Exhibit 10.13


 


EXECUTION COPY


 


EXECUTIVE EMPLOYMENT AGREEMENT


 


THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of April 6,
2009 (the “Effective Date”), between COLLECT
AMERICA, LTD., a Delaware corporation (the “Company”),
and PAUL A. LARKINS (“Executive”).


 


1.0                               RECITALS.


 


1.1                               Executive and the Company are entering into this Agreement setting forth
the terms and conditions of Executive’s 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.


 


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; (iii) the collection of debt on a contingency basis or
otherwise; (iv) the development and sale of software for the collections
industry; and/or (v) any other line of business in which the Company or
its Affiliates engage in, or formulate business plans to engage in, during the
term of Executive’s employment with the Company.


 

















 


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, business, or
finances of the Company or any Affiliate of the Company; (iii) such
Executive breaching in any material respect any provision of this Agreement
except Sections 4.7 or 4.8, (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; (iv)such Executive breaching any obligation contained in Sections
4.7 or 4.8 of this Agreement; and (v) 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.   Attached as Schedule A lists
the Company’s current subsidiaries.  An
updated Schedule A will be provided to Executive at the time of any separation
of employment for any reason.


 


2.13                        Termination For Good Reason:
“Termination For Good Reason” shall mean
voluntary termination of this Agreement by Executive if, without the written
consent of Executive: (i) there is a material reduction by the Company to
either (a) Executive’s annual salary then in effect or (b) Executive’s
bonus target established under Section 5.2 of this Agreement (although the
award of any bonus is discretionary and a bonus award that is less than the
target shall not give Executive the right to terminate this Agreement for Good
Reason); except for any reduction which is remedied by the Company promptly
after receipt of written notice thereof given by Executive; (ii) 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; (iii) there is a material, adverse, and non-temporary
diminution of Executive’s current job title, reporting relationship, or duties
as President, or requirements that are inconsistent with the position of
President, excluding for this purpose any action not taken in bad faith and
that is remedied by the Company promptly after receipt of written notice thereof
given by Executive; or (iv) there is a relocation of Executive to a
facility or location more than 


 

















 


forty (40) miles from the Company’s current
location.  If circumstances arise giving
Executive the right to terminate this Agreement for Good Reason, Executive
shall within 60 days notify the Company in writing of the existence of such
circumstances, and the Company shall have an additional 30 days within which to
investigate and remedy the circumstances, after which 30 days Executive shall
have an additional 60 days within which to exercise the right to terminate for
Good Reason.  If Executive does not
timely do so the right to terminate for Good reason shall lapse and be deemed
waived, and the Executive shall not thereafter have the right to terminate for
Good Reason unless further circumstances occur giving rise independently to a
right to terminate for Good Reason under this paragraph.


 


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 of the Company. Executive shall report
directly to the Chairman and the Board of Directors and shall be subject to
their 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 (including without limitation its equal employment opportunity and
harassment policies), 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 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.  Notwithstanding the foregoing sentence, the
following activities shall not be prohibited by this Section 3.2: (i) less
than a five percent (5%) ownership interest by Executive 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), (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
for-profit entity that does not compete with the Business, provided that
Executive has obtained advance authorization by the Board to serve in such
capacity, such authorization to be given or withheld in the Board’s discretion;
provided, however, that 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 shall not detract from Executive’s
performance of his duties to the Company or, except in the case of Section 3.2(i),
be in direct competition with the Business.


 


3.3                           Indemnification: The Company
shall, to the maximum extent permitted by the Company’s bylaws and applicable
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.”  In the event that (i) the
Company elects not to renew this Agreement and (ii) this Agreement
terminates by expiration of the Initial Term, or by expiration of either of the
first two Renewal Terms, if any, then the Company shall have no payment
obligation to Executive except for (i) payment of sums specified in Section 4.2;
and (ii) payment to Executive of the Without Cause Severance Pay, provided
that the Conditions (defined in Section 4.4. below) are met.  If the Agreement terminates by expiration of
the Term in any other instance except those outlined in the foregoing sentence,
the Company’s only obligation shall be payment of sums specified in Section 4.2.


