<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): March 31, 1999
NCO GROUP, INC.
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(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
Pennsylvania 0-21639 23-2858652
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<S> <C> <C>
(State or other jurisdiction of (Commission File Number) (I.R.S. Employee
incorporation or organization) Identification Number)
</TABLE>
515 Pennsylvania Avenue
Fort Washington, Pennsylvania 19034
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (215) 793-9300
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<PAGE>
Item 2. Acquisition or Disposition of Assets.
On March 31, 1999, NCO Group, Inc. ("NCO") acquired JDR Holdings, Inc.
("JDR") by the merger of JDR Acquisition Inc. ("Newco"), a wholly-owned
subsidiary of NCO, into JDR Holdings, Inc., with JDR becoming a wholly-owned
subsidiary of NCO (the "Merger"). In consideration of the Merger, the
stockholders of JDR received a total of 3,388,597 shares of common stock, no par
value, of NCO ("NCO Common Stock") in exchange for all of the outstanding shares
of capital stock of JDR and outstanding warrants to purchase capital stock of
JDR. Additionally, NCO assumed all outstanding stock options of JDR, which have
been converted in the Merger into options to purchase up to 333,538 shares of
NCO Common Stock. The transaction was accounted for as a pooling of interests
and treated as a tax free reorganization.
JDR is one of the leading providers of accounts receivable management
services and a provider of other services such as telemarketing, and
telecommunications consulting and brokerage services to businesses ranging from
Fortune 500 corporations to small businesses. JDR's revenue for fiscal year
ended December 31, 1998 was $51.0 million.
Risks Associated with Recent Acquisitions.
The businesses acquired by NCO in 1998 and acquired in the JDR Merger
had combined revenues of $223.2 million in 1997 compared to NCO's revenue of
$85.3 million in 1997. If NCO is unable to successfully handle these new
businesses and integrate them into NCO's operations, NCO may not be able to
realize expected operating efficiencies, eliminate redundant costs or operate
the businesses profitably. The integration of these businesses is subject to a
number of risks, including risks that: (i) the conversion of the acquired
companies' computer and operating systems to NCO's systems may take longer or
cost more than expected; (ii) NCO may be unable to retain clients or key
employees of the acquired companies; and (iii) the acquired companies might have
additional liabilities that NCO did not anticipate at the time of the
acquisitions.
Forward Looking Statements
Certain statements included in this Current Report on Form 8-K, other
than historical facts, are forward-looking statements (as such term is defined
in the Securities Exchange Act of 1934, and the regulations thereunder) which
are intended to be covered by the safe harbors created thereby. Forward-looking
statements include, without limitation, statements as to the Company's objective
to grow through strategic acquisitions and internal growth, the impact of
acquisitions on the Company's earnings, the Company's ability to realize
operating efficiencies in the integration of its acquisitions, trends in the
Company's future operating performance, Year 2000 compliance, the effects of
legal or governmental proceedings, the effects of changes in accounting
pronouncements and statements as to the Company's or management's beliefs,
expectations and opinions. Forward-looking statements are subject to risks and
uncertainties and may be affected by various factors which may cause actual
results to differ materially from those in the forward-looking statements. In
addition to the factors discussed in this report, certain risks, uncertainties
and other factors, including, without limitation, the risk that the Company will
not be able to realize operating efficiencies in the integration of its
acquisitions, risks associated with growth and future acquisitions, fluctuations
in quarterly operating results, risks relating to Year 2000 compliance and the
other risks detailed from time to time in the Company's filings with the
Securities and Exchange Commission, including the Company's Annual Report on
Form 10-K for the year ended December 31, 1998 and filed on March 31, 1999 and
the Company's Registration Statement on Form S-4, filed on February 26, 1999, as
amended, can cause actual results and developments to be materially different
from those expressed or implied by such forward-looking statements.
<PAGE>
Item 7. Financial Statements and Exhibits.
The following exhibits are being filed as part of this report:
(a) Financial Statements of businesses acquired.
It is impracticable to provide the required financial statements
for the acquired business at this time. The required financial
statements will be filed as an amendment to this Form 8-K as soon
as practicable, but not later than June 14, 1999.
(b) Pro Forma Financial Information.
It is impracticable to provide the required pro forma financial
information for the acquired business at this time. The required
pro forma financial information will be filed as an amendment to
this Form 8-K as soon as practicable, but not later than June 14,
1999.
(c) Exhibits.
Number Title
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1.* Amended and Restated Agreement and Plan of Reorganization
Agreement, dated as of November 1, 1998, by and among NCO,
JDR and Newco.
2.* Amended and Restated Agreement and Plan of Merger, dated
as of November 1, 1998, by and among NCO, JDR and Newco.
3. Escrow Agreement, dated as of March 31, 1999 by and among
NCO, JDR and The Chase Manhattan Bank.
4. JDR 1997 Option Plan, adopted on June 11, 1997.
5. Employment Agreement dated as of March 31, 1999, by and
between NCO and David D'Anna.
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*Incorporated by reference to NCO's Joint Proxy/Registration
Statement on Form S-4 (Registration No. 333-73087), filed with the Securities
Exchange Commission on February 26, 1999, as amended.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NCO GROUP, INC.
By: /s/ Joseph C. McGowan
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Joseph C. McGowan
Executive Vice President
Date: April 15, 1999
<PAGE>
ESCROW AGREEMENT
PARTIES: JDR HOLDINGS, INC.
a Delaware corporation ("JDR")
500 N. Franklin Turnpike
Ramsey, NJ 07446
NCO GROUP, INC.
a Pennsylvania corporation ("NCO")
515 Pennsylvania Avenue
Fort Washington, PA 19034
THE CHASE MANHATTAN BANK ("Escrow Agent")
450 West 33rd Street
New York, NY 10001
DATE: March 31, 1999
BACKGROUND
A. JDR, NCO and JDR Acquisition Inc. ("Newco") are parties to an
Amended and Restated Agreement and Plan of Reorganization dated as of November
1, 1998 ("Reorganization Agreement"), and a related Amended and Restated Plan of
Merger dated as of November 1, 1998 ("Plan of Merger") providing for the merger
(the "Merger") of Newco with and into JDR with the conversion of each
outstanding share of JDR Stock (as defined in the Reorganization Agreement) into
immediately deliverable shares of NCO Stock (as defined in the Plan of Merger)
and the right to receive additional shares of NCO Stock held by the Escrow Agent
under this Agreement. NCO will deliver to the Escrow Agent shares of NCO Stock
("Escrowed Stock") as is equal to six percent (6%) of the total NCO Stock to be
issued to the stockholders of JDR (the "Stockholders" or the "JDR Stockholders")
in exchange for their shares of JDR Stock in accordance with the terms of the
Plan of Merger (5% of the total NCO Stock is to be issued in the Merger and put
into escrow hereunder is hereinafter referred to as the "Base Escrow Fund" and
1% of the total NCO Stock to be issued in the Merger and put into escrow
hereunder is hereinafter referred to as the "Tax Escrow Fund".).
B. JDR and NCO have delivered to the Escrow Agent Exhibit A attached
hereto setting forth a list of the names and addresses of JDR's Stockholders
showing as to each the number of shares of NCO Stock (including fractional
shares) deposited in the Base Escrow Fund and the Tax Escrow Fund in respect of
the shares of JDR Stock owned by such Stockholders.
NOW, THEREFORE, the parties hereto agree as follows:
1. Stockholder Accounts.
<PAGE>
a. The Escrowed Stock shall be held of record in the name of the
Escrow Agent as escrow agent for the purposes of this Agreement. The Escrow
Agent shall maintain records and an account for each Stockholder showing the
number of shares deposited hereunder in respect of the shares of JDR Stock owned
by each such Stockholder. As soon as practicable after the effective date of the
Merger determined pursuant to the Plan of Merger (the "Effective Date"), the
Escrow Agent shall mail to each Stockholder a statement showing the number of
shares of Escrowed Stock held by the Escrow Agent for such Stockholder. Unless
the Escrow Agent is notified to the contrary by NCO, the Effective Date shall be
March 31, 1999. Subsequent statements shall be distributed following any
distributions pursuant to Section 2.b hereof.
b. At all times prior to the distribution of any Escrowed Stock to
NCO hereunder, all income earned on and all dividends or other distributions
paid with respect to any of the Escrowed Stock or Escrowed Cash, shall be the
sole property of the JDR Stockholders as their respective interests are set
forth herein, and the JDR Stockholders shall have the right to vote all Escrowed
Shares as their respective interests are set forth herein at all meetings of
shareholders of NCO.
2. Distribution of Escrowed Stock. The Escrow Agent shall distribute
the Escrowed Stock as follows:
a. In accordance with the mutual written direction of NCO and the
Stockholder's Agents.
b. When payment of any claim for indemnification becomes due under
Section 14 of the Reorganization Agreement, NCO shall forward to the Escrow
Agent with a copy to the Stockholder's Agents a notice ("Payment Notice")
setting forth the amount of shares and/or Escrowed Cash (as defined in Section
3) to which NCO is entitled ("Claim Amount") and provide evidence to the Escrow
Agent of the receipt by the Stockholder's Agent (as provided for in Section 13
hereof) of the Payment Notice. The Claim Amount shall be applied against all
Stockholders' accounts maintained by the Escrow Agent on a pro rata basis based
upon the amounts of Escrowed Stock initially deposited therein as indicated on
Exhibit A hereto. The Escrow Agent within 10 business days thereafter shall
deliver to NCO a certificate representing such number of shares of NCO Stock,
rounded downward to the nearest whole share, valued at the Valuation Price (as
defined below), equal to the amount specified in the Payment Notice allocated by
the Escrow Agent to accounts containing Escrowed Stock; provided that such
delivery shall only occur if either (i) the Escrow Agent has not received notice
from the Stockholder's Agents of its intention to contest the Claim Amount
within 7 business days after Escrow Agent and the Stockholder's Agents receive
NCO's Payment Notice or (ii) the Payment Notice is accompanied by either a final
judgment or order or a settlement agreement determining the amount of shares
and/or Escrowed Cash owed, and provided further, that all indemnification claims
under Section 14 of the Reorganization Agreement other than indemnification
claims made with respect to JDR sales and use tax liability claims ("Tax
Claims") shall be paid only from the Base Escrow Fund and all Tax Claims shall
be paid only from the Tax Escrow Fund as indicated in the Payment Notice. In the
event that the value of the Escrowed Stock in an account is insufficient to pay
the allocable portion of the Claim Amount, the Escrow Agent shall not be
entitled to make up any deficiency from any other account. Notwithstanding any
other provisions of this Agreement, the aggregate amount of all Claims to which
NCO is entitled shall not exceed, with respect to the Base Escrow Fund, the
product of the Valuation Price and the number of shares of NCO Stock initially
deposited in the Base Escrow Fund and, with respect to the Tax Escrow Fund, the
product of the Valuation Price and the number of shares of NCO Stock initially
deposited in the Tax Escrow Fund.
