Employment Agreement dated April 28, 2006

Contract Categories: Human Resources - Employment Agreements
EX-10.5 5 k07470exv10w5.txt EMPLOYMENT AGREEMENT DATED APRIL 28, 2006 EXHIBIT 10.5 EXECUTION - -------------------------------------------------------------------------------- EMPLOYMENT AGREEMENT by and among ASSET ACCEPTANCE HOLDINGS LLC and PREMIUM ASSET RECOVERY CORP. and ADAM O. HOLZHAUER ---------------------------- Dated as of April 28, 2006 ---------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE ---- 1. Employment; Term................................................. 1 2. Position and Duties.............................................. 1 3. Compensation; Benefits........................................... 2 4. Exclusivity...................................................... 4 5. Reimbursement for Expenses....................................... 4 6. Termination...................................................... 4 7. Confidentiality and Non Competition. ........................... 4 8. Remedies......................................................... 4 9. Deductions from Compensation..................................... 4 10. Termination Benefits............................................. 4 11. Extension of Restricted Periods.................................. 4 12. Successors; Binding Agreement.................................... 4 13. Waiver and Modification.......................................... 4 14. Severability..................................................... 4 15. Submission to Jurisdiction; Venue................................ 4 16. WAIVER OF JURY TRIAL............................................. 4 17. Blue Pencilling.................................................. 4 18. Notices.:........................................................ 4 19. Captions and Paragraph Headings.................................. 4 20. Entire Agreement................................................. 4 21. Counterparts..................................................... 4 22. Acknowledgment and Independent Legal Advice...................... 4 23. Governing Law.................................................... 4 24. Tax Matters...................................................... 4
EMPLOYMENT AGREEMENT This Employment Agreement (this "Agreement") is made and entered into as of this 28th day of April, 2006, by and among Asset Acceptance Holdings LLC, a Delaware limited liability company (the "Company"), Premium Asset Recovery Corp., a Florida corporation ("PARC"), and Adam O. Holzhauer (the "Executive"). BACKGROUND A. The Company acquired 100% of the issued and outstanding shares of the capital stock of PARC, pursuant to a certain Stock Purchase Agreement dated as of April 26, 2006, among the Company, the Executive, and PARC's other stockholders (the "Stock Purchase Agreement"). B. The Executive is currently a stockholder and has served PARC continuously during the past five (5) years as its senior vice president of medical business development and the Executive's services have constituted a material factor in the successful growth and development of PARC. C. The Company desires to retain the unique experience, ability and services of the Executive and to prevent any other competitive business from securing his services and utilizing his experience, background and know-how. D. The execution and delivery of this Agreement is a condition to the consummation of the transactions contemplated by the Stock Purchase Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows. AGREEMENT 1. EMPLOYMENT; TERM. PARC hereby agrees to employ the Executive and the Executive hereby accepts employment with PARC, on the terms and subject to the conditions set forth in this Agreement. The Executive's employment hereunder shall commence on the date hereof and shall end on the third anniversary of the date hereof unless otherwise terminated or extended pursuant to the terms of this Agreement (the "Employment Period"). In the event the Executive continues to be employed after the expiration of the Employment Period, the Executive shall be an "at-will" employee of PARC who may terminate his employment with PARC at any time, or the Executive may be terminated by PARC or the Company, at any time, with or without Cause (as hereinafter defined). 2. POSITION AND DUTIES. Subject to the terms and conditions contained herein, the Executive shall serve as Sr. Vice President - Business Development of PARC and, in such capacity, shall provide such services and perform such functions, consistent with the nature of such position, as shall be determined from time to time by, or pursuant to authority of, the board of directors of PARC (the "Board of Directors") and such other reasonable duties as are from time to time designated by the President of PARC. The Executive shall be authorized to make purchases related to charged off consumer receivables in the healthcare industry ("Medical Purchases") pursuant to PARC's policies and procedures governing the purchase of receivables as determined by the Company's Board of Directors, from time to time, which policies and procedures may be subject to the approval of Asset Acceptance Capital Corp.'s ("AACC") Board of Directors. The Executive shall observe all directives, rules, policies, regulations, customs and practices now or hereafter established by PARC or the Company for the conduct of its 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. 