exv10w3



 





Exhibit
10.3




EMPLOYMENT AGREEMENT




     This EMPLOYMENT AGREEMENT is made and entered into this 20th day of July, 2007
between ASSET ACCEPTANCE, LLC, a Delaware limited liability company (the “Company”), a wholly owned
subsidiary of Asset Acceptance Capital Corp., a Delaware corporation (“AACC”), and RION B. NEEDS
(the “Executive”).



     In consideration of the mutual covenants and agreements contained herein, the parties hereto
agree as follows:



     1. EMPLOYMENT. The Company hereby agrees to employ the Executive and the Executive hereby
accepts employment with the Company, on the terms and subject to the conditions hereinafter set
forth in this Agreement. Subject to the provisions set forth below regarding Severance Benefits
(as defined below), Executive serves at the pleasure of the Board of Directors of AACC and may be
terminated at any time, at will, with or without Cause (as defined below).



     2. POSITION AND DUTIES. Subject to the terms and conditions contained herein, the Executive
shall serve as Chief Operating Officer of the Company and AACC and, in such capacity, shall provide
such services and perform such functions, consistent with the nature of such position, as shall be
determined from time to time by, or pursuant to authority of, the Board of Directors of AACC (the
“Board of Directors”) and such other reasonable duties as are from time to time agreed to between
the Chief Executive Officer of the Company and AACC and the Executive. The Executive shall report
directly to the Chief Executive Officer of the Company and AACC, and shall observe all directives,
rules, policies, regulations, customs and practices now or hereafter established by AACC and the
Company for the conduct of their business to the extent the foregoing are not materially
inconsistent with the terms of this Agreement. The Executive understands and agrees that he may be
required to undertake normal business travel from time to time.



     3. COMPENSATION; BENEFITS.



          (a) As compensation for the performance of the Executive’s services hereunder, the Company
shall pay to the Executive an annual salary (the “Regular Base Salary”) of $320,000 (less
deductions required by law) payable in arrears in accordance with the Company’s payroll policy as
the same may be modified by the Company from time to time. So long as this Agreement is in effect,
the Regular Base Salary shall be subject to annual review, but shall not be reduced below $320,000.




          (b) The Executive shall be entitled to participate in AACC’s 2007 Annual Incentive
Compensation Plan for Management (the “Incentive Compensation Plan”), the terms and conditions of
which will be determined by the Board of Directors from time to time for future years, but shall be
substantially in accordance with Schedule 1 hereto. If the Executive is entitled to a bonus
pursuant to the Incentive Compensation Plan with respect to a fiscal year



 









 






commencing with the fiscal year ending December 31, 2007, the Executive shall be paid in
respect to such fiscal year an annual cash bonus (the “Bonus”), payable within two and one-half
months following the end of such fiscal year (or such later time as is allowed in accordance with
Treasury Regulation 1.409A-3(d)). The terms and conditions of the Incentive Compensation Plan for
the fiscal year ending December 31, 2007 are set forth in Schedule1 hereto; provided that any Bonus
payable for the fiscal year ending December 31, 2007, shall be pro rated as set forth in Schedule1.
Upon termination of employment, all rights to receive any Bonus for any period shall also
terminate; provided that, if the Executive’s employment is terminated during a fiscal year under
the circumstances contemplated by Section 6(c) or 6(d) and the Executive would have otherwise been
entitled to a Bonus with respect to the “Financial Objectives” referenced in the Incentive
Compensation Plan or “Personal Objectives” referenced in the Incentive Compensation Plan that were
met by Executive, the Executive shall be entitled to receive the pro rata portion (based upon the
number of days in such fiscal year that the Executive was employed by the Company) of the Bonus, if
any, that would have been paid to the Executive pursuant to this Section 3(b) at the time such
Bonus would have been paid had the Executive’s employment not been terminated under the
circumstances contemplated by Section 6(c) or 6(d).




          (c) During the period of Executive’s employment by the Company (the “Employment Period”), the
Executive shall be entitled to receive such other benefits and conditions of employment, including,
without limitation, participation in such group health, life, and disability plans provided by the
Company as are afforded from time to time hereafter to the other senior executives of the Company
with similar position, tenure, salary and other qualifications as the Executive’s. The Executive
acknowledges and agrees that the Company does not guarantee the adoption or continuation of any
particular employee benefit plan or program or other fringe benefit during his employment, and
participation by the Executive in any such plan or program shall be subject to the rules and
regulations applicable thereto.




          (d) The Company shall, in connection with a meeting of the Compensation Committee of the Board
of Directors in August 2007 after release of AACC’s second quarter financial results, take such
actions as are necessary for AACC to grant, as of the date of the August 2007 meeting of the
Compensation Committee of the Board of Directors, stock options and restricted stock or restricted
stock units pursuant to the terms of AACC’s 2004 Stock Incentive Plan, as amended (the “Stock
Incentive Plan”), subject to the terms and conditions set forth in Schedule 2 attached hereto and
subject to AACC and the Executive entering into appropriate stock option and restricted stock
agreements in accordance with the Stock Incentive Plan.




          (e) The Company shall reimburse the Executive for relocation expenses in accordance with
Schedule 3 attached hereto.




     4. EXCLUSIVITY. During his employment, and excluding any periods of vacation and sick leave
to which the Executive is entitled, the Executive shall devote his full attention and time during
normal business hours to the business and affairs of AACC and the Company, shall perform his
services primarily at AACC’s headquarters, wherever the Board of Directors may from time to time
designate them to be, but in any case, within a 50 mile radius of Detroit, Michigan, and at all
times use his best efforts to carry out such responsibilities faithfully and efficiently and to
advance the business of AACC and the Company. During the Employment Period, the Executive will not
be engaged in any other business activity which, in the reasonable judgment of the Board of
Directors or its designee, conflicts with the duties of the Executive



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hereunder, whether or not such activity is pursued for gain, profit or other pecuniary
advantage. It shall not be considered a violation of the foregoing for the Executive to (i) serve
on civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (iii) manage personal investments, so long as such activities
do not compete with and are not provided to or for any entity that competes with or intends to
compete with AACC or the Company or any of their subsidiaries and affiliates and do not interfere
significantly with the performance of the Executive’s responsibilities as an employee of the
Company in accordance with this Agreement.




     5. REIMBURSEMENT FOR EXPENSES. Upon the presentation of itemized vouchers and receipts to the
reasonable satisfaction of the Company, the Company shall reimburse the Executive for travel,
meals, entertainment and other expenses reasonably incurred by the Executive in the performance of
his duties under this Agreement in accordance with the Company’s expense reimbursement policy as
the same may be modified by the Company from time to time (provided that expense reimbursement will
under no circumstances occur later than sixty (60) days after the date on which the expense is
incurred).



     6. TERMINATION.



          (a) The Company shall be entitled to terminate this Agreement and the employment relationship
established hereby with or without Cause immediately by giving written notice of termination to the
Executive. As used herein, “Cause” means any of the following circumstances:





          (i) continual or deliberate neglect by the Executive in the performance of his
material duties under this Agreement;




          (ii) failure by the Executive to devote substantially all of his working time to the
business of AACC and the Company and the subsidiaries of AACC (the “Subsidiaries”) in
accordance with Section 4 hereof;




          (iii) the Executive’s willful failure to follow the directives of the Board of
Directors in any material respect; provided that such directives are not materially
inconsistent with the terms of this Agreement;




          (iv) the Executive’s engaging willfully in misconduct in connection with the
performance of any of his duties hereunder which is reasonably likely to result, in the
Board of Director’s good faith judgment, in material injury to the reputation of AACC, the
Company or any of the Subsidiaries, including, without limitation, the misappropriation of
funds;




          (v) the Executive’s breach of the provisions of Section 7 of this Agreement or any
other noncompetition, noninterference, nondisclosure, confidentiality or other similar
agreement executed by the Executive with the Company, AACC or any of its Subsidiaries; or




          (vi) the Executive’s engaging in conduct which is reasonably likely to result, in the
Board of Director’s good faith judgment, in material injury to the reputation of the
Company, AACC or any of its Subsidiaries, including, without limitation, commission of a
felony, fraud, embezzlement or other crime involving moral turpitude;



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provided that, with respect to the events set forth in clauses (i) through (iii), the Executive
shall have been given written notice of the act, omission or event constituting Cause and shall not
have cured such act, omission or event within 30 days after the giving of such notice.




