Exhibit 10.2
EMPLOYMENT
AGREEMENT
This EMPLOYMENT
AGREEMENT (the “ Agreement ”) is made and
entered into this 21 st day of January, 2009, to be
effective as of January 1, 2009, between ASSET ACCEPTANCE,
LLC, a Delaware limited liability company (the “
Company ”), a wholly owned subsidiary of Asset
Acceptance Capital Corp., a Delaware corporation (“
AACC ”), and RION B. NEEDS (the “
Executive ”).
Recitals
A. Prior to the date hereof, the
parties hereto entered into that certain Employment Agreement,
dated July 20, 2007, as amended by Amendment No. 1
thereto, dated October 18, 2007, and Amendment No. 2,
dated December 29, 2008 (collectively, the “ Initial
Employment Agreement ”).
B. On July 30, 2008, the Board
of Directors of AACC (the “ Board of Directors
”) appointed the Executive as the President and Chief
Executive Officer of AACC effective January 1, 2009, in line
with the succession plan approved by the Board of
Directors.
C. The parties hereto desire to
amend and restate the Initial Employment Agreement in its entirety
in the manner set forth below.
Agreement
In consideration of the mutual
covenants and agreements contained herein, the parties hereto agree
to amend and restate the Initial Employment Agreement in its
entirety, effective as of January 1, 2009, as
follows:
1. EMPLOYMENT PERIOD . The
Company hereby agrees to employ the Executive and the Executive
hereby accepts employment with the Company, on the terms and
subject to the conditions hereinafter set forth in this Agreement,
for the period commencing as of January 1, 2009 and ending at
midnight on December 31, 2011 (the “ Initial Term
”). The term of employment shall be automatically extended
for an additional one (1) year period (the “ Extended
Term ”) on December 31, 2011 and on each subsequent
anniversary thereafter unless at least two (2) years before
December 31, 2011 or each such subsequent anniversary date, as
the case may be, either party gives the other party notice in
writing of his or its intent not to extend this Agreement, in which
case the term of this Agreement shall end as of the end of the
Initial Term or such Extended Term, as the case may be, unless
sooner terminated in accordance with Section 6 hereof,
provided that the period of the Executive’s employment
under this Agreement pursuant to any such Extended Term cannot be
extended beyond midnight on December 31, 2018. Subject to the
provisions set forth below regarding Severance Benefits (as defined
below), the Executive serves at the pleasure of the Board of
Directors of AACC and may be terminated at any time, at will, with
or without Cause (as defined below). The period of the Initial Term
and all such Extended Terms, subject to earlier termination under
Section 6 hereof, are collectively referred to herein
as the “ Employment Period ”.
2. POSITION AND DUTIES .
Subject to the terms and conditions contained herein, the Executive
shall serve as President and Chief Executive Officer of the Company
and AACC and, in such capacities, shall provide such services and
perform such functions, consistent with the nature of such
positions, as shall be determined from time to time by, or pursuant
to authority of, the Board of Directors and such other reasonable
duties as are from time to time agreed to between the Board of
Directors and the Executive. The Executive shall report directly to
the Board of Directors and shall observe all directives, rules,
policies, regulations, customs and practices now or hereafter
established by AACC and the Company for the conduct of their
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. Notwithstanding anything to the
contrary in this Agreement, if the Board of Directors, in its
discretion, appoints the Executive as the Chairman of AACC or the
Company during the Employment Period, the Executive will serve in
such position at the pleasure of the Board of Directors and may be
terminated from such position at any time, at will, with or without
Cause and without any obligation on the part of AACC or the Company
to make any payments or other obligations under this
Agreement.
3. COMPENSATION; BENEFITS
.
(a) Regular Base Salary . As
compensation for the performance of the Executive’s services
hereunder, the Company shall pay to the Executive an annual salary
(the “ Regular Base Salary ”) of $500,000 (less
deductions required by law) payable in arrears in accordance with
the Company’s payroll policy as the same may be modified by
the Company from time to time. So long as this Agreement is in
effect, the Regular Base Salary shall be subject to annual review,
but shall not be reduced below $500,000.