3. COMPENSATION; BENEFITS. (a) As compensation for the performance of the Executive's services hereunder, PARC shall pay to the Executive an annual salary (the "Regular Base Salary") of $65,000 (less deductions required by law) payable in arrears on a bi-weekly basis. So long as this Agreement is in effect, the Regular Base Salary shall be subject to annual review, but shall not be reduced below $65,000. (b) In addition to the Regular Base Salary, beginning May 1, 2006 and subject to subsection (d), the Executive shall be entitled to a monthly commission (the "Commission") equal to 10% of all contingency fees received by PARC for all existing clients, whose names are set forth on Schedule 1, and for all future clients for which the Executive is solely responsible for negotiating and obtaining the accounts on which PARC receives a contingent fee, without the assistance or involvement of independent sales consultants, current sales employees of PARC or non-employees. (c) Subject to subsection (d) below, the Executive shall also be entitled to receive a monthly bonus (the "Monthly Bonus") equal to 3.5% of the aggregate collections with regard to each Medical Purchase owned by PARC as of the date of this Agreement (as set forth on Schedule 2) and each additional Medical Purchase acquired by PARC from and after the date hereof, to the extent that the aggregate collections for each such Medical Purchase exceed the actual purchase price for each such Medical Purchase. In any month in which the aggregate collections by PARC with respect to particular Medical Purchase owned by PARC do not exceed the actual purchase price of such Medical Purchase, the Executive shall not be entitled to receive the Monthly Bonus for such Medical Purchase. Notwithstanding the foregoing, the Monthly Bonus shall only be applicable to those Medical Purchases negotiated and obtained solely by the Executive that did not require or include the involvement of independent sales consultants, current sales employees of PARC or any other non-employee. (d) For purposes of this Agreement, the term "Sales Deduction" shall mean (i) for any month in which the Executive receives two Regular Base Salary payments, $5,000, and (ii) for any month in which the Executive receives three Regular Base Salary payments, $7,500. The amount of the Commission payment plus the Monthly Bonus payment, if any, for each month shall be reduced by the applicable Sales Deduction for each month; provided, however, that the aggregate amount of the Commission and 2 Monthly Bonus shall in no event be reduced below $0. Notwithstanding the foregoing, the Sales Deduction shall be subject to appropriate adjustment by PARC should the Regular Base Salary be converted to bi-monthly payments. (e) The Executive shall be entitled to receive a percentage of the actual purchase price of Medical Purchases made by PARC (the "Sales Incentive"). The Sales Incentive shall be determined and paid as follows. (i) 1% of the actual purchase price for all Medical Purchases by PARC negotiated and obtained by the Executive that required and included the involvement of independent sales consultants, current sales employees of PARC or non-employees. (ii) 2.5% of the actual purchase price for all Medical Purchases by PARC negotiated and obtained by the Executive that did not require or include the involvement of independent sales consultants, current sales employees or non-employees. (iii) In the event that aggregate buybacks relating to particular Medical Purchases in this subsection (e) exceed 2% of the actual purchase price of such Medical Purchase (the "Buyback Amount"), the total Sales Incentive paid by PARC to the Executive relating to the Buyback Amount of such Medical Purchases shall be credited against subsequent Sales Incentive payments owed to the Executive. (iv) The Sales Incentive shall be payable upon the closing of each new Medical Purchase and shall not be subject to the Sales Deduction. Each Medical Purchase under any forward flow agreement or arrangement for monthly Medical Purchases, shall constitute a separate and individual Medical Purchase in which the Executive shall be entitled to receive the appropriate Sales Incentive as set forth in Sections 3(c)(i) and (ii). (f) Upon termination of employment, all rights to receive any Commission, Sales Incentive or Monthly Bonus for any period shall also terminate; provided that, if the Executive's employment is terminated under the circumstances contemplated by Section 6(d), the Executive shall be entitled to receive the Commission, Sales Incentive or Monthly Bonus, if any, until the third anniversary of the date hereof that would have been paid to the Executive pursuant to this Section 3 at the time the Commission, Sales Incentive or Bonus would have been paid had the Executive's employment not been terminated under the circumstances contemplated by Section 6(d). (g) During the Employment Period, the Executive shall be entitled to receive such other benefits and conditions of employment, including, without limitation, participation in such group health, life and disability plans provided by PARC (such benefits collectively, the "Welfare Benefits"), as are generally afforded from time to time hereafter to the other senior executives of PARC. The Executive acknowledges and 3 agrees that neither the Company nor PARC guarantees the adoption of any particular employee benefit plan or program or other fringe benefit during the