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<PAGE>
c. On the one year anniversary of the Effective Date (the
"Termination Date"), the Escrow Agent shall distribute to the Stockholders the
remaining shares and remaining Escrowed Cash held in the Base Escrow Fund (less
a number of shares as indicated to the Escrow Agent in writing by NCO and
Stockholder's Agents (as defined in Section 13) equal to the aggregate of the
fractional share interests to which NCO is entitled by reason of the deposit by
NCO of an excess fractional share hereunder or by reason of distribution to NCO
of less than the Claim Amount specified in a Payment Notice, which shall be
distributed to NCO) less the shares and/or Escrowed Cash having a total value,
based upon the Valuation Price, equal to the aggregate amount set forth in any
then outstanding claim notices ("Pending Claim Amount") delivered under Section
14 of the Reorganization Agreement ("Claim Notices"). For this purpose the
amount set forth in any outstanding Claim Notices shall be allocated among
accounts in the same manner as set forth in Section 2.b hereof.
d. After the Termination Date, upon resolution of each remaining
outstanding Claim Notices in accordance with the procedure set forth in Section
2.b with respect to Payment Notices, the Escrow Agent shall distribute to the
Stockholders the remaining shares and Escrowed Cash held in the Base Escrow Fund
(less a number of shares as indicated to the Escrow Agent in writing by NCO and
Stockholder's Agents equal to the aggregate of the fractional share interests to
which NCO is entitled by reason of the deposit by NCO of an excess fractional
share hereunder or by reason of distribution to NCO of less than the Claim
Amount specified in a Payment Notice, which shall be distributed to NCO) less
the shares and/or Escrowed Cash having a total value, based upon the Valuation
Price, equal to the aggregate amount set forth in any then outstanding Claim
Notices. For this purpose the amount set forth in any outstanding Claim Notices
shall be allocated among accounts in the same manner as set forth in Section 2.b
hereof.
e. On the date Tax Claims have been resolved and satisfied with
applicable taxing authorities or the applicable portion of the statute of
limitations has run, the Escrow Agent shall distribute to the Stockholders the
remaining shares and the remaining Escrowed Cash held in the Tax Escrow Fund
(less a number of shares as indicated to the Escrow Agent in writing by NCO and
Stockholder's Agents equal to the aggregate of the fractional share interests to
which NCO is entitled by reason of the deposit by NCO of an excess fractional
share hereunder or by reason of distribution to NCO of less than the Claim
Amount specified in a Payment Notice, which shall be distributed to NCO).
f. No fractional shares of NCO Stock shall be distributed by the
Escrow Agent. In lieu of the distribution of fractional shares, the number of
shares of NCO Stock to be distributed to each Stockholder in accordance with
this Agreement shall be rounded off to the nearest whole number of shares of NCO
Stock by NCO.
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<PAGE>
3. Valuation of Escrowed Stock. Except as otherwise expressly provided
for, the value of each share of the Escrowed Stock for purposes of this
Agreement shall be the arithmetic average of the last reported sale prices
("Valuation Price") of one share of NCO Stock, as reported on the Nasdaq
National Market during the ten (10) trading days ending on and including the
trading day one day before the Effective Date (as defined in the Reorganization
Agreement). The parties agree that the Valuation Price is $33.81875.
4. Exchange of Collateral. A Stockholder may, at its or his option,
deposit with the Escrow Agent an equivalent value of cash ("Escrowed Cash") in
exchange for all or any portion of the Escrowed Stock in such Stockholder's
account. The equivalent value of the cash will be based on the last reported
sale price of NCO common stock, as reported on the Nasdaq National Market, on
the day that the cash is surrendered in substitution for the Escrowed Stock
("Exchange Value"); provided, however, no substitution hereunder may be
permitted or made if the Exchange Value is less than the Valuation Price. In any
such case, references to the Escrowed Stock and distributions thereof shall be
deemed to refer instead to the Escrowed Cash and distributions thereof. The
Escrowed Cash shall be held in such investment suitable for escrow accounts as
NCO, Escrow Agent and such Stockholder shall reasonably agree.
5. Resignation and Removal of Escrow Agent. The Escrow Agent may resign
at any time or be removed by the mutual consent of NCO and the Stockholder's
Agents upon notice given at least 30 days prior to the effective date of such
resignation or removal; provided, however, that no resignation or removal of the
Escrow Agent and no appointment of a successor Escrow Agent shall be effective
until the acceptance of appointment by a successor Escrow Agent in the manner
herein provided. In the event of the resignation or removal of the Escrow Agent,
and the failure of NCO and the Stockholder's Agents to agree upon a successor
Escrow Agent within 30 days after the receipt of notice of such resignation or
removal, NCO shall have the right to appoint a successor Escrow Agent which
shall be a commercial bank or trust company having a combined capital and
surplus of at least $100,000,000. Any successor Escrow Agent, whether appointed
by the mutual agreement of NCO and the Stockholder's Agents or otherwise, shall
execute and deliver to the predecessor Escrow Agent an instrument accepting such
appointment, and thereupon such successor Escrow Agent shall, without further
act, become vested with all the estates, properties, rights, powers and duties
of the predecessor Escrow Agent as if originally named herein.
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<PAGE>
6. Liability of Escrow Agent; Expenses. The Escrow Agent shall have no
liability or obligation hereunder except for its willful misconduct or gross
negligence. The Escrow Agent may rely upon any instrument, not only as to its
due execution, validity and effectiveness, but also as to the truth and accuracy
of any information contained therein, which the Escrow Agent shall in good faith
believe to be genuine, to have been signed or presented by the person or parties
purporting to sign the same and to conform to the provisions of this Agreement.
The Escrow Agent may consult legal counsel selected by it in the event of any
dispute or question of the construction of any of the provisions hereof or of
the Reorganization Agreement or of its duties hereunder, and shall incur no
liability and shall be fully protected in acting in accordance with the opinion
or instruction of such counsel. The fees and expenses of the Escrow Agent
charged and incurred in performing its obligations hereunder shall be borne by
NCO. Escrow Agent shall be entitled to compensation for its services as stated
in the fee schedule attached hereto as Exhibit B, which such compensation shall
be paid by NCO. The fee agreed upon for the services rendered hereunder is
intended as full compensation for Escrow Agent's services as contemplated by
this Agreement; provided, however, that in the event that the conditions for the
disbursement of funds under this Agreement are not fulfilled, or Escrow Agent
renders any material service not contemplated in this Agreement, or there is any
assignment of interest in the subject matter of this Agreement, or any material
modification hereof, or if any material controversy arises hereunder, or Escrow
Agent is made a party to any litigation pertaining to this Agreement, or the
subject matter hereof, then Escrow Agent shall be reasonably compensated for
such extraordinary services and reimbursed for all costs and expenses, including
reasonable attorney's fees, occasioned by any delay, controversy, litigation or
event, and the same shall be recoverable from NCO.
7. Indemnification of Escrow Agent. Subject to Section 6 hereof, each
of NCO and the Stockholders, severally and not jointly, hereby indemnify and
hold harmless Escrow Agent from and against, one-half of any and all loss,
liability, cost, damage and expense, including, without limitation, reasonable
counsel fees, which Escrow Agent may suffer or incur by reason of any action,
claim or proceeding brought against Escrow Agent arising out of or relating in
any way to this Agreement or any transaction to which this Agreement relates
unless such action, claim or proceeding is the result of the willful misconduct
or gross negligence of Escrow Agent. Anything in this agreement to the contrary
notwithstanding, in no event shall the Escrow Agent be liable for special,
indirect or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Escrow Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action. The
parties hereto acknowledge that the foregoing indemnities shall survive the
resignation or removal of the Escrow Agent or the termination of this Agreement.
8. Notices. All notices, consents, waivers or other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or one
business day after being sent by a nationally recognized overnight delivery
service, postage or delivery charges prepaid. Notices may also be given by
prepaid facsimile and shall be effective on the date transmitted if confirmed
telephonically immediately thereafter and within 48 hours thereafter by a signed
original sent in the manner provided in the preceding sentence. Notwithstanding
the foregoing, notices to the Escrow Agent shall be deemed given on the date
received by the Escrow Agent.
Notices to JDR shall be sent to JDR's address stated on page one of
this Agreement to the attention of its president and notices to the Stockholders
shall be sent to their most recent addresses of record with NCO or its transfer
agent. Notices to NCO shall be sent to NCO's address stated on page one of this
Agreement to the attention of its General Counsel, with a copy sent
simultaneously to the same address to the attention of its Chief Financial
Officer.
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<PAGE>
Notices to the Escrow Agent (including any Payment Notice) shall be
sent to:
The Chase Manhattan Bank
450 West 33rd Street
New York, NY 10001
Attention: Joseph Morales
Escrow Administration, 10th Floor
Fax: (212) 946-8156
with copies to NCO and the Stockholders (at their respective
addresses set forth in the Reorganization Agreement).
