EXHIBIT 10.40
11/14/96
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") has been executed as of [Date] 1996
by and between Countrywide Asset Management Corporation ("Employer") and Xxxxxxx
Xxxxx ("Officer").
WITNESSETH:
WHEREAS, Employer desires to obtain the benefit of continued services of Officer
and Officer desires to continue to render services to Employer and its
affiliates.
WHEREAS, Employer and Officer desire to set forth the terms and conditions of
Officer's employment with Employer and its affiliates under this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, the parties hereto agree as follows:
1. TERM. Employer agrees to employ Officer and Officer agrees to serve
Employer and its affiliates, in accordance with the terms hereof, for a
term beginning on the date first written above and ending on December
31, 2000, unless earlier terminated in accordance with the provisions
hereof.
2. POSITION, DUTIES AND RESPONSIBILITIES. Employer and Officer hereby agree
that, subject to the provisions of this Agreement, Employer will employ
Officer and Officer will serve Employer as President and a director of
Employer, as President and Chief Operating Officer of CWM Mortgage
Holdings, Inc. ("Holdings") and as President and Chief Executive Officer
of Independent National Mortgage Corporation ("Indy Mac") and
Independent Lending Corporation. Employer agrees that Officer's duties
hereunder shall be the usual and customary duties of such office and
such further duties shall not be inconsistent with the provisions of
applicable law. Officer shall have such executive power and authority as
shall reasonably be required to enable him to discharge his duties in
the offices which he may hold. All compensation paid to Officer by
Employer or any of its affiliates shall be aggregated in determining
whether Officer has received the benefits provided for herein, but
without prejudice to the allocation of costs among the entities to which
Officer renders services hereunder. Employer and
Officer hereby agree that the portion of Officer's services which are
provided to Indy Mac are to be treated for federal income tax purposes
as services provided by Officer as an employee of Indy Mac. Officer
agrees that Employer and Indy Mac shall make a determination as to the
portion of the total compensation payable to Officer hereunder which
shall be allocated to and deemed paid by Indy Mac for purposes of
section 162(m) and related provisions of the Internal Revenue Code.
3. SCOPE OF THIS AGREEMENT AND OUTSIDE AFFILIATIONS. During the term of
this Agreement, Officer shall devote his full business time and energy,
except as expressly provided below, to the business, affairs and
interests of Employer and its affiliates, and matters related thereto,
and shall use his best efforts and abilities to promote their respective
interests. Officer agrees that he will diligently endeavor to promote
the business, affairs and interests of Employer and its affiliates and
perform services contemplated hereby, in accordance with the policies
established by the Board, which policies shall be consistent with this
Agreement. Officer agrees to serve without additional remuneration as an
officer or director of Holdings or of one or more (direct or indirect)
subsidiaries or affiliates of Employer or Holdings as the Board may from
time to time request, subject to appropriate authorization by the
affiliate or subsidiary involved and any limitation under applicable
law. Officer's failure to discharge an order or perform a function
because Officer reasonably and in good faith believes such would violate
a law or regulation or be dishonest shall not be deemed a breach by him
of his obligations or duties pursuant to any of the provisions of this
Agreement, including without limitation pursuant to Section 5(c) hereof.
During the course of Officer's employment as a full-time officer
hereunder, Officer shall not, without the consent of the Board, compete,
directly or indirectly, with Employer in the business then conducted by
Employer or any of its affiliates.
Officer may make and manage personal business investments of his choice
and serve in any capacity with any civic, educational or charitable
organization, or any governmental entity or trade association, without
seeking or obtaining approval by the Board, provided such activities and
services do not materially interfere or conflict with the performance of
his duties hereunder.
4. COMPENSATION AND BENEFITS.
a. BASE SALARY. Employer shall pay to Officer a base salary in respect of
the portion of the fiscal year of Employer (a "Fiscal Year") beginning
July 1, 1996 at the annual rate of $550,000 (the "Annual
Rate"). In respect of the Fiscal Years ending in 1997, 1998, 1999, and
2000, the Compensation Committee of the Board (the "Compensation
Committee") may, based upon the recommendation of Xxxxxx X. Xxxxxx and
the performance of Officer and Employer, increase the Annual Rate.
