Exhibit 10.12


 


EXECUTION COPY


 


EXECUTIVE EMPLOYMENT AGREEMENT


 


THIS EXECUTIVE EMPLOYMENT
AGREEMENT (this “Agreement”) is made and entered
into as of August 5, 2005 (the “Effective Date”),
between COLLECT AMERICA, LTD., a Delaware corporation (the “Company”), and P. SCOTT LOWERY (“Executive”).


 


1.0          RECITALS.


 


1.1           Executive
and the Company are entering into this Agreement setting forth the terms and
conditions of Executive’s continued employment with the Company.  The Company hereby employs Executive and Executive
hereby accepts employment with the Company upon the terms and conditions
contained in this Agreement.


 


1.2           As
an executive officer of the Company, Executive has access to valuable
confidential and proprietary information used in the business of the Company,
including financial data, customer data, operational data, trade secrets and
other intellectual property that if disclosed to or used by competitors or
potential competitors would cause irreparable harm to the Company.


 


1.3           Executive
and the Company desire to enter into this Agreement in order to provide the
Company with adequate protection from the unauthorized disclosure or use of the
Company’s confidential and proprietary information.


 


1.4           Executive
acknowledges that Executive’s execution of this Agreement is a condition
precedent and an inducement to the payment by CA Holding, Inc., a Delaware
corporation (“Holding”), of the
Common Stock Merger Consideration (as defined in that certain Agreement and
Plan of Merger bearing even date herewith, by and among Holding, CA Merger Sub., Inc.,
a Delaware corporation and a wholly owned subsidiary of Holding and the
Company) (the “Merger Agreement”).


 


NOW, THEREFORE, IN CONSIDERATION of the
foregoing facts, the mutual covenants and agreements contained herein and other
good and valuable consideration, the Company and Executive agree as follows:


 


2.0          DEFINITIONS.


 


2.1           Affiliate:
“Affiliate” means, with respect to
any party, any corporation, limited liability company, partnership, joint
venture, firm and/or other entity which Controls, is Controlled by or is under
common Control with such party.


 


2.2           Board
of Directors: “Board of Directors”
shall mean the board of directors of the Company.


 


2.3           Business:
“Business” means (i) the
providing of operational assistance and/or software to collection law firms or
collection agencies, including without limitation the operation of a franchise
network of collection law firms, (ii) the purchasing of debt and/or (iii) the
collection of debt on a contingency basis or otherwise.


 

















 


2.4           Compensation
Committee: “Compensation Committee”
shall mean a committee of the Board of Directors which has been delegated
responsibility for employee compensation matters or, in the absence thereof,
the entire Board of Directors.


 


2.5           Confidential
and Proprietary Information: “Confidential
and Proprietary Information” means all proprietary trade secrets
and/or proprietary information and any idea in whatever form, tangible or
intangible, pertaining in any manner to the business of the Company or any
Affiliate of the Company, or to the Company’s clients, consultants, or business
associates, unless the information is or becomes publicly known through lawful
means (other than disclosure by Executive, unless such disclosure by Executive
is made in good faith in the course of performing Executive’s duties under this
Agreement, or with the express written consent of the Board of Directors).


 


2.6           Control:
“Control” means (i) in the
case of corporate entities, direct or indirect ownership of at least fifty
percent (50%) of the stock or participating assets entitled to vote for the
election of directors; and (ii) in the case of non-corporate entities
(such as individuals, limited liability companies, partnerships or limited
partnerships), either (A) direct or indirect ownership of at least fifty
percent (50%) of the equity interest, or (B) the power to direct the
management and policies of the noncorporate entity.


 


2.7           Covered
Entity: “Covered Entity” means
every Affiliate of Executive, and every business, association, trust,
corporation, partnership, limited liability company, proprietorship or other
entity in which Executive has invested in (whether through debt or equity
securities), or has contributed any capital or made any advances to, or in
which any Affiliate of Executive has an ownership interest or profit sharing
percentage, or a firm from which Executive or any Affiliate of Executive
receives or is entitled to receive income, compensation or consulting fees in
which Executive or any Affiliate of Executive has an interest as a lender
(other than solely as a trade creditor for the sale of goods or provision of
services that do not otherwise violate the provisions of this Agreement).  The agreements of Executive contained herein
specifically apply to each entity which is presently a Covered Entity or which
becomes a Covered Entity subsequent to the date of this Agreement.  Notwithstanding the foregoing, nothing
contained in this Agreement prohibits Executive or any Affiliate of Executive
from owning less than five percent (5%) of any class of voting securities
registered under the Securities Exchange Act of 1934, as amended, of any
issuer, and no such issuer shall be considered a Covered Entity solely by
virtue of such ownership or the incidents thereof.  Further notwithstanding anything contained in
the foregoing provisions to the contrary, the term “Covered Entity” shall not
include the Company, any Subsidiary of the Company, or any Affiliate of the
Company or any such Subsidiary.