     After the effective date of termination for Cause under this Section 6(a), the Company shall
not be obligated to make any further payments to the Executive under this Agreement, except for
amounts due the Executive hereunder as of such effective date or amounts or benefits to which the
Executive may be entitled under the terms of any employee benefit plan of the Company.



          (b) In the event that the Executive resigns, other than upon Retirement or for Substantial
Breach (as those terms are hereinafter defined), this Agreement and the employment relationship
established hereby shall terminate immediately upon the receipt by the Company of notice of the
Executive’s resignation. After the effective date of termination under this Section 6(b), the
Company shall not be obligated to make any further payments under this Agreement, except for
amounts due the Executive hereunder as of such effective date or for amounts or benefits to which
the Executive may be entitled under the terms of any employee benefit plan of the Company.




          (c) In the event that the Executive dies, Retires (as hereinafter defined) or becomes Disabled
(as hereinafter defined) during the term of this Agreement, this Agreement and the employment
relationship established hereby shall terminate immediately upon the date on which the Executive
dies, Retires or becomes Disabled, as the case may be. After the effective date of termination
under this Section 6(c), the Company shall not be obligated to make any further payments under this
Agreement, other than payment to the Executive or the Executive’s heirs, devisees, executors,
administrators, legal representatives or the trustee of a revocable trust of which the Executive is
the grantor, as the case may be, of (i) all amounts due the Executive hereunder as of such
effective date, including any amounts or benefits to which the Executive may be entitled under the
terms of any employee benefit plan of the Company, as in effect on the effective date of such
termination and (ii) the pro rata portion of the Bonus, if any, due to the Executive in accordance
with Section 3(b). For purposes of this Section 6(c), “Retires” or “Retirement” shall mean the
voluntary termination of employment by the Executive after the Executive attains age 65 and
“Disabled” shall mean, as of any date, the inability of the Executive to perform his essential
duties hereunder without reasonable accommodation for a period of six months as determined in the
good faith judgment of the Board of Directors.




          (d) In the event that (i) the Company elects to terminate the employment of the Executive
without Cause, or (ii) the Executive resigns from his employment hereunder following a Substantial
Breach (as defined in this Section 6(d) (such Substantial Breach having not been corrected by the
Company within 30 days of receipt of written notice from the Executive of the occurrence of such
Substantial Breach, which notice shall specifically set forth the nature of the Substantial Breach
which is the reason for such resignation), then, in either such event, the Company shall pay the
Executive the Severance Benefits as defined and provided in Section 9 hereof.




          “Substantial Breach” shall mean any material breach by the Company of its obligations under
this Agreement including without limitation, (i) the assignment of the Executive to a position or
duties materially diminished from those normally assigned to a Chief Operating Officer of a
business enterprise comparable to AACC; (ii) a material reduction in the



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Executive’s Regular Base Salary below $320,000; (iii) a change in the location at which the
Executive is required to perform his duties for the Company, AACC and its Subsidiaries which is
outside a 50 mile radius of Detroit, Michigan; or (iv) the material failure by the Company to allow
the Executive to participate in the Company’s employee benefit plans or incentive compensation
plans generally available from time to time to senior executives of the Company in comparable
positions; provided, that the term “Substantial Breach” shall not include (x) an immaterial breach
by the Company of any provisions of this Agreement or (y) a termination for Cause under Section
6(a).




          The date of termination of employment by the Company under this Section 6(d) shall, as the
case may be, be the later of the date, if any, specified in a written notice of termination to the
Executive or the date on which such notice is given to the Executive. The date of resignation
under this Section 6(d) shall be 31 days after receipt by the Company of written notice of
resignation; provided that the Substantial Breach specified in such notice shall not have been
corrected by the Company during the preceding 30-day period. The effective date of termination of
employment by the Company under this Section 6(d) and the effective date of resignation by the
Executive under this Section 6(d) shall each be referred to as a “Section 6(d) Termination Date”.




          (e) Notwithstanding anything in this Section 6 to the contrary, but subject to the
consequences set forth in this Section 6, (i) the Company may terminate the Executive’s employment
at any time with or without Cause, (ii) the Executive may terminate his employment at any time
whether or not there has been a Substantial Breach and (iii) the Executive’s rights in any employee
benefit plans offered by the Company shall be governed by the rules of such plans as well as by
applicable law.




          (f) Notwithstanding anything in this Section 6 to the contrary, the provisions of Sections 7
and 8 shall survive termination of this Agreement.




     7. CONFIDENTIALITY AND NON COMPETITION. The Executive acknowledges that (i) the agreements
and covenants contained herein are essential to protect AACC and the Company’s business and assets
and (ii) by virtue of his association with AACC and the Company, the Executive has access to and
has obtained and will continue to have access to and obtain such knowledge, know-how, proprietary
information, training and experience, which is known only to the members, officers or managers of
AACC and the Company, or other employees, former employees, consultants, or others in a
confidential relationship with the Company, AACC and its Subsidiaries, and there is a substantial
probability that such knowledge, know-how, proprietary information, training and experience could
be used to the substantial advantage of a competitor of AACC or the Company and to AACC or the
Company’s substantial detriment.



          (a) COVENANT NOT TO COMPETE.





     (i) The Executive agrees that, for the period commencing on the date of this
Agreement and ending on the date which is the later of (A) one year after the
termination of the Executive’s employment and (B) the date the Company ceases making
to the Executive the payments with respect to the Severance Benefits, if any,
required to be made pursuant to Sections 6 and 9 (the “Restricted Period “), the
Executive shall not, in the Territory (hereinafter defined), directly



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or indirectly, either for himself or for, with or through any other person,
own, manage, operate, control, be employed by, participate in, loan money to or be
connected in any manner with, or permit his name to be used by, any business which
is engaged (1) in the business of purchasing and collecting consumer accounts
receivable that have been charged off by the original creditor (“Charged Off
Accounts”),(2) in financing sales of consumer product retailers or (3) any other
business activity in which the Company, AACC or any of its Subsidiaries may engage
during the Employment Period (a “Competitive Activity “); provided that the Company
may, at its option, extend the Restricted Period for up to one additional year by
continuing to pay to the Executive on the regular payment dates the Executive’s
regular installments of Regular Base Salary as in effect on the day immediately
preceding the date of termination.




     (ii) For purposes of this Agreement, the term “participate “ includes any
direct or indirect interest, whether as an officer, director, employee, partner,
sole proprietor, trustee, beneficiary, agent, representative, independent
contractor, consultant, advisor, provider of personal services, creditor, owner
(other than by ownership of less than one (1) percent of the stock of a corporation
that has a class of equity securities registered under the Securities Exchange Act
of 1934). Territory means North America, South America, Europe and Asia.



          (b) NONDISCLOSURE OF CONFIDENTIAL INFORMATION.





     (i) The Executive shall not, whether during or after employment, disclose to
any person or entity or use, any information not in the public domain, in any form,
acquired by the Executive while he was employed or associated with AACC and the
Company or, if acquired following the termination of such association, such
information which, to the Executive’s knowledge, has been acquired, directly or
indirectly, from any person or entity owing a duty of confidentiality to the Company
or AACC (the “Confidential Information “). By way of illustration but not
limitation, Confidential Information may include trade secrets, supplier lists
regarding Charged Off Accounts , collection methods, information regarding bulk
purchases of Charged Off Accounts, employee compensation arrangements, business
practices, plans, policies, secret inventions, processes and compilations of
information, records and specifications, as well as information related to the
management policies and plans for AACC, the Company or their affiliates.




     (ii) Notwithstanding the foregoing, the restrictions in subsection (b)(i) of
this Section 7 are not applicable to the disclosure or use of Confidential
Information in connection with the following: (A) in the course of faithfully
performing the Executive’s duties as an employee of the Company; (B) with the
Company’s express written consent; (C) to the extent that any such Confidential
Information is in the public domain other than as a result of the Executive’s breach
of any of his obligations hereunder; or (D) where required to be disclosed by court
order, subpoena or other governmental process. In the event that the Executive
shall be required to make disclosure pursuant to the provisions of clause (D) of the
preceding sentence, the Executive promptly (but in no event more than forty-eight
(48) hours after learning of such subpoena, court order, or



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other governmental process) shall notify the Company in writing, by personal
delivery or by facsimile, confirmed by mail or by certified mail, return receipt
requested.




