Exhibit 10.27
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OPTION AGREEMENT
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This OPTION AGREEMENT (this "OPTION AGREEMENT") dated and effective as of
September 20, 2000 provides for the granting of options by NCI Acquisition
Corporation, a Delaware corporation (the "COMPANY") and the parent of Nationwide
Credit, Inc. ("NCI"), to Xxxxx Xxxxx, an employee of NCI (the "OPTIONEE").
The Company has duly adopted the NCI Acquisition Corporation 1997
Management Performance Option Plan (the "PLAN"), a copy of which is attached
hereto as EXHIBIT A and which is incorporated herein by reference. In accordance
with Section 6 of the Plan, the board of directors of the Company (the "BOARD OF
DIRECTORS") has determined that the Optionee is to be granted options under the
Plan to buy shares of the Company's common stock, $0.01 par value (the
"SHARES"), on the terms and subject to the conditions hereinafter provided.
1. NUMBER OF SHARES, OPTION PRICES.
(a) The Company hereby grants to the Optionee an option (the "CLASS A
OPTION") to purchase up to 1,000 Shares (the "CLASS A OPTION SHARES") at a price
of $100 per Share, exercisable by the payment of the exercise price in cash.
(b) In addition to the Class A Option, the Company hereby grants to the
Optionee an option (the "CLASS B Option") to purchase up to 1,000 Shares (the
"CLASS B OPTION SHARES") at a price of $100.00 per Share, exercisable by the
payment of the exercise price in cash. The Class B Option and the Class A Option
are collectively referred to herein as the "OPTIONS". The Class B Option Shares
and the Class A Option Shares are collectively referred to herein as the "OPTION
SHARES".
2. PERIOD OF OPTIONS AND CONDITIONS OF EXERCISE.
(a) Subject to the limitations set forth in the second sentence of Section
8 of the Plan, the period (the "CLASS A OPTION PERIOD") for which the Class A
Option shall be effective shall commence upon the date hereof and shall continue
until the eighth (8th) anniversary of the date hereof. The conditions to
exercise the Class A Option are as set forth in the Plan. For the avoidance of
doubt, the Company hereby acknowledges that it is not altering the vesting
period or vesting schedule with respect to the Class A Option from that set
forth in Section 9 of the Plan and that the Class A Option shall vest over a
three year period beginning on the date hereof (subject to Sections 9(d) and
9(e) of the Plan).
(b) Subject to the limitations set forth in the second sentence of Section
8 of the Plan, the period (the "CLASS B OPTION PERIOD") for which the Class B
Option shall be effective shall commence upon the date hereof and shall continue
until
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the tenth (10th) anniversary of the date hereof. Except as indicated in the next
sentence, the conditions to exercise the Class B Option are as set forth in the
Plan. The vesting period and vesting schedule for the Class B Option shall not
be as set forth in Section 9 of the Plan, but instead shall be as follows:
(i) The Class B Option held by the Optionee shall have a "Vested
Percentage" equal to 100% under the following conditions: (x) if (A) the
Optionee shall be employed full-time by NCI on the third (3rd) anniversary
of the date hereof and (B) the Major Stockholders under the Stockholders'
Agreement, dated as of December 31, 1997, among the Company and certain
stockholders thereof (the "STOCKHOLDERS' AGREEMENT") shall have achieved an
IRR (as defined below) in excess of thirty-four (34%) percent; or (y) the
Optionee shall be employed full-time by NCI on the ninth (9th) anniversary
of the date hereof. The "Vested Percentage" of the Class B Option held by
the Optionee in the event the Optionee is a full-time employee of NCI on
the third (3rd) anniversary of the date hereof (or if the Optionee's
full-time employment is terminated by NCI prior to such date for any reason
(other than for "Cause"), the Major Stockholders shall have realized an IRR
within the range of percentages set forth in this Section 2(b)(i) within
one-hundred and eighty (180) days of the date of such termination) with
respect to the percentage of the IRR set forth below shall be as follows:
Vested Percentage
IRR of Class B Option
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equal to or greater than 25% but less than 26% 10%
equal to or greater than 26% but less than 27% 20%
equal to or greater than 27% but less than 28% 30%
equal to or greater than 28% but less than 29% 40%
equal to or greater than 29% but less than 30% 50%
equal to or greater than 30% but less than 31% 60%
equal to or greater than 31% but less than 32% 70%
equal to or greater than 32% but less than 33% 80%
equal to or greater than 33% but less than 34% 90%
equal to or greater than 34% 100%
For purposes hereof, "IRR" means the internal rate of return per annum
realized in cash by the Major Stockholders on their investment in the
Shares acquired pursuant to the Stockholders' Agreement, taking into
account all payments made to the Company by the Major Stockholders in
consideration of the issuance of the Shares under the Stockholders'
Agreement and all payment received by the Major Stockholders from the
Company in respect of such Shares or received by the Major Stockholders
upon any sale, transfer or other disposition thereof. The IRR shall be
computed following the disposition by each of the Major Stockholders of not
less than one-half (1/2) of the Shares acquired by the Major Stockholders
pursuant to the Stockholders' Agreement based on the amounts paid for and
received in respect of the Shares so disposed of. Upon subsequent
dispositions of Shares, the IRR shall be computed on a cumulative basis for
the aggregate Shares
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disposed of, and in the event the cumulative IRR exceeds the rate
previously computed in accordance with this Section 2(b)(i), the Vesting
Percentage of the Class B Option shall be adjusted as appropriate.