While any such increase shall be at the discretion of the Compensation
Committee, it is anticipated that, for any Fiscal Year, a 15% increase
in Employer's reported earnings per share over the preceding Fiscal
Year normally would result in an increase in the Annual Rate of 10%,
but could exceed such percentage if warranted.
b. INCENTIVE COMPENSATION. Employer shall pay to Officer for each of the
Fiscal Years ending during the term of this Agreement an incentive
compensation award in an amount determined pursuant to the Annual
Incentive Plan and the Incentive Matrix attached hereto as Appendix A.
The incentive compensation award payable to Officer for any Fiscal
Year shall be paid no later than thirty (30) days after completion of
the applicable audited financial statements for such Fiscal Year. In
the event of a material one-time charge against earnings by Holdings
associated with Holdings' buyout of Employer as manager of Holdings,
the earnings of Holdings shall not be decreased for such charge in the
calculation of EPS in connection with the determination of Officer's
base and incentive compensation hereunder. For the purpose of any
allocation of Officer's incentive compensation pursuant to Section 2
above, it is understood that the calculation of earnings of Holdings
includes Holdings' equity interest in the earnings of Indy Mac.
c. STOCK OPTIONS. As soon as practicable after the date first written
above, Holdings shall grant to Officer a stock option in respect of
200,000 shares of the Holdings' common stock, such option to become
exercisable as to 66,667 shares, 66,666 shares and 66,667 shares on
each of the first three (3) anniversaries of the date of grant.
Beginning with the 1997 Fiscal Year and in respect of each of the
following Fiscal Years during the term of this Agreement, Holdings may
also grant to Officer stock options for such number of shares of
Holdings' common stock as the Compensation Committee in its sole
discretion determines, taking into account Officer's and Holdings'
performance and the competitive practices then prevailing regarding
the granting of stock options. Subject to the foregoing, it is
anticipated that the number of shares in respect of each annual stock
option grant shall be between 100,000 and 150,000, with the annual
grant normally targeted at 125,000 shares for "good performance," as
determined by the Compensation Committee. The stock options
described in this Section 4(c) in respect of a Fiscal Year shall be
granted at the same time as Holdings grants stock options to its other
senior executives in respect of such Fiscal Year.
All stock options granted in accordance with this Section 4(c): (i)
shall be granted pursuant to Holdings' current stock option plan, or
such other stock option plan or plans as may be or come into effect
during the term of this Agreement, (ii) shall have a per share
exercise price equal to the fair market value (as defined in the
current Plan or such other plan or plans) of the common stock at the
time of grant, (iii) shall become exercisable in three equal
installments on each of the first three anniversaries of the date of
grant, (iv) shall become immediately and fully exercisable in the
event of a Change in Control (as defined in Appendix B) or in the
event that Officer's employment is terminated due to death or
Disability or by Employer other than for Cause (as defined in Section
5(c)), and (v) shall be subject to such other reasonable and
consistent terms and conditions as may be determined by the
Compensation Committee and set forth in the agreement evidencing the
award.
d. ADDITIONAL BENEFITS. Officer shall also be entitled to all rights and
benefits for which he is otherwise eligible under any bonus plan,
stock purchase plan, participation or extra compensation plan,
executive compensation plan, pension plan, profit-sharing plan, life
and medical insurance policy, or other plans or benefits, which
Employer or its subsidiaries may provide for him, or provided he is
eligible to participate therein, for senior officers generally or for
employees generally, during the term of this Agreement (collectively,
"Additional Benefits"). This Agreement shall not affect the provision
of any other compensation, retirement or other benefit program or plan
of Employer. If Officer's employment is terminated hereunder, pursuant
to Section 5(a), 5(b) or 5(d), Employer shall continue for the period
specified in Section 5(a), 5(b) or 5(d) hereof, to provide benefits
substantially equivalent to Additional Benefits (other than qualified
pension or profit sharing plan benefits and option, equity or stock
appreciation or other incentive plan benefits as distinguished from
health, disability and welfare type benefits) on behalf of Officer and
his dependents and beneficiaries which were being provided to them
immediately prior to Officer's Termination Date, but only to the
extent that Officer is not entitled to comparable benefits from other
employment.
e. DEFERRAL OF AMOUNTS PAYABLE HEREUNDER. In the event Officer should
desire to defer receipt of any cash payments to which he
would otherwise be entitled hereunder, he may present such a written
request to the Compensation Committee which, in its sole discretion,
may enter into a separate deferred compensation agreement with
Officer.
f. CERTAIN PERQUISITES.