     (iii) The Executive agrees and acknowledges that all of such Confidential
Information, in any form, and copies and extracts thereof are and shall remain the
sole and exclusive property of AACC and the Company, and the Executive shall on
request return to the Company the originals and all copies of any such information
provided to or acquired by the Executive in connection with his association with
AACC or the Company, and shall return to the Company all files, correspondence
and/or other communications received, maintained and/or originated by the Executive
during the course of such association.



          (c) NO INTERFERENCE. During the Restricted Period, the Executive shall not, without the prior
written approval of the Board of Directors, directly or indirectly through any other person (i)
induce or attempt to induce any employee of the Company, AACC or any of its Subsidiaries to leave
the employ of the Company, AACC or any of its Subsidiaries or in any way interfere with the
relationship between the Company, AACC or any of its Subsidiaries and any employee thereof, (ii)
hire any person who was an employee of the Company, AACC or any of its Subsidiaries within twelve
months after such person’s employment with the Company, AACC or any of its Subsidiaries was
terminated for any reason, (iii) induce or attempt to induce any supplier of Charged Off Accounts
or other business relation of the Company, AACC or any of its Subsidiaries to cease doing business
with the Company, AACC or its Subsidiaries, or in any way interfere with the relationship between
any such supplier or business relation and the Company, AACC and its Subsidiaries or (iv) acquire
Charged Off Accounts from any person that was a seller of Charged Off Accounts to the Company, AACC
or any of its Subsidiaries during the Restricted Period; provided that the Company may, at its
option, extend the Restricted Period for up to one additional year by continuing to pay to the
Executive on the regular payment dates the Executive’s regular installments of Regular Base Salary
as in effect on the day immediately preceding the date of termination.




          (d) INVENTIONS. The Executive hereby sells, transfers and assigns to the Company or to any
person or entity designated by the Company all of the entire right, title and interest of the
Executive in and to all inventions, ideas, disclosures and improvements, whether patented or
unpatented, and copyrightable material, made or conceived by the Executive, solely or jointly, or
in whole or in part, during his employment (including employment prior to the date hereof) by the
Company which are not generally known to the public or recognized as standard practice and which
(i) relate to methods, apparatus, designs, products, processes or devices sold, leased, used or
under construction or development by the Company or any subsidiary and (ii) arise (wholly or
partly) from the efforts of the Executive during his employment with the Company (an “Invention “).
The Executive shall communicate promptly and disclose to the Company, in such form as the Company
requests, all information, details and data pertaining to any such Inventions; and, whether during
the Restricted Period or thereafter, the Executive shall execute and deliver to the Company such
form of transfers and assignments and such other papers and documents as reasonably may be required
of the Executive to permit the Company or any person or entity designated by the Company to file
and prosecute the patent applications and, as to copyrightable material, to obtain a copyright
thereon. The Company shall pay all costs incident to the execution and delivery of such transfers,
assignments and other documents. Any invention by the Executive within six months following the
termination of his employment



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hereunder shall be deemed to fall within the provisions of this Section 7(d) unless the
Executive bears the burden of proof of showing that the Invention was first conceived and made
following such termination.




     8. DEDUCTIONS FROM COMPENSATION. The Executive agrees that the Company shall be entitled to
deduct and withhold from any compensation payable to the Executive under this Agreement (i) any
taxes in respect of the Executive that the Company is required to deduct and withhold under
federal, state or local law whether arising from compensation hereunder or otherwise and (ii) any
other amounts lawfully due from the Executive as determined in good faith by the Company and/or the
Board of Directors. In the event that the Executive is no longer employed by the Company at a time
when the Company otherwise would be entitled to deduct and withhold any amount pursuant to the
preceding sentence, the Executive shall remit such amount to the Company within five days after the
receipt of notice from the Company specifying such amount or otherwise in accordance with the
Executive’s obligations with respect thereto.



     9. SEVERANCE BENEFITS. If the Executive’s employment with the Company is terminated pursuant
to Section 6(d)hereof, the Executive shall be entitled to receive as his sole and exclusive remedy
the termination benefits provided under this Section 9 (the “Severance Benefits”). As a condition
of receiving Severance Benefits, Executive agrees to sign an effective legal release (in any form
the Board of Directors may require) waiving any and all claims he has or may have against the
Company, AACC and their agents, employees, directors, subsidiaries, attorneys, successors, assigns,
and affiliates, as of the date of his termination.



          (a) The Executive shall be paid periodically, according to the Company’s payroll policy, his
Regular Base Salary at the rate in effect on the Section 6(d) Termination Date for a period of
twelve (12) months, provided that the Company, in its sole discretion, may elect to pay the
Executive’s Regular Base Salary for up to one additional year for the purpose of extending the term
of the Executive’s covenants set forth in Sections 7(a) and 7(c) during that additional one year
period. The Executive shall also be paid the pro rata portion of the Bonus, if any, due to the
Executive in accordance with Section 3(b) for the fiscal year in which he was terminated. The
Company shall make this pro rata Bonus payment within two and one-half months after the end of its
fiscal year to which the Bonus relates (or such later time as is allowed in accordance with
Treasury Regulation 1.409A-3(d)), with payment made promptly after the Company makes bonus payments
to its executive officers. The Executive shall not be entitled to any further notice, severance
pay, pay in lieu of notice or any compensation whatsoever, except any amounts owing under this
Agreement. The Executive agrees that the foregoing notice is deemed conclusively to be reasonable
notice of termination at common law and the Executive is not entitled to any additional notice or
pay in lieu of notice or severance pay. The Executive acknowledges that the Company has drawn his
attention to the provisions contained herein prior to executing this Agreement.




          (b) The Company shall pay the costs necessary to continue the Executive’s participation
pursuant to COBRA (to the extent applicable) for a period of 18 months following the Section 6(d)
Termination Date (including dependent coverage) in any life, disability, group health and dental
benefit plans provided by the Company, in effect immediately prior to the Section 6(d) Termination
Date. Following the Section 6(d) Termination Date, the Company shall not be obligated to (i)
provide business accident insurance covering the Executive or (ii) to



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make contributions in respect of the Executive to any qualified retirement and pension plans
or profit sharing plans for compensation paid after the Section 6(d) Termination Date.




     10. INJUNCTIVE RELIEF. Without intending to limit the remedies available to the Company, the
Executive acknowledges that a breach of any of the covenants contained in Section 7 hereof may
result in material irreparable injury to the Company or its affiliates for which there is no
adequate remedy at law, that it will not be possible to measure damages for such injuries precisely
and that, in the event of such a breach or threat thereof, the Company shall be entitled to obtain
a temporary restraining order and/or a preliminary or permanent injunction restraining the
Executive from engaging in activities prohibited by Section 7 hereof or such other relief as may be
required to specifically enforce any of the covenants in Section 7 hereof. The Executive hereby
agrees and consents that such injunctive relief may be sought in any state or federal court of
record in Michigan, or in the state in which such violation may occur, or in any other court having
jurisdiction, at the election of the Company.



     11. EXTENSION OF RESTRICTED PERIODS. In addition to the remedies the Company may seek and
obtain pursuant to Section 10 of this Agreement, the Restricted Period shall be extended by any and
all periods during which the Executive shall be found by a court to have been in violation of the
covenants contained in Section 7 hereof.



     12. SUCCESSORS; BINDING AGREEMENT. This Agreement is personal to the Executive and, without
the prior written consent of the Company, shall not be assignable by the Executive otherwise than
by will, the laws of descent and distribution or the terms of a revocable trust of which the
Executive is the grantor. This Agreement shall inure to the benefit of and be enforceable by the
Executive’s legal representatives. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.



     13. WAIVER AND MODIFICATION. Any waiver, alteration or modification of any of the terms of
this Agreement shall be valid only if made in writing and signed by the parties hereto; provided
that any such waiver, alteration or modification is consented to on the Company’s behalf by the
Board of Directors. No waiver by either of the parties hereto of their rights hereunder shall be
deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder
unless such waiver specifically states that it is to be construed as a continuing waiver.