 


4.2                               Payments Upon Termination.  In the event Executive’s employment under
this Agreement is terminated for any reason, Executive shall be paid for all
accrued, unpaid base salary and all accrued, unused vacation, in each case
through the date of termination, in accordance with applicable law.  Executive shall also be reimbursed for any expenses
incurred in accordance with Section 5.3 of this Agreement.


 


4.3                               Discharge For Cause:
Executive’s employment under this Agreement may be immediately terminated by
the Company for Cause, without further obligation by the Company, except for
payment of sums specified in Section 4.2, 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.


 


4.4                               Discharge Without Cause or Termination for Good Reason:  Executive’s employment under
this Agreement may be immediately terminated by the Company upon written notice
to Executive of a Discharge Without Cause or immediately terminated by
Executive upon written notice to the Company of a Termination for Good Reason.
In the event of such termination and subject to the Conditions (defined in this
Section 4.4 below), 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, over 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) 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 by a fraction, 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 the denominator of which is 365, such bonus to
be paid at the time that comparable executives at the Company are paid bonuses
for the bonus period; and (ii) to the extent Executive is eligible under
and elects to continue his health care coverage under COBRA, the Company shall
continue to pay Executive’s COBRA continuation premiums for medical and dental
insurance pursuant to Section 5.4 for  twelve (12)
months from the date of such termination or, if sooner, the date Executive
becomes eligible to receive health care pursuant to a subsequent employer’s
group health care plan. Other than the foregoing, Executive shall not be
entitled to any payment for subsequent periods after the effective date of any
Discharge Without Cause or Termination for Good Reason. Without Cause Severance
Pay, except as specified above, shall be payable to Executive in accordance
with the Company’s general payroll practices as the same may exist from time to
time. As a condition to receiving any payment under this Section 4.4,
Executive must comply with his post employment obligations under Section 4.7
and 4.8 and must execute and not revoke a release of claims in the form
attached hereto as Exhibit A within 45 days of Executive’s
termination of employment, collectively (the “Conditions”).


 


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 sums specified in Section 4.2


 


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 and in
addition to payment of the sums specified in Section 4.2, 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”),
provided that Executive complies with
the Conditions outlined in Section 4.4 above.  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.


 


4.7                               Confidential and Proprietary Information:
Executive agrees that he will not, either directly or indirectly, both during
and after the termination of his employment with the Company, 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 (ii) through (v) inclusive, 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, regardless of the reason for the
termination of Executive’s employment, Executive shall not either directly or
indirectly, and will not permit any Covered Entity which is Controlled by
Executive to either directly or indirectly, compete with the Business in the
Territory or otherwise participate in, assist, aid or advise in any way, any
competitive business or enterprise that competes with the Business in 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, except that Executive may solicit such institutions or creditors
if doing so would not violate his obligations under Section 4.8(i); 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
acknowledges that the foregoing geographic restriction on competition is fair
and reasonable, given the nature and geographic scope of the Company’s business
operations and the nature of Executive’s position with the Company.  Executive also acknowledges that while
employed by the Company, Executive will have access to information that would
be valuable or useful to the Company’s competitors, and therefore acknowledges
that the foregoing restrictions on Executive’s future employment and business
activities are fair and reasonable. 
Executive acknowledges and is prepared for the possibility that
Executive’s standard of living may be reduced during the one-year period
following the termination of Executive’s employment, and assumes and accepts
any risk associated with that possibility.


 


(iv)                              Executive
acknowledges the following provisions of Colorado law, set forth in Colorado
Revised Statutes § 8-2-113(2):


 

















 


Any covenant not to compete which restricts
the right of any person to receive compensation for performance of skilled or
unskilled labor for any employer shall be void, but this subsection (2) shall
not apply to:


 


(b)                                 Any
contract for the protection of trade secrets;


 


(d)                                 Executive
and management personnel and officers and employees who constitute professional
staff to executive and management personnel.


 


Executive acknowledges that this agreement
is a contract for the protection of trade secrets within the meaning of §
8-2-113(2)(b) and is intended to protect the Confidential Information and
Confidential Records identified above and that Executive is an executive or
manager, or professional staff to an executive or manager,  within the meaning of § 8-2-113(2)(d).