(i) CLUB MEMBERSHIPS. Employer shall pay standard annual and monthly
membership fees and any business related charges for Officer's
participation in the Young Presidents' Organization, the San
Xxxxxxx Country Club, the California Club, and such other
memberships as may be approved by Xxxxxx Xxxxxx and the Board of
Directors.
(ii) CAR ALLOWANCE. Employer shall either provide Officer with an
appropriate luxury automobile for Officer's exclusive use or pay
Officer an equivalent monthly automobile allowance, such
automobile or amount to be mutually agreed to by the Employer
and Officer.
(iii) TRAVEL. In connection with business travel, Officer shall be
permitted to travel first class and to be reimbursed by Employer
for such travel expenses.
5. TERMINATION. The compensation and benefits provided for herein and the
employment of Officer by Employer shall be terminated only as provided
for below in this Section 5:
a. DISABILITY. In the event that Officer shall fail, because of illness,
injury or similar incapacity ("Disability"), to render for four (4)
consecutive calendar months, or for shorter periods aggregating
eighty (80) or more business days in any twelve (12) month period,
services contemplated by this Agreement, Officer's full-time
employment hereunder may be terminated, by written Notice of
Termination from Employer to Officer; and thereafter, Employer shall
continue, from the Termination Date until Officer's death or December
31, 2000, whichever first occurs (the "Disability Payment Period"),
(i) to pay compensation to Officer, in the same manner as in effect
immediately prior to the Termination Date, in an amount equal to (1)
fifty percent (50%) of the then existing base salary payable
immediately prior to the termination, minus (2) the amount of any
cash payments to him under the terms of Employer's disability
insurance or other disability benefit plans or employer's tax-
qualified Defined Benefit Pension Pan, and any compensation he may
receive pursuant to any other employment, and (ii) to provide
during the Disability Payment period the benefits specified in the
last sentence of Section 4(d) hereof.
The determination of Disability shall be made only after 30 days
notice to Officer and only if Officer has not returned to performance
of his duties during such 30-day period. In order to determine
Disability, both employer and Officer shall have the right to provide
medical evidence to support their respective positions, with the
ultimate decision regarding Disability to be made by a majority of
Employer's disinterested directors.
b. DEATH. In the event that Officer shall die during the term of this
Agreement, Employer shall pay Officer's base salary for a period of
twelve (12) months following the date of Officer's death and in the
manner otherwise payable hereunder, to such person or persons as
Officer shall have directed in writing or, in the absence of a
designation, to his estate (the "Beneficiary"). Employer shall also
(1) pay to such Beneficiary (x) an amount equal to the incentive
compensation that would have been payable to Officer pursuant to
Section 4(b) in respect of the Fiscal Year in which the Officer's
death occurs multiplied by a fraction, the numerator of which is the
number of days in such Fiscal Year through the date of Officer's death
and the denominator of which is 365 and (y) any unpaid incentive
compensation payable to Officer pursuant to Section 4(b) in respect of
the Fiscal Year immediately preceding the Fiscal Year in which his
death occurs and (2) provide during the twelve-month period following
the date of Officer's death the benefits specified in the last
sentence of Section 4(d) hereof. If Officer's death occurs while he is
receiving payments for Disability under Section 5(a) above, such
payments shall cease and the Beneficiary shall be entitled to the
payments and benefits under this Subsection 5(b), which shall continue
for a period of twelve months thereafter at the full rate of base
salary in effect immediately prior to the Disability. This Agreement
in all other respects will terminate upon the death of Officer;
provided, however, that (i) the termination of the Agreement shall not
affect Officer's entitlement to all other benefits in which he has
become vested or which are otherwise payable in respect of periods
ending prior to its termination, and (ii) to the extent not otherwise
vested, all outstanding stock options granted to Officer pursuant to
Section 4(c) will vest upon his death.