     14. SEVERABILITY. The Executive acknowledges and agrees that the covenants set forth in
Section 7 hereof are reasonable and valid in geographical and temporal scope and in all other
respects. If any of such covenants or other provisions of this Agreement are found to be invalid
or unenforceable by a final determination of a court of competent jurisdiction (i) the remaining
terms and provisions hereof shall be unimpaired and (ii) the invalid or unenforceable term or
provision shall be deemed replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term or provision.



     15. SUBMISSION TO JURISDICTION; VENUE.




     (a) WITH THE EXCEPTION OF THE RIGHTS OF THE COMPANY UNDER SECTION 10 OF THIS AGREEMENT,
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY



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TRANSACTIONS CONTEMPLATED HEREBY SHALL BE BROUGHT IN THE COURTS OF THE STATE OF
MICHIGAN OR IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN SITTING
IN DETROIT, MICHIGAN, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES
HEREBY ACCEPTS FOR HIMSELF OR ITSELF AND IN RESPECT OF HIS OR ITS PROPERTY GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SUCH PARTY AT HIS OR ITS ADDRESS AS PROVIDED IN SECTION 18 HEREOF.
NOTHING IN THIS PARAGRAPH (a) SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS IN ANY OTHER JURISDICTION.




     (b) WITH THE EXCEPTION OF THE RIGHTS OF THE COMPANY UNDER SECTION 10 OF THIS AGREEMENT,
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTIONS WHICH HE OR IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN PARAGRAPH (a) OF THIS
SECTION 15 AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN
ANY SUCH COURT THAT ANY ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.




     (c) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH OF THE PARTIES TO THIS
AGREEMENT AGREES THAT, AT THE TIME OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY, EACH OF THE PARTIES WILL EXECUTE SUCH
INSTRUMENTS AND OTHER DOCUMENTS AS MAY BE NECESSARY TO CONSENT TO AND WAIVE ANY OBJECTION TO
VENUE AND JURISDICTION IN THE COURTS IDENTIFIED IN SUBSECTIONS (a) AND (b) ABOVE.



     16. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS



     AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.



     17. BLUE PENCILLING. In the event that, notwithstanding the first sentence of Section 14
hereof, any of the provisions of Section 7 relating to the geographic or temporal scope of the
covenants contained therein or the nature of the business restricted thereby shall be declared by a
court of competent jurisdiction to exceed the maximum restrictiveness such court



10









 







deems enforceable, such provision shall be deemed to be replaced herein by the maximum
restriction deemed enforceable by such court.



     18. NOTICES. All notices required to be given hereunder shall be in writing and shall be
deemed to have been given if (i) delivered personally or by documented courier or delivery service,
(ii) transmitted by facsimile or (iii) mailed by registered or certified mail (return receipt
requested and postage prepaid) to the following listed persons at the addresses and facsimile
numbers specified below, or to such other persons, addresses or facsimile numbers as a party
entitled to notice shall give, in the manner hereinabove described, to the others entitled to
notice:


In the case of the Company:



Asset Acceptance, LLC

28405 Van Dyke Avenue

Warren, Michigan 48093

Attention: Nathaniel F. Bradley IV



Chairman, President and CEO



Facsimile No.: 586-446-7832




     with a copy to:


Asset Acceptance, LLC

28405 Van Dyke Avenue

Warren, Michigan 48093

Attention: Edwin L. Herbert, Esq.



Vice President and General Counsel



Facsimile No.: 586-446-7832




In the case of the Executive:



Rion B. Needs

925 New Norwalk Road

New Canaan, Connecticut 06840



Notice pursuant hereto shall be deemed given (i) if delivered personally, when so delivered, (ii)
if given by facsimile, when transmitted to the facsimile number set forth above, when so
transmitted if transmitted during normal business hours at the location to which it is transmitted
or upon the opening of business on the next Business Day if transmitted other than during normal
business hours at the location to which it is transmitted and (iii) if given by mail, on the third
business day following the day on which it was posted.




     19. TAXES. Except as otherwise specifically provided elsewhere in this Agreement or herein,
the Executive is solely responsible for the satisfaction of any taxes that may arise pursuant to
this Agreement (including taxes arising under Section 409A regarding deferred compensation, and
Section 4999 regarding golden parachute excise taxes, of the Internal



11









 







Revenue Code of 1986 (the “Code”)). The Company shall not have any obligation whatsoever to
pay such taxes or to otherwise indemnify or hold the Executive harmless from any or all of such
taxes. If any amounts that become due under this Agreement constitute “nonqualified deferred
compensation” within the meaning of Section 409A, payment of such amounts shall not commence until
the Executive incurs a “separation from service” within the meaning of Treasury Regulation Section
1.409A-1(h). If, at the time of the Executive’s separation from service, the Executive is a
“specified employee” (within the meaning of Internal Revenue Code Section 409A), any benefit as to
which Section 409A additional taxes could be assessed on account of his separation from
service (including any amounts payable pursuant to the preceding sentence) will not be paid until
after the end of the sixth calendar month beginning after the Executive’s separation from service
(the “409A Suspension Period”) to the extent such delay may reasonably be expected to avoid Section
409A additional taxes. Within 14 calendar days after the end of the 409A Suspension Period, the
Executive shall be paid a lump sum payment in cash equal to any payments delayed because of the
preceding sentence. Thereafter, the Executive shall receive any remaining benefits as if there had
not been an earlier delay. The Company shall have the sole discretion to interpret the requirements
of the Code, including Section 409A, for purposes of this Agreement.



     20. CAPTIONS AND PARAGRAPH HEADINGS. Captions and section headings herein are for convenience
only, are not a part hereof and shall not be used in construing this Agreement.



     21. ENTIRE AGREEMENT. This Agreement, including the Schedules hereto, constitutes the entire
understanding and agreement of the parties hereto regarding the employment of the Executive, and
supersedes all prior agreements and understandings between the parties, including, without
limitation, the “General Employment Terms” shared with the Executive on or about June 1, 2007.



     22. COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the same instrument.



     23. ACKNOWLEDGMENT AND INDEPENDENT LEGAL ADVICE. The Executive acknowledges that (i) he has
read and understands this Agreement and that the Company has advised him that the foregoing alters
and supersedes his common law rights, and (ii) neither his execution of this Agreement nor his
performance of services pursuant to this Agreement will violate any prior or existing employment
agreement, non-competition agreement, or similar agreement to which the Executive is or ever has
been a party. The Executive acknowledges that the Company has advised him to seek legal advice
prior to executing this Agreement.



     24. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the
domestic laws of the State of Michigan, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of Michigan or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of Michigan.



[Signatures on next page]




12









 








          WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first
above written.




	 	 	 	 	 
	 	ASSET ACCEPTANCE, LLC

 	 
	 	By:  	/s/ Nathaniel F. Bradley
 	 
	 	 	Name:  	Nathaniel F. Bradley IV 	 
	 	 	Title:  	Chairman, CEO, President 	 
	 
	 	 	 
	 	By:  	     /s/ Rion B. Needs
 	 
	 	 	RION B. NEEDS 	 
	 	 	 	 
	 




13









 





SCHEDULE 1




2007 Annual Incentive Compensation Plan for Management



Attached is the Asset Acceptance Capital Corp. 2007 Annual Incentive Compensation Plan for
Management, with the terms for participation by Rion Needs for 2007 to include the following and
the attainment of personal objectives to be established by the Chief Executive Officer and Rion
Needs within the first two (2) weeks following the commencement of his employment with the Company:




	 	 	 	 	 
	Target
Bonus Rate
	60.0	%	 	 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Bonus as %	 	 	 	 
	 	 	Objectives	 	 	% of Target	 	 	of Salary	 	 	$
Bonus (1)	 
	% Based on Company Objectives
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Minimum
	 	 	50.0	%	 	As determined	 	 	0.0	%	 	$	0	 
	Target
	 	 	50.0	%	 	 	100.0	%	 	 	30.0	%	 	$	96,000	 
	Maximum
	 	 	50.0	%	 	 	110.0	%	 	 	60.0	%	 	$	192,000	 
	 
	% Based on Personal Objectives
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Target
	 	 	50.0	%	 	 	 	 	 	 	30.0	%	 	$	96,000	 
	 
	Total Bonus Opportunity
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Minimum
	 	 	 	 	 	As determined	 	 	30.0	%	 	$	96,000	 
	Target
	 	 	 	 	 	 	100.0	%	 	 	60.0	%	 	$	192,000	 
	Maximum
	 	 	 	 	 	 	110.0	%	 	 	90.0	%	 	$	288,000	 






	 	 	 	 	 
	Personal Objectives	 	% of Personal Bonus	 
	(1)
	 	 	—	%
	(2)
	 	 	—	%
	(3)
	 	 	—	%
	(4)
	 	 	—	%
	(5)
	 	 	—	%








 




			
	(1)	 	Prorated for a partial year of employment in accordance with the terms of the 2007 Annual
Incentive Compensation Plan for Management, resulting in a pro rata adjustment, as illustrated by
the following: suppose an executive begins employment and eligibility under the 2007 Annual
Incentive Compensation Plan for Management on July 1, 2007, at an annual salary of $320,000, with a
60% target bonus opportunity. The executive would collect $160,000 in base salary during 2007, and
have a $96,000 target bonus opportunity (which equals 60% of $160,000).