 


(v)                                 Executive
agrees that the payment of any Without Cause Severance Pay is conditioned on
Executive’s compliance with this Section 4.8 and that the Company will
have the right to withhold payment, and/or seek to recover any payments already
made, if Executive is in breach of this Section 4.8.


 


(vi)                              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), or (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 does not compete with the Business, shall not constitute a violation of
this Section 4.8, provided, however, that 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 shall not
detract from Executive’s performance of his duties to the Company or, except in
the case of Section 4.8(iv)(a), 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                        Limitations Under Code Section 409A


 


                                                                                                                                                (i)                                     If at the time of Executive’s separation from service,
(i) Executive is a specified employee (within the meaning of Section 409A
and using the identification methodology selected by the Company from time to
time), and (ii) the Company makes a good faith determination that an
amount payable hereunder constitutes deferred compensation (within the meaning
of Section 409A) the payment of which is required to be delayed pursuant
to the six-month delay rule set forth in Section 409A in order to
avoid taxes or penalties under Section 409A, then the Company will not pay
such amount on the otherwise scheduled payment date but will instead pay it in
a lump sum on the first business day after such six-month period, together with
interest for the period of delay, compounded annually, equal to the prime rate
(as published in the Wall Street Journal) in effect as of the dates the
payments should otherwise have been provided.


 


(ii)                                  It
is the intention of the parties that payments or benefits payable under this
Agreement not be subject to the additional tax imposed pursuant to Section 409A
of the Code.  To the extent such
potential payments or benefits could become subject to such Section, the
parties shall cooperate to amend this Agreement with the goal of giving
Executive the economic benefits described herein in a manner that does not
result in such tax being imposed.


 


(iii)                               With
respect to payments under this Agreement, for purposes of Section 409A of the
Code of 1986, each severance payment and COBRA continuation reimbursement
payment will be considered one of a series of separate payments.


 


(iv)                              Executive
will be deemed to have a termination of employment for purposes of determining
the timing of any payments that are classified as deferred compensation only
upon a “separation from service” within the meaning of Section 409A.


 


(v)                                 Any
amount that Executive is entitled to be reimbursed under this Agreement will be
reimbursed to Executive as promptly as practical and in any event not later
than the last day of the calendar year after the calendar year in which the
expenses are incurred, and the amount of the expenses eligible for
reimbursement during any calendar year will not affect the amount of expenses
eligible for reimbursement in any other calendar year.


 


(vi)                              If
on the due date for any payment pursuant to Section 4 (except for payments
under Section 4.2), the release has not been executed and delivered and
all revocation periods with respect to the release have not yet expired, such
payment will not be made until such revocation period has expired and if such
revocation period has not expired by the end of the calendar year in which the
payment would have otherwise been made, the payment shall be forfeited.  To the extent not forfeited pursuant to the
prior sentence, the Company will pay all amounts that would have otherwise been
paid pursuant to Section 4 prior to the executive’s delivery and lapse of
the revocation periods for the release within five days after satisfaction of
these requirements.


 

















 


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 $500,000 (Five Hundred 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 or 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 150% of the base salary, with a target bonus
of 100% of base salary, and based upon the actual performance of the Company in
relation to projected EBITDA milestones, other tangible financial metrics, and
management bonus objectives to be established by the Compensation Committee of
the Board of Directors (the “Compensation Committee”) after consultation with
the Chairman of the Board. The Compensation Committee will set such milestones
within the first 45 days of each calendar year, and within 45 days following
Executive’s first day of employment for the for calendar year 2009. Any bonus
payable as a performance bonus shall be in the amount and paid in the manner,
as determined by the Compensation Committee or the Board of Directors in its
sole discretion.  Any such bonus payable
shall be paid within fifteen (15) days of the delivery of the Company annual
audit but in any event by the end of the calendar year after the calendar year
to which the performance relates. 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 Sections 4.1 and 4.4.  Executive shall be entitled to receive a
prorated bonus for calendar year 2009  at the target
rate of 100% of base salary, prorated based on Executive’s first day of
employment with the Company.


 


5.3                               Signing Bonus:  The Company shall pay Executive a one-time
signing bonus in the gross amount of $50,000, less legally-required withholdings.


 


5.4                               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.


 


5.5                               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.