 


2.8           Discharge
For Cause: “Discharge For Cause”
shall mean termination of employment for any one or more of the following: (i) willful
misfeasance or nonfeasance by Executive of his assigned duties, which includes
not following the reasonable written direction of the Board of Directors or any
committee thereof (other than by reason of disability), or repeated intentional
refusal by Executive to perform his assigned duties (other than by reason of
disability) which continues uncured for thirty (30) days following receipt of
written notice from the Board of Directors, the Compensation Committee or the
Chairman of the Board of Directors; (ii) such Executive personally
engaging in illegal conduct or in any act of moral turpitude that causes
material harm to the reputation of the Company or any Affiliate of the Company;
(iii) such Executive breaching in any material respect any provision of
this Agreement, (other than by reason of disability) which continues uncured
for thirty (30) days following receipt of written notice from the Board of
Directors, the Compensation Committee or the Chairman of the Board of
Directors; and (iv) such Executive’s commencement of employment with
another company while he is an employee of the Company without the prior
consent of the Board of Directors.


 

















 


2.9           Discharge
Without Cause: “Discharge Without Cause”
shall mean the Company’s termination of Executive’s employment hereunder during
the term hereof for any reason other than a Discharge For Cause or due to
Executive’s death or Permanent Disability.


 


2.10         EBITDA:
“EBITDA” shall mean earnings
before interest, taxes, depreciation and amortization, as determined by
generally accepted accounting principles, consistently applied, and including
without limitation, an accrual for bonuses of officers and employees (including
the Executive) for the year for which EBITDA is determined.


 


2.11         Permanent
Disability: “Permanent Disability”
shall mean Executive’s inability to perform Executive’s duties hereunder due to
a physical or mental condition for a period of one hundred twenty (120)
consecutive days or an aggregate of one hundred eighty (180) days in any twelve
(12) month period.


 


2.12         Subsidiary:
“Subsidiary” shall mean any
corporation, trust, general or limited partnership, limited liability company,
limited liability partnership, firm, company or other business enterprise which
is Controlled by the Company thorough direct ownership of the stock or other
proprietary interests of such business enterprise or indirectly through the
ownership of stock or other proprietary interests in one (1) or more other
business enterprises which are connected with the Company by means of one (1) or
more chains of business enterprises that are connected by ownership of stock or
other proprietary interests.


 


2.13         Termination
For Good Reason: “Termination For Good
Reason” shall mean voluntary termination of this Agreement by
Executive if, without the prior consent of Executive: (i) there is a
reduction by the Company in Executive’s annual salary then in effect; (ii) the
Company acts in any way that would adversely affect Executive’s participation
in or materially reduce Executive’s benefit under any benefit plan of the
Company in which Executive is participating, except those changes generally
affecting similarly situated employees of the Company, and except any action
not taken in bad faith and which is remedied by the Company promptly upon
receipt of notice thereof given by Executive; (iii) the Company materially
breaches the terms of this Agreement and such breach is not cured within thirty
(30) days after receipt of written notice thereof given by Executive; (iv) there
is a material diminution of Executive’s job title, reporting relationship, job
duties, responsibilities (which include, without limitation, responsibilities
in managing the Business) or requirements that are inconsistent with the
position or positions listed in Section 3.1; or (v) there is a
relocation of Executive to a facility or location more than twenty-five (25)
miles from the Company’s current location.


 


2.14         Territory:
“Territory” means the United
States and Canada.


 


3.0          CAPACITIES AND DUTIES: INDEMNIFICATION.


 


3.1           Title:
Executive is hereby employed in the capacity of President and Chief Executive
Officer and a member of the Board of Directors of the Company.  Executive shall report directly to the Board
of Directors or an executive committee established by the Board of Directors
and shall be subject to its supervision, control and direction.  Executive will at all times abide by the
Company’s written personnel policies applicable to similarly situated employees
of the Company as in effect from time to time and previously provided to
Executive, and will faithfully, industriously and to the best of Executive’s
ability, experience and talents perform all of the duties that may be required
of and from Executive pursuant to the terms hereof, consistent with Executive’s
status as the President and Chief Executive Officer of the Company.


 


3.2           Exclusive
Services:  During the Term, Executive
agrees to devote


 

















 


