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EXHIBIT 10.5
AGREEMENT OF EMPLOYMENT
THIS
AGREEMENT OF EMPLOYMENT (“Agreement”) is made and
entered into in duplicate this
11 th
day of
July
, 2007, by and between PERFORMANCE CAPITAL MANAGEMENT, LLC, a
Limited Liability Company (“Employer”), and
William D. Constantino (“Executive”).
RECITALS
A.
Employer
is a Limited Liability Company duly organized and validly existing
pursuant to the laws of the State of California.
B.
Employer
is in the business of acquiring, processing, servicing and
collecting commercial and consumer indebtedness.
C.
Employer
desires to employ Executive, subject to the terms and conditions
specified in this Agreement.
D.
Executive
hereby accepts employment with Employer as chief Operations Officer
of Employer, subject to the terms and conditions specified in this
Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE RECITALS SPECIFIED ABOVE
THAT SHALL BE DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREEMENT,
AND THE MUTUAL COVENANTS, PROMISES, UNDERTAKINGS, AGREEMENTS,
REPRESENTATIONS AND WARRANTIES SPECIFIED IN THIS AGREEMENT AND
OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY
OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED
LEGALLY AND EQUITABLY, THE PARTIES DO HEREBY COVENANT, PROMISE,
AGREE, REPRESENT AND WARRANT AS FOLLOWS:
ARTICLE I
TERM OF EMPLOYMENT
Section1.1 Specified Term. Employer hereby
employs Executive and Executive hereby accepts employment with
Employer for a period of five (5) years commencing on the date of
execution and delivery of this Agreement.
ARTICLE II
DUTIES AND OBLIGATIONS OF EXECUTIVE
Section 2.1 General Duties. Executive shall
serve as Chief Officer of Legal Affairs of PERFORMANCE
CAPITAL MANAGEMENT, LLC, a California Limited Liability
Company. In Executive’s capacity as the Chief
Officer of Legal Affairs of Employer, Executive shall do and
perform all services, acts, or things necessary or appropriate to
manage and conduct the financial and fiscal affairs of Employer,
subject at all times to the policies, directives and rules
established by the Board of Directors of Employer
(“Board”), and to the consent of the Board when
required. The duties to be performed by Executive shall
be determined from time to time by the Board.
Section 2.2 Devotion to Employer’s
Business.
A.
Exclusive
Services. During his employment by the Employer, the Executive
shall not, without the express prior written consent of the Board
of Directors, engage directly or indirectly in any outside
employment or consulting of any kind, whether or not the Executive
receives remuneration for such services, or in any other activity
that relates to any line of business in which the Employer is at
that time engaged or plans to engage in, or that would otherwise
conflict with the Executive’s employment obligations,
contractual duties, or fiduciary obligations to the
Employer
Section 2.3 Competitive Activities.
During the term of this Agreement Executive shall not,
directly or indirectly, whether as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate
officer, director, or in any other individual or representative
capacity, engage or participate in any business that is in
competition in any manner whatsoever with the business of
Employer. This provision is intended by the
Parties to be interpreted broadly and includes the array of
activities carried out in the debt buying and collection
industries, including collecting as a third-party
agency.
ARTICLE III
OBLIGATIONS OF EMPLOYER
Section 3.1 General Description.
Employer shall provide Executive with the compensation,
incentives and benefits specified elsewhere in this
Agreement.
Section 3.2 Office and Staff.
Employer shall provide Executive with equipment,
supplies, facilities and services, suitable to Executive’s
position and adequate for the performance of Executive’s
duties created by the provisions of this Agreement.
Section 3.3 Reimbursement of Business Expenses.
Executive is authorized to incur reasonable business
expenses for promoting the business of Employer, including
expenditures for entertainment, and travel in accordance with the
policies and practices of Employer then in
effect. Reimbursement shall be paid within two weeks of
presentation of expense statements or vouchers and such other
supporting information as Employer may reasonably
require.