 


5.6                               Stock:  In addition, the Company shall use its
reasonable best efforts to issue Executive within 120 days of the Effective
Date of this Agreement the stock described in


 














 


Exhibit B, subject to the terms contained in
such Exhibit B and the Certificate(s) of Designation for such stock.


 


5.6                           Temporary Housing Stipend.
The Company will pay Executive a gross stipend in the amount of $4,000 per
month to assist Executive in securing reasonable temporary housing in the
greater Denver, Colorado metropolitan area for the shorter of (i) six
months, or (ii) until such time as Executive secures and is able to occupy
permanent housing (the “Stipend Period”).  The Company shall also reimburse Executive
for reasonable storage costs for his personal belongings during the Stipend
Period.


 


5.7                               Vacation: During the Term,
Executive shall be entitled to  four (4) weeks
(160 hours) of paid vacation each year during the Term, accrued on a pro rata basis
through each full year of the Term. Executive will use his reasonable efforts
to schedule vacation periods to minimize disruption of the Company’s
business.  Any accrued vacation time that
is not used by December 31st of each calendar year will not roll over to
the following year absent written approval by the Chairman of the Board.


 


5.8                               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) 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.


 


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.


4340 S. Monaco, Second Floor


Denver, CO 80237


Attention:                                         Chairman of the Board


Facsimile:                                         (303) 713-2509


 


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


          Damon Judd


 


with a copy to:                                                               Hogan & Hartson LLP


1200 17th Street, 15th Floor


Denver, Colorado 80210


Facsimile:
(303) 899-7333


Attention:
Robert Mintz, 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                        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.


 


17.0                        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.


 


18.0                        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.


 


19.0                        RESOLUTION OF DISPUTES AND CONSENT TO JURISDICTION.


 


19.1                        Litigation of Disputes Under Sections 4.7 and 4.8 of this Agreement.  All disputes under or related
to the enforcement of Sections 4.7 and 4.8 of this Agreement, together with any
other dispute under this Agreement that is related to whether Sections 4.7 and
4.8 have been or are threatened to be breached (including without limitation
whether any termination under this Agreement was for Cause) shall be litigated
as provided below.  Specifically, with
respect to such disputes or enforcement actions, 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) consents to personal jurisdiction within the City and
County of Denver, Colorado, and (c) accepts, 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.


 


19.2                        Arbitration of Other Disputes Under this Agreement.


 


(i)                                     Any
controversy, claim or dispute involving the parties (or their affiliated
persons) concerning this Agreement, or the subject matter thereof, except as
provided in Section 19.1, 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 19.2.


 


(ii)                                  The
parties hereto agree that any action to compel arbitration pursuant to this Section 19.2
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.


 


[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/ Scott Lowery

  
	
   

  	
  Name:

  	
  Scott Lowery

  
	
   

  	
  Title:

  	
  CEO/Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Paul A. Larkins

  
	
   

  	
  PAUL A. LARKINS

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Facsimile:

  	
   

  



 

















 


EXHIBIT A


 


FORM OF MUTUAL RELEASE


 


Mutual Legal Release


 


This Mutual Legal Release (“Release”) is between Collect America, LTD.
(the “Company”) and Paul A.
Larkins (“Executive”) (each a “Party,” and together, the “Parties”) and shall be effective on the day
that Executive signs it, provided that such day is after Executive’s last day
of employment with the Company (“Effective
Date”).


 


Recitals


 


1.              Executive
and the Company are parties to an Executive Employment Agreement to which this
Release is appended as Appendix A (the “Agreement”).


 


2.              Executive
wishes to receive the Without Cause Severance Pay or Permanent Disability
Severance Pay, as the case may be and as provided for and defined in the
Agreement, and understands that receipt of such benefits are conditioned upon
his execution of this Release and compliance with the terms of Sections 4.7 and
4.8 of the Agreement.


 


3.              Executive
and the Company wish to resolve, except as specifically set forth herein, all
claims between them arising from or relating to any act or omission predating
the Effective Date defined above.


 


Agreement


 


The Parties agree as follows:


 


1.              Confirmation
of Severance Pay Obligation  The Company shall pay or provide to the
Executive the [Without Case Severance Pay or Permanent Disability Severance
pay] as, when and on the terms and conditions specified in the Agreement,
including but not limited to continued compliance with Executive’s obligations
under Sections 4.7 and 4.8 of the Agreement.