 









 





Asset Acceptance Capital Corp.

2007 Annual Incentive Compensation Plan for Management




     General



     Each year, in connection with the approval of the annual budget and forecast, the Compensation
Committee (the “Committee”) of the Board of Directors (the “Board”) of Asset Acceptance Capital
Corp. (the “Company”) establishes an annual incentive compensation plan for key executives and
certain other management level employees (the “Plan Participant(s)”) of the Company.



     The Annual Incentive Compensation Plan will establish for each Plan Participant a bonus target
(the “Bonus Target”) equal to a specified percentage of Base Salary (as defined below). The Bonus
Target will be set by the Committee at a level consistent with each executive’s responsibilities.
As used in this Plan, “Base Salary” shall be the Plan Participant’s base compensation (excluding
incentive and any other compensation) paid during 2007. For individuals who become Plan
Participants during 2007, Base Salary shall be the base compensation (excluding incentive and any
other compensation) paid in 2007 beginning on the date the individual first becomes eligible to
participate in the Annual Incentive Compensation Plan.



     The Annual Incentive Compensation Plan will be comprised of two parts: (a) Financial
Objectives; and (b) Personal Objectives. Bonus amounts will be computed separately for achievement
of Financial Objectives and Personal Objectives, as set forth below under the captions “Financial
Objectives” and “Personal Objectives”, respectively. Final payments under the Annual Incentive
Compensation Plan will be made after receipt and approval by the Board of the annual audited
financial statements of the Company for the year ending December 31, 2007. A Plan Participant will
not be paid a bonus unless the Plan Participant is employed by the Company on the date the Board
approves the annual audited financial statements for 2007.



     Payments shall be made under the Plan in a manner necessary to preserve the exemption from
Section 409A of the Internal Revenue Code.



     The Compensation Committee recognizes the need of the Plan Participants to conduct themselves
in compliance with the Code of Business Conduct. In addition to the non-financial consequences
contained in the Code of Business Conduct, any violation of the Code of Business Conduct shall
result in complete forfeiture of any bonus which would otherwise be paid under this Plan.



     Financial Objectives



     The financial performance of the Company will be measured against Earnings Before Interest,
Taxes, Depreciation and Amortization (“EBITDA”), after accrual of all incentive compensation plan
payments. EBITDA will be determined in a manner consistent with the definition of EBITDA contained
in Exhibit 1.



 









 





     For the fiscal year ended December 31, 2007, the Financial Objective goal will be set at the
2007 budgeted EBITDA of $XXXXXX (the “2007 Financial Objective Goal”). The minimum goal will be
set at a percentage of the 2007 Financial Objective Goal equal to the greater of (i) 2006 EBITDA
achieved by the Company (expressed as a percentage of the 2007 EBITDA Financial Objective Goal), or
(ii) 90% of the 2007 Financial Objective Goal (the “Minimum Goal”). The maximum goal will be set
at 110% of the 2007 Financial Objective Goal (the “Maximum Goal”).



     The bonus payout under the Financial Objective portion of the Plan shall be 50% of the Target
Bonus at achievement of the 2007 Financial Objective Goal. If the 2007 actual EBITDA achieved is
at least equal to the Minimum Goal, the bonus payout under the Financial Objective portion of the
Plan shall be expressed as 50% of the Target Bonus multiplied by the following percentage (provided
that the bonus payout shall not exceed the Maximum Goal):




     The sum of:




     (1) 100%, plus




     (2) the product of (a) 10, multiplied by (b) the difference of actual EBITDA as
a percentage of the 2007 Financial Objective Goal, less 100%




     The following examples illustrate the application of the Financial Objectives:



     (1) If a Plan Participant had a Target Bonus of $100, the 2007 Financial Objective Goal was
$5,000 and the actual 2007 achieved EBITDA was equal to the 2007 Financial Objective Goal, then the
bonus payout under the Financial Objective portion of the Plan would be $50.



     (2) However, if the actual 2007 achieved EBITDA exceeded the Minimum Goal and was equal to 98%
of the 2007 Financial Objective Goal, then the bonus payout under the Financial Objective portion
of the Plan would be $50 multiplied by 80%, or $40, calculated as follows:



     The sum of:




     (1) 100%, plus




     (2) the product of (a) 10, multiplied by (b) the difference of 98%, less 100%



     (3) Moreover, if the actual 2007 achieved EBITDA exceeded the Minimum Goal and was equal to
105% of the 2007 Financial Objective Goal, then the bonus payout under the Financial Objective
portion of the Plan would be $50 multiplied by 150%, or $75, calculated as follows:



     The sum of:




     (1) 100%, plus



 









 






     (2) the product of (a) 10, multiplied by (b) the difference of 105%, less 100%



     Personal Performance Objectives



     Personal Objectives should be measurable goals jointly developed by the Plan
Participant and his/her immediate supervisor (subject to approval by the Chairman, President and
Chief Executive Officer or his designee(s), and for certain participants, the Compensation
Committee of the Board of Directors). The points earned under Personal Performance will be
calculated based on the percentage of completion of each assigned objective, recognizing the
determination of such percentage completion is in part subjective. If there is any disagreement as
to the scoring of each assigned objective, the determination of the Chairman, President and Chief
Executive Officer or his designee(s) shall be final and binding.



     Each Plan Participant may earn up to a maximum of 50% of his or her Target Bonus based on the
achievement of Personal Objectives. No Plan Participant will be eligible to earn any part of his
or her bonus based on the achievement of Personal Objectives unless 2007 EBITDA achieved by the
Company equals or exceeds the 2006 EBITDA achieved by the Company.




 









 








AACC 2007 BONUS PLAN




	 	 	 
	Name:

	 	Insert Name
	 
	Title:

	 	Insert Title
	 
	Estimated Salary:

	 	2007 Base Comp.
	 
	Target Bonus Rate

	 	Insert Target Bonus %






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Bonus as %	 	 	 	 
	 	 	Objectives	 	 	% of Target	 	 	of Salary	 	 	$Bonus	 
	% Based on Company Objectives
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Minimum
	 	 	50.0	%	 	As determined	 	 	 	0.0	%	 	$	—	 
	Target
	 	 	50.0	%	 	 	100.0	%	 	50% of Target Bonus Rate	 	 	Computed	 
	Maximum
	 	 	50.0	%	 	 	110.0	%	 	100% of Target Bonus Rate	 	 	Computed	 
	% Based on Personal Objectives
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Target
	 	 	50.0	%	 	 	 	 	 	50% of Target Bonus Rate	 	 	Computed	 
	Total Bonus Opportunity
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Minimum
	 	 	 	 	 	As determined	 	 	Computed	 	 	Computed	 
	Target
	 	 	 	 	 	 	100.0	%	 	Computed	 	 	Computed	 
	Maximum
	 	 	 	 	 	 	110.0	%	 	Computed	 	 	Computed	 






	 	 	 	 	 
	Personal Objectives	 	% of Personal Bonus
	(1) Insert Goal 1
	 	Goal 1 Weight
	(2) Insert Goal 2
	 	Goal 2 Weight
	(3) Insert Goal 3
	 	Goal 3 Weight
	(4) Insert Goal 4
	 	Goal 4 Weight
	(5) Insert Goal 5
	 	Goal 5 Weight
	Total
	 	 	100.0%





 









 






Exhibit 1




     EBITDA: The earnings of the Company before interest, income taxes, depreciation and
amortization (including amortization of purchased receivables). The determination of EBITDA, for
purposes of this Plan, shall be made by the Board in accordance with generally accepted accounting
principles in effect in the United States, applied on a consistent basis (“GAAP”); provided,
however, that EBITDA shall be adjusted for this purpose to (A) exclude net gains and losses on the
disposal of assets and other non-operating income or expense items and (B) exclude EBITDA generated
from acquisitions of new businesses or companies during the year (an acquisition of a new office
would not be deemed to be a material acquisition). EBITDA will be determined after accrual for all
bonuses, including bonuses to be paid under this and all other Company annual incentive
compensation plans.