c. CAUSE. Employer may terminate Officer's employment under this
Agreement for "Cause." A termination for Cause is a termination by
reason of (i) a material breach of this Agreement by Officer (other
than as a result of incapacity due to physical or mental illness)
which
is committed in bad faith or without reasonable belief that such
breach is in the best interests of Employer and which is not remedied
within a reasonable period of time after receipt of written notice
from Employer specifying such breach, or (ii) Officer's conviction by
a court of competent jurisdiction of a felony, or (iii) entry of an
order duly issued by any federal or state regulatory agency having
jurisdiction in the matter removing Officer from office of Employer or
its affiliates or permanently prohibiting him from participation in
the conduct of the affairs of Employer of any of its affiliates. If
Officer shall be convicted of a felony or shall be removed from office
and/or temporarily prohibited from participating in the conduct of
Employer's or any of its affiliates' affairs by any federal or state
regulatory authority having jurisdiction in the matter, Employer's
obligations under Sections 4(a), 4(b), 4(c), and 4(f) hereof shall be
automatically suspended; provided, however, that if the charges
resulting in such removal or prohibition are finally dismissed or if a
final judgment on the merits of such charges is issued in favor of
Officer, or if the conviction is overturned on appeal, then Officer
shall be reinstated in full with back pay for the removal period plus
accrued interest at the rate then payable on judgments. During the
period that Employer's obligations under Sections 4(a), 4(b), 4(c),
and 4(f) hereof are suspended, Officer shall continue to be entitled
to receive Additional Benefits under Section 4(d) until the conviction
of the felony or removal from office has become final and non-
appealable. When the conviction of the felony or removal from office
has become final and non-appealable, all of Employer's obligations
hereunder shall terminate; provided, however, that the termination of
Officer's employment pursuant to this Section 5(c) shall not affect
Officer's entitlement to all benefits in which he has become vested or
which are otherwise payable in respect of periods ending prior to his
termination of employment. Anything herein to the contrary
notwithstanding, termination for Cause shall not include termination
by reason of Officer's job performance or a job performance rating
given to Officer for his job performance or the financial performance
of Holdings or any affiliated company.
x. XXXXXXXXX.
(i) Except as provided in Section 5(d)(ii), if during the term of
this Agreement, Officer's employment shall be terminated by
Employer other than for Cause, then Employer shall (1) pay
Officer in a single payment as soon as practicable after the
Termination Date, but in no event later than thirty (30) days
thereafter, (A) an amount in cash equal to one year of Officer's
base salary at the Annual Rate at the Termination Date and (B)
an amount equal to the incentive compensation paid or payable to
Officer pursuant to Section 4(b) in respect
of the Fiscal Year immediately preceding the Fiscal
Year in which Officer's Termination Date occurs (the "Bonus
Rate"); provided, however, that in the event the first
anniversary of the Termination Date occurs on a date prior to
the end of a Fiscal Year, Employer shall also pay Officer an
amount equal to the product of (x) the Bonus Rate and (y) a
fraction, the numerator of which is (I) the number of days
elapsed since the end of the immediately preceding Fiscal Year
through the end of the Severance Period and (II) the
denomination of which is 365, and (2) until the first
anniversary of the Termination Date, provide the benefits
specified in the last sentence of Section 4(d) hereof. Employer
shall also pay in a single payment as soon as practicable after
the Termination Date, but in no event later than thirty (30)
days thereafter, any unpaid incentive compensation payable to
Officer pursuant to Section 4(b) in respect of the Fiscal Year
immediately preceding the Fiscal Year in which Officer's
Termination Date occurs.
