July 29, 2008 Mr. Peter H. Rothschild Interim Chairman of the Board of Directors Deerfield Capital Corp. 6250 N. River Road Rosemont, IL 60018 Dear Mr. Rothschild:
Exhibit 10.1
![(DEERFIELD LOGO)](https://www.sec.gov/Archives/edgar/data/1313918/000095014408006347/g14655g1465500.gif)
July 29, 2008
Xx. Xxxxx X. Xxxxxxxxxx
Interim Chairman of the Board of Directors
Deerfield Capital Corp.
0000 X. Xxxxx Xxxx
Xxxxxxxx, XX 00000
Interim Chairman of the Board of Directors
Deerfield Capital Corp.
0000 X. Xxxxx Xxxx
Xxxxxxxx, XX 00000
Dear Xx. Xxxxxxxxxx:
This letter agreement (the
“Agreement”) sets forth the
fees that Deerfield Capital
Corp., or DFR, proposes to
pay you for your services as
Interim Chairman of the Board
of Directors, or the Board,
of DFR for the 2008 calendar
year. By your execution and
delivery to DFR of a copy of
this Agreement, this
Agreement will become a
binding legal obligation of
the parties, and will replace
in its entirety the temporary
arrangement established by
the Board on December 13,
2007 for the payment of
additional compensation to
you as Board Chairman (the
“Temporary Arrangement”).
The proposed fees reflect the
discussions that the
Compensation Committee of the
Board, or the Committee,
began in early 2008 with you
and the Committee’s
compensation consultant to
develop a fee structure for
you for 2008 that would be in
the best interests of DFR
shareholders. The Committee
determined that the proposed
structure—which consists of
a guaranteed fee and two
types of success fees the
Committee has discretion to
award—would meet that
objective.
The factors considered by the
Committee in that regard
included your devotion of a
major amount of your
professional time to your
services as non-executive
Board Chairman upon your
appointment as such in April
2007; your commitment to
continue this level of
service, which has
significantly exceeded that
of a non-executive chairman,
in 2008; your continued
active involvement in the
management of DFR and its
subsidiaries; the exceedingly
high level of skill you have
demonstrated as Board
Chairman; the major
challenges faced by DFR in
recovering from the recent
unprecedented
Deerfield Capital Corp.
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
xxx.xxxxxxxxxxxxxxxxxxxx.xxx
Board of Directors
Xxxxx Xxxxxxxxxx
Interim Chairman
Xxxxxx X. Xxxxxxx
Xxxxxx X. Machinist
Xxxxx Xxx
Xxxxxx Xxxxx
Xxxxxxxx X. Xxxxxxx
Officers
Xxxxxxxx X. Xxxxxxx
Chief Executive Officer
Xxxxxx X. Xxxxx
President
Xxxxxxx X. Xxxxx
Senior Vice President,
Chief Financial Officer
and Treasurer
Xxxxxxxxx X. Xxxxx
Senior Vice President,
General Counsel
and Secretary
![(DEERFIELD LOGO)](https://www.sec.gov/Archives/edgar/data/1313918/000095014408006347/g14655g1465500.gif)
dislocations in the credit markets and the Committee’s view that your services are vital to
overcoming those challenges; the recommendation of the Committee’s compensation consultant that the
guaranteed portion of the proposed fee structure is commensurate with the fees paid by comparable
financial service companies to non-executive board chairs who actively participate in the company’s
management and closely support the company’s chief executive officer; the fact that the proposed
fee structure will disqualify you from continuing to receive the independent director fees you have
been receiving, as the Board will no longer be able to make the affirmative determination that you
meet the DFR and New York Stock Exchange standards for independent director status; and the
enhanced alignment of your interests with those of DFR shareholders in connection with the success
fees that are part of the proposed fee structure.