 


2.              Legal
Releases.


 


(a)                                 Executive, on behalf of Executive and Executive’s heirs,
personal representatives and assigns, and any other person or entity that could
or might act on behalf of Executive, including, without limitation, Executive’s
counsel (all of whom are collectively referred to as “Executive
Releasers”), hereby fully and forever releases and discharges the
Company, its present and future parents, affiliates, and subsidiaries, and each
of their past, present and future officers, directors, employees, shareholders,
investors, independent contractors, attorneys, insurers and any and all other
persons or entities that are now or may become liable to any Executive Releaser
due to any Executive Releasee’s act or omission, (all of whom are collectively
referred to as “Executive Releasees”) of and from
any and all actions, causes of action, claims, demands, costs and expenses,
including attorneys’ fees, of every kind and nature whatsoever, in law or in
equity, whether now known or unknown, that Executive 


 

















 


Releasers, or any person acting
under any of them, may now have, or claim at any future time to have, based in
whole or in part upon any act or omission relating to or arising out of
Executive’s employment relationship with, and/or service as a member of the
Board of Directors (if any) for, the Company or its subsidiaries or affiliates
occurring on or before the Effective Date, without regard to present actual
knowledge of such acts or omissions, including specifically, but not by way of
limitation, matters which may arise at common law, such as breach of contract,
express or implied, promissory estoppel, wrongful discharge, tortious
interference with contractual rights, infliction of emotional distress,
defamation, or under federal, state or local laws, such as the Fair Labor
Standards Act, the Employee Retirement Income Security Act, the National Labor
Relations Act, Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Rehabilitation Act of 1973, the Equal Pay
Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and
any civil rights law of any state or other governmental body, all as amended
and to the extent releasable under the statute, and all claims relating to
equity incentives of any kind, except as specifically set forth in the
Agreement; PROVIDED, HOWEVER, that notwithstanding
the foregoing or anything else contained in the Agreement or this Release, the
release set forth in this Supplemental Release shall not extend to:  (i) any vested, unpaid rights under any
pension, retirement, profit sharing or similar plan; or (ii) Executive’s
rights, if any, to indemnification, and/or defense under any Company
certificate of incorporation, bylaw and/or policy or procedure, or under any
insurance contract, in connection with Executive’s acts an omissions within the
course and scope of Executive’s employment with the Company.  Executive hereby warrants that Executive has
not assigned or transferred to any person any portion of any claim which is
released, waived and discharged above. 
Executive further states and agrees that Executive has not experienced
any illness, injury, or disability that is compensable or recoverable under the
worker’s compensation laws of any state that was not reported to the Company by
Executive before the Effective Date, and Executive agrees not to not file a
worker’s compensation claim asserting the existence of any such previously undisclosed
illness, injury, or disability. 
Executive has specifically consulted with counsel with respect to the
agreements, representations, and declarations set forth in the previous
sentence.  Executive understands and
agrees that by signing this Agreement and Release, Executive is giving up any
right to bring any legal claim against the Company concerning, directly or
indirectly, Executive’s employment relationship with the Company, including
Executive’s separation from employment. 
Executive agrees that this legal release is intended to be interpreted
in the broadest possible manner in favor of the Company, to include all actual
or potential legal claims that Executive may have against the Company, except
as specifically provided otherwise in this Agreement or Release.


 


(b)                                 Executive agrees and acknowledges that Executive: (i) understands
the language used in this Release and its legal effect; (ii) understands
that by signing this Release Executive is giving up the right to sue the
Company for age discrimination;(iii) will receive compensation and/or
benefits under the Agreement to which Executive would not have been entitled
without signing this Release; (iv) has been advised by the Company to
consult with an attorney before signing the Agreement and this Release; and (iv) will
be given no less than [twenty-one OR forty-five} days to consider whether to
sign this Release.