Executive’s best efforts and full business
time to rendering services to the Company. 
Executive is specifically restricted from being employed by any other
company, other than a Subsidiary or an Affiliate of the Company, while under
the Company’s employ pursuant to this Agreement; provided that neither (i) Executive’s
ownership of less than a five percent (5%) ownership interest in another
competing business entity (where such ownership does not constitute Control and
where Executive does not act as a director, officer, consultant or otherwise
provide services to such entity), nor (ii) Executive’s service on the
board of directors of any charitable, non-profit or educational institution
without compensation (other than reimbursement of out-of-pocket expenses) or
any entity that is not in direct competition with the Business, nor (iii) managing
Executive’s personal investments and affairs and the personal investment and
affairs of any of his family members, nor (iv) acquiring any interest in
any entity, whether or not part of a Control group, that is directly or
indirectly owned or Controlled, in whole or in part, by Executive and/or one or
more members of his family, or a partnership, trust or other entity held by or
for the benefit of Executive and/or one or more members of his family, nor (v) performing
services for any entity, whether or not part of a Control group, that is
directly or indirectly owned or Controlled, in whole or in part, by Executive
and/or one or more members of his family, or a partnership, trust, or other
entity held by or for the benefit of Executive and/or one or more members of
his family, nor (vi) Executive’s ownership and oversight of (A) Executive’s
existing three (3) franchises of the Company in accordance with the terms
and conditions of the franchise agreements between the Company and such
franchises, (B) Wild Horses Receivables, so long as the acquisitions of
charged off debt by Wild Horses Receivables from anyone other than the Company
do not exceed $50,000 per year in aggregate purchase price, and (C) Executive’s
law firm with respect to the debt collection activities so long as such law
firm has a franchise agreement with the Company, provided that such collection
activities may continue following the termination of such franchise agreement
for no more than twelve (12) months (or such longer period as is required for
Executive to comply with his ethical obligations under applicable state bar
rules) in order to permit Executive’s law firm to liquidate charged off debt
acquired prior to the termination of such franchise agreement, shall not be a
violation of this Section 3.2, provided, however, except for Section 3.2(vi),
any such services shall be insubstantial and shall not include any active
involvement in the management of such entity and provided further that such
service or ownership addressed in Sections 3.2(i) through (vi) shall
not detract from Executive’s performance of his duties to the Company or,
except in the case of Section 3.2(i) or (vi)(B), be in direct
competition with the Business.


 


3.3           Indemnification:
The Company shall, to the maximum extent permitted by law, indemnify and hold
harmless Executive for any loss, injury, damage, expense (including reasonable
attorneys’ fees, and costs), and claim or demand, arising out of, connected
with, or in any manner related to, any act, omission, or decision made in good
faith while performing services for the Company from and after the Effective
Date.


 


4.0          TERM.


 


4.1           Term:
Subject to Sections 4.2, 4.3, 4.4, 4.5 and 4.6 the term of this Agreement shall
be three (3) years commencing on the Effective Date, unless terminated
earlier pursuant to the terms herein (the “Initial
Term”); provided that, unless earlier terminated pursuant to the
terms herein, the Initial Term shall be automatically extended for additional
one-year terms (each, a “Renewal Term”)
upon the expiration of the Initial Term or any such Renewal Term unless the
Company or Executive delivers to the other at least thirty (30) days prior to
the expiration of the Initial Term or the then-current Renewal Term, as the
case may be, a written notice specifying that the term of Executive’s
employment will not be renewed at the end of the Initial Term or the
then-current Renewal Term, as the case may be. 
The Initial Term or, in the event that Executive’s 


 

















 


employment
hereunder is terminated earlier pursuant to the terms herein or renewed
pursuant to this Section 4.1, such shorter or longer period, as the case
may be, is referred to herein as the “Term.”


 


4.2           Discharge
For Cause: Executive’s employment under this Agreement may be terminated by
the Company (subject to the notice and cure period set forth in Section 2.8,
if applicable), by vote of a majority of the Board of Directors, specifically
finding that an action constituting a Discharge for Cause has occurred, without
further obligation by the Company, except for payment of any base salary
compensation and expense reimbursement accrued and unpaid through the effective
date of termination and except as otherwise required by law, upon written
notice to Executive of a Discharge For Cause. 
The Company shall provide Executive in such written notification such
facts as shall be reasonably necessary to apprise Executive of the basis for
such Discharge For Cause and for Executive to exercise Executive’s right to
cure under Section 2.8, if applicable.


 


4.3           Discharge
Without Cause and Payments Upon Expiration of Term: Executive’s employment
under this Agreement may be immediately terminated by the Company upon written
notice to Executive of a Discharge Without Cause.  Upon termination pursuant to this Section 4.3,
the Company shall continue to pay to Executive an amount equal to Executive’s
base salary, as provided in Section 5.1, at the annual rate in effect at
the time of termination, for a period equal to twelve (12) months from the date
of such termination (“Without Cause Severance
Pay”).  Without Cause
Severance Pay shall also include, in addition to the foregoing, (i) all
amounts of base salary compensation and expense reimbursement accrued to the
effective date of termination and a bonus equal to a pro rata portion of the
bonus amount that would have been paid to Executive for the current bonus
period had Executive not been terminated, which bonus amount is determined by
multiplying the bonus that would have been earned for the then-current twelve
(12) month bonus period assuming the Company’s EBITDA continued at the same
rate per month as experienced from the beginning of the current period through
the date of termination, by a fraction (y) the numerator of which is
number of calendar days in the then-current bonus period that have elapsed as
of the date of termination and (z) the denominator of which is 365; and (ii) the
Company shall continue to pay or provide to Executive the medical, dental, life
and disability insurance benefits pursuant to Section 5.4 until the later
to occur of twelve (12) months from the date of such termination or (ii) the
Noncompete Term as defined in that certain Noncompetition and Nonsolicitation
Agreement dated as of the Effective Date between Company and Executive;
provided, however, the Company’s obligation to pay or provide the benefits in
clause (ii) above shall be subject to Section 4.11.  Other than the foregoing, Executive shall not
be entitled to any payment for subsequent periods upon Executive’s termination
of employment upon a Discharge Without Cause. 
Without Cause Severance Pay shall be payable to Executive, in accordance
with the Company’s general payroll practices as the same may exist from time to
time, upon Executive’s termination of employment upon a Discharge Without
Cause.  Other than Executive’s claims for
amounts required to be paid pursuant to this Section 4.3, as a condition
to receiving Without Cause Severance Pay, Executive shall execute a release of
claims in the form attached hereto as Exhibit A.