Any party may change its address for notice and the address to which
copies must be sent by giving notice of the new addresses to the other parties
in accordance with this Section 8, provided that any such change of address
notice shall not be effective unless and until received.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to its
principles of conflicts of laws and any action brought hereunder involving the
Escrow Agent shall be brought in the federal or state courts located in the
County of New York, State of New York. Each party hereto irrevocably waives any
objection on the grounds of venue, forum non-conveniens or any similar grounds
and irrevocably consents to service of process by mail or in any other manner
permitted by applicable law and consents to the jurisdiction of said courts. In
any action not involving the Escrow Agent, the provisions of Section 15.16 of
the Reorganization Agreement shall be controlling.
10. Assignment; Binding Effect. The rights of the Stockholders
hereunder are personal and may not be assigned or otherwise transferred except
by operation of law. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
11. Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed an original and all of which together shall constitute
one and the same instrument.
12. Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof
and cannot be changed, modified or terminated except by written amendment.
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<PAGE>
13. Right of Stockholder's Agent to Act for Former JDR Stockholders.
Each of the JDR Stockholders expressly grants to David D'Anna and Advanta
Partners LP, or their respective designees (collectively the "Stockholder's
Agents") the full power and authority to represent such JDR Stockholder for the
purpose of handling claims under and pursuant to this Escrow Agreement including
settling all disputes related thereto, provided that nothing herein shall have
the effect of treating any JDR Stockholder differently from any other. Any
action by the Stockholder's Agents shall be valid only if authorized by both
such agents. JDR agrees to indemnify, defend and hold harmless the Stockholder's
Agent from any and all costs, expenses, damages or liabilities of any kind
whatsoever (including legal fees) arising by virtue of their services as
Stockholder's Agent hereunder.
14. Certain Procedures With Respect to Escrow Agent.
a. In the event written instructions are given (other than in
writing at the time of execution of the Agreement), by or on behalf of NCO or
the Stockholder's Agents, whether in writing, by telecopier or otherwise
pursuant to this Agreement, the Escrow Agent is authorized to seek confirmation
of such instructions by telephone call-back to the person or persons designated
on Exhibit C hereto, as applicable, and the Escrow Agent may rely upon the
confirmations of anyone purporting to be the person or persons so designated who
confirms such written instructions. The persons and telephone numbers for
call-backs may be changed only in a writing actually who confirm such written
instructions received and acknowledged by the Escrow Agent. The parties to this
Agreement acknowledge that such security procedure is commercially reasonable.
b. In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or demands from
any party hereto which, in its opinion, conflict with any of the provisions of
this Agreement, it shall be entitled to refrain from taking any action and its
sole obligation shall be to keep safely all property held in escrow until it
shall be directed otherwise in writing by all of the other parties hereto or by
a final order or judgment of a court of competent jurisdiction.
[SIGNATURES APPEAR ON NEXT PAGE]
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<PAGE>
WITNESS THE DUE EXECUTION AND DELIVERY OF THIS ESCROW AGREEMENT AS OF
THE DATE FIRST STATED ABOVE.
JDR HOLDINGS, INC. NCO GROUP, INC.
By: /s/ David E. D'Anna By: /s/ Michael J. Barrist
----------------------- ---------------------------
Name: David E. D'Anna Name: Michael J. Barrist
Title: CEO Title: CEO
ESCROW AGENT:
THE CHASE MANHATTAN BANK
By: /s/ John Sciacchitano
---------------------------
Name: John Sciacchitano
Title: Vice President
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<PAGE>
EXHIBIT A:* List of JDR Stockholders and Escrowed Stock
EXHIBIT B:* Compensation of Escrow Agent
EXHIBIT C:* Persons and Telephone Number(s) for Instruction Confirmation
*Exhibits to be supplied to the SEC upon request.
<PAGE>
JDR HOLDINGS, INC.
1997 OPTION PLAN
As Adopted by the Board of Directors
June 11, 1997
1. Purpose. JDR Holdings, Inc., a Delaware corporation (the
"Company"), hereby adopts the JDR Holdings, Inc. 1997 Option Plan (the "Plan").
The Plan is intended to recognize the contributions made to the Company by
employees (including employees who are members of the Board of Directors) of the
Company or any Affiliate, to provide such persons with additional incentive to
devote themselves to the future success of the Company or an Affiliate, and to
improve the ability of the Company or an Affiliate to attract, retain, and
motivate individuals upon whom the Company's sustained growth and financial
success depend, by providing such persons with an opportunity to acquire or
increase their proprietary interest in the Company through receipt of rights to
acquire the Company's Non-Voting Common Stock, par value $.001 per share (the
"Non-Voting Common Stock"), and through the transfer or issuance of Non-Voting
Common Stock. In addition, the Plan is intended as an additional incentive to
directors of the Company who are not employees of the Company or an Affiliate to
serve on the Board of Directors and to devote themselves to the future success
of the Company by providing them with an opportunity to acquire or increase
their proprietary interest in the Company through the receipt of rights to
acquire Non-Voting Common Stock. Furthermore, the Plan may be used to encourage
consultants and advisors of the Company to further the success of the Company.
2. Definitions. Unless the context clearly indicates
otherwise, the following terms shall have the following meanings:
(a) "Affiliate" means a corporation which is a parent
corporation or a subsidiary corporation with respect to the Company within the
meaning of Section 424(e) or (f) of the Code.
(b) "Award" shall mean a transfer of Non-Voting
Common Stock made pursuant to the terms of the Plan.
(c) "Award Agreement" shall mean the agreement
between the Company and a Grantee with respect to an Award made pursuant to the
Plan, including, without limitation, an Option Document.
(d) "Board of Directors" means the Board of Directors
of the Company.
(e) "Change of Control" shall have the meaning as set
forth in Section 9 of the Plan.
(f) "Code" means the Internal Revenue Code of 1986,
as amended.
(g) "Committee" shall have the meaning set forth in
Section 3 of the Plan.
<PAGE>
(h) "Company" means JDR Holdings, Inc., a Delaware
corporation.
(i) "Disability" shall have the meaning set forth in
Section 22(e)(3) of the Code.
(j) "Employee" means an employee of the Company or an
Affiliate.
(k) "Fair Market Value" shall have the meaning set
forth in Subsection 8(b) of the Plan.
(l) "Grantee" shall mean a person to whom an Award
has been granted pursuant to the Plan.
(m) "ISO" means an Option granted under the Plan
which is intended to qualify as an "incentive stock option" within the meaning
of Section 422(b) of the Code.
(n) "Non-Employee Director" shall mean a member of
the Board of Directors of the Company who is a "non-employee director" as that
term is defined in paragraph (b)(3) of Rule 16b-3 and an "outside director" as
that term is defined in Treasury Regulations Section 1.162-27 promulgated under
the Code.
(o) "Non-qualified Stock Option" means an Option
granted under the Plan which is not intended to qualify, or otherwise does not
qualify, as an "incentive stock option" within the meaning of Section 422(b) of
the Code.
(p) "Non-Voting Common Stock" shall have the meaning
set forth in Section 1 of the Plan.
(q) "Option" means either an ISO or a Non-qualified
Stock Option granted under the Plan.
(r) "Optionee" means a person to whom an Option has
been granted under the Plan, which Option has not been exercised and has not
expired or terminated.
(s) "Option Document" means the document described in
Section 8 of the Plan which sets forth the terms and conditions of each grant of
Options.
(t) "Option Price" means the price at which Shares
may be purchased upon exercise of an Option, as calculated pursuant to
Subsection 8(b) of the Plan.
(u) "Rule 16b-3" means Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended.
(v) "SAR" shall have the meaning set forth in Section
11 of the Plan.
(w) "Section 16 Officers" means any person who is an
"officer" within the meaning of Rule 16a-1(f) promulgated under the Securities
Exchange Act of 1934, as amended, or any successor rule.
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(x) "Shares" means the shares of Non-Voting Common
Stock of the Company which are the subject of Options or granted as Awards under
the Plan.
3. Administration of the Plan. The Board of Directors may
administer the Plan and/or it may, in its discretion, designate a committee or
committees composed of two or more of directors, each of whom is a Non-Employee
Director, to operate and administer the Plan with respect to all or a designated
portion of the participants. Any such committee designated by the Board of
Directors, and the Board of Directors itself in its administrative capacity with
respect to the Plan, is referred to as the "Committee."
(a) Meetings. The Committee shall hold meetings at
such times and places as it may determine, shall keep minutes of its meetings,
and shall adopt, amend and revoke such rules or procedures as it may deem
proper; provided, however, that it may take action only upon the agreement of a
majority of the whole Committee. Any action which the Committee shall take
through a written instrument signed by a majority of its members shall be as
effective as though it had been taken at a meeting duly called and held.
(b) Exculpation. No member of the Board of Directors
shall be personally liable for monetary damages for any action taken or any
failure to take any action in connection with the administration of the Plan or
the granting of Options or Awards under the Plan, provided that this Subsection
3(b) shall not apply to (i) any breach of such member's duty of loyalty to the
Company, an Affiliate, or the Company's stockholders, (ii) acts or omissions not
in good faith or involving intentional misconduct or a knowing violation of law,
(iii) acts or omissions that would result in liability under applicable law, and
(iv) any transaction from which the member derived an improper personal benefit.
(c) Indemnification. Service on the Committee shall
constitute service as a member of the Board of Directors of the Company. Each
member of the Committee shall be entitled, without further act on his part, to
indemnity from the Company and limitation of liability to the fullest extent
provided by applicable law and by the Company's Certificate of Incorporation
and/or By-law in connection with or arising out of any action, suit or
proceeding with respect to the administration of the Plan or the granting of
Options or Awards thereunder in which he or she may be involved by reason of his
or her being or having been a member of the Committee, whether or not he or she
continues to be such member of the Committee at the time of the action, suit or
proceeding.
(d) Interpretation. The Committee shall have the
power and authority to interpret the Plan and to adopt rules and regulations for
its administration that are not inconsistent with the express terms of the Plan.
