directly or indirectly, owns
or is owned by, or is under common ownership with, the Company. The term "own"
(including, with correlative meanings, "owned by" and "under common ownership
with") shall mean the ownership of 50% or more of the voting securities (or
their equivalent) of a particular entity.
(b) For purposes of this Agreement, "Good Reason" shall mean the
occurrence, without the Employee's consent, of any of the following events
during the Employment Term within two years following a Sale of the Company: (A)
a relocation of the principal location of the performance of work by the
Employee beyond a thirty mile radius of such location as of the time of the Sale
of the Company; (B) an assignment to the Employee of duties that result in a
material diminution of the Employee's duties and responsibilities under this
Agreement, (C) a reduction of the Employee's base salary in effect as of the
time of the Sale of the Company, (D) a material breach of the Company's
obligations set forth in this Agreement, or (E) the failure of any acquiror of,
or successor to, all or substantially all of the assets or business of the
Company to expressly assume this Agreement and agree to perform all of the
obligations of the Company hereunder.
9. Change in Control Bonus. Upon consummation of a "Sale of the
Company," if the Employee is employed by the Company immediately prior thereto,
he will be entitled to receive a payment from the Company in the amount of 250%
of his (i) then current base salary plus (ii) target annual bonus, reduced by
his "Option Gain" and subject to any applicable withholding or employment taxes.
Such amount (the "Change in Control Bonus") will be paid to the Employee in
immediately available funds in a lump-sum at the time such Sale of the Company
is consummated. The foregoing to the contrary notwithstanding, the Employee will
only be entitled to receive the Change in Control Bonus if the Change in Control
Bonus is previously approved by a vote of more than seventy-five percent (75%)
of the voting power of the Company's outstanding stock immediately before any
Sale of the Company. For purposes of this Agreement, the following terms have
the meanings set forth below:
"Sale of the Company" - a (i) a stock sale, merger, consolidation,
combination, reorganization or other transaction resulting in less than
fifty percent (50%) of the combined voting power of the surviving or
resulting entity being owned by the shareholders of the Company
immediately prior to such transaction or (ii) the sale or other
disposition of all or substantially all of the assets or business of the
Company (other than, in the case of either clause (i) or (ii) above, in
connection with any employee benefit plan of the Company or an
Affiliate); provided, however, that a public offering of the capital
stock of the Company shall not be a "Sale of the Company."
"Option Gain" - the aggregate amount computed for all of the options to
purchase capital stock of the Company or other equity compensation
awards theretofore granted to the Employee, of the excess of the
consideration received by the holders of the Company's common stock for
a share of such common stock in connection with the applicable Sale of
the Company over the exercise price of the option or other award, if
any, multiplied by the number of shares of the Company's common stock
covered by each such option or award. The amount of the Option Gain
shall be finally and conclusively determined by the Board of Directors
of the Company in its good faith.
10. Notice. Any notices required or permitted hereunder shall be
in writing and shall be deemed to have been given when personally delivered or
when mailed, certified or registered mail, postage prepaid, to the following
addresses:
If to the Employee:
Xxxxx Xxxxxxx
0000 Xxxxxxxx Xx. X. X.
Xxxxxxx, XX 00000
If to the Company:
Outsourcing Solutions Inc.
000 Xxxxx Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attn: President
11. General.
(a) Governing Law; Jurisdiction. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Missouri applicable to contracts executed and to be performed
entirely within said State. Any judicial proceeding brought against any of the
parties to this Agreement or any dispute arising out of this Agreement or any
matter related hereto may be brought in the courts of the State of Missouri or
in the United States District Court for the Eastern District of Missouri, and,
by execution and delivery of this Agreement, each of the parties to this
Agreement accepts the jurisdiction of said courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. The
foregoing consent to jurisdiction shall not be deemed to confer rights on any
person other than the respective parties to this Agreement.
(b) Assignability. The Employee may not assign his interest in or
delegate his duties under this Agreement. Notwithstanding anything else in this
Agreement to the contrary, the Company may assign this Agreement to and all
rights hereunder shall inure to the benefit of any person, firm or corporation
succeeding to all or substantially all of the business or assets of the Company
by purchase, merger or consolidation.
(c) Enforcement Costs. In the event that either the Company or
the Employee initiates an action or claim to enforce any provision or term of
this Agreement, or in the event of any dispute or controversy arising out of or
relating to this Agreement, the costs and expenses (including attorney's fees
and disbursements) of the prevailing party shall be paid by the other party,
such party to be deemed to have prevailed if such action or claim is concluded
pursuant to a court order or final judgment which is not subject to appeal, a
settlement agreement or dismissal of the principal claims. Notwithstanding the
foregoing, following a Sale of the Company, all reasonable costs and expenses
(including attorney's fees and disbursements) incurred by the Employee in an
action or claim to enforce any provision or term of this Agreement, and all
costs and expenses of any court proceeding or arbitration in connection with any
dispute or controversy arising out of or relating to this Agreement, shall be
promptly paid or reimbursed by the Company or its successor; provided, however,
that no payment or reimbursement shall be made of such costs or expenses if and
to the extent that the court or arbitrator adjudicating or deciding the matter
determines that any of the Employee's litigation assertions or defenses were in
bad faith or frivolous. Pending the resolution of any court proceeding or
arbitration described in this Section 11(c), the Company or its successor shall
continue payment of all amounts and benefits due the Employee under this
Agreement.
(d) Binding Effect. This Agreement is for the employment of
Employee, personally, and for the services to be rendered by him must be
rendered by him and no other person. This Agreement shall be binding upon and
inure to the benefit of the Company and its successors and assigns.
(e) Entire Agreement; Modification. This Agreement constitutes
the entire agreement of the parties hereto with respect to the subject matter
hereof and may not be modified or amended in any way except in writing by the
parties hereto.
(f) Duration. Notwithstanding the term of employment hereunder,
this Agreement shall continue for so long as any obligations remain under this
Agreement.
(g) Survival. The covenants set forth in Sections 6 and 8 of this
Agreement shall survive and shall continue to be binding upon Employee
notwithstanding the termination of this Agreement for any reason whatsoever. The
covenants set forth in Sections 6 and 8 of this Agreement shall be deemed and
construed as separate agreements independent of any other provision of this
Agreement. The existence of any claim or cause of action by Employee against
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by Company of any or all covenants. It is expressly
agreed that the remedy at law for the breach or any such covenant is inadequate
and that injunctive relief shall be available to prevent the breach or any
threatened breach thereof.
IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound, have hereunto executed this Agreement the day and year first written
above.
OUTSOURCING SOLUTIONS INC.
By /s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx, President and
Chief Executive Officer
EMPLOYEE
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