(b) Bonus . The Executive
shall be entitled to participate in such cash bonus plans and with
such terms and conditions as may be determined by the Board of
Directors from time to time (the “ Bonus ”), in
each case with a target Bonus to be set at 80% of the Regular Base
Salary payable and in each case payable within two and one-half
months following the end of each fiscal year as to which the Bonus
relates (or such later time as is allowed in accordance with
Treasury Regulation 1.409A-3(d)). Unless otherwise expressly
approved by the Board of Directors, upon termination of employment,
all rights to receive any Bonus for any period shall also
terminate; provided that :
(i) If the Executive’s
employment is terminated during a fiscal year under the
circumstances contemplated by Section 6(c) and the
Executive would have otherwise been entitled to a Bonus with
respect to the attainment of any broad-based objectives tied to the
performance of AACC or the Company (ignoring whether the Executive
attained any personal objectives not related to broad-based
objectives tied to the performance of AACC or the Company), the
Executive shall be entitled to receive the pro rata portion (based
upon the number of days in such fiscal year that the Executive was
employed by the Company) of the Bonus, if any, that would have been
paid to the Executive pursuant to this Section 3(b) at
the time such Bonus would have been paid had the Executive’s
employment not been terminated under the circumstances contemplated
by Section 6(c) , with the amount of the Bonus subject
to such pro rata portion to be calculated solely with respect to
the broad-based objectives tied to the performance of AACC or the
Company ( i.e ., regardless of whether such personal
objectives were attained)
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(the “ Earned Bonus
”). (For example, if the Executive’s employment is
terminated under the circumstances contemplated by
Section 6(c) , if the target Bonus was $400,000 (with
50% related to the attainment of personal objectives and 50%
related to the attainment of broad-based objectives tied to the
performance of AACC or the Company), and if the broad-based
objectives tied to the performance of AACC or the Company were
attained at the target level, then the Earned Bonus would be equal
to the pro rata portion (based upon the number of days in such
fiscal year that the Executive was employed by the Company) of
$400,000.)
(ii) If the Executive’s
employment is terminated pursuant to Section 6(d)
within one (1) year of the effective date of a Change in
Control (as defined below in Section 8(b)(ii) ), the
Executive shall be entitled to receive the amount described in
Section 8(b)(ii) .
(c) Benefits . During the
Employment Period, the Executive shall be entitled to receive such
other employee benefits, including, without limitation,
participation in such group health, life, and disability plans
provided by the Company, as are afforded from time to time
hereafter to the other Senior Executives (as defined below) of the
Company. The Executive acknowledges and agrees that (i) the
Company does not guarantee the adoption or continuation of any
particular employee benefit plan or program or other fringe benefit
during his employment, (ii) participation by the Executive in
any such plan or program shall be subject to the rules and
regulations applicable thereto, (iii) participation by the
Executive in any such plan or program may be limited from time to
time by tax or other regulations applicable to AACC and the
Company, and (iv) subject to the provisions in
Section 3(b) and 3(e) , the grant of any Bonus or other
equity award shall be at the discretion of the Board of Directors
and, as a result, may or may not be equal to those of other Senior
Executives based upon such factors as base salary, prior grants,
etc.
As used herein, “ Senior
Executive ” means any officer of AACC who files Forms 3,
4 and/or 5 under Section 16(a) of the Securities Exchange Act
of 1934, as amended (the “ Exchange Act
”).
(d) Vacation . During the
Employment Period, the Executive shall be entitled to twenty-four
(24) days paid time off (PTO) during each full calendar year
to be scheduled at the mutual convenience of the Executive and AACC
and otherwise in accordance with the policies of the Company. Any
PTO not taken during a calendar year shall be forfeited.