Employment Period, and participation by the Executive in any such plan or program shall be subject to the rules and regulations applicable thereto. (h) During the Employment Period the Executive shall be entitled to four (4) weeks' paid vacation during each full calendar year to be scheduled at the mutual convenience of the Executive and the Company. Any vacation not taken during a calendar year shall be forfeited. For 2006, the Executive's four (4) weeks of paid vacation shall include paid vacation time taken in 2006 prior to the date hereof. (i) The monthly bonuses and commissions payable to Executive hereunder shall be payable within thirty (30) days after the end of each month with respect to amounts earned during the prior calendar month and shall be accompanied by a written report, prepared by the Board of Directors, substantiating the amounts due (the "Monthly Bonus Reports"). The Executive shall review the Monthly Bonus Report and shall have thirty (30) days to provide the Board of Directors with written notice of any objections to the Monthly Bonus Report, which notice shall specify the disputed portions of the Monthly Bonus Reports (the "Disputed Bonus Amounts") and shall state the basis of the objection (the "Objection Notice"). If the Executive fails to deliver the Objection Notice to PARC during such thirty day period, then the Executive shall be deemed to have accepted the Monthly Bonus Report in full and such report shall not be subject to further adjustment. (j) If the Executive timely delivers an Objection Notice to the Board of Directors, then the Board of Directors shall have thirty (30) days to review such notice and attempt to resolve the Disputed Bonus Amounts with the Executive. If the Board of Directors and Executive fail to resolve all of the Dispute Bonus Amounts before the end of such thirty (30) day period, then the Executive shall have the right, one (1) time per calendar year while this Agreement is in effect, to request that a nationally or regionally recognized accounting firm, independent of, and approved by, PARC, the Company, and the Executive (which approval shall not be unreasonably withheld or delayed) (the "Independent Accountants"), review PARC's books and records with regard to the Disputed Bonus Amounts and determine whether the Monthly Bonus Report accurately reflects the amount of the monthly bonuses and commissions due to the Executive for such month pursuant to the terms of this Agreement. If the Independent Accountants determine that any Disputed Bonus Amounts are due to the Executive pursuant to the terms of this Agreement, PARC shall promptly pay to the Executive any and all such Disputed Bonus Amounts. If the Disputed Bonus Amounts as finally determined result in (i) PARC being required to make a payment to the Executive in an amount greater than $2,500, then PARC shall pay all fees and expenses of the Independent Accountants with respect to such review and such review shall not be counted as the Executive's one review permitted per calendar year, and (ii) PARC being required to make a payment to the Executive in an amount equal to or less than $2,500, then the Executive shall pay all 4 fees and expenses of the Independent Accountants with respect to such review. In any event, any determination as to the Disputed Bonus Amounts made by the Independent Accountants shall be final, binding and conclusive on the parties, and shall not be subject to any appeal by any party. 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 PARC, and at all times use his best efforts to carry out such responsibilities faithfully and efficiently and to advance the business of PARC 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 (a) serve on civic or charitable boards or committees, or (b) manage personal investments, so long as such activities do not (i) compete with or are not provided to or for any entity that competes with or intends to compete with PARC, the Company or any of their subsidiaries and affiliates, or (ii) interfere in any material respect with the performance of the Executive's responsibilities as an employee of PARC in accordance with this Agreement. 5. REIMBURSEMENT FOR EXPENSES. Upon the presentation of itemized vouchers and receipts to the reasonable satisfaction of PARC, PARC 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 PARC's expense reimbursement policy as the same may be modified by PARC from time to time without prejudice to any rights of the Executive which may have accrued prior to such notification. 6. TERMINATION. (a) PARC shall be entitled to terminate this Agreement and the employment relationship established hereby immediately for "Cause" by giving written notice of termination to the Executive. As used in this Agreement, the term "Cause" shall mean any of the following events: (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 PARC in accordance with Section 4; (iii) the Executive's willful failure to follow the lawful 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 5 reputation of the Company, PARC or any of their respective subsidiaries, including, without limitation, the misappropriation of funds or determinations of discrimination or harassment; (v) the Executive's breach of the provisions of Section 7 or any other noncompetition, noninterference, nondisclosure, confidentiality or other similar agreement executed by the Executive with the Company, PARC or any of their respective subsidiaries; or (vi) the commission by the Executive 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), upon the delivery of written notice to the Executive setting forth the act, omission or event constituting Cause, the Executive shall have thirty (30) days in which to cure such act, omission or event after the delivery of such written notice. If the Executive's employment is terminated under the provisions of this clause (a), all rights of the Executive to compensation and benefits pursuant to Section 3 shall cease as of the effective date of such termination, except for amounts due to the Executive hereunder as of such effective date, or amounts or benefits to which the Executive may be entitled to under the terms of any employee benefit plan of the Company or PARC. (b) 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 and PARC of written notice of the Executive's resignation. After the effective date of termination under this Section 6(b), neither the Company nor PARC shall be obligated to make any further payments under this Agreement, except for amounts due the Executive hereunder as of such effective date or for amounts or benefits to which the Executive may be entitled under the terms of any employee benefit plan of the Company or PARC. (c) 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), PARC 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) all amounts due the Executive hereunder as of such effective date, including any amounts or benefits to which the Executive may be entitled under the terms of any employee benefit plan of the Company or PARC, as in effect on the effective date of such termination, and (ii) the amount of any Sales Incentive or Monthly Bonus, if any, due to the Executive in accordance with Sections 3(c) and (d). 6 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 65 and "Disabled" shall mean, as of any date, the inability of the Executive to perform his essential duties hereunder with or without reasonable accommodation for a period of six (6) months as determined in the good faith judgment of the Board of Directors. (d) In the event that (i) PARC elects to terminate the employment of the Executive prior to the expiration of the Employment Period (other than pursuant to paragraphs (a) through (c) of this Section 6), 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 PARC within thirty (30) days of a 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, PARC shall continue to pay the Executive as provided in Section 10. "Substantial Breach" shall mean any material breach by PARC of its obligations under this Agreement including, without limitation (i) the assignment of the Executive to a position or duties materially inconsistent with those normally assigned to a senior sales manager or director of the Company, (ii) a reduction in the Executive's Regular Base Salary below $65,000, (iii) the failure by PARC to allow the Executive to participate in PARC's employee benefit plans or incentive compensation plans generally available from time to time to senior executives of PARC in comparable positions, or (iv) any requirement that Executive relocate his principal office or residence, or principal situs for duties, outside of metropolitan San Antonio, Texas, without Executive's consent; provided that, the term "Substantial Breach" shall not include (A) an immaterial breach by PARC of any provisions of this Agreement, or (B) a termination for Cause under paragraph (a) of this Section 6. The date of termination of employment by the Company or PARC under this Section 6(d) (the "Section 6(d) Termination Date") shall, as the case may be, be the later of the date, if any, specified in a written notice of termination to the Executive or the date on which such notice is given to the Executive. The date of resignation under this Section 6(d) shall be thirty (30) days after receipt by PARC and 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 such 30-day period. (e) Notwithstanding anything in this Section 6 to the contrary, but subject to the consequences set forth in this Section 6, (i) the Company or PARC 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 PARC shall be governed by the rules of such plans as well as by applicable law. 7 (f) Notwithstanding anything in this Section 6 to the contrary, the provisions of Sections 7 and 8 shall survive termination of this Agreement. 7. CONFIDENTIALITY AND NON COMPETITION. The Executive acknowledges that (i) the agreements and covenants contained herein are essential to protect the Company's and PARC's business and assets, and (ii) by virtue of his past and continued association with PARC, the Executive had 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 directors, officers or managers of PARC or any employees, former employees, consultants or others in a confidential relationship with the Company, PARC or their respective affiliates or 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 the Company or PARC and to the Company's or PARC's substantial detriment. (a) COVENANT NOT TO COMPETE. (i) The Executive agrees that, for the period beginning on the date of this Agreement and ending on the later of (A) the fifth anniversary of the date of this Agreement, and (B) the third anniversary of the effective date of the termination of the Executive's employment with PARC (regardless of the reason for the Executive's termination) (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 (as defined