(ii) If within two (2) years after a "Change in Control" (as defined
in Appendix B to this Agreement) and during the term of this
Agreement, Officer's employment shall be terminated by Employer
other than for Cause or by Officer for Good Reason, then (A)
Employer shall pay Officer in a single payment as soon as
practicable after the Termination Date, but in no event later
than thirty (30) days thereafter, (x) as severance pay and in
lieu of any further salary and incentive compensation for
periods subsequent to the Termination Date, an amount in cash
equal to two times the sum of (1) Officer's base salary at the
Annual Rate at the Termination Date and (2) the incentive
compensation paid or payable to Officer pursuant to Section 4(b)
in respect of the Fiscal Year immediately preceding the Fiscal
Year in which Officer's Termination Date occurs and (y) any
unpaid incentive compensation payable to Officer pursuant to
Section 4(b) in respect of the Fiscal Year immediately preceding
the Fiscal Year in which Officer's Termination Date occurs, and
(B) Employer shall continue to provide for two years from the
Termination Date the benefits specified in the last sentence of
Section 4(d) hereof. For purposes of this Agreement, "Good
Reason" shall be deemed to occur if Employer (x) breaches this
Agreement in any material respect or (y) takes any other action
which results in the
diminution in Officer's status, title, position, authority and
responsibilities other than an insubstantial action not taken in
bad faith and which is remedied by Employer promptly after
receipt of notice by Officer.
Notwithstanding anything in this Agreement to the contrary, in
the event it shall be determined that any payment or
distribution by Employer or any other person or entity to or for
the benefit of Officer (within the meaning of Section 280G(b)(2)
of the Internal Revenue Code of 1986, as amended (the "Code"),
whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise in connection with,
or arising out of, his employment with Employer or a change in
ownership or effective control of Employer or a substantial
portion of its assets (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Code (the "Excise
Tax"), the Payments shall be reduced (but not below zero) to the
extent necessary so that no Excise Tax would be imposed. If the
application of the preceding sentence should require a reduction
in Payments or other "parachute payment" (within the meaning of
Section 280G of the Code), unless Officer shall have designated
otherwise, such reduction shall be implemented, first, by
reducing any non-cash benefits (other than stock options) to the
extent necessary, second, by reducing any cash benefits to the
extent necessary and, third, by reducing any stock options to
the extent necessary. In each case, the reductions shall be made
starting with the payment or benefit to be made on the latest
date following the Termination Date and reducing payments or
benefits in reverse chronological order therefrom. All
determinations concerning the application of this paragraph
shall be made by a nationally recognized firm of independent
accountants, selected by Officer and satisfactory to Employer,
whose determination shall be conclusive and binding on all
parties. The fees and expenses of such accountants shall be
borne by Employer.
e. RESIGNATION. Except as provided in Section 5(d)(ii) hereof, if during
the term of this Agreement, Officer shall resign voluntarily, all of
his rights to payment or benefits hereunder shall immediately
terminate; provided, however, that the termination of Officer's
employment pursuant to this Section 5(e) shall not affect Officer's
entitlement to all benefits in which he has become vested or which are
otherwise
payable in respect of periods ending prior to his termination of
employment.
f. NOTICE OF TERMINATION. Any purported termination by Employer or by
Officer shall be communicated by a written Notice of Termination to
the other party hereto which indicates the specific termination
provision in this Agreement, if any, relied upon and which sets forth
in reasonable detail the facts and circumstances, if any, claimed to
provide a basis for termination of Officer's employment under the
provision so indicated. For purposes of this Agreement, no such
purported termination shall be effective without such Notice of
Termination. The "Termination Date" shall mean the date specified in
the Notice of Termination, which shall be no less than 30 or more than
60 days from the date of the Notice of Termination. Notwithstanding
any other provision of this Agreement, in the event of any termination
of Officer's employment hereunder for any reason, Employer shall pay
Officer his full base salary through the Termination Date, plus any
Additional Benefits which have been earned or become payable, but
which have not yet been paid as of such Termination Date.
6. REIMBURSEMENT OF BUSINESS EXPENSES. During the term of this Agreement,
Employer shall reimburse Officer promptly for all business expenditures
to the extent that such expenditures meet the requirements of the Code
for deductibility by Employer for federal income tax purposes or are
otherwise in compliance with the rules and policies of Employer and are
substantiated by Officer as required by the Internal Revenue Service and
rules and policies of Employer.
7. INDEMNITY. To the extent permitted by applicable law, the Certificate of
Incorporation and the By-Laws of Employer (as from time to time in
effect) and any indemnity agreements entered into from time to time
between Employer and Officer, Employer shall indemnify Officer and hold
him harmless for any acts or decisions made by him in good faith while
performing services for Employer, and shall use reasonable efforts to
obtain coverage for him under liability insurance policies now in force
or hereafter obtained during the term of this Agreement covering the
other officers or directors of Employer.