 


4.4           Termination
For Good Reason: This Agreement may be immediately terminated by Executive,
subject to the notice and time limitations set forth in Section 2.13, upon
written notice to the Company of a Termination For Good Reason.  Upon termination pursuant to this Section 4.4,
the Company shall continue to pay Executive an amount equal to Executive’s base
salary, as provided in Section 5.1, at the annual rate in effect at the
time of termination, for a period equal to twelve (12) months from the date of
such termination (“Good Reason Severance Pay”).  Good Reason Severance Pay shall also include,
in addition to the foregoing, (i) all amounts of base salary compensation
and expense reimbursement accrued to the effective date of termination and a
bonus equal to the pro rata portion of the bonus amount that would have been
paid to Executive for the current bonus period had Executive not been
terminated, which bonus amount is determined by multiplying the bonus that
would have been earned for the then-current twelve (12) month bonus 


 

















 


period
assuming the Company’s EBITDA continued at the same rate per month as
experienced from the beginning of the current period through the date of
termination, by a fraction (y) the numerator of which is number of
calendar days in the then-current bonus period that have elapsed as of the date
of termination and (z) the denominator of which is 365; and (ii) the
Company shall continue to pay or provide to Executive the medical, dental, life
and disability insurance benefits pursuant to Section 5.4 until the later
to occur of twelve (12) months from the date of such termination or the
Noncompete Term as defined in that certain Noncompetition and Nonsolicitation
Agreement dated as of the Effective Date between Company and Executive;
provided, however, that the Company’s obligation to pay or provide the benefits
in clause (ii) above shall be subject to Section 4.11.  Other than the foregoing, Executive shall not
be entitled to any payment upon Executive’s termination of employment upon a
Termination For Good Reason.  Good Reason
Severance Pay shall be payable in accordance with the Company’s general payroll
practices as the same may exist from time to time upon Executive’s termination
of employment upon a Termination For Good Reason.  Other than Executive’s claims for amounts
required to be paid pursuant to this Section 4.4, as a condition to
receiving Good Reason Severance Pay, Executive shall execute a release of
claims in the form attached hereto as Exhibit A.


 


4.5           Termination
Upon Death: This Agreement shall be immediately terminated without action
or notice by either party upon the death of Executive and without further
obligation by the Company, except for payment of all amounts of base salary
compensation and expense reimbursement accrued to the effective date of
termination, and except as otherwise required by law.


 


4.6           Termination
Upon Permanent Disability: Executive’s employment under this Agreement may
be immediately terminated by the Company upon written notice of a termination
for the Permanent Disability of Executive. 
Upon termination pursuant to this Section 4.6, the Company shall
continue to pay to Executive an amount equal to Executive’s base salary, as
provided in Section 5.1, at the annual rate in effect at the time of
termination, for a period equal to three (3) months from the date of
termination (“Permanent Disability Severance
Pay”).  Permanent Disability
Severance Pay shall also include, in addition to the foregoing, all amounts of
base salary compensation and expense reimbursement accrued to the effective
date of termination.  Permanent
Disability Severance Pay shall be reduced by the amount of any disability
benefits paid during and for the same period to Executive under any disability
insurance policy provided by the Company as a benefit to Executive.  Permanent Disability Severance Pay shall be
payable to Executive, in accordance with the Company’s general payroll
practices as the same may exist from time to time, upon Executive’s termination
pursuant to this Section 4.6.  Other
than Executive’s claims for amounts required to be paid pursuant to this Section 4.6,
as a condition to receiving Permanent Disability Severance Pay, Executive shall
execute a release of claims in the form attached hereto as Exhibit A.