 


(c)                                  For a period of seven days after the Effective Date,
Executive may, in Executive’s sole discretion, rescind this Release, by delivering
a written notice of recision to [insert contact] at the Company.  If Executive rescinds this Release within
seven calendar days 


 

















 


after the Effective Date, this
Release shall be void, all actions taken pursuant to this Release shall be
reversed, and neither this Release nor the fact of or circumstances surrounding
its execution shall be admissible for any purpose whatsoever in any proceeding
between the parties, except in connection with a claim or defense involving the
validity or effective rescission of this Release.  If Executive does not rescind this Release
within seven calendar days after the Effective Date, this Release shall become
final and binding and shall be irrevocable.


 


(d)  The Company, for itself,
its affiliates, and any other person or entity that could or might act on
behalf of the Company, including, without limitation, the Company’s counsel
(all of whom are collectively referred to as “Company
Releasers”), hereby fully and forever releases and discharges
Executive and Executive’s heirs, personal representatives and any and all other
persons or entities that are now or may become liable to any Company Releaser
due to any Company Releasee’s act or omission, (all of whom are collectively
referred to as “Company Releasees”) of and from
any and all actions, causes of action, claims, demands, costs and expenses,
including attorneys’ fees, of every kind and nature whatsoever, in law or in
equity, whether now known or unknown, that Company Releasers, or any person
acting under any of them, may now have, or claim at any future time to have,
based in whole or in part upon any act or omission occurring within the course
and scope of Executive’s employment relationship with the Company or its
subsidiaries and affiliates occurring on or before the Effective Date, without
regard to present actual knowledge of such acts or omissions, including
specifically, but not by way of limitation, matters which may arise at common
law, such as breach of contract, express or implied, promissory estoppel, wrongful
discharge, tortious interference with contractual rights, infliction of
emotional distress, defamation, or under federal, state or local laws; PROVIDED, HOWEVER, that notwithstanding the foregoing or
anything else contained in this Agreement, the release set forth in this
paragraph shall not extend to:  (i) any
rights of the Company or duties of the Executive pursuant to the Section 4.7,
4.8, or 4.9 of the Agreement, which sections shall survive the signing of this
Release; (ii) to any Executive act or omission that was actively concealed
from the Company by Executive or at Executive’s direction; or (iii) to any
acts of fraud, embezzlement, or other misappropriation of Company funds,
assets, or property.  The Company hereby
warrants that the Company has not assigned or transferred to any person any
portion of any claim which is released, waived and discharged above.  The Company understands and agrees that by
signing this Agreement the Company is giving up any right to bring any legal
claim against Executive concerning, directly or indirectly, Executive’s
employment relationship with the Company, including Executive’s separation from
employment.  The Company agrees that this
legal release is intended to be interpreted in the broadest possible manner in
favor of Executive, to include all actual or potential legal claims that the
Company may have against Executive, except as specifically provided otherwise
in this Release or the Agreement.


 


3.              Executive
acknowledges that the Company paid Executive for all earned, unpaid wages and
all accrued, unused vacation, less applicable withholdings, through his last
day of employment, and that Executive is entitled to no further payments for
wages, compensation, benefits, bonuses, equity, or any other type of compensation
or benefit, except for the [Without Case Severance Pay or Permanent Disability
Severance pay] Executive will receive if he signs and does not revoke this
Release.


 

















 


4.                                      Executive covenants never to disparage or speak ill of the
Company or any of the Company’s products or services, or of any past or present
employee, officer or director of the Company, nor shall Executive at any time
harass or behave unprofessionally toward any past, present or future Company
employee, officer or director.  If
Executive breaches this non-disparagement obligation, Executive shall be liable
to the Company for liquidated damages, not a penalty, in the amount of $10,000
for each breach.


 


5.                                      Executive acknowledges that because of Executive’s position
with the Company, Executive may possess information that may be relevant to or
discoverable in connection with claims, litigation or judicial, arbitral or
investigative proceedings initiated by a private party or by a regulator,
governmental entity, or self-regulatory organization, that relates to or arises
from matters with which Executive was involved during Executive’s employment
with the Company, or that concern matters of which Executive has information or
knowledge (collectively, a “Proceeding”). 
Executive agrees that Executive shall testify truthfully in connection
with any such Proceeding, shall cooperate with the Company in connection with
every such Proceeding, and that Executive’s duty of cooperation shall include
an obligation to meet with the Company representatives and/or counsel
concerning all such Proceedings for such purposes, and at such times and
places, as the Company reasonably requests, and to appear for deposition and/or
testimony upon the Company’s reasonable request and without a subpoena.  The Company shall reimburse Executive for
reasonable out-of-pocket expenses that Executive incurs in honoring Executive’s
obligation of cooperation under this paragraph.