Section 3.4 Indemnification.
Employer shall indemnify Executive, if Executive is
made a party to or threatened to be made a party to, or otherwise
involved in, any proceeding commenced during the employment term,
or after the employment term, because Executive is or was an
employee or agent of Employer. The indemnification
contemplated by the provisions of this Section 3.4 shall include
any and all expenses, judgments, fines, penalties, settlements, and
other amounts, actually and reasonably incurred by Executive in
connection with the defense or settlement of any such proceeding;
provided, however, Executive shall have acted in good faith and in
a manner that Executive reasonably believed to be in the best
interests of Employer. In the event the dispute involves
a claim of criminal activity, Executive must have had no
reasonable cause to believe that Executive’s conduct was
unlawful. It is agreed and understood that a conflict of
interest may arise between the parties. It is agreed
that the Employer is entitled to participate in good faith in the
selection of Executive’s separate legal counsel, which
Employer will pay for, if it is determined that Executive is
entitled to indemnification pursuant to this
section. Executive agrees to cooperate with Employer in
all strategy and settlement decisions. Any dispute
arising under this section, including the settlement of any action
either jointly or severally shall be subject to the arbitration
provisions of Section 8.1.
Section 3.5 Advances of Expenses.
Any and all expenses, including, but not limited to,
filing fees, costs of investigation, attorney’s fees,
messenger and delivery expenses, postage, court reporters’
fees and similar fees and expenses, incurred by Executive in any
proceeding for which Executive is reasonably entitled to
indemnification shall be advanced by Employer prior to the final
disposition of such proceeding. The obligation to
advance such expenses at the written request of Executive is
subject to considerations of reasonableness, Prior to any payments
Executive shall agree to repay such advances unless and to the
extent that it is ultimately determined that Executive is entitled
to indemnification.
Section 3.6 Indemnification Not
Exclusive. The indemnification contemplated by
the provisions of this Agreement shall not be deemed exclusive of
any other rights to which Executive may be entitled pursuant to the
provisions of the Articles of Incorporation or Bylaws of Employer,
or any agreement, vote of shareholders, or disinterested directors,
the General Corporation Law of the State of California, or
otherwise as to action in his official capacities as an employee or
agent of Employer. The indemnification contemplated by
the provisions of this Agreement shall continue as to the Executive
although he may have ceased to be an employee or agent of Employer
and shall inure to the benefit of the heirs and personal
representatives of Executive, including the estate of
Executive.
ARTICLE IV
COMPENSATION OF EXECUTIVE
Section 4.1 Annual Salary. As
compensation for the services to be rendered by Executive pursuant
to provisions of this Agreement, Employer shall pay Executive or
cause Executive to be paid (by an affiliate of Employer) an annual
salary in the amount of One Hundred Fifty Thousand dollars
($150,000.00), payable in equal semi-monthly installments of Six
Thousand Two Hundred Fifty dollars
($6,250.00)). Executive salary increases during the term
of this agreement maybe made at the discretion of the
Employer’s Board of Directors. Any such changes
shall be incorporated as Addenda to this agreement.
Section 4.2 Profit Bonuses.
Executive profit bonuses, if any, shall be at the
discretion of the Employer’s Board of
Directors. The Board of Directors may in its discretion
set up a specific bonus program for a predetermined length of
time. Any such program will be communicated to the
Executive in writing prior to the commencement of the
program.
Section
4.3 Equity Participation. If during the term of
this contract the Board takes action to bring liquidity to all
PCM unit holders (as, for example, by selling or taking the
company public), the Board intends to compensate the
Executives, provided they remain in the employ of the company
at the time. They will have the option of receiving 1) a sum
equal to the total of their annual salaries divided by the
total number of Executives employed by employer at the time of
the action; or 2) 10% of the payment in kind actually
distributed to the unit holders divided by the total number of
Executives employed by Employer at the time of the
action.