2









 





SCHEDULE 2




Equity Grants — Stock Options; Restricted Stock



The equity awards that the Executive shall receive pursuant to Section 3(d) of the Employment
Agreement to which this Schedule 2 relates shall be subject to the terms and conditions of the
Stock Incentive Plan, shall be set forth in award agreements comparable to those that AACC enters
into with other similarly-situated executives, and shall reflect the following terms and
conditions:



Restricted Stock or Restricted Stock Units (at AACC discretion):





	 	1.	 	Number of shares of AACC common stock subject to award: 56,500 shares.
	 
	 	2.	 	Vesting Schedule: 25% on each of the four annual anniversary dates of the award date
(in August 2007), but only if the Executive is employed by the Company on the particular
vesting date.





Stock Options:





	 	1.	 	Number of shares of AACC common stock subject to award:






	 	a.	 	2007 (August) grant: 125,000 shares.






	 	b.	 	Each of the next 4 years (August of 2008, 2009, 2010, and 2011): 62,500
shares.






	 	2.	 	Exercise Price: fair market value on date of award, determined pursuant to the Stock
Incentive Plan and general practices applicable to executive officers.
	 
	 	3.	 	Vesting Schedule for each individual grant:






	 	a.	 	0% until the 4th annual anniversary of the grant date (the “Vesting
Date”).
	 
	 	b.	 	If and only if the Executive is employed by the Company on the Vesting
Date, the percentage determined according to the following table based on AACC’s
cumulative earnings per share (“EPS”) over AACC’s most recent four-year period
ending at the end of the calendar quarter immediately preceding the Vesting Date:





	 	 	 	 	 
	4-year Cumulative EPS	 	 
	(measured from a base of	 	 	 	 
	$XXXX per share for the	 	 	 	 
	2007 grant) (1)	 	Vested
Percentage (1)
	Less than
XX% per annum
	 	 	0	%
	At XX% per annum
	 	 	60	%
	At XX% per annum
	 	 	80	%
	At XX% per annum
	 	 	100	%






3









 







(1) The Executive’s vested percentage from the foregoing table will be pro
rated for EPS results between XX% and XX% per annum, as well as between
XX% and XX% per annum. For the grants occurring from 2008 through 2011,
the Compensation Committee of the Board of Directors shall specify the
base EPS in the award agreement making each particular grant. Cumulative
EPS will be rounded to the nearest one hundredth of one percent. The
Executive’s vested percentage will be rounded to the nearest one hundredth
of one percent. Full shares only will be awarded.




The Board of Directors or Compensation Committee will determine four-year EPS in
accordance with Generally Accepted Accounting Principles (subject (1) to their
discretion to take into account or to disregard extraordinary financial events on a
uniform basis for all executives, and net gains and losses on the disposal of assets
and other non-operating income or expense items, and (2) to excluding non-cash
equity compensation expense).



Superseding of the Foregoing through Award Agreements:



The terms and conditions of any executed award agreement for stock options or restricted stock or
restricted stock units will be deemed to supersede and to automatically satisfy all terms of this
Schedule 2 for the granting of equity awards pursuant to Section 3(d) of the Employment Agreement.




4









 








SCHEDULE 3




Relocation Expenses




Pre- Move



Temporary living at Hawthorne Suites for up to 6 months for associate until the move to Michigan is
complete.





	 	•	 	Rental car for transportation to and from airport, work, locate housing, etc.
	 
	 	•	 	Airfare to commute on weekends until relocation is complete.
	 
	 	•	 	One round trip for airfare for spouse and 4-5 children to travel to Michigan to seek
housing and three nights of hotel accommodations.
	 
	 	•	 	Two additional round trip tickets for spouse to travel to Michigan to close housing.





Existing Home Sale



Coverage of:





	 	•	 	Up to 4% realtor’s commission





New Location Home Purchase



Coverage of:





	 	•	 	Home inspection
	 
	 	•	 	Attorney fees to review Michigan home purchase
	 
	 	•	 	Radon testing
	 
	 	•	 	Sewer line scope





Relocation



Includes:





	 	•	 	$ 5,000 lump sum for miscellaneous settling-in expenses.
	 
	 	•	 	One way ticket for spouse and 4-5 children to travel to Michigan to new home.
	 
	 	•	 	Packing, insurance, transportation for all household goods and transport of up to three
motor vehicles if necessary.





Gross-Up



All taxable expense reimbursements will be grossed up to ensure no relocation related tax liability
for the associate.





5











 





AMENDMENT NO. 1

TO

EMPLOYMENT AGREEMENT




     This
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (“Amendment
No. 1”), dated October 18,
2007, is made between ASSET ACCEPTANCE, LLC, a Delaware limited liability company (the
“Company”) and RION B. NEEDS (the “Executive”).



Recitals




     1. Prior to the date hereof, the parties hereto entered into that certain Employment
Agreement, dated July 20, 2007 (the “Employment Agreement”). Capitalized terms not
otherwise defined herein shall have their respective meanings set forth in the Employment
Agreement.



     2. The parties hereto desire to amend the Employment Agreement in the manner set forth below.



Agreement




     NOW THEREFORE, in consideration of these premises and subject to the terms and conditions
contained herein and for other consideration provided herein, the parties agree as follows:



     A. Annual Cash Compensation. Schedule 1 to the Employment Agreement is hereby amended
and restated in its entirety to read as provided in Schedule 1 to this Amendment No. 1.



     B. Stock Incentive Plan Awards. Section 3(d) of the Employment Agreement is hereby
amended and restated in its entirety to read as follows:




     (d) The Company, in connection with (i) a meeting of the Compensation Committee
(the “Committee”) of the Board of Directors in August 2007 after release of AACC’s
second quarter financial results and (ii) a meeting of the Committee in the fourth
quarter of 2007 after the release of AACC’s third quarter financial results, either
has taken or shall take such actions as are necessary for AACC to grant, as of the
date of the meeting of the Committee, stock options and restricted stock units
pursuant to the terms of AACC’s 2004 Stock Incentive Plan, as amended (the “Stock
Incentive Plan”), subject to the terms and conditions set forth in Schedule 2
attached hereto and subject to AACC and the Executive entering into appropriate
stock option and restricted stock agreements in accordance with the Stock Incentive
Plan.


Schedule 2 to the Employment Agreement is hereby amended and restated in its entirety
to read as provided in Schedule 2 to this Amendment No. 1.




 









 








     C. Miscellaneous.



          (1) Effective Date. This Amendment No. 1 shall be effective as of October 1, 2007.




          (2) Continuation of Employment Agreement. Except as expressly modified or amended
hereby, all of the terms and conditions of the Employment Agreement shall continue and remain in
full force and effect.




          (3) Counterparts. This Amendment No. 1 may be executed in any number of counterparts,
each of which shall be treated as an original but all of which, collectively, shall constitute a
single instrument.




          (4) Governing Law. This Amendment No. 1 shall be governed by and construed in
accordance with the domestic laws of the State of Michigan, without giving effect to any choice or
conflict of law provision or rule (whether of the State of Michigan or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State of Michigan.




          (5) Cooperation. In case at any time after the date hereof any further action is
necessary to carry out the purposes of this Amendment No. 1, each of the parties hereto will take
such further action (including the execution and delivery of such further instruments and
documents) as the other party reasonably may request, all at the sole cost and expense of the
requesting party.




[Signatures Appear on the Following Page]




 









 








     In WITNESS WHEREOF, the parties hereto have duly executed this Amendment No. 1 as of the day
and year first above written.