(ii) The Vested Percentage of the unexercised portion of the Class B
Option held by the Optionee in the event that the Optionee's full-time
employment by NCI shall be terminated for "Cause" shall be zero percent
(0%). Except as otherwise provided in any employment agreement between the
Optionee and NCI or the Company (in which case the term "Cause" as used
herein with respect to such Optionee shall have the meaning ascribed to it
therein), "CAUSE" as used in this Option Agreement shall mean (w) the gross
negligence or wilful misconduct of the Optionee in carrying out her
obligations and duties, (x) any other breach by the Optionee of the terms
of the Optionee's employment which has not been cured within five (5) days
after delivery of notice by NCI to the Optionee of such breach (or such
shorter period if such breach adversely affects NCI's ability to conduct
debt collection activities in any jurisdiction), including, without
limitation, the Optionee's insubordination, chronic absences from work or
alcoholism or drug dependency, (y) the Optionee shall have committed an act
of fraud, theft or dishonesty against the Company or NCI or any of their
subsidiary or affiliated companies, or (z) the Optionee shall be indicted
for or convicted of (or plead NOLO CONTENDRE to) any felony or be convicted
of (or plead NOLO CONTENDRE to) any misdemeanor involving fraud, dishonesty
or moral turpitude or any other misdemeanor that might, in the reasonable
opinion of the Board of Directors, adversely affect the Optionee's ability
to perform the Optionee's obligations or duties to the Company or NCI in
any material respect or adversely affects NCI's ability to conduct its debt
collection activities in any jurisdiction.
(iii) In the event of the occurrence of a Transfer Event (as defined
below), the condition set forth in Section 2(b)(i)(x)(A) with respect to
the Class B Option shall be deemed to be satisfied. For purposes hereof,
"TRANSFER EVENT" shall mean (x) assets constituting all or substantially
all of the assets of the Company are sold, in one or more related
transactions, to any "person" or "group" (as such terms are defined in the
United States Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")) and as a result, less than fifty percent (50%) of the outstanding
voting securities or other capital interest of which are owned in the
aggregate by the stockholders of the Company, directly or indirectly,
immediately prior to or after such sale, (y) an event or series of events
(whether a share purchase, merger, consolidation or other business
combination or otherwise) by which any person or group (other than a
stockholder of the Company on the date hereof) is or becomes the
"beneficial owner" (as defined in the Exchange Act) directly or indirectly
of more than fifty percent (50%) of the combined voting power of the then
outstanding securities of the Company, or (z) a report filed on Schedule
13D or Schedule 14D-1 (or any successor schedule, form or report) each as
promulgated pursuant to the Exchange Act disclosing that any person (as the
term "person" is used in Section 13(d)3 or Section 14(d)2 of the Exchange
Act), other than a stockholder or group of stockholders of the Company on
the date hereof, has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of fifty percent (50%) or more of the
issued and outstanding shares of voting securities of the Company,
excluding in the case of each of clauses (x), (y) and (z) any
reincorporation, reorganization or recapitalization transaction in which
the stockholders of the Company
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continue to possess all of the outstanding voting securities of the
successor or surviving entity in the same relative proportions.
3. TERMINATION UPON TERMINATION OF EMPLOYMENT. The duration of the
Options shall be subject to the limitations set forth in the second sentence set
forth in Section 8 of the Plan.