8. MISCELLANEOUS.
a. SUCCESSION. This Agreement shall inure to the benefit of and shall be
binding upon Employer, its successors and assigns, but without the
prior written consent of Officer, this Agreement may not be assigned
other than in connection with a merger or sale of substantially all
the assets of Employer or similar transaction. Notwithstanding the
foregoing, Employer may assign, whether by assignment agreement,
merger, operation of law or otherwise, this Agreement to Holdings or
Independent National Mortgage Corporation, or to any successor of
either of them, subject to such assignee's express assumption of all
obligations of Employer hereunder, and Officer hereby consents to any
such assignment. The failure of any successor to or assignee of the
Employer's business and/or assets in such transaction to expressly
assume all obligations of Employer hereunder shall be deemed a
material breach of this Agreement by Employer. The obligations and
duties of Officer hereby shall be personal and not assignable.
b. NOTICES. Any notices provided for in this Agreement shall be sent to
Employer at its corporate headquarters, Attention: Corporate
Counsel/Secretary, with a copy to the Chairman of the Compensation
Committee at the same address, or to such other address as Employer
may from time to time in writing designate, and to Officer at such
address as he may from time to time in writing designate (or his
business address of record in the absence of such designation). All
notices shall be deemed to have been given two (2) business days after
they have been deposited as certified mail, return receipt requested,
postage paid and properly addressed to the designated address of the
party to receive the notices.
c. ENTIRE AGREEMENT. This instrument contains the entire agreement of the
parties relating to the subject matter hereof, and it replaces and
supersedes any prior agreements between the parties relating to said
subject matter. No modifications or amendments of this Agreement shall
be valid unless made in writing and signed by the parties hereto.
d. WAIVER. The waiver of the breach of any term or of any condition of
this Agreement shall not be deemed to constitute the waiver of any
other breach of the same or any other term or condition.
e. CALIFORNIA LAW. This Agreement shall be construed and interpreted in
accordance with the laws of California.
f. ATTORNEYS' FEES IN ACTION ON CONTRACT. If any litigation shall occur
between the Officer and Employer, which litigation arises out of our
as a result of this Agreement or the acts of the parties hereto
pursuant to this Agreement, or which seeks an interpretation of this
Agreement, the prevailing party in such litigation, in addition to any
other judgment or award, shall be entitled to receive such sums as the
court hearing the matter shall find to be reasonable as and for the
attorneys' fees of the prevailing party.
g. CONFIDENTIALITY. Officer agrees that he will not divulge or otherwise
disclose, directly or indirectly, any trade secret or other
confidential information concerning the business or policies of
Employer or any of its subsidiaries which he may have learned as a
result of his employment during the term of this Agreement or prior
thereto as an employee, officer or director of or consultant to
Employer or any of its subsidiaries, except to the extent such use or
disclosure is (i) necessary or appropriate to the performance of this
Agreement and in furtherance of Employer's best interests, (ii)
required by applicable law or in response to a lawful inquiry from a
governmental or regulatory authority, (iii) lawfully obtainable from
other sources, or (iv) authorized by Employer. The provisions of this
subsection shall survive the expiration, suspension or termination,
for any reason, of this Agreement.
h. REMEDIES OF EMPLOYER. Officer acknowledges that the services he is
obligated to render under the provisions of this Agreement are of a
special, unique, unusual, extraordinary and intellectual character,
which gives this Agreement peculiar value to Employer. The loss of
these services cannot be reasonably or adequately compensated in
damages in an action at law and it would be difficult (if not
impossible) to replace these services. By reason thereof, Officer
agrees and consents that if he violates any of the material provisions
of this Agreement, Employer, in addition to any other rights and
remedies available under this Agreement or under applicable law, shall
be entitled during the remainder of the term to seek injunctive
relief, from a tribunal of competent jurisdiction, restraining Officer
from committing or continuing any violation of this Agreement.
i. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable, the remainder of this Agreement shall nevertheless
remain in full force and effect, and if any provision is held invalid
or unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other
circumstances.
j. NO OBLIGATION TO MITIGATE. Officer shall not be required to mitigate
the amount of any payment provided for in this Agreement by seeking
other employment or otherwise and, except as provided in Section
5(a)(i)(2) hereof, no payment hereunder shall be offset or
reduced by the amount of any compensation or benefits provided to
Officer in any subsequent employment.
k. COVENANT NOT TO COMPETE
(i) IN GENERAL. Officer agrees that while he is employed by Employer
during the term of this Agreement and for a period of one year
after the termination of such employment for whatever reason
other than any termination by Employer, either for Cause or
other than for Cause (the "Non-Compete Period"), he shall not,
within North America:
(A) engage in any business, whether as an employee, consultant,
partner, principal, agent, representative or stockholder
(other than as a stockholder of less than a one percent (1%)
equity interest) or in any other corporate or representative
capacity with any other business whether in corporate,
proprietorship, or partnership form or otherwise, where such
business is engaged in any activity which competes with the
business of Employer (or its subsidiaries or affiliates) as
conducted on the date Officer's employment terminated or
which will compete with any proposed business activity of
Employer (or its subsidiaries or affiliates) in the planning
stage on such date;
(B) solicit business from, or perform services for, any company
or other business entity which at any time during the two-
year period immediately preceding Officer's termination of
employment with Employer was a client of Employer (or its
subsidiaries or affiliates) (including without limitation any
lessee, vendor or supplier); or
(C) offer, or cause to be offered, employment, either on a full-
time, part-time or consulting basis, to any person who was
employed by Employer (or its subsidiaries or affiliates) on
the date Officer's employment terminated, unless Officer
shall have received the prior written consent of Employer.
(ii) CONSIDERATION. The consideration for the foregoing covenant not
to compete, the sufficiency of which is hereby acknowledged, is
Employer's agreement to continue to employ Officer and provide
compensation and benefits
pursuant to this Agreement, including but not limited to Section
5(d).
(iii) EQUITABLE RELIEF AND OTHER REMEDIES. Officer acknowledges and
agrees that Employer's remedies at law for a breach or threatened
breach of any of the provisions of this Section would be
inadequate and, in recognition of this fact, Officer agrees that,
in the event of such a breach or threatened breach, in addition
to any remedies at law, Employer, without posting any bond, shall
be entitled to obtain equitable relief in the form of specific
performance, a temporary restraining order, a temporary or
permanent injunction or any other equitable remedy which may then
be available.
(iv) REFORMATION. If the foregoing covenant not to compete would
otherwise be determined invalid or unenforceable by a court of
competent jurisdiction, such court shall exercise its discretion
in reforming the provisions of this Section to the end that
Officer be subject to a covenant not to compete, reasonable under
the circumstances, enforceable by Employer.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EMPLOYER
By: ____________________
Title: ____________________
OFFICER:
___________________________
in his individual capacity
APPENDIX A
ANNUAL INCENTIVE PLAN
INCENTIVE MATRIX *
ANNUAL INCENTIVE EARNED ($000)
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PERCENT CHANGE IN EPS OVER PRIOR YEAR
-30% 30% OR
EPS ACHIEVED OR LESS -20% -10% 0% 10% 20% MORE
-----------------------------------------------------------------------------------------------------------------------
Less than $1.10 0 0 0 0 0 0 0
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1.10 $ 0 $100 $250 $400 $ 550 $ 700 $ 850
-----------------------------------------------------------------------------------------------------------------------
1.30 50 150 300 450 600 750 900
-----------------------------------------------------------------------------------------------------------------------
1.50 100 200 350 500 650 800 950
-----------------------------------------------------------------------------------------------------------------------
1.70 150 250 400 550 700 850 1,000
-----------------------------------------------------------------------------------------------------------------------
1.90 200 300 450 600 750 900 1,050
-----------------------------------------------------------------------------------------------------------------------
2.10 250 350 500 650 800 950 1,100
-----------------------------------------------------------------------------------------------------------------------
2.30 300 400 550 700 850 1,000 1,150
-----------------------------------------------------------------------------------------------------------------------
2.50 300 450 600 750 900 1,050 1,200
-----------------------------------------------------------------------------------------------------------------------
2.70 300 500 650 800 950 1,100 1,300
-----------------------------------------------------------------------------------------------------------------------
2.90 300 500 700 850 1,000 1,200 1,400
-----------------------------------------------------------------------------------------------------------------------
3.10 300 500 750 900 1,100 1,300 1,500
-----------------------------------------------------------------------------------------------------------------------
3.30 or more 300 500 800 950 1,200 1,400 1,600
-----------------------------------------------------------------------------------------------------------------------
----------------
* INTERPOLATE BETWEEN INDICATED AMOUNTS.
APPENDIX B
A "Change in Control" shall mean the occurrence during the term of the
Agreement, of any one of the following events:
A. An acquisition (other than directly from Employer) of any common stock
or other "Voting Securities" (as hereinafter defined) of Employer by any
"Person" (as the term person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), immediately after which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
twenty five percent (25%) or more of the then outstanding shares of
Employer's common stock or the combined voting power of Employer's then
outstanding Voting Securities; provided, however, in determining whether
a Change in Control has occurred, Voting Securities which are acquired
in a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. For
purposes of this Agreement, (1) "Voting Securities" shall mean
Employer's outstanding voting securities entitled to vote generally in
the election of directors and (2) a "Non-Control Acquisition" shall mean
an acquisition by (i) an employee benefit plan (or a trust forming a
part thereof) maintained by (A) Employer or (B) any corporation or other
Person of which a majority of its voting power or its voting equity
securities or equity interest is owned, directly or indirectly, by
Employer (for purposes of this definition, a "Subsidiary"), (ii)
Employer or any of its Subsidiaries, (iii) any Person in connection with
a "Non-Control Transaction" (as hereinafter defined) or (iv) Countrywide
Credit Industries, Inc. or any of its affiliates or subsidiaries
("Countrywide Credit").
B. The individuals who, as of the date of the Agreement are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at
least two-thirds of the members of the Board; provided, however, that if
the election, or nomination for election by Employer's common
stockholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for purposes
of this Agreement, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened "Election Contest"
(as described in Rule 14a-11 promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the
Board (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
C. The consummation of:
(i) A merger, consolidation or reorganization involving Employer,
unless such merger, consolidation or reorganization is a "Non-
Control Transaction." A "Non-Control Transaction" shall mean a
merger, consolidation or reorganization of Employer into, with or
involving Countrywide Credit, Holdings or where:
a. the stockholders of Employer, immediately before such merger,
consolidation or reorganization, own directly or indirectly
immediately following such merger, consolidation or
reorganization, at least seventy percent (70%) of the combined
voting power of the outstanding Voting Securities of the
corporation resulting from such merger, consolidation or
reorganization (the "Surviving Corporation") in substantially
the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization;
b. the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute at
least two-thirds of the members of the board of directors of the
Surviving Corporation, or in the event that, immediately
following the consummation of such transaction, a corporation
beneficially owns, directly or indirectly, a majority of the
Voting Securities of the Surviving Corporation, the board of
directors of such corporation; and
c. no Person other than (i) Employer, (ii) any Subsidiary, (iii)
any employee benefit plan (or any trust forming a part thereof)
maintained by Employer, the Surviving Corporation, or any
Subsidiary, (iv) Countrywide Credit, or (v) any Person who,
immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of twenty five percent
(25%) or more of the combined voting power of the Surviving
Corporation's then outstanding Voting Securities or its common
stock;
(ii) A complete liquidation or dissolution of Employer; or
(iii) The sale or other disposition of all or substantially all of the
assets of Employer to any Person (other than a transfer to a
Subsidiary or Countrywide Credit).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of more than the permitted amount of the then outstanding common stock or Voting
Securities as a result of the acquisition of common stock or Voting Securities
by Employer which, by reducing the number of shares of common stock or Voting
Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person; provided, however, that if a Change of
Control would occur (but for the operation of this sentence) as a result of the
acquisition of common stock or Voting Securities by Employer, and after such
share acquisition by Employer, the Subject Person becomes the Beneficial Owner
of any additional common stock or Voting Securities which increases the
percentage of the then outstanding common stock or Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control shall occur.