1. Base Fee
a. Base Fee. Subject to b. below, DFR shall pay you a fee, or the Base Fee, for 2008
of $500,000 (less the $20,000 that has been paid to you in 2008 as your additional compensation for
your services as Board Chairman under the Temporary Arrangement). The Base Fee will be paid in
cash, on a monthly basis, in accordance with payroll practices of DFR’s subsidiary, Deerfield
Capital Management LLC, or DCM. The Base Fee for the period from January 1, 2008 to the date of
the first periodic payment shall be paid in a lump sum on the date of the first periodic payment.
The payments of the Base Fee amounts shall be subject to customary tax withholding.
b. Termination of Base Fee. DFR shall terminate the Base Fee immediately upon your
(i) voluntary resignation as Board Chairman, (ii) death or Disability (as defined below), (iii)
removal as a Board member pursuant to the Director removal provision in Section 4.8 of DFR’s
Charter as in effect on the date hereof or (iv) failure to be re-elected as a Director by the DFR
stockholders at the DFR 2008 annual stockholders meeting. Disability means your physical or mental
incapacity as a result of which you are unable for a period of 90 days during any 180-day period to
perform your duties as Board Chairman with substantially the same level of quality as immediately
before the incapacity.
c. Equity Participation. There shall be no prohibition against the Committee, in the
exercise of its discretion, granting you all or part of the equity awards granted to the
independent directors of the Board (upon the same terms and conditions as the grants to such
directors).
2. Success Fees
a. General. You shall be eligible for a discretionary success fee in either or both
of the two situations specified below. The Committee shall have complete discretion as to whether
a success fee is awarded in either situation, and, if awarded, the amount of the fee (subject to
the ceilings on each fee specified below), as well as the fee
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![(DEERFIELD LOGO)](https://www.sec.gov/Archives/edgar/data/1313918/000095014408006347/g14655g1465500.gif)
portion, if any, payable in cash and the portion, if any, payable in Performance Shares (as
defined in the DFR Stock Incentive Plan, or the Plan, in effect on the date hereof) or other
non-cash compensation specified in the Plan. The Committee shall also have complete discretion as
to the vesting and other provisions relating to such non-cash awards, subject to the condition that
such provisions shall generally be comparable to those relating to the awards of non-cash
compensation to DCM employees for their 2008 services.
b. Capital Transaction Success Fee. You shall be eligible for a Capital Transaction
Success Fee, not to exceed $1,000,000, if the following conditions are met: (i) in your capacity as
Board Chairman, you are instrumental in causing DFR to execute agreement(s) for a Capital
Transaction, as defined below, in 2008 that substantially increases DFR shareholder value; and (ii)
after the Capital Transaction the surviving entity does not offer you a position with DFR that is
acceptable to you.
A Capital Transaction means (i) the ownership or acquisition by any person of more than 50% of
the outstanding common stock of DFR; (ii) the merger or consolidation of DFR with or into any
person; or (iii) any one or a series of related sales or conveyances to any person of all or
substantially all of DFR’s assets.
c. Other Success Fee. You shall also be eligible for the Other Success Fee, not to
exceed $500,000, if the following conditions are met: (i) in your capacity as Board Chairman you
are instrumental in causing DFR to engage in actions other than a Capital Transaction that increase
DFR shareholder value, such as strategic partnerships or joint ventures, and (ii) such actions
result in a substantial increase in DFR shareholder value in 2008.
d. Committee Discretion. You acknowledge and agree that the awards of the Capital
Transaction Success Fee and/or the Other Success Fee are wholly within the discretion of the
Committee, as are the amounts of any such awards and the cash or stock components of such awards;
that the Committee may award you both or one of the success fees and not the other; and that the
Committee may not award you either of the fees.
Deerfield Capital Corp. |
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By: | /s/ Xxxxxxxx X. Xxxxxxx | |||
Name: | Xxxxxxxx X. Xxxxxxx | |||
Its: Chief Executive Officer | ||||
Agreed and Acknowledged:
/s/ Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx
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