	 	 	 	 	 
	 	ASSET ACCEPTANCE, LLC

 	 
	 	By:  	/s/ Nathaniel F. Bradley
 	 
	 	 	Nathaniel F. Bradley IV 	 
	 	 	Chairman, President and
Chief Executive Officer 	 
	 
	 	 	 
	 	     /s/ Rion B. Needs
 	 
	 	RION B. NEEDS 	 
	 	 	 
	 




 









 





SCHEDULE 1




2007 Annual Incentive Compensation Plan for Management



Attached is the Asset Acceptance Capital Corp. 2007 Annual Incentive Compensation Plan for
Management, with the terms for participation by Rion Needs for 2007 to include the following:




	 	 	 	 	 
	Target Bonus Rate
	80.0	%	 	 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Bonus as %	 	 
	 	 	Objectives	 	% of Target	 	of Salary	 	$ Bonus (1)
	% Based on Company Objectives
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Minimum
	 	 	50.0	%	 	As determined	 	 	0.0	%	 	$	0	 
	Target
	 	 	50.0	%	 	 	100.0	%	 	 	40.0	%	 	$	140,000	 
	Maximum
	 	 	50.0	%	 	 	110.0	%	 	 	80.0	%	 	$	280,000	 
	 
	% Based on Personal Objectives
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Target
	 	 	50.0	%	 	 	 	 	 	 	40.0	%	 	$	140,000	 
	 
	Total Bonus Opportunity
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Minimum
	 	 	 	 	 	As determined	 	 	40.0	%	 	$	140,000	 
	Target
	 	 	 	 	 	 	100.0	%	 	 	80.0	%	 	$	280,000	 
	Maximum
	 	 	 	 	 	 	110.0	%	 	 	120.0	%	 	$	420,000	 






	 	 	 	 		 	 	 	 
	Personal Objectives		% of Personal Bonus	 
	 	(1	)	 		 	 	—	%
	 	 	 	 		 	 	 	 
	 	 	 	 		 	 	 	 
	 	(2	)	 		 	 	—	%
	 	 	 	 		 	 	 	 
	 	 	 	 		 	 	 	 
	 	 	 	 		 	 	 	 
	 	 	 	 		 	 	 	 
	 	 	 	 		 	 	 	 
	 	 	 	 		 	 	 	 
	 	(3	)	 		 	 	—	%
	 	(4	)	 		 	 	—	%
	 	(5	)	 		 	 	—	%
	 	 	 	 		 	 	 	 
	 	 	 	 		 	 	 	 
	 	 	 	 		 	 	100	%








 




			
	(1)	 	Prorated for a partial year of employment in accordance with the terms of the 2007 Annual Incentive Compensation Plan for Management, resulting
in a pro rata adjustment, as illustrated by the following: suppose an executive begins employment and eligibility under the 2007 Annual Incentive Compensation
Plan for Management on July 1, 2007, at an annual salary of $350,000, with an 80% target bonus opportunity. The executive would collect $175,000 in base salary
during 2007, and have a $140,000 target bonus opportunity (which equals 80% of $175,000). Executive’s annual base salary of $350,000, effective October 1, 2007,
will be used for purposes of computation of all Bonus amounts, regardless of the definition of “Base Salary” set forth in the Asset Acceptance Capital Corp. 2007
Annual Incentive Compensation Plan for Management.





 









 





Asset Acceptance Capital Corp.

2007 Annual Incentive Compensation Plan for Management




     General



     Each year, in connection with the approval of the annual budget and forecast, the Compensation
Committee (the “Committee”) of the Board of Directors (the “Board”) of Asset Acceptance Capital
Corp. (the “Company”) establishes an annual incentive compensation plan for key executives and
certain other management level employees (the “Plan Participant(s)”) of the Company.



     The Annual Incentive Compensation Plan will establish for each Plan Participant a bonus target
(the “Bonus Target”) equal to a specified percentage of Base Salary (as defined below). The Bonus
Target will be set by the Committee at a level consistent with each executive’s responsibilities.
As used in this Plan, “Base Salary” shall be the Plan Participant’s base compensation (excluding
incentive and any other compensation) paid during 2007. For individuals who become Plan
Participants during 2007, Base Salary shall be the base compensation (excluding incentive and any
other compensation) paid in 2007 beginning on the date the individual first becomes eligible to
participate in the Annual Incentive Compensation Plan.



     The Annual Incentive Compensation Plan will be comprised of two parts: (a) Financial
Objectives; and (b) Personal Objectives. Bonus amounts will be computed separately for achievement
of Financial Objectives and Personal Objectives, as set forth below under the captions “Financial
Objectives” and “Personal Objectives”, respectively. Final payments under the Annual Incentive
Compensation Plan will be made after receipt and approval by the Board of the annual audited
financial statements of the Company for the year ending December 31, 2007. A Plan Participant will
not be paid a bonus unless the Plan Participant is employed by the Company on the date the Board
approves the annual audited financial statements for 2007.



     Payments shall be made under the Plan in a manner necessary to preserve the exemption from
Section 409A of the Internal Revenue Code.



     The Compensation Committee recognizes the need of the Plan Participants to conduct themselves
in compliance with the Code of Business Conduct. In addition to the non-financial consequences
contained in the Code of Business Conduct, any violation of the Code of Business Conduct shall
result in complete forfeiture of any bonus which would otherwise be paid under this Plan.



     Financial Objectives



     The financial performance of the Company will be measured against Earnings Before Interest,
Taxes, Depreciation and Amortization (“EBITDA”), after accrual of all incentive compensation plan
payments. EBITDA will be determined in a manner consistent with the definition of EBITDA contained
in Exhibit 1.



 









 





     For the fiscal year ended December 31, 2007, the Financial Objective goal will be set at the
2007 budgeted EBITDA of $XXXXXX (the “2007 Financial Objective Goal”). The minimum goal will be
set at a percentage of the 2007 Financial Objective Goal equal to the greater of (i) 2006 EBITDA
achieved by the Company (expressed as a percentage of the 2007 EBITDA Financial Objective Goal), or
(ii) 90% of the 2007 Financial Objective Goal (the “Minimum Goal”). The maximum goal will be set
at 110% of the 2007 Financial Objective Goal (the “Maximum Goal”).



     The bonus payout under the Financial Objective portion of the Plan shall be 50% of the Target
Bonus at achievement of the 2007 Financial Objective Goal. If the 2007 actual EBITDA achieved is
at least equal to the Minimum Goal, the bonus payout under the Financial Objective portion of the
Plan shall be expressed as 50% of the Target Bonus multiplied by the following percentage (provided
that the bonus payout shall not exceed the Maximum Goal):




     The sum of:




     (1) 100%, plus




     (2) the product of (a) 10, multiplied by (b) the difference of actual EBITDA as
a percentage of the 2007 Financial Objective Goal, less 100%



     The following examples illustrate the application of the Financial Objectives:



     (1) If a Plan Participant had a Target Bonus of $100, the 2007 Financial Objective Goal was
$5,000 and the actual 2007 achieved EBITDA was equal to the 2007 Financial Objective Goal, then the
bonus payout under the Financial Objective portion of the Plan would be $50.



     (2) However, if the actual 2007 achieved EBITDA exceeded the Minimum Goal and was equal to 98%
of the 2007 Financial Objective Goal, then the bonus payout under the Financial Objective portion
of the Plan would be $50 multiplied by 80%, or $40, calculated as follows:



     The sum of:




     (1) 100%, plus




     (2) the product of (a) 10, multiplied by (b) the difference of 98%, less 100%



     (3) Moreover, if the actual 2007 achieved EBITDA exceeded the Minimum Goal and was equal to
105% of the 2007 Financial Objective Goal, then the bonus payout under the Financial Objective
portion of the Plan would be $50 multiplied by 150%, or $75, calculated as follows:



     The sum of:




     (1) 100%, plus



 









 





          (2) the product of (a) 10, multiplied by (b) the difference of 105%, less 100%




     Personal Performance Objectives



     Personal Objectives should be measurable goals jointly developed by the Plan
Participant and his/her immediate supervisor (subject to approval by the Chairman, President and
Chief Executive Officer or his designee(s), and for certain participants, the Compensation
Committee of the Board of Directors). The points earned under Personal Performance will be
calculated based on the percentage of completion of each assigned objective, recognizing the
determination of such percentage completion is in part subjective. If there is any disagreement as
to the scoring of each assigned objective, the determination of the Chairman, President and Chief
Executive Officer or his designee(s) shall be final and binding.