Any such actions by the Committee shall be final, binding and conclusive on all
parties in interest.
4. Grants of Options under the Plan. Grants of Options under
the Plan may be in the form of a Non-qualified Stock Option, an ISO or a
combination thereof, at the discretion of the Committee.
5. Eligibility. All Employees, members of the Board of
Directors and consultants and advisors to the Company shall be eligible to
receive Options and Awards hereunder. Consultants and advisors shall be eligible
only if they render bona fide services to the Company unrelated to the offer or
sale of securities. The Committee, in its sole discretion, shall determine
whether an individual qualifies as an Employee.
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6. Shares Subject to Plan. The aggregate maximum number of
Shares for which Awards or Options may be granted pursuant to the Plan is
211.23. The number of Shares which may be issued under the Plan shall be subject
to adjustment in accordance with Section 10. The Shares shall be issued from
authorized and unissued Non-Voting Common Stock or Non-Voting Common Stock held
in or hereafter acquired for the treasury of the Company. If an Option
terminates or expires without having been fully exercised for any reason or if
Shares subject to an Award have been conveyed back to the Company pursuant to
the terms of an Award Agreement, the Shares for which the Option was not
exercised or the Shares that were conveyed back to the Company shall again be
available for issuance pursuant to the terms of one or more Options, or one or
more Awards, granted pursuant to the Plan.
7. Term of the Plan. The Plan is effective as of June 11,
1997, the date on which it was adopted by the Board of Directors, subject to the
approval of the Plan within one year after such date by the stockholders in the
manner required by state law. If the Plan is not so approved by the
stockholders, all Options granted under the Plan shall be null and void. No ISO
may be granted under the Plan after June 10, 2007.
8. Option Documents and Terms. Each Option granted under the
Plan shall be a Non-qualified Stock Option unless the Option shall be
specifically designated at the time of grant to be an ISO for Federal income tax
purposes. If any Option designated an ISO is determined for any reason not to
qualify as an incentive stock option within the meaning of Section 422 of the
Code, such Option shall be treated as a Non-qualified Stock Option for all
purposes under the provisions of the Plan. Options granted pursuant to the Plan
shall be evidenced by the Option Documents in such form as the Committee shall
from time to time approve, which Option Documents shall comply with and be
subject to the following terms and conditions and such other terms and
conditions as the Committee shall from time to time require which are not
inconsistent with the terms of the Plan.
(a) Number of Option Shares. Each Option Document
shall state the number of Shares to which it pertains. An Optionee may receive
more than one Option, which may include Options which are intended to be ISO's
and Options which are not intended to be ISO's, but only on the terms and
subject to the conditions and restrictions of the Plan. Notwithstanding anything
herein to the contrary, no Optionee shall be granted Options during one fiscal
year of the Company for more than two hundred (200) Shares (such number to be
subject to adjustment in accordance with Section 10).
(b) Option Price. Each Option Document shall state
the Option Price which, for a Non-qualified Stock Option, may be less than,
equal to, or greater than the Fair Market Value of the Shares on the date the
Option is granted and, for an ISO, shall be at least 100% of the Fair Market
Value of the Shares on the date the Option is granted as determined by the
Committee in accordance with this Subsection 8(b); provided, however, that if an
ISO is granted to an Optionee who then owns, directly or by attribution under
Section 424(d) of the Code, shares possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or an Affiliate,
then the Option Price shall be at least 110% of the Fair Market Value of the
Shares on the date the Option is granted. If the Non-Voting Common Stock is
traded in a public market, then the Fair Market Value per share shall be, if the
Non-Voting Common Stock is listed on a national securities exchange or included
in the NASDAQ System, the last reported sale price thereof on the relevant date,
or, if the Non-Voting Common Stock is not so listed or included, the mean
between the last reported "bid" and "asked" prices thereof on the relevant date,
as reported on NASDAQ or, if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Committee determines.
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(c) Exercise. No Option shall be deemed to have been
exercised prior to the receipt by the Company of written notice of such exercise
and (unless arrangements satisfactory to the Company have been made for payment
through a broker in accordance with procedures permitted by Regulation T of the
Federal Reserve Board) of payment in full of the Option Price for the Shares to
be purchased. Each such notice shall specify the number of Shares to be
purchased and shall (unless the Shares are covered by a then current
registration statement or a Notification under Regulation A under the Securities
Act of 1933, as amended (the "Act")), contain the Optionee's acknowledgment in
form and substance satisfactory to the Company that (a) such Shares are being
purchased for investment and not for distribution or resale (other than a
distribution or resale which, in the opinion of counsel satisfactory to the
Company, may be made without violating the registration provisions of the Act),
(b) the Optionee has been advised and understands that (i) the Shares have not
been registered under the Act and are "restricted securities" within the meaning
of Rule 144 under the Act and are subject to restrictions on transfer and (ii)
the Company is under no obligation to register the Shares under the Act or to
take any action which would make available to the Optionee any exemption from
such registration, (c) such Shares may not be transferred without compliance
with all applicable federal and state securities laws, and (d) an appropriate
legend referring to the foregoing restrictions on transfer and any other
restrictions imposed under the Option Documents may be endorsed on the
certificates. Notwithstanding the foregoing, if the Company determines that
issuance of Shares should be delayed pending (A) registration under federal or
state securities laws, (B) the receipt of an opinion of counsel satisfactory to
the Company that an appropriate exemption from such registration is available,
(C) the listing or inclusion of the Shares on any securities exchange or an
automated quotation system or (D) the consent or approval of any governmental
regulatory body whose consent or approval is necessary in connection with the
issuance of such Shares, the Company may defer exercise of any Option granted
hereunder until any of the events described in this sentence has occurred.
(d) Medium of Payment. Subject to the terms of the
applicable Option Document, an Optionee shall pay for Shares (i) in cash, (ii)
by certified or cashier's check payable to the order of the Company, or (iii) by
such other mode of payment as the Committee may approve, including payment
through a broker in accordance with procedures permitted by Regulation T of the
Federal Reserve Board. The Optionee may also exercise the Option in any manner
contemplated by Section 11. Furthermore, the Committee may provide in an Option
Document that payment may be made in whole or in part in shares of the Company's
Non-Voting Common Stock held by the Optionee. If payment is made in whole or in
part in shares of the Company's Non-Voting Common Stock, then the Optionee shall
deliver to the Company certificates registered in the name of such Optionee
representing the shares owned by such Optionee, free of all liens, claims and
encumbrances of every kind and having an aggregate Fair Market Value on the date
of delivery that is at least as great as the Option Price of the Shares (or
relevant portion thereof) with respect to which such Option is to be exercised
by the payment in shares of Non-Voting Common Stock, endorsed in blank or
accompanied by stock powers duly endorsed in blank by the Optionee. In the event
that certificates for shares of the Company's Non-Voting Common Stock delivered
to the Company represent a number of shares in excess of the number of shares
required to make payment for the Option Price of the Shares (or relevant portion
thereof) with respect to which such Option is to be exercised by payment in
shares of Non-Voting Common Stock, the stock certificate or certificates issued
to the Optionee shall represent (i) the Shares in respect of which payment is
made, and (ii) such excess number of shares. Notwithstanding the foregoing, the
Committee may impose from time to time such limitations and prohibitions on the
use of shares of the Non-Voting Common Stock to exercise an Option as it deems
appropriate.
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(e) Termination of Options.
(i) No Option shall be exercisable after the
first to occur of the following:
(A) Expiration of the Option term
specified in the Option Document, which, in the case of an ISO, shall not occur
after (1) ten years from the date of grant, or (2) five years from the date of
grant if the Optionee on the date of grant owns, directly or by attribution
under Section 424(d) of the Code, shares possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company or of
an Affiliate;
(B) Except to the extent otherwise
provided in an Optionee's Option Document, a finding by the Committee, after
full consideration of the facts presented on behalf of both the Company and the
Optionee, that the Optionee has been engaged in disloyalty to the Company or an
Affiliate, including, without limitation, fraud, embezzlement, theft, commission
of a felony or proven dishonesty in the course of his employment or service, or
has disclosed trade secrets or confidential information of the Company or an
Affiliate. In such event, in addition to immediate termination of the Option,
the Optionee shall automatically forfeit all Shares for which the Company has
not yet delivered the share certificates upon refund by the Company of the
Option Price. Notwithstanding anything herein to the contrary, the Company may
withhold delivery of share certificates pending the resolution of any inquiry
that could lead to a finding resulting in a forfeiture;
(C) The date, if any, set by the Board of
Directors as an accelerated expiration date in the event of the liquidation or
dissolution of the Company; or
(D) The occurrence of such other event or
events as may be set forth in the Option Document as causing an accelerated
expiration of the Option.
(E) Except as otherwise set forth in the
Option Document and subject to the foregoing provisions of this Subsection 8(e),
thirty days after the Optionee's employment or service with the Company or its
Affiliates terminates for any reason other than Disability or death or one year
after such termination due to Optionee's Disability or death. With respect to
this Subsections 8(e)(i)(E), the only Options that may be exercised during the
thirty-day or one-year period, as the case may be, are Options which were
exercisable on the last date of such employment or service and not Options
which, if the Optionee were still employed or rendering service during such
three-month or one-year period, would become exercisable, unless the Option
Document specifically provides to the contrary. The terms of an executive
severance agreement or other agreement between the Company and an Optionee,
approved by the Committee, whether entered into prior or subsequent to the grant
of an Option, which provide for Option exercise dates later than those set forth
in Subsection 8(e)(i) shall be deemed to be Option terms approved by the
Committee and consented to by the Optionee.
(ii) Notwithstanding the foregoing, the Committee
may extend the period during which all or any portion of an Option may be
exercised to a date no later than the Option term specified in the Option
Document pursuant to Subsection 8(e)(i)(A), provided that any change pursuant to
this Subsection 8(e)(ii) which would cause an ISO to become a Non-qualified
Stock Option may be made only with the consent of the Optionee.