 


4.7           Confidential
and Proprietary Information: 
Executive agrees that he will not, either directly or indirectly, and
Executive will not permit any Covered Entity which is Controlled by Executive
to, either directly or indirectly, divulge to any person or use any of the
Confidential and Proprietary Information, except (i) as required in
connection with the performance of such Executive’s duties to the Company, (ii) as
required to be included in any report, statement or testimony requested by any
municipal, state or national regulatory body having jurisdiction over Executive
or any Covered Entity which is Controlled by Executive, (iii) as required
in response to any summons or subpoena or in connection with any litigation, (iv) to
the extent necessary in order to comply with any law, order, regulation, ruling
or governmental request applicable to Executive or any Covered Entity which is
Controlled by Executive, (v) as required in connection with an audit by
any taxing authority, or (vi) is made with the express written consent of
the Board of Directors.  In the event
that Executive or any such Covered Entity which is Controlled by Executive is
required to disclose Confidential and Proprietary Information pursuant to the
foregoing exceptions, Executive shall promptly notify the Company of such
pending disclosure and assist the Company (at the 


 

















 


Company’s
expense) in seeking a protective order or in objecting to such request, summons
or subpoena with regard to the Confidential and Proprietary Information.  If the Company does not obtain such relief
after a period that is reasonable under the circumstances, Executive (or such
Covered Entity) may disclose that portion of the Confidential and Proprietary
Information which counsel to such party advises such party that they are
legally compelled to disclose or else stand liable for contempt or suffer
censure or penalty.  In such cases,
Executive shall promptly provide the Company with a copy of the Confidential
and Proprietary Information so disclosed.


 


4.8           Non-Compete and Non-Solicitation:


 


(i)            During
the term of Executive’s employment with the Company or any Affiliate of the
Company and for one (1) year thereafter, Executive shall not either
directly or indirectly, and will not permit any Covered Entity which is
Controlled by Executive to either directly or indirectly, participate in,
assist, aid or advise in any way, any competitive business or enterprise that
competes with the Business in the Territory. 
For purposes of this Agreement, the Company shall be deemed to be
conducting the Business in the Territory if the applicable collection account
debtors are located in the Territory or if the applicable franchisees or other
customers (or such franchisee’s or customer’s respective collection account
debtors) are located in the Territory, regardless of whether the collection
activities or services are performed from locations outside of the Territory.


 


(ii)           During
the term of Executive’s employment with the Company or any Affiliate of the
Company and one (1) year thereafter, Executive will not, either directly
or indirectly and will not permit any Covered Entity which is Controlled by
Executive to, either directly or indirectly, (a) (1) attempt in any
manner to solicit the business of any franchisee of the Company or Affiliates
of the Company, or (2) solicit the business of any financial institution
or other creditors with which the Company or its Affiliates has had a
relationship; or (b) hire, solicit, take away, or attempt to hire, solicit
or take away (either on such Executive’s behalf or on behalf of any other
person or entity) any person (1) who is then an employee of the Company or
any Affiliate of the Company or an employee or a franchisee of the Company; or (2) who
has terminated his or her employment with the Company or any Affiliate of the
Company within the previous ninety (90) days.


 


(iii)          Executive
agrees that the payment of any Without Cause Severance Pay or Good Reason
Severance Pay is conditioned on Executive’s compliance with this Section 4.8
and that the Company will have the right to withhold payment if Executive is in
breach of this Section 4.8.


 


(iv)          Notwithstanding
the provisions of Sections 4.8(i) and (ii) above, (a) Executive’s
ownership of less than a five percent (5%) ownership interest in another
competing business entity (where such ownership does not constitute Control and
where Executive does not act as a director, officer, consultant or otherwise
provide services to such entity), (b) Executive’s service on the board of
directors of any charitable, non-profit or educational institution without
compensation (other than reimbursement of out-of-pocket expenses) or any entity
that is not in direct competition with the Business, (c) managing Executive’s
personal investments and affairs and the personal investment and affairs of any
of his family members, (d) acquiring any interest in any entity, whether
or not part of a Control group, that is directly or indirectly owned or
Controlled, in whole or in part, by Executive and/or one or more members of his
family, or a partnership, trust or other entity held by or for the benefit of
Executive and/or one or more members of his family, (e) performing
services for any entity, whether or not part of a Control group, that is
directly or indirectly owned or Controlled, in whole or in part, by Executive
and/or one or more members of his family, or a partnership, trust, or other
entity held by or for the benefit of Executive and/or one or more members 


 

















 


of his family, or (f) Executive’s ownership,
oversight and operation of (1) Executive’s existing three (3) franchises
of the Company in accordance with the terms and conditions of the franchise
agreements between the Company and such franchises, (2) Wild Horses
Receivables, so long as the acquisitions of charged off debt by Wild Horses
Receivables from anyone other than the Company do not exceed $50,000 per year
in aggregate purchase price, and (3) Executive’s law firm with respect to
the debt collection activities so long as such law firm has a franchise
agreement with the Company, provided that such collection activities may
continue following the termination of such franchise agreement for no more than
twelve (12) months (or such longer period as is required for Executive to
comply with his ethical obligations under applicable state bar rules) in order
to permit Executive’s law firm to liquidate charged off debt acquired prior to
the termination of such franchise agreement, shall not be considered a
violation of Sections 4.8(i) and (ii), provided, however, that any such
services or ownership addressed in this Section 4.8(iv) shall not
detract from Executive’s performance of his duties to the Company during the
term of his employment with the Company or, except in the case of Sections
4.8(iv)(a) or 4.8(iv)(f)(2), be in direct competition with the Business.


