EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 1st day of January, 2002,
between Portfolio Recovery Associates, L.L.C., a Delaware limited liability
company with its principal place of business in the City of Norfolk, Virginia
("Company") and Kevin P. Stevenson ("Employee").
IN CONSIDERATION of the mutual covenants contained herein and for other
considerations the receipt and sufficiency of which are acknowledged, the
parties agree as follows:
1. POSITION AND RESPONSIBILITIES.
The Company hereby hires Employee as a Senior Vice President.
Subject to the LLC Agreement (as defined herein), he shall be vested with such
authority and responsibilities as may be conferred upon him by the Management
Committee of the Company (the "Management Committee") and the President of the
Company (the "President") and which are appropriate and customary to his office.
He shall report to and act under the direction of the President. The Employee
accepts such employment and agrees to diligently and faithfully exercise the
authority and discharge the responsibility of his office to the best of his
ability, devoting substantially all of his business time, attention, and
services to the affairs of the Company. Except with the consent of the
Management Committee, the Employee shall not engage in any other pursuits for
compensation while serving as an officer of the Company.
2. PLACE OF PERFORMANCE.
The principal place of employment of Employee shall be at the
Company's principal executive offices in Norfolk, Virginia or where such offices
may be relocated within a twenty-five (25) mile radius of Norfolk, Virginia (the
"Metropolitan Area"). Notwithstanding the foregoing, Employee may be required to
travel beyond the Metropolitan Area as may be reasonably required to perform his
duties hereunder.
3. COMPENSATION.
(a) Base Salary. The Employee shall be paid a base salary at the
rate of $120,000 per year, which shall be paid in approximately equal
installments consistent with the Company's payroll policy, as it may exist from
time to time ("Base Salary"). Following the first anniversary of the
Commencement Date (as defined herein) and for each anniversary thereafter during
the Employment Period (as defined herein), Base Salary shall be increased
annually by no less than 4% over the immediately preceding year's Base Salary.
(b) Management Bonus Program. The performance of the business shall
be reviewed at the end of each operating year and compared to such goals as are
set forth in the business plan for that year as developed and presented by the
Operating Member of the Company and approved by its Management Committee (the
"Business Plan"). If the results of operations for the year achieve the net
profitability goals for the year specified in the approved
Business Plan and Employee's contribution to such performance results are
satisfactory as determined in the sole discretion of the Management Committee, a
bonus equal to no less than thirty-three percent (33%) of the Employee's Base
Salary shall be paid to him (the "Bonus"). If the results of operations for the
year exceed the net profitability goals of the approved Business Plan, the
amount of the Employee's Bonus may be increased in recognition of the degree to
which performance exceeded such goals, and the Employee's contribution to such
superior performance results as determined in the sole discretion of the
Management Committee. If the results of operations for the year fail to achieve
such net profitability goals, the amount (if any) of the Employee's Bonus shall
be within the absolute discretion of the Management Committee.
(c) Benefits. The Employee shall be entitled to a benefits package
consisting of: (i) four (4) weeks paid annual vacation and (ii) such other
employee benefits programs as may be offered by the Company to other employees,
provided that he shall not be entitled to participate in any incentive bonus
program adopted for non-management level employees during the time the
Management Bonus Program is in effect. In addition, the Company shall reimburse
Employee for reasonable business expenses incurred by Employee upon appropriate
documentation and in accordance with Company policies for senior executives, as
they may exist from time to time. The Company shall reimburse Employee for his
reasonable legal fees incurred with respect to the preparation of this
Agreement; provided, that, such reimbursement shall not exceed $1,000.
(d) Warrants. The Employee was granted warrants to acquire equity
interests in the Company in accordance with the terms set forth in Exhibit A to
the Employment Agreement between the Employee and the Company dated March 31,
1999.
4. TERM.
The period of employment of Employee by the Company hereunder (the
"Employment Period") shall commence on the date hereof (the "Commencement Date")
and shall continue through the third anniversary thereof; provided, that,
commencing on the third anniversary of the Commencement Date and each
anniversary thereafter, the Employment Period shall be automatically extended
for one (1) additional year unless either party shall notify the other party at
least ninety (90) days prior to the expiration of the Employment Period that it
intends to let the Agreement expire. The Employment Period may be sooner
terminated by either party in accordance with Section 5 of this Agreement.
In an event of a Change of Control, the period of employment shall
be automatically extended by 24 months from the date of the event.
For purposes of this Agreement, a Change in Control shall mean a
reorganization or recapitalization of the Company, whether by merger, sale of
substantially all of its assets except in the ordinary course of business, share
exchange or sale, or other form or structure of transaction which when given
effect will result in Angelo, Gordon & Co., L.P. and its affiliates ceasing to
hold at least a majority of the outstanding Units. In the event of an impending
Change in Control, the Company shall provide Employee as much advance notice as
administratively possible prior to such Change in Control.
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5. TERMINATION.
Employee's employment hereunder maybe terminated during the
Employment Period under the following circumstances:
(a) Death. Employee's employment hereunder shall terminate upon his
death.
(b) Disability. If, as a result of Employee's incapacity due to
physical or mental illness, Employee shall have been substantially unable to
perform his duties hereunder for an entire period of six (6) consecutive months
or nine (9) months in any twelve (12) month period, and within thirty (30) days
after written Notice of Termination is given after such period, Employee shall
not have returned to the substantial performance of his duties on a full-time
basis, the Company shall have the right to terminate Employee's employment
hereunder for "Disability", and such termination in and of itself shall not be,
nor shall it be deemed to be, a breach of this Agreement.
(c) Cause. The Company shall have the right to terminate Employee's
employment for Cause, and such termination in and of itself shall not be, nor
shall it be deemed to be, a breach of this Agreement. For purposes of this
Agreement, the Company shall have "Cause" to terminate Employee's employment
upon Employee's:
(i) conviction of, or plea of guilty or nolo contendere to, a
felony; or
(ii) willful and continued failure to use reasonable best efforts to
substantially perform his duties hereunder (other than such failure
resulting from Employee's incapacity due to physical or mental illness or
subsequent to the issuance of a Notice of Termination by Employee for Good
Reason) or to obey the lawful written directives of the Management
Committee or the President after demand for substantial performance is
delivered by the Company in writing that specifically identifies the
manner in which the Company believes Employee has not used reasonable best
efforts to substantially perform his duties; or
(iii) willful misconduct (including, but not limited to, a willful
breach of the provisions of Section 9) that is economically injurious to
the Company or to any entity in control of, controlled by or under common
control with the Company ("Affiliates").
(d) Good Reason. Employee may terminate his employment for "Good
Reason" within thirty (30) days after Employee has actual knowledge of the
occurrence, without the written consent of Employee, of one of the following
events that has not been cured within thirty (30) days after written notice
thereof has been given by Employee to the Company:
(i) the relocation of the Company's principal executive offices or
Employee's own office location to a location beyond the Metropolitan Area;
or
(ii) the Company's failure to provide any material payments due to
be provided to Employee.
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Employee's right to terminate his employment hereunder for Good Reason shall not
be affected by his incapacity due to physical or mental illness. Employee's
continued employment during the thirty (30) day period referred to above in this
paragraph (d) shall not constitute consent to, or a waiver of rights with
respect to, any act or failure to act constituting Good Reason hereunder.
(e) Without Cause. The Management Committee or the President shall
have the right to terminate Employee's employment hereunder without Cause by
providing Employee with a Notice of Termination, and such termination shall not
in and of itself be, nor shall it be deemed to be, a breach of this Agreement.
(f) Without Good Reason. Employee shall have the right to terminate
his employment hereunder without Good Reason by providing the Company with a
Notice of Termination, and such termination shall not in and of itself be, nor
shall it be deemed to be, a breach of this Agreement.
(g) Expiration of the Term. Unless the Company and the Employee
agree to continue the employment on an at will basis pending negotiation of a
new employment agreement, Employee's employment shall terminate upon the
expiration of the Employment Period and such expiration shall not be deemed to
be a termination by the Management Committee or the President without Cause.
6. TERMINATION PROCEDURE.
(a) Notice of Termination. Any termination of Employee's employment
by the Company or by Employee during the Employment Period (other than
termination pursuant to Section 5(a)) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 12. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Employee's employment under the provision so
indicated.
(b) Date of Termination. "Date of Termination" shall mean (i) if
Employee's employment is terminated by his death, the date of his death, (ii) if
Employee's employment is terminated pursuant to Section 5(b), thirty (30) days
after Notice of Termination (provided that Employee shall not have returned to
the substantial performance of his duties on a full-time basis during such
thirty (30) day period), (iii) if Employee's employment is terminated pursuant
to Section 5(g), the date of expiration, and (iv) if Employee's employment is
terminated for any other reason, the date on which a Notice of Termination is
given or any later date (within thirty (30) days after the giving of such
notice) set forth in such Notice of Termination.
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
In the event Employee is disabled or his employment terminates
during the Employment Period, the Company shall provide Employee with the
payments and benefits set forth below. Employee acknowledges and agrees that the
payments set forth in this Section 7 constitute liquidated damages for any claim
of breach of contract under this Agreement as it relates to termination of his
employment during the Employment Period. In order to receive any
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of the payments set forth below, prior to the payments of such amounts, Employee
shall execute and agree to be bound by an agreement relating to the waiver and
general release of any and all claims (other than claims for the compensation
and benefits payable under Section 7 hereof) arising out of or relating to
Employee's employment and termination of employment (the "Release"). Such
Release must be made in a form that is reasonably satisfactory to the Company,
and shall run in favor of the Company and its affiliates, and their respective
officers, directors, employees, agents, successors and assigns.
(a) Termination by Management Committee without Cause or by any
individual (other than Steven D. Fredrickson) serving as President without
Cause. If Employee's employment is terminated by the Management Committee
without Cause or by any individual (other than Steven D. Fredrickson) serving as
President without Cause:
(i) the Company shall pay to Employee (A) his Base Salary and
accrued vacation pay through the Date of Termination, as soon as
practicable following the Date of Termination, (B) a lump-sum payment
equal to two (2) times Employee's then current Base Salary and (C) a
lump-sum payment equal to two (2) times the amount of the Bonus, if any,
paid to Employee in the year immediately prior to the year of termination.
Such payment under clauses (B) and (C) hereof shall be made as soon as
administratively feasible following the Date of Termination and execution
of a valid Release, but in no event more than forty-five (45) days
following the execution of such Release; and
(ii) Employee shall be entitled to any other rights, compensation
and/or benefits as may be due to Employee in accordance with the terms and
provisions of any agreements, plans or programs of the Company.
(b) Termination by Steven D. Fredrickson if serving as the President
without Cause or by Employee for Good Reason. If Employee's employment is
terminated by Steven D. Fredrickson if serving as the President without Cause or
by Employee for Good Reason:
(i) the Company shall pay to Employee (A) his Base Salary and
accrued vacation pay through the Date of Termination, as soon as
practicable following the Date of Termination, (B) a lump-sum payment
equal to one (1) times Employee's then current Base Salary and (C) a
lump-sum payment equal to one (1) times the amount of the Bonus, if any,
paid to Employee in the year immediately prior to the year of termination.
Such payment under clauses (B) and (C) hereof shall be made as soon as
administratively feasible following the Date of Termination and execution
of a valid Release, but in no event more than forty-five (45) days
following the execution of such Release; and
(ii) Employee shall be entitled to any other rights, compensation
and/or benefits as may be due to Employee in accordance with the terms and
provisions of any agreements, plans or programs of the Company.
(c) Cause by Employee without Good Reason or upon Expiration of the
Employment Period. If Employee's employment is terminated by the Company for
Cause or by Employee (other than for Good Reason) or upon expiration of the
Employment Period:
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(i) the Company shall pay Employee his Base Salary and, to the
extent required by law or the Company's vacation policy, his accrued
vacation pay through the Date of Termination, as soon as practicable
following the Date of Termination; provided, that, if the Employee's
termination of employment occurs do to an expiration of the Employment
Period initiated by a notice provided to Employee by the Company under
Section 4 of the Agreement, notwithstanding the foregoing and in lieu
thereof, the Company shall pay to Employee (A) his Base Salary and accrued
vacation pay through the Date of Termination, as soon as practicable
following the Date of Termination, (B) a lump-sum payment equal to
one-half (0.5) times Employee's then current Base Salary and (C) a
lump-sum payment equal to one-half (0.5) times the amount of the Bonus, if
any, paid to Employee in the year immediately prior to the year of
termination. Such payment under clauses (B) and (C) hereof shall be made
as soon as administratively feasible following the Date of Termination and
execution of a valid Release, but in no event more than forty-five (45)
days following the execution of such Release; and
(ii) Employee shall be entitled to any other rights, compensation
and/or benefits as may be due to Employee in accordance with the terms and
provisions of any agreements, plans or programs of the Company.