(e) Equity Awards . The
Company shall take such actions as are necessary for AACC to grant
equity awards during the period of 2009, 2010, 2011 and 2012
pursuant to the terms of AACC’s 2004 Stock Incentive Plan, as
amended (the “ Stock Incentive Plan ”), subject
to the terms and conditions set forth in Schedule 1 attached
hereto and subject to AACC and the Executive entering into
appropriate stock option and restricted stock agreements in
accordance with the Stock Incentive Plan.
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
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AACC and the Company, shall perform his services
primarily at AACC’s headquarters, wherever the Board of
Directors may from time to time designate them to be, and at all
times use his best efforts to carry out such responsibilities
faithfully and efficiently and to advance the business of AACC 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
(i) serve on not more than two (2) for profit, private,
civic or charitable boards, provided that , in addition to
the Executive’s service on the Board of Directors of AACC,
the Executive shall not be permitted to serve on more than one
(1) other board of directors of a company with securities
registered under the Exchange Act, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions,
and (iii) manage personal investments, so long as such
activities in clauses (i), (ii) or (iii) do not
compete with and are not provided to or for any entity that
competes with or intends to compete with AACC or the Company or any
of their subsidiaries and affiliates and do not interfere with the
performance of the Executive’s responsibilities as an
employee of the Company in accordance with this
Agreement.
5. REIMBURSEMENT FOR EXPENSES. Upon
the presentation of itemized vouchers and receipts to the
reasonable satisfaction of the Company, the Company 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 the Company’s
expense reimbursement policy as the same may be modified by the
Company from time to time (provided that expense reimbursement will
under no circumstances occur later than sixty (60) days after
the date on which the expense is incurred).
6. TERMINATION.
(a) With or Without Cause .
The Company shall be entitled to terminate this Agreement and the
employment relationship established hereby with or without Cause
immediately by giving written notice of termination to the
Executive.
As used herein, “ Cause
” means any of the following circumstances:
(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
AACC and the Company and the subsidiaries of AACC (the “
Subsidiaries ”) in accordance with
Section 4 hereof;
(iii) the Executive’s willful
failure to follow the 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 reputation of AACC, the Company or any of the
Subsidiaries, including, without limitation, the misappropriation
of funds;
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(v) the Executive’s breach of
the provisions of Section 7 of this Agreement or any
other noncompetition, noninterference, nondisclosure,
confidentiality or other similar agreement executed by the
Executive with the Company, AACC or any of its Subsidiaries;
or
(vi) the Executive’s engaging
in conduct which is reasonably likely to result, in the Board of
Director’s good faith judgment, in material injury to the
reputation of the Company, AACC or any of its Subsidiaries,
including, without limitation, commission 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) , the Executive
shall have been given written notice of the act, omission or event
constituting Cause and shall not have cured such act, omission or
event within 30 days after the giving of such notice.
After the effective date of
termination for Cause under this Section 6(a) , the
Company shall not be obligated to make any further payments to the
Executive under this Agreement, except for all amounts due the
Executive hereunder as of such effective date for the accrued but
unpaid Regular Base Salary (which shall be paid by the end of the
next payroll period following the date of termination), plus any
amounts or benefits to which the Executive may be entitled under
the terms of any employee benefit plan of the Company, as in effect
on the effective date of such termination.
(b) Resignation – Other
than Retirement or Substantial Breach . 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 of notice of the
Executive’s resignation. After the effective date of
termination under this Section 6(b) , the Company shall
not be obligated to make any further payments under this Agreement,
except for all amounts due the Executive hereunder as of such
effective date for the accrued but unpaid Regular Base Salary
(which shall be paid by the end of the next payroll period
following the date of termination), plus any amounts or benefits to
which the Executive may be entitled under the terms of any employee
benefit plan of the Company, as in effect on the effective date of
such termination.
(c) Death, Retirement or
Disability . 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) , the Company 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) for all amounts due the Executive
hereunder as of such effective date for the accrued but unpaid
Regular Base Salary (which shall be paid by the end of the next
payroll period following the date of termination), plus any amounts
or benefits to which the Executive may be entitled under
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the terms of any employee benefit plan of the
Company, as in effect on the effective date of such termination,
and (ii) the pro rata portion of the Earned Bonus, if any, due
to the Executive in accordance with Section 3(b)
.