 


4.9           Enforcement;
Remedies: Executive acknowledges that Executive’s expertise in the Business
is of a special and unique character which gives this expertise a particular
value, and that a breach of Sections 4.7 or 4.8 by Executive will cause serious
and potentially irreparable harm to the Company.  Executive therefore acknowledges that a
breach of Sections 4.7 or 4.8 by Executive cannot be adequately compensated in
an action for damages at law, and equitable relief would be necessary to
protect the Company from a violation of this Agreement and from the harm which
this Agreement is intended to prevent. 
By reason thereof, Executive acknowledges that the Company is entitled,
in addition to any other remedies it may have under this Agreement or
otherwise, to preliminary and permanent injunctive and other equitable relief
to prevent or curtail any breach of this Agreement.  Executive acknowledges, however, that no specification
in this Agreement of a specific legal or equitable remedy may be construed as a
waiver of or prohibition against pursuing other legal or equitable remedies in
the event of a breach of this Agreement by Executive.  Executive’s sole and exclusive remedy in the
event of a breach of this Agreement by the Company shall be payment of the
Without Cause Severance Pay or Good Reason Severance Pay.


 


4.10         COBRA:
If, following a Termination For Good Reason by Executive or a Discharge Without
Cause by the Company, Executive elects continued coverage under the Company’s
health plan pursuant to the Comprehensive Omnibus Budget Reconciliation Act of
1985, as amended (“COBRA”), then
the Company shall continue to pay the premium for Executive’s continued
coverage under the Company’s health plan until the first to occur of (i) twelve
(12) months from the date of termination; (ii) Executive is employed by a
third party, or (iii) Executive elects to cease such coverage or fails to
pay his portion of the premium.  If the
Company changes its insurance provider or the amounts or terms of such coverage
for its employees during such period, including changes and contribution
percentages or costs, the Company may provide such substitute or changed
coverage to Executive in full satisfaction of its obligations under this Section 4.10.


 


4.11         Severance
Pay Benefit Conditions: If, following a Termination For Good Reason by
Executive or a Discharge Without Cause by the Company, Executive is no longer
entitled to the medical, dental, life and disability insurance benefits
referenced in Section 4.3(ii) and Section 4.4(ii) because
Executive is no longer an employee of the Company, then the Company shall first
attempt to resolve the eligibility issue by paying Executive a nominal (no less
than minimum wage) salary, less applicable tax withholdings, during the period
for which Executive is entitled to the benefit under Section 4.3(ii) or
Section 4.4(ii).  If the Company’s
attempt to resolve the eligibility issue in the previous sentence is not
permitted by the applicable benefit plan or policy, then Company shall pay to
Executive a monthly amount equal to the monthly premium that the Company paid
under the applicable benefit plan or policy with respect to the Executive’s
benefits in the month prior to the termination of Executive’s employment with
the Company.  The monthly payments 


 

















 


described
in the foregoing sentence shall be paid for the period during which Executive
was otherwise entitled to receive the benefits under Section 4.3(ii) or
Section 4.4(ii).


 


5.0          COMPENSATION AND BENEFITS.  For Executive’s services, the
Company agrees to pay Executive compensation as follows:


 


5.1           Salary:
Base compensation equal to an annual salary of $350,000 (Three Hundred Fifty
Thousand Dollars) to be paid according to the Company’s general payroll
practices as same may exist from time to time. 
Executive’s base compensation will be subject to annual reviews and
increases as approved by the Board of Directors and the Compensation
Committee.  Such annual reviews will be
conducted on or about Executive’s normal anniversary date of hire in accordance
with past practice of the Company.


 


5.2           Incentive
Compensation Program: During the Term, Executive shall be eligible for an
annual discretionary performance-based bonus of up to 100% of the base salary
based upon the actual performance of the Company in relation to projected
EBITDA milestones and management objectives to be agreed upon by the
Compensation Committee of the Board of Directors (the “Compensation Committee”)
or the Board of Directors.  The
Compensation Committee or the Board of Directors will set such milestones on or
before December 31st of each year of the Term, and within 30 days
following the Closing Date (as defined in the Merger Agreement) for fiscal
2005.  Any bonus payable as a performance
bonus shall be in the amount, and paid at the time and in the manner, as
determined by the Compensation Committee or the Board of Directors.  Executive shall not be entitled to any bonus
for the calendar year in which Executive’s employment with the Company is
terminated for any reason, except as provided in Section 4.3 (Discharge
Without Cause) or Section 4.4 (Termination For Good Reason).


 


5.3           Reimbursement
of Expenses: The Company shall reimburse Executive for any reasonable
business expenses incurred by Executive in the ordinary course of the Company’s
business in accordance with the Company’s reimbursement policies then in
effect.  These · expenses shall be substantiated by invoices
and receipts, to be submitted by Executive within thirty (30) days after
incurrence.