 


[SIGNATURES
FOLLOW]


 

















 


[SIGNATURE
PAGE TO MUTUAL RELEASE]


 


	
  PAUL A. LARKINS

  	
   

  	
  COLLECT AMERICA, LTD.,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  By:

  
	
   

  	
   

  	
  As its:

  
	
   

  	
   

  	
  Date:

  	
   

  
					



 














 


EXHIBIT B


 


PREFERRED
STOCK


 


Larkins
Preferred Stock


 


·                  The Company will establish a new series
of non-voting, convertible preferred stock (the “Larkins Preferred”).  The Larkins Preferred will be senior in right
of payment to all other equity securities of the Company.


·                  The Larkins Preferred will be purchased
for a fair market value to be confirmed as reasonable by third party valuation
firm mutually acceptable to Larkins and the Company.  Larkins will make and file with the IRS a Section 83(b) election
with respect to the fair market value of the Larkins Preferred (and the
Series B-2 Convertible Preferred stock described below) within 30 days of
the receipt thereof.


·                  The Larkins Preferred will be purchased
by Larkins in cash at the fair market value of the Larkins Preferred at the
time of issuance, currently expected to be approximately $250,000.  The first $50,000 shall be paid by Larkins in
cash; the remainder of the purchase price shall be structured as a recourse
note secured by the Larkins Preferred and accruing interest at the mid-term
applicable federal rate.  Interest on the
note shall be payable in cash annually at the same time bonuses are paid.  The note shall mature eight years and 9
months after the time of issuance and payments under the note shall be
accelerated in the event of a Change of Control or IPO.


·                  The Larkins Preferred will have a
liquidation preference based on the Enterprise Value of the Company upon the
effectiveness of a Change of Control or IPO.  
The liquidation preference of the Larkins Preferred will be based on the
following schedule (with amounts within a range pro rated).  The Larkins Preferred will not have any
liquidation preference to the extent the Enterprise Value is below $750 million
at the time of a Change of Control or IPO. 
The Larkins Preferred liquidation preference will be capped at $62.0
million.


 


	
  Enterprise Value
  ($000’s)

  	
   

  	
  $

  	
  750,000

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  $

  	
  1,250,000

  	
   

  	
  $

  	
  1,500,000

  	
   

  	
  $

  	
  1,750,000

  	
   

  	
  $

  	
  2,000,000

  	
   

  	
  $

  	
  2,250,000

  	
   

  	
  $

  	
  2,500,000

  	
   

  	
  $

  	
  2,750,000

  	
   

  
	
  Larkins Preferred Value
  ($000’s)

  	
   

  	
  $

  	
  2,250

  	
   

  	
  $

  	
  4,500

  	
   

  	
  $

  	
  8,500

  	
   

  	
  $

  	
  15,000

  	
   

  	
  $

  	
  24,000

  	
   

  	
  $

  	
  30,000

  	
   

  	
  $

  	
  39,000

  	
   

  	
  $

  	
  50,000

  	
   

  	
  $

  	
  62,000

  	
   

  



 


·                  Upon an IPO, the Larkins Preferred will
automatically be converted into common stock of the Company.  The conversion will be made at the IPO price
for the common stock in the IPO.  No
conversion of the Larkins Preferred will be made in connection with a Change of
Control; in that instance the Larkins Preferred will be sold or transferred as
part of that transaction.


·                  The Larkins Preferred would be subject to
“vesting” based on a 5 year schedule with 20% vesting on each anniversary of
your start date.   From a structural
standpoint, the vesting 


 

















 


is likely to be accomplished through repurchase rights
for a portion of the shares at minimal value that fall away each year. Vesting will accelerate in a Change of
Control or IPO.  Vesting will cease as of
the date of any termination of employment for any reason.