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(iii) Notwithstanding anything to the contrary
contained in the Plan or an Option Document, an ISO shall be treated as a
Non-qualified Stock Option to the extent such ISO is exercised at any time after
the expiration of the time period permitted under the Code for the exercise of
an ISO.
(f) Transfers. Except as otherwise provided in this
Subsection 8(f), no Option granted under the Plan may be transferred, except by
will or by the laws of descent and distribution, and, during the lifetime of the
person to whom an Option is granted, such Option may be exercised only by him.
Notwithstanding the foregoing, an Option, other than an ISO, shall be
transferrable pursuant to a "domestic relations order" as defined in the Code or
Title I of the Employee Retirement Income Security Act, or the rules thereunder,
and also shall be transferrable, without payment of consideration, to (a)
immediate family members of the holder (i.e., spouse or former spouse, parents,
issue, including adopted and "step" issue or siblings), (b) trusts for the
benefit of immediate family members, and (c) partnerships whose only partners
are such family members. Any transferee will be subject to all of the conditions
set forth in the Option prior to its transfer.
(g) Limitation on ISO Grants. To the extent that the
aggregate fair market value of the shares of Non-Voting Common Stock (determined
at the time the ISO is granted) with respect to which ISO's under all incentive
stock option plans of the Company or its Affiliates are exercisable for the
first time by the Optionee during any calendar year exceeds $100,000, such ISO's
shall, to the extent of such excess, be treated as Non-qualified Stock Options.
(h) Other Provisions. Subject to the provisions of
the Plan, the Option Documents shall contain such other provisions including,
without limitation, provisions authorizing the Committee to accelerate the
exercisability of all or any portion of an Option granted pursuant to the Plan,
additional restrictions upon the exercise of the Option or additional
limitations upon the term of the Option, as the Committee shall deem advisable.
(i) Amendment. Subject to the provisions of the Plan,
the Committee shall have the right to amend any Option Document or Award
Agreement issued to an Optionee or Award holder, subject to the Optionee's or
Award holder's consent if such amendment is not favorable to the Optionee or
Award holder, or if such amendment has the effect of changing an ISO to a
Non-Qualified Stock Option, except that the consent of the Optionee or Award
holder shall not be required for any amendment made pursuant to Subsection
8(e)(i)(C) or Section 9 of the Plan, as applicable.
9. Change of Control. In the event of a Change of Control, the
Committee may take whatever actions it deems necessary or desirable with respect
to any of the Options outstanding, which need not be treated identically,
including, without limitation, accelerating (a) the expiration or termination
date in the respective Option Documents to a date no earlier than seven (7) days
after notice of such acceleration is given to the Optionees, or (b) the
exercisability of the Option. Notwithstanding the foregoing, in the event of a
Change of Control, except as otherwise set forth in the Option Document, Options
granted pursuant to the Plan will become automatically exercisable in full.
A "Change of Control" shall be deemed to have
occurred upon the earliest to occur of the following events:
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(i) the date the stockholders of the Company (or the Board of
Directors of the Company, if stockholder action is not required) approve a plan
or other arrangement pursuant to which the Company will be dissolved or
liquidated;
(ii) the date the stockholders of the Company (or the Board of
Directors of the Company, if stockholder action is not required) approve a
definitive agreement to sell or otherwise dispose of substantially all of the
assets of the Company and its subsidiaries; or
(iii) the date any "person" (within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended)
(other than the Company or any of its Affiliates, David E. D'Anna, Advanta
Partners LP or their respective affiliates, any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its Affiliates
or any person acting on behalf of the Company as underwriter pursuant to an
offering who is temporarily holding securities in connection with such
offering), shall have become the beneficial owner of, or shall have obtained
voting control over, more than fifty percent (50%) of the outstanding shares of
the Company's Voting Common Stock, par value $.001 per share.
10. Adjustments on Changes in Capitalization.
(a) Except as otherwise set forth in the Option
Document, in the event that the outstanding Shares are changed by reason of a
reorganization, merger, consolidation, recapitalization, reclassification, stock
split-up, combination or exchange of shares and the like (not including the
issuance of Non-Voting Common Stock on the conversion of other securities of the
Company which are convertible into Non-Voting Common Stock) or dividends payable
in Shares, an equitable adjustment shall be made by the Committee in the
aggregate number of shares available under the Plan and in the number of Shares
and price per Share subject to outstanding Options. Unless the Committee makes
other provisions for the equitable settlement of outstanding Options, if the
Company shall be reorganized, consolidated, or merged with another corporation,
or if all or substantially all of the assets of the Company shall be sold or
exchanged, an Optionee shall at the time of issuance of the stock under such
corporate event be entitled to receive upon the exercise of his or her Option
the same number and kind of shares of stock or the same amount of property, cash
or securities as he or she would have been entitled to receive upon the
occurrence of any such corporate event as if he or she had been, immediately
prior to such event, the holder of the number of shares covered by his or her
Option.
(b) Any adjustment under this Section 10 in the
number of Shares subject to Options shall apply proportionately to only the
unexercised portion of any Option granted hereunder.
(c) The Committee shall have authority to determine
the adjustments to be made under this Section, and any such determination by the
Committee shall be final, binding and conclusive.
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11. Stock Appreciation Rights (SARs).
(a) In General. Subject to the terms and conditions
of the Plan, the Committee may, in its sole and absolute discretion, grant to an
Optionee the right to surrender an Option to the Company, in whole or in part,
and to receive in exchange therefor payment by the Company of an amount equal to
the excess of the fair market value of the shares of Non-Voting Common Stock
subject to such Option, or portion thereof, so surrendered (determined in the
manner described in section 8(b) as of the date the SARs are exercised) over the
exercise price to acquire such shares (which right shall be referred to as an
"SAR"). Except as may otherwise be provided in an Option Document, such payment
may be made, as determined by the Committee in accordance with subsection 11(c)
below and set forth in the Option Agreement, either in shares of Non-Voting
Common Stock or in cash or in any combination thereof.
(b) Grant. Each SAR shall relate to a specific Option
granted under the Plan and shall be granted to the Optionee concurrently with
the grant of such Option by inclusion of appropriate provisions in the Option
Agreement pertaining thereto. The number of SARs granted to an Optionee shall
not exceed the number of shares of Non-Voting Common Stock which such Optionee
is entitled to purchase pursuant to the related Option. The number of SARs held
by an Optionee shall be reduced by (i) the number of SARs exercised under the
provisions of the Option Agreement pertaining to the related Option, and (ii)
the number of shares of Non-Voting Common Stock purchased pursuant to the
exercise of the related Option.
(c) Payment. The Committee shall have sole discretion
to determine whether payment in respect of SARs granted to any Optionee shall be
made in shares of Non-Voting Common Stock, or in cash, or in a combination
thereof. If payment is made in Non-Voting Common Stock, the number of shares of
Non-Voting Common Stock which shall be issued pursuant to the exercise of SARs
shall be determined by dividing (i) the total number of SARs being exercised,
multiplied by the amount by which the Fair Market Value (as determined under
section 8(b)) of a share of Non-Voting Common Stock on the exercise date exceeds
the exercise price for shares covered by the related Option, by (ii) the Fair
Market Value of a share of Non-Voting Common Stock on the exercise date of the
SARs. No fractional share of Non-Voting Common Stock shall be issued on exercise
of an SAR; cash may be paid by the Company to the individual exercising an SAR
in lieu of any such fractional share. If payment on exercise of an SAR is to be
made in cash, the individual exercising the SAR shall receive in respect of each
share to which such exercise relates an amount of money equal to the difference
between the Fair Market Value of a share of Non-Voting Common Stock on the
exercise date and the exercise price for shares covered by the related Option.
(d) Limitations. SARs shall be exercisable at such
times and under such terms and conditions as the Committee, in its sole and
absolute discretion, shall determine; provided, however, that an SAR may be
exercised only at such times and by such individuals as the related Option may
be exercised under the Plan and the Option Agreement.
12. Terms and Conditions of Awards. Awards granted pursuant to
the Plan shall be evidenced by written Award Agreements in such form as the
Committee shall from time to time approve, which Award Agreements shall comply
with and be subject to the following terms and conditions and such other terms
and conditions which the Committee shall from time to time require which are not
inconsistent with the terms of the Plan.
(a) Number of Shares. Each Award Agreement shall
state the number of shares of Non-Voting Common Stock to which it pertains.
(b) Purchase Price. Each Award Agreement shall
specify the purchase price, if any, which applies to the Award. If the Board
specifies a purchase price, the Grantee shall be required to make payment on or
before the payment date specified in the Award Agreement. A Grantee shall pay
for Shares (i) in cash, (ii) by certified check payable to the order of the
Company, or (iii) by such other mode of payment as the Committee may approve.
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(c) Grant. In the case of an Award which provides for
a grant of Shares without any payment by the Grantee, the grant shall take place
on the date specified in the Award Agreement. In the case of an Award which
provides for a payment, the grant shall take place on the date the initial
payment is delivered to the Company, unless the Committee or the Award Agreement
otherwise specifies. Stock certificates evidencing Shares granted pursuant to an
Award shall be issued in the sole name of the Grantee. Notwithstanding the
foregoing, as a precondition to a grant, the Company may require an
acknowledgment by the Grantee as required with respect to Options under
Subsection 8(c).
(d) Conditions. The Committee may specify in an Award
Agreement any conditions under which the Grantee of that Award shall be required
to convey to the Company the Shares covered by the Award. Upon the occurrence of
any such specified condition, the Grantee shall forthwith surrender and deliver
to the Company the certificates evidencing such Shares as well as completely
executed instruments of conveyance. The Committee, in its discretion, may
provide that certificates for Shares transferred pursuant to an Award be held in
escrow by the Company or an officer of the Company until such time as each and
every condition has lapsed and that the Grantee be required, as a condition of
the Award, to deliver to such escrow agent or Company officer stock powers
covering the Award Shares duly endorsed by the Grantee. Unless otherwise
provided in the Award Agreement, distributions made on Shares held in escrow
shall be deposited in escrow, to be distributed to the party becoming entitled
to the Shares on which the distribution was made. Stock certificates evidencing
Shares subject to conditions shall bear a legend to the effect that the
Non-Voting Common Stock evidenced thereby is subject to repurchase by, or
conveyance to, the Company in accordance with the terms applicable to such
Shares under an Award made pursuant to the Plan and that the Shares may not be
sold or otherwise transferred.