 


5.4           Benefits:
During the Term, Executive shall be entitled to receive all benefits of
employment generally available to the Company’s other executive employees when
and as such benefits, if any, become available and Executive becomes eligible
for them, including any vacation and sick leave, medical, dental, life and
disability insurance benefits, long term incentive plan, stock option plan,
pension plan and/or profit-sharing plan, and parking.  In addition, during the term the Company shall
pay the premiums on a term life insurance policy in the amount of $2,000,000
that names Executive’s named beneficiary(ies). 
In addition, Executive shall receive, within sixty (60) days following
the Effective Date, the right to purchase restricted stock under Holding’s
Equity Incentive Plan for certain shares (to be determined by the Board of
Directors within sixty (60) days following the Effective Date) of Series B-1
Contingent Preferred Stock at a price per share equal to $0.10 per share.


 


5.5           Vacation:
During the Term, Executive shall be entitled to four (4) weeks (160 hours)
of paid vacation each year during the Term. 
Executive will use his reasonable efforts to schedule vacation periods
to minimize disruption of the Company’s business.  Except upon Discharge Without Cause or
Termination for Good Reason, the Company will not reimburse Executive for any
unused vacation.


 


5.6           Withholding:
Executive authorizes the Company to make any and all applicable withholdings of
federal and state taxes and other items the Company may be required to deduct,
as such items may exist under this Agreement or otherwise from time to time.


 

















 


6.0          SUCCESSORS AND ASSIGNS.  This Agreement is intended to
bind and inure to the benefit of and be enforceable by Executive, the Company
and their respective heirs, successors and assigns, except that Executive shall
not have any right to assign or otherwise transfer this Agreement, or any of
Executive’s rights, duties or any other interest herein to any party without
the prior written consent of the Company, and any such purported assignment
shall be null and void.


 


7.0          SURVIVAL OF RIGHTS AND OBLIGATIONS.  The rights and obligations of
the parties as stated herein shall survive the termination of this Agreement.


 


8.0          ENTIRE AGREEMENT.


 


8.1           Sole
Agreement: This Agreement (including any attachments and exhibits hereto),
any non-competition, non-solicitation, confidentiality or proprietary
information agreement contain the parties’ sole and entire agreement regarding
the subject matter hereof, and supersedes any and all other agreements,
statements and representations of the parties, including but not limited to any
employment agreement or other agreement regarding Executive’s compensation or
terms of employment entered into prior to the Effective Date.


 


8.2           No
Other Representations: The parties acknowledge and agree that no party has
made any representations (i) concerning the subject matter hereof, or (ii) inducing
the other party to execute and deliver this Agreement, except those
representations specifically referenced herein. 
The parties have relied on their own judgment in entering into this
Agreement.


 


9.0          MODIFICATIONS OR WAIVERS.  Waivers or modifications of
this Agreement, or of any covenant, condition, or limitation contained herein,
are valid only if in writing duly executed by the parties hereto.


 


10.0        GOVERNING LAW.  This Agreement shall be governed pursuant to
the laws of the State of Colorado.


 


11.0        SEVERABILITY.  If any part, clause, or condition of this
Agreement is held to be partially or wholly invalid, unenforceable, or
inoperative for any reason whatsoever, such shall not affect any other
provision or portion hereof, which shall continue to be effective as though
such invalid, unenforceable or inoperative part, clause or condition had not
been made.


 


12.0        INTERPRETATION.


 


12.1         Section headings:
The section and subsection heading of this Agreement are included for purposes
of convenience only, and shall not affect the construction or interpretation of
any of its provisions.


 


12.2         Gender
and Number: Whenever required by the context, the singular shall include
the plural, the plural shall include the singular, and the masculine gender
shall include the neuter and feminine genders and vice versa.


 


13.0        NOTICES.  All notices and other communications under or
in connection with this Agreement shall be in writing and shall be deemed given
(i) if delivered personally, upon delivery, (ii) if delivered by
registered or certified mail (return receipt requested), upon the earlier of
actual delivery or three (3) days after being mailed, (iii) if given
by overnight courier with receipt acknowledgment requested, the next business
day following the date sent, or (iv) if given by telecopy, upon confirmation
of transmission by telecopy, in each case to the parties at the following
addresses:


 

















 


	
  To the Company:

  	
  Collect America, Ltd.

  
	
   

  	
  5000 Republic Plaza 370

  
	
   

  	
  Seventeenth Street Denver,

  
	
   

  	
  CO 80202

  
	
   

  	
  Attention:

  	
  President

  
	
   

  	
  Facsimile:

  	
  (303) 296-8538

  
	
   

  	
   

  
	
  with a copy to:

  	
  KRG Capital Partners, LLC

  
	
   

  	
  1515 Arapahoe Street

  
	
   

  	
  Tower One, Suite 1500

  
	
   

  	
  Denver, Colorado 80202

  
	
   

  	
  Facsimile: (303) 390-5015

  
	
   

  	
  Attention:

  	
  Mark M. King

  
	
   

  	
   

  	
  Christopher J. Bock

  
	
   

  	
   

  
	
  with a copy to:

  	
  Paul, Hastings, Janofsky & Walker LLP

  
	
   

  	
  695 Town Center Drive, 17th Floor

  
	
   

  	
  Costa Mesa, California 92626

  
	
   

  	
  Facsimile: (714) 979-1921

  
	
   

  	
  Attention: William J. Simpson, Esq.