herein), own, manage, operate, control, be employed by, participate in, loan money to or be connected in any manner with, or permit his name to be used by, any business which is engaged in the business of purchasing and collecting consumer accounts receivable of any type that have been charged off by the original creditor ("Charged Off Accounts") and financing sales of consumer product retailers or any other business whose products or activities compete in whole or in part with the Company or PARC. Subject to the provisions of Section 7(c), nothing contained in this Agreement shall be deemed to restrict or prohibit Executive, during the period from the effective date of the termination of the Executive's employment with PARC until the end of the Restricted Period, from: (A) owning, participating in, or providing services to any provider of healthcare services or products so long as such provider is not primarily or substantially engaged in the accounts receivable management industry, including the business of purchasing or collecting Charged Off Accounts; or (B) providing consulting or advisory or similar services to any originator of Charged Off Accounts (but not to any business or entity that is primarily or substantially engaged in the accounts receivable management industry, including the business of purchasing or collecting Charged Off Accounts), provided that if the Executive provides brokering or sales services to 8 such an originator with respect to Charged Off Account, then the Executive shall give PARC a reasonable opportunity to make a proposal to purchase such accounts, unless the particular originator specifically prohibits the Executive from providing PARC with such opportunity. In no event shall the Executive have any right to engage in any of the activities contemplated by subsections (A) and (B) above while the Executive is employed by PARC or the Company. (ii) For purposes of this Agreement, the term "participate" includes any direct or indirect interest, whether as an officer, director, employee, partner, sole proprietor, trustee, beneficiary, agent, representative, independent contractor, consultant, advisor, provider of personal services, creditor or owner (other than by ownership of less than five (5) percent of the stock of a corporation that has a class of equity securities registered under the Securities Exchange Act of 1934). Territory means North America, South America, Europe and Asia. (iii) The Executive and the Company acknowledge and agree that the restrictions contained in this Section 7(a) are reasonable for the purpose of preserving the Company and PARC and their respective goodwill, proprietary rights and going concern value. (b) NONDISCLOSURE OF CONFIDENTIAL INFORMATION. (i) The Executive shall not, whether during or after the Employment Period, disclose to any person or other entity or use, for his own purposes or for the benefit of any person or other entity (except PARC or the Company), any information relating to PARC or its customers or the Company, not in the public domain, in any form, acquired by the Executive while he was employed or associated with the Company or PARC or, if acquired following the termination of such association, such information which, to the Executive's knowledge, has been acquired, directly or indirectly, from any Person owing a duty of confidentiality to the Company or PARC (the "Confidential Information"). Confidential Information includes, but is not limited to, trade secrets, Charged Off Accounts supplier lists, collection methods, information regarding bulk purchases of Charged Off Accounts, all credit and financial data concerning Charged Off Accounts, employee compensation arrangements, business practices, plans, policies, secret inventions, processes and compilations of information, records and specifications, as well as information related to the management policies and plans for the Company or PARC. Confidential Information shall not include Executive's Know-How (as defined below). (ii) Notwithstanding the foregoing, the restrictions in subsection (b)(i) of this Section 7 are not applicable to the disclosure or use of Confidential Information in connection with the following: (A) in the course of faithfully performing the Executive's duties as an employee of PARC; (B) with the 9 Company's or PARC's express written consent; (C) to the extent that any such Confidential Information is in the public domain other than as a result of the Executive's breach of any of his obligations hereunder; or (D) where required to be disclosed by court order, subpoena or other governmental process. In the event that the Executive shall be required to make disclosure pursuant to the provisions of clause (D) of the preceding sentence, the Executive promptly (but in no event more than five (5) business days after learning of such subpoena, court order or other governmental process) shall notify the Company and PARC in writing, by personal delivery or by facsimile, confirmed by mail or by certified mail, return receipt requested. (iii) The Executive agrees and acknowledges that all of such Confidential Information in any form, and copies and extracts thereof, are and shall remain the sole and exclusive property of the Company or PARC, as applicable, and the Executive shall, upon request, return to the Company the originals and all copies of any such Confidential Information provided to or acquired by the Executive in connection