(e) Lapse of Conditions. Upon termination or lapse of
each and every forfeiture condition, the Company shall cause certificates
without the legend referring to the Company's repurchase or acquisition right
(but with any other legends that may be appropriate) evidencing the Shares
covered by the Award to be issued to the Grantee upon the Grantee's surrender to
the Company of the legended certificates held by him.
(f) Rights as Stockholder. Upon payment of the
purchase price, if any, for Shares covered by an Award and compliance with the
acknowledgment requirement of subsection 12(c), the Grantee shall have all of
the rights of a stockholder with respect to the Shares covered thereby,
including the right to vote the Shares and receive all dividends and other
distributions paid or made with respect thereto, except to the extent otherwise
provided by the Committee or in the Award Agreement.
13. Amendment of the Plan. The Board of Directors of the
Company may amend the Plan from time to time in such manner as it may deem
advisable. Nevertheless, the Board of Directors of the Company may not change
the class of individuals eligible to receive an ISO or increase the maximum
number of shares as to which Options may be granted under the Plan, or to any
individual under the Plan in any year, without obtaining approval, within twelve
months before or after such action, by the stockholders in the manner required
by state law. No amendment to the Plan shall adversely affect any outstanding
Option or Award, however, without the consent of the Optionee or Grantee, as the
case may be.
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14. No Commitment to Retain. The grant of an Option or Award
pursuant to the Plan shall not be construed to imply or to constitute evidence
of any agreement, express or implied, on the part of the Company or any
Affiliate to retain the Optionee or Grantee as an employee, consultant or
advisor of the Company or any Affiliate, as a member of the Company's Board of
Directors or in any other capacity.
15. Withholding of Taxes. In connection with any event
relating to an Option or Award, the Company shall have the right to (a) require
the recipient to remit or otherwise make available to the Company an amount
sufficient to satisfy any federal, state and/or local withholding tax
requirements prior to the delivery or transfer of any certificate or
certificates for such Shares or (b) take whatever other action it deems
necessary to protect its interests with respect to tax liabilities. The
Company's obligations under the Plan shall be conditioned on the Optionee's or
Grantee's compliance, to the Company's satisfaction, with any withholding
requirement.
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EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 31st day of March 1999, by and
between NCO Group, Inc., a Pennsylvania corporation, (hereinafter called
"Company"), and David E. D'Anna, an individual (hereinafter called "Employee").
W I T N E S S E T H:
WHEREAS, Employee's present employer, JDR Holdings, Inc.
("JDR"), is being acquired by and merged with a wholly owned subsidiary of
Company (the "Merger");
WHEREAS, Company wishes to continue to employ Employee and
Employee wishes to continue in the employ of Company on the terms and conditions
contained in this Agreement.
NOW, THEREFORE, subject to the closing of the aforementioned
acquisition and merger, and in consideration of the facts, mutual promises and
covenants contained herein, intending to be legally bound hereby, Company and
Employee agree as follows:
1. Definitions. As used herein, the following terms shall have
the meanings set forth below unless the context otherwise requires.
"Affiliate" shall mean a person who with respect to
any entity, directly or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, such entity;
"Annual Bonus" shall mean the bonus payments set
forth in Section 5(b), as such amount may be adjusted from time to time.
"Base Compensation" shall mean the annual rate of
compensation set forth in Section 5(a), as such amount may be adjusted from time
to time.
"Board" shall mean the Board of Directors of Company.
<PAGE>
"Business" shall mean the business conducted by
Company or JDR in the past and on the date of execution of this Agreement,
including without limitation any business in the debt collection, telemarketing,
outsourcing and teleservices industries, and including business activities in
developmental stages, business activities which may be developed by Company, or
any Subsidiary or corporate parent thereof or entity sharing a common corporate
parent with Company, during the period of Employee's employment by Company, and
all other business activities which flow from a reasonable expansion of any of
the foregoing, including any business engaged in by Company subsequent to the
execution of this Agreement in which Employee participates.
"Cause" shall mean any one or more of the following:
(a) if Employee is convicted of a
felony involving fraud, theft or
embezzlement or has entered a plea of nolo
contendere (or similar plea) to a charge of
such an offense; or
(b) if Employee commits any act of
fraud or deliberate misappropriation
relating to or involving Company; or
(c) if Employee commits a material
breach of this Agreement.
"Commencement Date" shall have the meaning specified
in Section 4 hereof.
"Confidential Information" shall have the meaning
specified in Section 14(c) hereof.
"Disability" shall mean Employee's inability, for a
period of 150 consecutive days, or more than 240 days in the aggregate over a
consecutive period of eighteen months, to perform the essential duties of
Employee's position, with or without any reasonable accommodation required by
law, due to a mental or physical impairment which substantially limits one or
more major life activities.
"Restricted Area" shall have the meaning specified in
Section 14(a) hereof.
"Restricted Period" shall mean:
(a) For purposes of Section 14(a)(A), from
the date hereof until one (1) year after Employee's employment with Company is
either terminated by Employee or by Company for Cause, or for the remaining term
of this Agreement if Employee's employment with Company is terminated by Company
without Cause;
(b) For purposes of Section 14(a)(B), from
the date hereof until five (5) years after Employee's employment is either
terminated by Employee or by Company for Cause, or for five (5) years after the
remaining term of this Agreement if Employee's employment with Company is
terminated by Company without Cause;
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"Subsidiary" shall mean any corporation in which
Company owns directly or indirectly 50% or more of the Voting Stock or 50% or
more of the equity; or any other venture in which it owns either 50% or more of
the voting rights or 50% or more of the equity.
"Term of Employment" shall mean the period specified
in Section 4 hereof as the same may be modified in accordance with this
Agreement.
2. Employment. Company hereby employs Employee and Employee
hereby accepts employment by Company for the period and upon the terms and
conditions specified in this Agreement.
3. Office and Duties.
(a) Employee initially shall serve as Executive Vice
President of Company and Divisional Chief Executive Officer of Company's
Technology Based Outsourcing Division (the "Division"). In such capacity,
Employee shall render such services as are necessary and desirable to protect
and advance the best interests of Company, acting, in all instances, under the
supervision of and in accordance with the policies set by the Board. Employee
will be responsible for and provide senior management services relating to the
debt collection and professional financial services and related marketing of the
services of Company and ongoing senior management services relating to all
aspects of Company's general administration. In addition, Employee will render
such other executive services and perform such other executive duties for
Company and its direct and indirect wholly owned Subsidiaries thereof
(collectively, with Company, the "NCO Group") as the Boards of Directors of the
members of the NCO Group may from time to time reasonably request of Employee.
Employee may, in addition, hold such offices with the NCO Group which may from
time to time be offered to Employee. Employee's authority shall be subject at
all times to the direction and control of the Chief Executive Officer of Company
and the Boards of Directors of Company and the other members of the NCO Group
and to the Boards' discretion to determine the policies of the NCO Group.
(b) For as long as Employee shall remain an employee
of Company, Employee's entire working time, energy, skill and best efforts shall
be devoted to the performance of Employee's duties hereunder in a manner which
will faithfully and diligently further the business and interests of Company.
Employee may engage in charitable, civic, fraternal, trade and professional
association activities that do not interfere with Employee's obligations to
Company, but Employee shall not be employed by any other for-profit business
without prior written consent of Board, which shall not be unreasonably
withheld.
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(c) Employee's services will be conducted at
Company's headquarters in Ramsey, New Jersey and at such other places as
Employee's duties may require; provided however, that Employee shall not be
required by Company to relocate his principal residence without his consent, and
shall not be required to perform services in any location that is greater than
fifty (50) miles from his principal residence, except in the course of normal
daily business travel.
4. Term. Employee shall be employed by Company for an initial
Term of Employment (the "Initial Term"), commencing on the effective date of the
Merger (the "Commencement Date"), and ending on March 31, 2002, unless sooner
terminated as hereinafter provided. Unless either party elects to terminate this
Agreement at the end of the Initial Term by giving the other party written
notice of such election at least one hundred eighty (180) days before the
expiration of the Initial Term, the Term of Employment shall be deemed to have
been extended for an additional term of one (1) year (the "Additional Term")
commencing on the day after the expiration of the Initial Term. At any time
during the Additional Term, either party may terminate this Agreement by giving
the other party written notice of such election at least sixty (60) days prior
to such termination.
5. Compensation and Benefits.
(a) For all of the service rendered by Employee to
Company, Employee shall receive Base Compensation at the gross annual rate of
Three Hundred Sixty-Seven Thousand Five Hundred Dollars ($367,500.00) payable in
installments in accordance with Company's regular payroll practices in effect
from time to time. The amount of Base Compensation payable hereunder shall be
adjusted no later than June 30 of each year during the Term of Employment,
effective as of June 1 of each year, by an increase of at least five (5)
percent, and may be further increased by such other amounts as may be determined
in the discretion of the Board.