·                  If your employment terminates prior to a
Change of Control or IPO, the liquidation preference of the vested portion of
the Larkins Preferred will be established by the then fair market value of the
Company (the “Determined Value”) at the date of termination and no further
accretion or diminution in liquidation preference will occur thereafter.  Upon such an event, the Larkins Preferred
will remain outstanding at the Determined Value and wwill not be payable until
a Change of Control.   The Determined
Value shall be determined by the Board in good faith subject to Larkins’s right
to object to the Determined Value within sixty (60) days of being notified in
writing of the Determined Value.  If such
an objection is made, the Company and Larkins will agree upon a neutral
third-party to conduct a valuation of the Larkins Preferred, the cost of such
valuation to be borne equally by the Company and Larkins.  Any such third-party valuation shall be
binding on both parties.


·                  The Company will use its reasonable best
efforts to issue the Larkins Preferred within 120 days of your start date.


 


Series B-2 Convertible Preferred
Stock


 


·                  The Company will establish a new series
of convertible preferred stock (the “B-2 Preferred”).


·                  The B-2 will be convertible into non-voting
common stock of the Company based on the KRG ROI being between 1.50x and 3.50x,
with conversion pro rated within that range. 
No shares will convert to the extent KRG’s IRR (as defined in the Third
Amended and Restated Certificate of Incorporation of CA Holding, Inc.) on
its investment is less than 10%.  For
example, if the KRG ROI was 2.50x at the time of an exit (and assuming the 10%
IRR had been achieved), one half of Larkins’ B-2 Preferred would convert into
nonvoting common stock and the other half would be forfeited.   “KRG ROI” shall mean the ratio determined by
dividing (i) the total proceeds received by KRG Capital Fund II, L.P.
(“KRG”) for its investments in the preferred and common equity securities of
the Company measured as of a Liquidity Event (as defined in the Third Amended
and Restated Certificate of Incorporation of CA Holding, Inc.), by
(ii) the total capital invested by KRG in the preferred and common equity
securities of the Company.  For purposes
of calculating the KRG ROI, any transaction fees or management fees received by
KRG Capital Management, L.P. pursuant to the Management Agreement between
Collect America, Ltd. and KRG Capital Management, L.P. will not be
included in the calculation.


 

















 


·                  Larkin will be issued 42,500 shares of
B-2 Preferred to be purchased by you at the fair market value of $0.10 per
share.  The Company will use its
reasonable best efforts to issue these securities within 120 days of your start
date.


·                  Vesting will be conceptually the same as
on the Larkins Preferred.


 

















 


Schedule
A


Current
List of Company Subsidiaries


 


	
  Astrum Fianncial, LLC

  
	
  Autus, LLC

  
	
  CA Acquisition Company

  
	
  CA Holding, Inc.

  
	
  CA Internet Marketing, LLC

  
	
  CACH of NJ, LLC

  
	
  CACH, LLC

  
	
  CACV of New Jersey, LLC

  
	
  CACV of Colorado, LLC

  
	
  Candeo, LLC

  
	
  Collect Air, LLC

  
	
  Collect America Commercial Services, Inc.

  
	
  Collect America of Canada, LLC

  
	
  Collect America, Ltd.

  
	
  Collect Canada, Ltd.

  
	
  Healthcare Funding Solutions, LLC

  
	
  Impulse Marketing Group, LLC

  
	
  Metropolitan Legal Services, Inc.

  
	
  Orsa, LLC

  
	
  Preferred Credit Resources Limited

  
	
  ReFinance America, Ltd.

  
	
  Valesco Data Services, LLC

  
	
   

  
	
  IMG No Asset Subsidiaries

  
	
  Ameripromotion, LLC

  
	
  Bigelow, LLC

  
	
  Chocolate Punch, LLC

  
	
  Depot Tech, LLC

  
	
  Digital Masters, LLC

  
	
  Ecaddie, LLC

  
	
  Eclipses, LLC

  
	
  Ehanover, LLC

  
	
  Email Hello, LLC

  
	
  Extract, LLC

  
	
  Govault, LLC

  
	
  Preference Networks, LLC

  
	
  Rackorib, LLC

  
	
  Tango Telco, LLC

  
	
  Telway Online, LLC

  
	
  Val 17, LLC

  
	
  Vigorous, LLC

  
	
  Webexpo, LLC