Section 4.4 Tax Withholding.
Employer shall have the right to deduct or withhold
from the compensation due and payable to Executive pursuant to the
provisions of this Agreement any and all amounts required for
federal income and Social Security taxes and all state or local
taxes now applicable or which may be enacted and may become
applicable in the future.
ARTICLE V.
EXECUTIVE BENEFITS
Section 5.1 Annual Vacation.
During the employment term, Executive shall be
entitled to an annual vacation leave, of three weeks without loss
of compensation. Executive may take his vacation from
time to time unless specifically requested not to do so by
Employer. In the event that Executive is unable for any
reason to take the total amount of vacation time authorized herein
during any year, except at the specific request of the Employer,
Executive at his option, may elect to be paid out up to one
week’s vacation or carry it over into the first quarter up to
one week’s vacation. Any additional vacation benefit will be
forfeited. Other than one carryover week that must be used within
the first quarter of the succeeding year, there will be no accrual
of vacation time. The three weeks of vacation pay will vest on
January 1 of each calendar year such that Executive will be
entitled to take up to three weeks off with pay during that
year. In the event this employment relationship is
terminated, executive will be entitled to be compensated only for
the prorated portion of vacation, including reimbursing Employer
for used but unearned vacation. Proration will be
based on the assumption that a week of vacation is earned as of
February 15, June 15 and October 15 of each year.
Section 5.2 Paid Holidays. During the
employment term, Executive shall be entitled to a holiday with full
pay on each New Year’s Day, President’s Day, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day during the term of this Agreement, and such other days as
Employer currently provides other employees.
Section 5.3 Health Care Benefits. During the
employment term, Employer shall include Executive and his
dependents in the hospital, surgical, medical and dental benefit
plan adopted and maintained by Employer for senior executives.
Executive shall be entitled to sick days/personal days as Employer
currently provides other employees.
Section 5.4 Other Benefits. During the
employment term, Employer shall provide the Executive such other
benefits as Employer, in its sole and absolute discretion, may
determine to be necessary or appropriate.
ARTICLE VI
TERMINATION OF EMPLOYMENT
Section 6.1 Termination. Either party
shall have the right to terminate this Agreement with or without
Cause before the expiration of the Term or any Renewal Term, as
provided below. Whatever the circumstances of the
termination may be, the Executive shall continue to be bound after
termination by Articles 7 and 8 of this Agreement.
Section 6.2 Termination for Cause.
A.
Employer
reserves the right to terminate this Agreement if Executive
willfully breaches or habitually neglects the duties which he is
required to perform pursuant to the provisions of this Agreement;
or commits such acts of dishonesty, fraud, misrepresentation or
other acts of moral turpitude as would prevent the effective
performance of his duties.
B.
Employer,
at its option, may terminate this Agreement for the reasons stated
in this section by giving written notice of termination to
Executive without prejudice to any other remedy to which Employer
may be entitled either at law, in equity, or pursuant to the
provisions of this Agreement.
C.
The
notice of termination required by this section shall specify the
ground for the termination and shall be supported by a statement of
relevant facts.
D.
Termination
pursuant to this section shall be considered “for
cause” for the purposes of this Agreement.
E.
If
the Employer terminates the Executive’s employment for Cause,
the Employer shall pay to the Executive any compensation due under
Article 4 of this Agreement, including any unused vacation,
prorated through the date of termination, and the Employer shall
have an option to purchase all the ownership interest of the
Executive, if any, in accordance with the agreement creating such
interest, at fair market value, to be determined by the Board. The
Executive shall have no right to receive any further compensation
or benefits otherwise payable under any other provision of this
Agreement.
F.
Termination
by Executive. Executive may terminate his obligations
pursuant to this Agreement by giving Employer at least thirty (30)
days written notice. The time shall run from the date
the notice is received by the Chair or Co-Chairs of the Board of
Directors. In the event Executive terminates
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