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<PAGE>
(b) In addition to the foregoing compensation, if the
outsourcing business of the Division records an increase in gross revenues in
any year over the immediately prior year's gross revenues, then Employee shall
be entitled to receive an annual bonus (the "Annual Bonus") in the amount of One
Hundred Fifty Thousand Dollars ($150,000.00). If such increase in gross revenues
exceeds the immediately prior year's gross revenues by more than 20%, then the
Annual Bonus shall be increased by an amount equal to the product obtained by
multiplying Fifteen Thousand Dollars ($15,000.00) by the lesser of (x) 10 or (y)
the amount by which such percentage increase in gross revenues exceeds 20%. For
example, if the Division's outsourcing business annual gross revenues for 1998
were $1,000,000, and the applicable annual gross revenues for 1999 are
$1,250,000 (i.e., an increase in annual gross revenue of 25%), then the Annual
Bonus of $150,000 would be increased by $75,000 to a total of $225,000. It
should be noted that in no event would the total Annual Bonus as calculated
above exceed Three Hundred Thousand Dollars ($300,000.00). If the increase in
applicable gross revenues exceeds 30%, any further additional bonus shall be at
the discretion of Company. For purposes of determining gross revenues, such
revenues must be of a quality consistent with the Division's past practice and
the applicable business plan. In addition, the Annual Bonus formula set forth
above shall be subject to adjustment for any extraordinary events, including,
without limitation, shifts in business between divisions, as well as
acquisitions and divestitures within the Division. For the year ending December
31, 1999, a 20% increase in the immediately prior year's gross revenues would be
attained if the applicable gross revenues for the year ended December 31, 1999
equal $44,877,600.
6. Fringe Benefits. As an inducement to Employee to commence
employment hereunder, and in consideration of Employee's covenants under this
Agreement, Employee shall be entitled to the benefits set forth below (the
"Fringe Benefits") during the Term of Employment:
(a) Employee shall be eligible to participate in any
health, life, accident or disability insurance, sick leave or other benefit
plans or programs made available to other similarly situated employees of
Company as long as they are kept in force by Company and provided that Employee
meets the eligibility requirements and other terms, conditions and restrictions
of the respective plans and programs.
(b) Employee shall be entitled to paid vacation and
personal days during each year, subject to Company's generally applicable
policies. All vacation and personal days must be used within the year in which
available and may not be carried over into subsequent years. Employee shall give
oral or written prior to the commencement of any vacation in excess of five (5)
business days.
(c) Company will reimburse Employee for all
reasonable expenses incurred by Employee in connection with the performance of
Employee's duties hereunder upon receipt of documentation therefor in accordance
with Company's regular reimbursement procedures and practices in effect from
time to time. Payment to Employee will be made upon presentation of expense
vouchers in such detail as Company may from time to time require.
(d) Company shall provide Employee one Company leased
automobile which shall of comparable value to that presently provided to
Employee, shall provide automobile insurance on that Company leased automobile,
shall provide a cellular telephone and shall maintain Employee's reserved
parking space at the Ramsey, New Jersey office.
7. Disability. If Employee suffers a Disability, Company may
terminate Employee's employment relationship with Company at any time thereafter
by giving Employee ten (10) days written notice of termination. Thereafter,
Company shall have no obligation to Employee for Base Compensation, Annual
Bonus, Fringe Benefits or any other form of compensation or benefit to Employee,
except as otherwise required by law or by benefit plans provided at Company
expense, other than (a) amounts of Base Compensation accrued through the date of
termination, (b) a pro rata portion of the Annual Bonus to the date of
termination of employment, to the extent payable hereunder, and (c)
reimbursement of appropriately documented expenses incurred by Employee before
the termination of employment, to the extent that Employee would have been
entitled to such reimbursement but for the termination of employment.
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<PAGE>
8. Death. If Employee dies during the Term of Employment, the
Term of Employment and Employee's employment with Company shall terminate as of
the date of Employee's death. Company shall have no obligation to Employee or
Employee's estate for Base Compensation, Annual Bonus, Fringe Benefits or any
other form of compensation or benefit, except as otherwise required by law or by
benefit plans provided at Company expense, other than (a) amounts of Base
Compensation that have accrued through the date of Employee's death, (b) a pro
rata portion of the Annual Bonus to the date of Employee's death, to the extent
payable hereunder, and (c) reimbursement of appropriately documented expenses
incurred by Employee before Employee's death, to the extent that Employee would
have been entitled to such reimbursement but for his death.
9. Termination for Cause. Company may terminate Employee's
employment relationship with Company at any time for Cause. Upon termination of
Employee under this Section 9, Company shall have no obligation to Employee for
Base Compensation, Annual Bonus, Fringe Benefits or other form of compensation
or benefits other than (a) amounts of Base Compensation accrued through the date
of termination, and (b) reimbursement of appropriately documented expenses
incurred by Employee before the termination of employment, to the extent that
Employee would have been entitled to such reimbursement but for the termination
of employment.
10. Termination without Cause. Company may terminate
Employee's employment relationship with Company at any time without Cause.
Notwithstanding termination of Employee' employment under this Section 10,
Employee shall continue to be eligible to receive and Company shall continue to
pay Employee's Base Compensation in accordance with standard payroll practices,
a prorated portion of the Annual Bonus and all other compensation and benefits
as such amounts would have accrued through the end of the Initial Term or, if
such termination occurs during the Additional Term, through the end of the
Additional Term.
11. Termination by Employee. Employee may terminate his
employment at any time upon at least 30 days' prior written notice to Company.
If Employee terminates his employment, Company shall have no obligation to
Employee for Base Compensation, Annual Bonus, Fringe Benefits or other form of
compensation or benefits other than (a) amounts of Base Compensation accrued
through the date of termination, and (b) reimbursement of appropriately
documented expenses incurred by Employee before the termination of employment,
to the extent that Employee would have been entitled to such reimbursement but
for the termination of employment.
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<PAGE>
12. Consideration. Employee agrees and acknowledges that
Employee is agreeing to be bound by the terms of this Agreement, including
without limitation the provisions of Sections 13 and 14, in consideration of
Company's agreement to pay in full all amounts due as Base Compensation and
other amounts due after Employee's termination without Cause in accordance with
Section 10 of this Agreement; and Employee further agrees and acknowledges that
the benefits described above constitute full, complete and adequate
consideration for Employee's obligations hereunder.
13. Company Property. All advertising, sales, manufacturers'
and other materials or articles or information, including without limitation
data processing reports, computer programs, software, customer information and
records, business records, price lists or information, samples, or any other
materials or data of any kind furnished to Employee by Company or developed by
Employee on behalf of Company or at Company's direction or for Company's use or
otherwise in connection with Employee's employment hereunder, are and shall
remain the sole property of Company, including in each case all copies thereof
in any medium, including computer tapes and other forms of information storage.
If Company requests the return of such materials at any time during or at or
after the termination of Employee's employment, Employee shall deliver all
copies of the same to Company immediately. Notwithstanding the foregoing,
Employee may retain records relevant to the filing of Employee's personal income
taxes and Company shall grant Employee reasonable access during normal business
hours, to business records of Company relevant to the discharge of Employee's
duties as an officer of Company or any other legitimate non-competitive business
purpose.
14. Noncompetition, Trade Secrets, Etc. Employee hereby
acknowledges that, during and solely as a result of his employment by Company,
Employee will have access to confidential information and business and
professional contacts. In consideration of such special and unique opportunities
afforded by Company to Employee as a result of Employee's employment and the
other benefits referred to in Section 12 of this Agreement, Employee hereby
agrees as follows:
(a) For the duration of the Restricted Period,
Employee shall not directly or indirectly (A) engage in (as a principal,
shareholder, partner, director, officer, agent, employee, consultant or
otherwise) or be financially interested in any business operating within the
United States (the "Restricted Area"), which is involved in or any other
business activities which are the same as, similar to or in competition with the
Business, or with any business activities carried on by Company, or being
definitely planned by Company, at the time of the termination of Employee's
employment; provided however, that nothing contained in this Section 14 shall
prevent Employee from holding for investment no more than five percent (5%) of
any class of equity securities of a company whose securities are publicly traded
on a national securities exchange or in a national market system; or (B) induce
or attempt to influence any employee, customer, independent contractor or
supplier of Company to terminate employment or any other relationship with
Company.
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<PAGE>
(b) During the Term of Employment, Employee shall
not, directly or indirectly, disclose or otherwise communicate to any of the
clients, customers or accounts of Company, its Affiliates or any Subsidiary
thereof that he is considering terminating, or has decided to terminate,
employment with Company. Following the termination of Employee's employment,
Company shall have sole discretion to determine who may notify the clients,
customers or accounts of Company of the termination of Employee's employment,
and the form, substance and timing of such notification; provided, however, that
Company shall not disseminate any notice of Employee's termination for any
reason other than Cause which is unfavorable to Employee's professional or
personal reputation or career. Company shall inform Employee of the identity of
all persons or entities to be so notified and provide to Employee a copy of any
written notice to such persons or entities at least ten business days prior to
its dissemination to allow Employee to object to or otherwise challenge the
content of the written notice and/or its dissemination.
(c) Employee shall not use for Employee's personal
benefit, or disclose, communicate or divulge to, or use for the direct or
indirect benefit of any person, firm, association or company other than Company,
any "Confidential Information" which term shall mean any information regarding
the business methods, business policies, policies, procedures, techniques,
research or development projects or results, historical or projected financial
information, budgets, trade secrets, or other knowledge or processes of or
developed by Company or any names and addresses of customers or clients or any
data on or relating to past, present or prospective Company customers or clients
or any other confidential information relating to or dealing with the business
operations or activities of Company, made known to Employee or learned or
acquired by Employee while in the employ of Company, but Confidential
Information shall not include information otherwise lawfully known generally by
or readily accessible to the trade or the general public. All memoranda, notes,
lists, records, files, documents and other papers and other like items (and all
copies, extracts and summaries thereof) made or compiled by Employee or made
available to Employee concerning the business of Company shall be Company's
property and shall be delivered to Company promptly upon the termination of
Employee's employment with Company or at any other time on request. The
foregoing provisions of this Subsection 14(c) shall apply during and after the
period when Employee is an employee of Company and shall be in addition to (and
not a limitation of) any legally applicable protections of Company's interest in
confidential information, trade secrets and the like. At the termination of
Employee's employment with Company, Employee shall return to Company all copies
of Confidential Information in any medium, including computer tapes and other
forms of data storage. Notwithstanding the foregoing, Employee may retain
records relevant to the filing of Employee's personal income taxes and Company
shall grant Employee reasonable access during normal business hours, to business
records of Company relevant to Employee's discharge of Employee's duties as an
officer of Company or other legitimate non-competitive business purpose.