4. NON-TRANSFERABILITY OF PERFORMANCE OF OPTIONS; DEATH OF OPTIONEE. The
Options and this Option Agreement shall not be transferred by the Optionee
except to a living trust for the benefit of any or all of the Optionee's spouse
or descendants or to a deceased Optionee's executors, legal heirs, devisees,
administrators or testamentary trustees and beneficiaries, and the Options may
be exercised during the lifetime of the Optionee only by the Optionee. Except to
the extent provided above, the Options and this Option Agreement may not be
assigned, transferred, pledged, hypothecated or disposed of in any way (whether
by operation of law or otherwise) and shall not be subject to execution,
attachment or similar process.
5. EXERCISE OF OPTIONS. The Options shall be exercised in the manner set
forth in the Plan.
6. SPECIFIC RESTRICTIONS UPON OPTION SHARES. The Optionee hereby agrees
with the Company as follows:
(a) The Optionee is acquiring the Options and may acquire the Option
Shares for investment purposes only and not with a view to resale or other
distribution thereof to the public in violation of the Securities Act of 1933,
as amended (the "SECURITIES ACT"), and shall not dispose of any Options or
Option Shares in transactions which, in the opinion of counsel to the Company,
violate the Securities Act, or the rules and regulations thereunder, or any
applicable state securities or "blue sky" laws; and further
(b) If any Option Shares shall be registered under the Securities Act, no
public offering (otherwise than on a national securities exchange, as defined in
the Exchange Act) of any Option Shares shall be made by the Optionee (or any
other persons) under such circumstances that he or she (or such person) may be
deemed an underwriter, as defined in the Securities Act; and further
(c) The Company shall have the authority to endorse upon the certificate
or certificates representing the Option Shares such legends referring to the
foregoing restrictions, any restrictions resulting from the fact that the
Optionee is a party
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to the Stockholders' Agreement and any other applicable restrictions as it may
deem appropriate.
(d) The Optionee is, by reason of his, her or its business or financial
experience described below, capable of evaluating the merits and risks of this
investment and of protecting the Optionee's own interests in connection with the
acquisition of the Options and any purchase of Option Shares.
List any information the Optionee believes is relevant in showing that
he, she or it is able to evaluate adequately the risks and merits of
this investment or has knowledge and experience in financial or
business matters:
Optionee is an executive officer of NCI.
Optionee has had access to the Company's financial statements.
Optionee has been afforded the opportunity to ask questions concerning
the Options, the Company and NCI and has been supplied with all
additional information deemed necessary by her to verify the accuracy
of all information provided to her.
7. NOTICES. Any notice required or permitted under this Option Agreement
shall be deemed given (i) when delivered personally or by recognized overnight
courier, or (ii) when deposited in a United States Post Office as registered
mail, postage prepaid, addressed, as appropriate, either to the Optionee at his
or her address set forth below or such other address as he or she may designate
in writing to the Company, and to the Company at 0000 Xxxxxx Xxxx, Xxxxxxxx 000,
Xxxxxxxx, XX 00000, Attention: President, or such other address as the Company
may designate in writing to the Optionee.
8. FAILURE TO ENFORCE NOT A WAIVER. The failure of the Company to enforce
at any time any provision of this Option Agreement shall in no way be construed
to be a waiver of such provision or of any other provision hereof.
9. GOVERNING LAW. This Option Agreement shall be governed by and
construed in accordance with the laws of the State of New York,
without giving effect to the conflict of laws principles thereof.
10. PROVISIONS OF PLAN. The Options provided for herein are granted
pursuant to the Plan, and said Options and this Option Agreement are in all
respects governed by the Plan and subject to all of the terms and provisions
thereof, whether such terms and provisions are incorporated in this Option
Agreement solely by reference or are expressly cited herein. A copy of the Plan
has been furnished to the Optionee, and the Optionee hereby acknowledges receipt
thereof.
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IN WITNESS WHEREOF, the Company has executed this Option Agreement on the
day and year first above written.
NCI ACQUISITION CORPORATION
By: /s/ XXXXXXX XXXX
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Xxxxxxx Xxxx
The undersigned hereby accepts, and agrees to, all terms and provisions of
the foregoing Option Agreement.
/s/ XXXXX XXXXX
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Signature
Printed Name and Address:
Xxxxx Xxxxx
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
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