with his association with PARC or the Company, and shall return to the Company all files, correspondence and/or other communications received, maintained and/or originated by the Executive during the course of such association. (iv) Subject to Sections 7(a) and (c), nothing in this Agreement shall be deemed or construed to prohibit or restrict the Executive from utilizing his Executive Know-How. "Executive Know-How" means methods, techniques, concepts or know-how generally relating to the collection of accounts receivable or Charged Off Accounts or the business of collecting accounts receivable or Charged Off Accounts, currently known or becoming known to Executive, currently or formerly utilized by Executive, or developed by Executive during the term of this Agreement or thereafter, except to the extent that such methods, techniques, concepts or know-how are proprietary to PARC. (c) NO INTERFERENCE. During the Restricted Period, the Executive shall not, directly or indirectly through any other individual, legal entity, business enterprise, governmental body or unit, including any corporation, partnership, limited partnership or limited liability company ("Person"): (i) solicit, induce or attempt to induce any employee of the Company, PARC or any of their respective subsidiaries, to leave the employ of the Company, PARC or any of their respective subsidiaries, or in any way interfere with the relationship between the Company, PARC or any of their respective subsidiaries, and its subsidiaries and any employee or independent contractor thereof; (ii) hire or retain or attempt to hire or retain any Person who was an employee or independent contractor of the Company, PARC or any of their respective subsidiaries while the Executive was employed by PARC; (iii) cause, induce or attempt to cause or induce any supplier of Charged Off Accounts, licensee, licensor, franchisee, employee, consultant or other business relation of the Company, PARC or any of their respective subsidiaries to 10 cease doing business with the Company, PARC or any of their respective subsidiaries, to deal with any competitor of the Company, PARC or any of their respective subsidiaries, or in any way interfere with its relationship with the Company, PARC or any of their respective subsidiaries; or (iv) acquire Charged Off Accounts from any Person that was a seller of Charged Off Accounts to the Company, PARC or any of their respective subsidiaries. 8. REMEDIES. (a) The Executive hereby acknowledges that the Executive's covenants and obligations hereunder are of special, unique, unusual, extraordinary and intellectual character, which gives them a peculiar value, the actual or threatened breach of which shall result in substantial injuries and damages, for which monetary relief may fail to provide an adequate remedy at law. Accordingly, the Executive agrees that the Company and PARC shall be entitled, in the event of an actual or threatened breach of this Agreement, to seek remedies including but not necessarily limited to (i) temporary or permanent injunctive relief restraining the Executive from engaging in activities prohibited by Section 7 or such other relief as may be required to specifically enforce any of the covenants in Section 7, (ii) specific performance, and (iii) monetary relief, to the extent that monetary relief may constitute an adequate remedy in whole or in part; provided that, the Executive does not waive the right to oppose relief on the grounds that no breach or threatened breach has occurred. The Executive hereby agrees and consents that such injunctive relief may be sought in any state or federal court, in the state in which such violation may occur, or in any other court having jurisdiction, at the election of the Company or PARC. (b) If any proceeding for injunctive relief and/or specific performance is brought by the Company or PARC to enforce the terms of this Agreement, the Executive shall be deemed to have waived, and shall not assert, any claim or defense that the Company or PARC has an adequate remedy at law or that such a remedy at law exists. (c) If any action at law or in equity is brought to enforce or interpret the terms of this Agreement, the party that prevails in such action, shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief which a court of competent jurisdiction may order. 9. DEDUCTIONS FROM COMPENSATION. The Executive agrees that PARC shall be entitled to deduct and withhold from any compensation payable to the Executive hereunder any taxes in respect of the Executive that PARC is required to deduct and withhold under federal, state or local law whether arising from compensation hereunder or otherwise. In the event that the Executive is no longer employed by PARC at a time when PARC otherwise would be entitled to deduct and withhold any amount pursuant to the preceding sentence, the Executive shall remit such amount to PARC within five (5) days after the receipt of notice from PARC specifying such amount or otherwise in accordance with the Executive's obligations with respect thereto. 11 10. TERMINATION BENEFITS. If the Executive's employment with PARC is terminated pursuant to Section 6(d), the Executive shall be entitled to receive, as his sole and exclusive remedy, the termination benefits provided under this Section 10. (a) COMPENSATION-REGULAR BASE SALARY AND BONUSES. In lieu of notice, if any, required under applicable law which may be in force from time to time, upon the Section 6(d) Termination Date occurring prior to the third anniversary of the date hereof, (i) the Executive shall be paid bi-weekly, his Regular Base Salary at the rate in effect on the Section 6(d) Termination Date, up to the third anniversary of the date hereof, and (ii) the Executive shall be paid any Commission, Sales Incentive or Monthly Bonus due, if any, for the period ending on the third anniversary of the date hereof, as if his employment had continued. The Employment Period shall end upon the third anniversary of the date hereof, unless otherwise terminated, after which time the Executive shall be deemed to be an at-will employee and shall be entitled to severance pursuant to PARC's policy then in effect and required by applicable law. The Executive shall not be entitled to any further notice, severance pay, pay in lieu of notice or any compensation whatsoever, except any amounts owed to the Executive under this Agreement. The Executive agrees that the foregoing notice is deemed conclusively to be reasonable notice of termination at common law and the Executive is not entitled to any additional notice or pay in lieu of notice or severance pay. The Executive acknowledges that the Company and PARC has drawn his attention to the provisions contained herein prior to executing this Agreement. (b) WELFARE BENEFITS, ETC. If, after receiving timely notice from PARC or the Company, the Executive timely makes the appropriate COBRA election, PARC or the Company shall pay the costs necessary to continue the Executive's participation pursuant to COBRA for a period of eighteen (18) months following the Section 6(d) Termination Date (including dependent coverage) in any life, disability, group health and dental benefit plans provided by PARC, in effect immediately prior to the Section 6(d) Termination Date. Following the Section 6(d) Termination Date, PARC shall not be obligated to (i) provide business accident insurance covering the Executive, and (ii) make contributions in respect of the Executive to any qualified retirement and pension plans or profit sharing plans. (c) TIMING RESTRICTIONS. Notwithstanding the foregoing or any provisions of this Agreement to the contrary, in the event that the Executive is determined, by the Board of Directors in its good faith judgment, to be a "specified employee" within the meaning of Internal Revenue Code Section 409A, none of the termination benefits contemplated by this Section 10 shall be paid or provided to the Executive prior to the first day of the seventh month after the Executive's termination of employment, at which time such benefits shall commence; provided that all benefits accumulated from the date of the Executive's termination of employment to which Executive is entitled under this Agreement and which were not paid or provided sooner because of this provision, also will immediately become payable at that time. Subject to PARC's obligations to timely 12 pay the amounts due to the Executive as set forth in the preceding sentence, with respect to the amounts payable to the Executive pursuant to Section 10(a), any Regular Base Salary amounts shall be paid no later than the end of the calendar year to which such salary amounts relate (determined by dividing the Executive's annual Regular Base Salary by twelve and allocating such salary to each month following the Executive's termination of employment), and any Commission, Sales Incentive or Monthly Bonus or other bonus amount shall be paid no later than 2-1/2 months after the end of the calendar year to which such amount relates. 11. EXTENSION OF RESTRICTED PERIODS. In addition to the remedies the Company or PARC may seek and obtain pursuant to Section 8, the Restricted Period, set forth therein, shall be extended by any and all periods during which the Executive shall be found by a court to have been in violation of the covenants contained in Section 7. 12. SUCCESSORS; BINDING AGREEMENT. This Agreement is personal to the Executive and, without the prior written consent of the Company and PARC, shall not be assignable by the Executive otherwise than by will, the laws of descent and distribution or the terms of a revocable trust of which the Executive is the grantor. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. This Agreement shall inure to the benefit of and be binding upon the Company, PARC and their respective successors and assigns. 13. WAIVER AND MODIFICATION. Any waiver, alteration or modification of any of the terms of this Agreement shall be valid only if made in writing and signed by the parties hereto; provided that, any such waiver, alteration or modification is consented to on the Company's and PARC's behalf by their respective Boards of Directors. No waiver by any of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver. 14. SEVERABILITY. The Executive acknowledges and agrees that the covenants set forth in Section 7 are reasonable and valid in geographical and temporal scope and in all other respects. If any of such covenants or other provisions of this Agreement are found to be invalid or unenforceable by a final determination of a court of competent jurisdiction (i) the remaining terms and provisions hereof shall be unimpaired, and (ii) the invalid or unenforceable term or provision shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. 