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<PAGE>
(d) Any and all writings, inventions, improvements,
processes, procedures and/or techniques which Employee may make, conceive,
discover or develop, either solely or jointly with any other person or persons,
at any time when Employee is an employee of Company, whether or not during
working hours and whether or not at the request or upon the suggestion of
Company, which relate to or are useful in connection with the Business or with
any business now or hereafter during the time of Employee's employment hereunder
carried on or known by Employee to be contemplated by Company, including
developments or expansions of its present fields of operations, shall be the
sole and exclusive property of Company. Employee shall make full disclosure to
Company of all such writings, inventions, improvements, processes, procedures
and techniques, and shall do everything necessary or desirable to vest the
absolute title thereto in Company. Employee shall write and prepare all
specifications and procedures regarding such inventions, improvements,
processes, procedures and techniques and otherwise aid and assist Company so
that Company can prepare and present applications for copyright or Letters
Patent therefor and can secure such copyright or Letters Patent wherever
possible, as well as reissues, renewals, and extensions thereof, and can obtain
the record title to such copyright or patents so that Company shall be the sole
and absolute owner thereof in all countries in which it may desire to have
copyright or patent protection. Employee shall not be entitled to any additional
or special compensation or reimbursement regarding any and all such writings,
inventions, improvements, processes, procedures and techniques.
(e) Employee acknowledges that the restrictions
contained in the foregoing Subsections (a), (b), (c) and (d), in view of the
nature of the business in which Company is engaged, are reasonable and necessary
in order to protect the legitimate interests of Company, that their enforcement
will not impose a hardship on Employee or significantly impair Employee's
ability to earn a livelihood, and that any violation thereof would result in
irreparable injuries to Company. Employee therefore acknowledges that, in the
event of Employee's violation of any of these restrictions, Company shall be
entitled to obtain from any court of competent jurisdiction preliminary and
permanent injunctive relief as well as damages and an equitable accounting of
all earnings, profits and other benefits arising from such violation, which
rights shall be cumulative and in addition to any other rights or remedies to
which Company may be entitled.
(f) If the Restricted Period or the Restricted Area
specified in Subsections (a) and (b) above should be adjudged unreasonable in
any proceeding, then the period of time shall be reduced by such amount or the
area shall be reduced by the elimination of such portion or both such reductions
shall be made so that such restrictions may be enforced for such time and in
such area as is adjudged to be reasonable. If Employee violates any of the
restrictions contained in the foregoing Subsections (a) or (b), the Restricted
Period shall be extended by a period equal to the length of time from the
commencement of any such violation until such time as such violation shall be
cured by Employee to the satisfaction of Company. Company shall have the right
and remedy to require Employee to account for and pay over to Company all
compensation, profits, monies, accruals, increments or other benefits derived or
received by Employee as the result of any transactions constituting a breach of
this Section 14, and Employee shall account for and pay over such amounts to
Company upon Company's request therefor. Employee hereby expressly consents to
the jurisdiction of any court within the Commonwealth of Pennsylvania to enforce
the provisions of this Section 14, and agrees to accept service of process by
mail relating to any such proceeding. Company may supply a copy of Section 14 of
this Agreement to any future or prospective employer of Employee or to any
person to whom Employee has supplied information if Company determines in good
faith that there is a reasonable likelihood that Employee has violated or will
violate such Section.
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15. Prior Agreements. Employee represents to Company that there
are no restrictions, agreements or understandings, oral or written, to which
Employee is a party or by which Employee is bound that prevent or make unlawful
Employee's execution or performance of this Agreement.
16. Consent to Jurisdiction/Arbitration.
(a) Any legal suit, action, claim, proceeding or
investigation arising out of or relating to this Agreement may be instituted in
the Montgomery County Court of Common Pleas of the Commonwealth of Pennsylvania,
and each of the parties hereto waives any objection which party may now or
hereafter have to such venue of any such suit, action, claim, proceeding or
investigation, and irrevocably submits to the jurisdiction of any such court.
Any and all service of process and any other notice in any such suit, action,
claim, proceeding or investigation shall be effective against any party if given
by registered or certified mail, return receipt requested, or by any other means
of mail which requires a signed receipt, postage prepaid, mailed to such party
as herein provided. Nothing herein contained shall be deemed to affect the right
of any party to serve process in any manner permitted by law or to commence
legal proceedings or otherwise proceed against any other party in any
jurisdiction other than Pennsylvania.
(b) With the exception of Company's right to
injunctive or equitable relief described in paragraph 14(e) above, any dispute,
controversy or claim arising out of or relating to this Agreement or the breach
or alleged breach of this Agreement shall be settled by arbitration in
Montgomery County, Pennsylvania in accordance with the commercial arbitration
rules, then obtaining, of the American Arbitration Association, and judgment
upon any such arbitration award rendered by the arbitrators may be entered in
any state or federal court sitting in Pennsylvania. If the parties to any such
dispute, controversy or claim are unable to agree upon an arbitrator or
arbitrators, then three arbitrators shall be appointed by the American
Arbitration Association, as it may determine, in accordance with the commercial
arbitration rules and practices, then obtaining, of such Association. If the
parties to any such dispute, controversy or claim shall agree upon two
arbitrators, but such parties or such arbitrators shall be unable to agree upon
a third arbitrator, then only such third arbitrator shall be appointed as
aforesaid by the American Arbitration Association. Each of the parties and the
arbitrators shall use its best efforts to keep confidential the existence of any
dispute and arbitration proceedings and all information relating thereto or
submitted in connection therewith and, in the event of judicial proceedings for
the enforcement of this paragraph or any award pursuant thereto, shall cooperate
to seal the record of any such arbitration or judicial proceedings.
(c) In the event judicial proceedings or arbitration
proceedings are commenced, the prevailing party shall be entitled to an award
for its reasonable legal fees and costs incurred in relation to such
proceedings.
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17. Miscellaneous.
(a) Indulgences, Etc. Neither the failure nor any
delay on the part of either party to exercise any right, remedy, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power or privilege preclude any
other or further exercise of the same or of any other right, remedy, power or
privilege, nor shall any waiver of any right, remedy, power or privilege with
respect to any occurrence be construed as a waiver of such right, remedy, power
or privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
(b) Controlling Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning limitations of actions),
shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania, notwithstanding any conflict-of-laws doctrines of
such jurisdiction to the contrary, and without the aid of any canon, custom or
rule of law requiring construction against the draftsman.
(c) Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received only when
personally delivered, on the day specified for delivery when deposited with a
recognized national or regional courier service for delivery to the intended
addressee or five (5) days following the day when deposited in the United States
mails, first class postage prepaid, addressed as set forth below:
If to Employee:
Mr. David E. D'Anna
30 Trotters Lane
Mahwah, NJ 07430
with a copy, given in the manner prescribed above, to:
Herbert Henryson II
Wolf, Block, Schorr and Solis-Cohen LLP
250 Park Avenue
New York, NY 10177
If to Company:
Michael Barrist
Chief Executive Officer
NCO Group, Inc.
515 Pennsylvania Avenue
Fort Washington, PA 19034
with a copy, given in the manner prescribed above, to:
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Joshua Gindin
Executive Vice-President and General Counsel
NCO Group, Inc.
515 Pennsylvania Avenue
Fort Washington, PA 19034
In addition, notice by mail shall be by air mail if
posted outside of the continental United States. Any party may alter the address
to which communications or copies are to be sent by giving notice of such change
of address in conformity with the provisions of this Section for the giving of
notice.
(d) Binding Nature of Agreement. This Agreement shall
be binding upon Company and shall inure to the benefit of Company, its present
and future Subsidiaries, Affiliates, successors and assigns including any
transferee of the business operation, as a going concern, in which Employee is
employed and shall be binding upon Employee, Employee's heirs and personal
representatives. None of the rights or obligations of Employee hereunder may be
assigned or delegated, except that in the event of Employee's death or
Disability, any rights of Employee hereunder shall be transferred to Employee's
estate or personal representative, as the case may be. Company may assign its
rights and obligations under this Agreement in whole or in part to any one or
more Affiliates or successors, but no such assignment shall relieve Company of
its obligations to Employee if any such assignee fails to perform such
obligations.
(e) Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when such number of counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.
(f) Provisions Separable. The provisions of this
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.
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(g) Entire Agreement. This Agreement contains the
entire understanding among the parties hereto with respect to the employment of
Employee by Company, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing. Notwithstanding the foregoing, nothing herein shall limit
the application of any generally applicable Company policy, practice, plan or
the terms of any manual or handbook applicable to Company's employees generally,
except to the extent the foregoing directly conflict with this Agreement, in
which case the terms of this Agreement shall prevail.
(h) Section Headings. The Section headings in this
Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
(i) Number of Days. Except as otherwise provided
herein, in computing the number of days for purposes of this Agreement, all days
shall be counted, including Saturdays, Sundays and holidays; provided, however,
that if the final day of any time period falls on a Saturday, Sunday or holiday
on which federal banks are or may elect to be closed, then the final day shall
be deemed to be the next day which is not a Saturday, Sunday or such holiday.
(j) Gender, Etc. Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine
or neuter, as the context indicates is appropriate.
(k) Survival. All provisions of this Agreement which
by their terms survive the termination of Employee's employment with Company,
including without limitation the covenants of Employee set forth in Sections 13
and 14 and the obligations of Company to make any post-termination payments
under this Agreement, shall survive termination of Employee's employment by
Company and shall remain in full force and effect thereafter in accordance with
their terms.
IN WITNESS WHEREOF, the parties have duly executed and
delivered this Agreement as of the date first above written.
NCO GROUP, INC.
By: /s/ Michael J. Barrist
---------------------------------
Name: Michael J. Barrist
Title: CEO
/s/ David E. D'Anna
-----------------------------------------(SEAL)
David E. D'Anna
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