(d) Disability. During any period that Employee fails to perform his
duties hereunder as a result of incapacity due to physical or mental illness
("Disability Period"), Employee shall continue to receive his full Base Salary
set forth in Section 3(a) until his employment is terminated pursuant to Section
5(b); provided, that, any such amounts shall be off-set, on a dollar for dollar
basis, for each dollar Employee receives by any disability insurance or social
security benefit. In the event Employee's employment is terminated for
Disability pursuant to Section 5(b):
(i) the Company shall pay to Employee (A) his Base Salary and
accrued vacation pay through the Date of Termination, off-set, on a dollar
for dollar basis, for each dollar Employee receives by any disability
insurance or social security benefit, as soon as practicable following the
Date of Termination and (B) a Bonus, for the year in which the Date of
Termination occurs, pro-rated to the Date of Termination and payable at
the same time as bonuses are customarily paid; and
(ii) Employee shall be entitled to any other rights, compensation
and/or benefits as may be due to Employee in accordance with the terms and
provisions of any agreements, plans or programs of the Company.
(e) Death. If Employee's employment is terminated by his death:
(i) the Company shall pay in a lump sum to Employee's beneficiary,
legal representatives or estate, as the case may be, Employee's (A) Base
Salary through the Date of Termination and (B) Bonus, for the year in
which the Date of Termination occurs, pro-rated to the Date of Termination
and payable at the same time as bonuses are customarily paid; and
(ii) Employee's beneficiary, legal representatives or estate, as the
case may be,
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shall be entitled to any other rights, compensation and benefits as may be
due to any such persons or estate in accordance with the terms and
provisions of any agreements, plans or programs of the Company.
8. MITIGATION.
Except as otherwise noted above, Employee shall not be required to
mitigate amounts payable under this Agreement by seeking other employment, and
there shall be no offset against amounts due Employee under this Agreement on
account of subsequent employment except as specifically provided herein.
9. CONFIDENTIAL INFORMATION; OWNERSHIP OF DOCUMENTS; NON-COMPETITION.
(a) Confidential Information. Employee shall hold in a fiduciary
capacity for the benefit of the Company all trade secrets and confidential
information, knowledge or data relating to the Company and its businesses and
investments, which shall have been obtained by Employee during Employee's
employment by the Company and which is not generally available public knowledge
(other than by acts by Employee in violation of this Agreement). Except as may
be required or appropriate in connection with his carrying out his duties under
this Agreement, Employee shall not, without the prior written consent of the
Company or as may otherwise be required by law or any legal process, or as is
necessary in connection with any adversarial proceeding against the Company (in
which case Employee shall use his reasonable best efforts in cooperating with
the Company in obtaining a protective order against disclosure by a court of
competent jurisdiction), communicate or divulge any such trade secrets,
information, knowledge or data to anyone other than the Company and those
designated by the Company or on behalf of the Company in the furtherance of its
business or to perform duties hereunder.
(b) Removal of Documents; Rights to Products. All records, files,
drawings, documents, models, equipment, and the like relating to the Company's
business, which Employee has control over shall not be removed from the
Company's premises without its written consent, unless such removal is in the
furtherance of the Company's business or is in connection with Employee's
carrying out his duties under this Agreement and, if so removed, shall be
returned to the Company promptly after termination of Employee's employment
hereunder, or otherwise promptly after removal if such removal occurs following
termination of employment. Employee shall assign to the Company all rights to
trade secrets and other products relating to the Company's business developed by
him alone or in conjunction with others at any time while employed by the
Company.
(c) Nonsolicitation. During the Employment Period and for two (2)
years after Employee's employment is terminated for any reason, Employee will
not, directly or indirectly, solicit the customers, suppliers or key employees
of the Company to terminate their relationship with the Company (or to modify
such relationship in a manner that is adverse to the interests of the Company),
or to violate any valid contracts they may have with the Company.
(d) Noncompetition. During the Employment Period and for one (1)
year after Employee's employment is terminated for any reason (other than
pursuant to Section 5(d),
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by the Management Committee under Section 5(e), and by any individual (other
than Steven D. Fredrickson) serving as President under Section 5(e)), Employee
will not, directly or indirectly, own, manage, operate, control, be employed by,
or perform services for any business, howsoever organized and in whatsoever
form, that engages in the same or a similar line of business as the Company, as
determined from its latest Business Plan, and which is located in the market
area of the Company existing on the date of termination of Employee's employment
with Company.
(e) Blue Pencil. If, at any time, the provisions of this Section 9
shall be determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 9 shall be
considered divisible and shall become and be immediately amended to only such
area, duration and scope of activity as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter and
Employee agrees that this Section 9 as so amended shall be valid and binding as
though any invalid or unenforceable provision had not been included herein.