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 sixty-five (65), and “ Disabled ”
shall mean, as of any date, the inability of the Executive to
perform his essential duties hereunder without reasonable
accommodation for a period of six (6) months as determined in
the good faith judgment of the Board of Directors.
(d) Without Cause or Substantial
Breach . In the event that (i) the Company elects to
terminate the employment of the Executive without Cause, 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 the Company within thirty (30) days of 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 in clause (i) or
(ii) and regardless of the time remaining in the Initial
Term or Extended Term, as the case may be, the Company shall not be
obligated to make any further payments under this Agreement, except
(x) for amounts due the Executive hereunder as of such
effective date for the accrued but unpaid Regular Base Salary
(which shall be paid by the end of the next payroll period
following the date of termination), plus any amounts or benefits to
which the Executive may be entitled under the terms of any employee
benefit plan of the Company, as in effect on the effective date of
such termination, and (y) for the Severance Benefits as
defined and provided in Section 8 hereof.
“ Substantial Breach
” shall mean any material breach by the Company of its
obligations under this Agreement including without limitation:
(i) the assignment of the Executive to a position or duties
materially diminished from those normally assigned to a President
and Chief Executive Officer of a business enterprise comparable to
the Company and AACC; (ii) a material reduction in the
Executive’s then Regular Base Salary; or (iii) a change
in location at which the Executive is required to perform his
duties for the Company, AACC and its Subsidiaries which is outside
a 50 mile radius of Detroit, Michigan, but only if such change
occurs within one (1) year after a Change in Control;
provided that the term “Substantial Breach”
shall not include (x) an immaterial breach by the Company of
any provisions of this Agreement or (y) a termination for
Cause under Section 6(a) .
The Executive must notify the
Company in writing of the Executive’s intention to invoke
termination for “Substantial Breach” within ninety
(90) days after the initial existence of such event and
provide the Company with thirty (30) days for cure, or such
event shall not constitute a “Substantial Breach” under
this Agreement. Additionally, the Executive must terminate
employment within one (1) year following the initial existence
of one (1) or more of the events listed above for the
termination to be considered a “Substantial Breach”.
The date of resignation under this Section 6(d) shall
be thirty-one (31) days after receipt by 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 the preceding 30-day period. The effective date
of termination of employment by the Company under this
Section 6(d) and the effective date of resignation by
the Executive under this Section 6(d) shall each be
referred to as a “ Section 6(d) Termination Date
”.
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(e) General . Notwithstanding
anything in this Section 6 to the contrary, but subject
to the consequences set forth in this Section 6 ,
(i) the Company 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 the Company shall be governed
by the rules of such plans as well as by applicable law.
(f) Survival .
Notwithstanding anything in this Section 6 to the
contrary, the provisions of Sections 7 and 9 shall survive
termination of this Agreement.
7. CONFIDENTIALITY AND NON
COMPETITION . The Executive acknowledges that (x) the
agreements and covenants contained herein are essential to protect
AACC and the Company’s business and assets and (y) by
virtue of his association with AACC and the Company, the Executive
has 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 members,
officers or managers of AACC and the Company, or other employees,
former employees, consultants, or others in a confidential
relationship with the Company, AACC and its 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 AACC or the Company
and to AACC or the Company’s substantial
detriment.
(a) Covenant Not To Compete .
The Executive agrees that, for the period commencing on the date of
this Agreement and ending two (2) years after the effective
date of the termination of the Executive’s employment with
the Company (regardless of whether such effective date occurs upon
the expiration of the Initial Term or the Extended Term, as the
case may be, occurs pursuant to Section 6 or occurs
after the expiration of the Initial Term or the Extended Term, as
the case may be, due to the Executive’s continued employment
with the Company outside of the terms of this Agreement) (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, own,
manage, operate, control, be employed by