15. SUBMISSION TO JURISDICTION; VENUE. (a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SITTING IN SAN ANTONIO, TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY ACCEPTS FOR HIMSELF, OR ITSELF AND IN RESPECT OF HIS OR ITS PROPERTY GENERALLY AND 13 UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT HIS OR ITS ADDRESS AS PROVIDED IN SECTION 18. NOTHING IN THIS PARAGRAPH (a) SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS IN ANY OTHER JURISDICTION. (b) EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTIONS WHICH HE OR IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN PARAGRAPH (a) OF THIS SECTION 15 AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. (c) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH OF THE PARTIES TO THIS AGREEMENT AGREES THAT, AT THE TIME OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY, EACH OF THE PARTIES WILL EXECUTE SUCH INSTRUMENTS AND OTHER DOCUMENTS AS MAY BE NECESSARY TO CONSENT TO AND WAIVE ANY OBJECTION TO VENUE AND JURISDICTION IN THE COURTS IDENTIFIED IN SUBSECTIONS (a) AND (b) ABOVE. 16. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. 17. BLUE PENCILLING. In the event that, notwithstanding the first sentence of Section 14, any of the provisions of Section 7 relating to the geographic or temporal scope of the covenants contained therein or the nature of the business restricted thereby shall be declared by a court of competent jurisdiction to exceed the maximum restrictiveness such court deems enforceable, such provision shall be deemed to be replaced herein by the maximum restriction deemed enforceable by such court. 14 18. NOTICES. All notices required to be given hereunder shall be in writing and shall be deemed to have been given if (a) delivered personally or by documented courier or delivery service, (b) transmitted by facsimile, or (c) mailed by registered or certified mail (return receipt requested and postage prepaid) to the following listed persons at the addresses and facsimile numbers specified below, or to such other persons, addresses or facsimile numbers as a party entitled to notice shall give, in the manner hereinabove described, to the others entitled to notice: In the case of the Company: Asset Acceptance Holdings LLC 28405 Van Dyke Avenue Warren, Michigan 48090 Attention: Nathaniel F. Bradley IV Facsimile No.: 586 ###-###-#### In the case of the Executive: Adam O. Holzhauer 328 Box Oak San Antonio, TX 78230 Facsimile No.: 210 ###-###-#### Notice pursuant hereto shall be deemed given (i) if delivered personally, when so delivered, (ii) if given by facsimile, when transmitted to the facsimile number set forth above, when so transmitted if transmitted during normal business hours at the location to which it is transmitted or upon the opening of business on the next Business Day if transmitted other than during normal business hours at the location to which it is transmitted and (iii) if given by mail, on the third business day following the day on which it was posted. 19. CAPTIONS AND SECTION HEADINGS. Captions and section headings in this Agreement are for convenience only, are not a part hereof and shall not be used in construing this Agreement. Unless otherwise specified in this Agreement, all references to sections in this Agreement shall mean sections of this Agreement. 20. ENTIRE AGREEMENT. This Agreement, including the Schedules hereto, constitutes the entire understanding and agreement of the parties hereto regarding the employment of the Executive, and supersedes all prior agreements and understandings between the parties. 21. COUNTERPARTS. This Agreement may be executed in counterparts (including by facsimile or electronic transmittal copy), each of which shall be deemed an original, but all of 15 which taken together shall constitute one and the same instrument. 22. ACKNOWLEDGMENT AND INDEPENDENT LEGAL ADVICE. The Executive acknowledges that he has read and understands this Agreement and that the Company and PARC have advised him that the foregoing alters and supersedes his common law rights. The Executive acknowledges that the Company and PARC have advised him to seek legal advice prior to executing this Agreement and that he has obtained such advice. 23. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Michigan, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Michigan or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Michigan. 24. TAX MATTERS. Notwithstanding any other provision of this Agreement, the parties to this Agreement agree to take all actions (including adopting amendments to this Agreement) as are required to comply with or to minimize any potential interest charges and/or additional taxes as may be imposed under Internal Revenue Code Section 409A with respect to any payment or benefit due to Executive under this Agreement (including a delay in payment until six months after the date of termination of Executive's employment hereunder, in the event Executive is a "specified employee" within the meaning of Code Section 409A). 16 The parties hereto have executed this Employment Agreement as of the day and year first above written. ASSET ACCEPTANCE HOLDINGS LLC By: /s/ Nathaniel F. Bradley IV ----------------------------------- Nathaniel F. Bradley IV, Manager PREMIUM ASSET RECOVERY CORP. By: ________________________________ Name: __________________________ Title: ________________________ EXECUTIVE /s/ Adam O. Holzhauer ----------------------------------------- Adam O. Holzhauer 17 SCHEDULE 1 CLIENT LIST 18 SCHEDULE 2 HOLZHAUER MEDICAL PURCHASES 19