(f) Injunctive Relief. In the event of a breach or threatened breach
of this Section 9, Employee agrees that the Company shall be entitled to
injunctive relief in a court of appropriate jurisdiction to remedy any such
breach or threatened breach, Employee acknowledging that damages would be
inadequate and insufficient.
(g) Continuing Operation. Except as specifically provided in this
Section 9, the termination of Employee's employment or of this Agreement shall
have no effect on the continuing operation of this Section 9.
10. LIMITATION OF LIABILITY AND INDEMNITY.
The limitation of liability and indemnity provisions of Section
3.8(b)(c) and (d) of the LLC Agreement are a contractual benefit to the Employee
and are a material consideration for his employment.
11. GOVERNING LAW; LEGAL FEES AND EXPENSES.
This Agreement, the employment relationship contemplated herein and
any claim arising from such relationship, shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its
conflicts of laws rules. If any contest or dispute shall arise between the
Company and Employee regarding the provisions of this Agreement, each party
shall be responsible for the payment of its own legal fees and expenses relating
to such claim or dispute regardless of outcome.
12. NOTICES.
All notices hereunder shall be in writing and shall be delivered in
person or mailed by first-class mail with adequate postage affixed, as follows:
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If to the Company, to:
Portfolio Recovery Associates, L.L.C.
c/o Angelo, Gordon & Co., L.P.
245 Park Avenue
New York, NY 10067
Attn: David Roberts
If to the Employee, to:
Kevin P. Stevenson
2364 Ken Drive
Virginia Beach, VA 23454
13. LLC AGREEMENT.
The term "LLC Agreement" as used herein shall mean the Amended and
Restated Limited Liability Company Agreement of the Company dated as of the date
hereof. All capitalized terms appearing in the text of this Agreement shall have
the same meanings as they have in the LLC Agreement to the extent not defined
herein.
14. SUCCESSORS; BINDING AGREEMENT.
(a) Company's Successors. The Company may assign or transfer this
Agreement; provided, that, the Company will require any successor to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such assignment or transfer
had taken place.
(b) Employee's Successors. No rights or obligations of Employee
under this Agreement may be assigned or transferred by Employee other than his
rights to payments or benefits hereunder, which may be transferred only by will
or the laws of descent and distribution. Upon Employee's death, this Agreement
and all rights of Employee hereunder shall inure to the benefit of and be
enforceable by Employee's beneficiary or beneficiaries, personal or legal
representative, or estate, to the extent any such person succeeds to Employee's
interests under this Agreement. Employee shall be entitled to select and change
a beneficiary or beneficiaries to receive any benefit or compensation payable
hereunder following Employee's death by giving the Company written notice
thereof. In the event of Employee's death or a judicial determination of his
incompetence, reference in this Agreement to Employee shall be deemed, where
appropriate, to refer to his beneficiar(y)(ies), estate or other legal
representative(s). If Employee should die following his Date of Termination
while any amounts would still be payable to him hereunder if he had continued to
live, all such amounts unless otherwise provided herein shall be paid in
accordance with the terms of this Agreement to such person or persons so
appointed in writing by Employee, or otherwise to his legal representatives or
estate.
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15. MISCELLANEOUS.
No provisions of this Agreement may be amended, modified, or
waived unless such amendment or modification is agreed to in writing signed by
Employee and by a duly authorized officer of the Company, and such waiver is set
forth in writing and signed by the party to be charged. No waiver by either
party hereto at any time of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. The respective rights and obligations of the parties hereunder shall
survive Employee's termination of employment and the termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations.
16. VALIDITY.
The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
17. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
18. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersede all prior
agreements, promises, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee or
representative of any party hereto in respect of such subject matter. Any prior
agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and cancelled.
19. WITHHOLDING.
All payments hereunder shall be subject to any required withholding
of Federal, state and local taxes pursuant to any applicable law or regulation.
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20. SECTION HEADINGS.
The section headings in this Agreement are for convenience of
reference only, and they form no part of this Agreement and shall not affect its
interpretation.
"COMPANY":
PORTFOLIO RECOVERY ASSOCIATES, L.L.C.
By: /s/ JOSHUA BRAIN
-----------------------------------
Name: Joshua Brain
Title: Capital Manager
"EMPLOYEE":
By: /s/ KEVIN P. STEVENSON
-----------------------------------
Kevin P. Stevenson
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