     Each Plan Participant may earn up to a maximum of 50% of his or her Target Bonus based on the
achievement of Personal Objectives. No Plan Participant will be eligible to earn any part of his
or her bonus based on the achievement of Personal Objectives unless 2007 EBITDA achieved by the
Company equals or exceeds the 2006 EBITDA achieved by the Company.



 









 





AACC 2007 BONUS PLAN




	 	 	 
	 
	
Name:

	 	
Insert Name
	 
	 	 
	Title:

	 	Insert Title
	 
	 	 
	Estimated Salary:

	 	2007 Base Comp.
	 
	 	 
	Target Bonus Rate

	 	Insert Target Bonus %






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Bonus as %	 	 	 	 
	 	 	Objectives	 	 	% of Target	 	 	of Salary	 	 	$ Bonus	 
	% Based on Company Objectives
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Minimum
	 	 	50.0	%	 	As determined	 	 	 	0.0	%	 	$	—	 
	Target
	 	 	50.0	%	 	 	100.0	%	 	50% of Target Bonus Rate	 	 	Computed	 
	Maximum
	 	 	50.0	%	 	 	110.0	%	 	100% of Target Bonus Rate	 	 	Computed	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	% Based on Personal Objectives
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Target
	 	 	50.0	%	 	 	 	 	 	50% of Target Bonus Rate	 	 	Computed	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Bonus Opportunity
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Minimum
	 	 	 	 	 	As determined	 	 	Computed	 	 	Computed	 
	Target
	 	 	 	 	 	 	100.0	%	 	Computed	 	 	Computed	 
	Maximum
	 	 	 	 	 	 	110.0	%	 	Computed	 	 	Computed	 






	 	 	 	 	 
	Personal Objectives	 	% of Personal Bonus	 
	(1) Insert Goal 1
	 	Goal 1 Weight
	(2) Insert Goal 2
	 	Goal 2 Weight
	(3) Insert Goal 3
	 	Goal 3 Weight
	(4) Insert Goal 4
	 	Goal 4 Weight
	(5) Insert Goal 5
	 	Goal 5 Weight
	 Total
	 	 	100.0	%






 









 






      



Exhibit 1




     EBITDA: The earnings of the Company before interest, income taxes, depreciation and
amortization (including amortization of purchased receivables). The determination of EBITDA, for
purposes of this Plan, shall be made by the Board in accordance with generally accepted accounting
principles in effect in the United States, applied on a consistent basis (“GAAP”); provided,
however, that EBITDA shall be adjusted for this purpose to (A) exclude net gains and losses on the
disposal of assets and other non-operating income or expense items and (B) exclude EBITDA generated
from acquisitions of new businesses or companies during the year (an acquisition of a new office
would not be deemed to be a material acquisition). EBITDA will be determined after accrual for all
bonuses, including bonuses to be paid under this and all other Company annual incentive
compensation plans.



 









 





SCHEDULE 2




Equity Grants – Stock Options; Restricted Stock Units



The equity awards that the Executive shall receive pursuant to Section 3(d) of the Employment
Agreement to which this Schedule 2 relates shall be subject to the terms and conditions of the
Stock Incentive Plan, shall be set forth in award agreements comparable to those that AACC enters
into with other similarly-situated executives, and shall reflect the following terms and
conditions:




2007 Time-Vested Restricted Stock Units:





	 	1.	 	Number of units of AACC common stock subject to award: 56,500 awarded on August 7,
2007; 56,135 to be awarded during the fourth quarter of 2007.
	 
	 	2.	 	Vesting Schedule: 25% on each of the next four annual anniversaries of August 7, 2007,
but only if the Executive is employed by the Company on the particular vesting date.





2007 Stock Options:





	 	1.	 	Number of shares of AACC common stock subject to award:






	 	a.	 	August 7, 2007 grant: 62,500 shares.






	 	2.	 	Exercise Price: $9.28 per share.
	 
	 	3.	 	Vesting Schedule: 25% each August 7, for the next 4 years.





2007 Performance-Based Restricted Stock Units:





	 	1.	 	Number of units of AACC common stock subject to award: 31,250 awarded August 7, 2007.
	 
	 	2.	 	Vesting Schedule:






	 	a.	 	0% until the earlier of (i) the filing date of the Company’s Form 10-Q
for the quarterly period ending June 30, 2011 or (ii) August 15, 2011 (the “Vesting
Date”).
	 
	 	b.	 	If and only if the Executive is employed by the Company on the Vesting
Date, the percentage determined according to the following table based on AACC’s
cumulative earnings per share (“EPS”) over AACC’s most recent four-year period
ending at the end of the calendar quarter immediately preceding the Vesting Date:




 









 











	 	 	 	 	 
	4-year Cumulative EPS	 	 
	(measured from a base of	 	 
	$XXXX per share for the	 	 
	2007 grant) (1)	 	Vested Percentage (1)
	Less than XX% per annum
	 	 	0	%
	At XX% per annum
	 	 	60	%
	At XX% per annum
	 	 	80	%
	At XX% per annum
	 	 	100	%








 




			
	(1)	 	The Executive’s vested percentage from the foregoing table
will be pro rated for EPS results between XX% and XX% per annum, as well as
between XX% and XX% per annum. Cumulative EPS will be rounded to the
nearest one-tenth of one cent. The Executive’s vested percentage will be
rounded to the nearest one hundredth of one percent. Full shares only will
be awarded.






The Board of Directors or Compensation Committee will determine four-year EPS in
accordance with Generally Accepted Accounting Principles (subject (1) to their
discretion to take into account or to disregard extraordinary financial events on a
uniform basis for all executives, and net gains and losses on the disposal of assets
and other non-operating income or expense items, and (2) to excluding non-cash
equity compensation expense).



Equity Awards for 2008, 2009, 2010 and 2011:





	 	1.	 	In each of the next 4 years (August of 2008, 2009, 2010 and 2011), a mix of (1) stock
options vesting in 25% annual increments over a four-year period, (2) performance-based
restricted stock units having the vesting schedule set forth below or (3) other types of
equity awards, together having a total value equal to 62,500 “option equivalents” to
purchase shares of Company stock in each of the years 2008, 2009, 2010, 2011, the
Compensation Committee to determine the allocation among stock options, performance-based
restricted stock units or other types of equity awards having a total value equal to 62,500
“option equivalents” to purchase shares of Company stock, in amounts consistent with awards
made by the Compensation Committee to other executive officers of the Company.






	 	2.	 	Vesting Schedule for each individual grant of performance-based restricted stock units:






	 	a.	 	0% until the earlier of (i) the filing date of the Company’s Form 10-Q
for the quarterly period ending June 30 of the fourth year following the year of
the grant date or (ii) August 15 of the fourth year following the year of the grant
date (the “Vesting Date”).
	 
	 	b.	 	If and only if the Executive is employed by the Company on the Vesting
Date, the percentage determined according to the following table based on AACC’s
cumulative earnings per share (“EPS”) over AACC’s most recent four-year period
ending at the end of the calendar quarter immediately preceding the Vesting Date:




 









 











	 	 	 	 	 
	4-year Cumulative EPS 	 	 
	(to be determined by the	 	 	 	 
	Compensation committee	 	 	 	 
	for all executive officers) (1)	 	Vested Percentage (1)
	Less than XX% per annum
	 	 	0	%
	At XX% per annum
	 	 	60	%
	At XX% per annum
	 	 	80	%
	At XX% per annum
	 	 	100	%








 




			
	(1)	 	The Executive’s vested percentage from the foregoing table
will be pro rated for EPS results between XX% and XX% per annum, as well as
between XX% and XX% per annum. Cumulative EPS will be rounded to the
nearest one-tenth of one cent. The Executive’s vested percentage will be
rounded to the nearest one hundredth of one percent. Full shares only will
be awarded.




The Board of Directors or Compensation Committee will determine four-year EPS in accordance with
Generally Accepted Accounting Principles (subject (1) to their discretion to take into account or
to disregard extraordinary financial events on a uniform basis for all executives, and net gains
and losses on the disposal of assets and other non-operating income or expense items, and (2) to
excluding non-cash equity compensation expense).



Superseding of the Foregoing through Award Agreements:



The terms and conditions of any executed award agreement for stock options or restricted stock or
restricted stock units will be deemed to supersede and to automatically satisfy all terms of this
Schedule 2 for the granting of equity awards pursuant to Section 3(d) of the Employment Agreement.