  
	
   

  	
   

  
	
  To Executive:

  	
  To the address listed on the signature
  page hereto.

  



 


14.0        JOINT PREPARATION.  All parties to this Agreement have negotiated
it at length, and have had the opportunity to consult with and be represented
by their own competent counsel.  This
Agreement is therefore deemed to have been jointly prepared by the parties, and
any uncertainty or ambiguity existing in it shall not be interpreted against
any party, but rather shall be interpreted according to the rules generally
governing the interpretation of contracts.


 


15.0        THIRD-PARTY BENEFICIARIES.  No term or provision of this
Agreement is intended to be, or shall be, for the benefit of any person, firm,
organization or corporation not a party hereto, and no such other person, firm,
organization or corporation shall have any right or cause of action hereunder.


 


16.0        ARBITRATION.


 


(i)           Any controversy, claim or dispute involving
the parties (or their affiliated persons) directly or indirectly concerning
this Agreement, or the subject matter thereof, shall be finally settled by
arbitration held in Denver, Colorado by one (1) arbitrator in accordance
with the rules of employment arbitration then followed by the American
Arbitration Association or any successor to the functions thereof.  The arbitrator shall apply Colorado law in
the resolution of all controversies, claims and disputes and shall have the
right and authority to determine how his or her decision or determination as to
each issue or matter in dispute may be implemented or enforced.  Any decision or award of the arbitrator shall
be final and conclusive on the parties to this Agreement and their respective
affiliates, and there shall be no appeal therefrom other than from gross
negligence or willful misconduct. 
Notwithstanding the foregoing, claims of employment discrimination,
worker’s compensation and unemployment compensation benefits shall not be
subject to arbitration under this Agreement. 
The Company shall bear all costs of the arbitrator in any action brought
under this Section 16.0.


 

















 


(ii)          The parties hereto agree that any
action to compel arbitration pursuant to this Agreement may be brought in the
appropriate Colorado court and in connection with such action to compel the
laws of the State of Colorado shall control. 
Application may also be made to such court for confirmation of any
decision or award of the arbitrator, for an order of the enforcement and for
any other remedies which may be necessary to effectuate such decision or
award.  The parties hereto hereby consent
to the jurisdiction of the arbitrator and of such court and waive any objection
to the jurisdiction of such arbitrator and court.


 


(iii)         Notwithstanding the foregoing
provisions of this Section 16.0, nothing contained herein shall be deemed
to preclude any party from bringing an action for injunctive relief in any
court having jurisdiction.


 


17.0        COOPERATION AND FURTHER ACTIONS.  The parties agree to perform
any and all acts and to execute and deliver any and all documents necessary or
convenient to carry out the terms of this Agreement.


 


18.0        ATTORNEYS’ FEES.  In the event of any dispute related to or
based upon this Agreement, the prevailing party shall be entitled to recover
from the other party its reasonable attorneys’ fees and costs.


 


19.0        COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, including electronically transmitted counterparts, each of which
shall be deemed an original and all of which shall be considered one and the
same instrument.


 


20.0        CONSENT TO JURISDICTION.  Each party to this Agreement
hereby (a) consents to the jurisdiction of the United States District
Court for the District of Colorado or, if such court does not have jurisdiction
over such matter, the applicable Colorado State or County Court that has
jurisdiction, (b) irrevocably agrees that all actions or proceedings
arising out of or relating to this Agreement which are not subject to arbitration
as set forth in Section 16.0(i) shall be litigated in such court and (c) consents
to personal jurisdiction within the City and County of Denver, Colorado.  Each party to this Agreement accepts for
itself and in connection with its properties, generally and unconditionally,
the exclusive jurisdiction and venue of the aforesaid courts and waives any
defense of lack of personal jurisdiction or inconvenient forum or any similar
defense, and irrevocably agrees to be bound by any non-appealable judgment rendered
thereby in connection with this Agreement.


 


[SIGNATURE PAGE
FOLLOWS]


 

















 


[SIGNATURE PAGE TO
EXECUTIVE EMPLOYMENT AGREEMENT]


 


IN WITNESS WHEREOF, the parties hereto have
executed, or caused their duly authorized representatives to execute, this Agreement
as of the Effective Date.


 


	
   

  	
  COLLECT AMERICA, LTD.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher J. Bock

  
	
   

  	
   

  	
  Name:

  	
  Christopher J. Bock

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ P. Scott Lowery

  
	
   

  	
  P. SCOTT LOWERY

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Facsimile: