XXXXXXX EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of March 1, 1999 by and between Countrywide Credit Industries, Inc., a Delaware
corporation ("Employer"), and Xxxxxxxx X. Xxxxxxx ("Officer").
W I T N E S S E T H:
WHEREAS, Officer currently holds the offices of Senior Managing
Director and Chief Operating Officer of Employer, and President and Chief
Executive Officer of Countrywide Home Loans, Inc. ("Home Loans"), a wholly-owned
subsidiary of Employer; and
WHEREAS, Employer desires to obtain the benefit of continued services
of Officer and Officer desires to continue to render services to Employer and
its subsidiaries, including Home Loans; and
WHEREAS, the Board of Directors of Employer (the "Board") has
determined that it is in Employer's best interest and that of its stockholders
to recognize the substantial contribution that Officer has made and is expected
to continue to make to the Employer's business and to retain his services in the
future; and
WHEREAS, Employer and Officer desire to set forth the terms and
conditions of Officer's employment with Employer 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, in accordance with the terms hereof, for a term beginning on the
Effective Date (as defined in Section 8(c) hereof) and ending on February 28,
2002, unless earlier terminated in accordance with the provisions hereof.
2. Specific 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 Senior Managing Director and
Chief Operating Officer of Employer and as President and Chief Executive Officer
of Home Loans. Employer agrees that Officer's duties hereunder shall be the
usual and customary duties of such offices or such other duties as may be
designated from time to time by the Board consistent with his status as an
executive officer of Employer; any such duties shall be consistent with the
provisions of the charter documents of Employer or 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 subsidiaries shall be
aggregated in determining whether Officer has received the benefits provided for
herein.
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 subsidiaries, and matters related thereto, and shall use his best
efforts and abilities to promote its interests. Officer agrees that he will
diligently endeavor to promote the business, affairs and interests of Employer
and its subsidiaries 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 of one or more (direct or indirect) subsidiaries of Employer as the
Board may from time to time request, subject to appropriate authorization by the
subsidiary or subsidiaries 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 businesses then conducted by
Employer or any of its subsidiaries.
Officer may serve as a director or in any other capacity of any
business enterprise, including an enterprise whose activities may involve or
relate to the business of Employer, provided that such service is expressly
approved by the Board. 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
after the Effective Date at the annual rate of $744,187.50 (the "Annual Rate").
In respect of the Fiscal Years ending in 2000, 2001 and 2002, the Compensation
Committee of the Board (the "Compensation Committee") shall, based upon the
recommendation of Xxxxxx X. Xxxxxx (or, if he is no longer an officer of
Employer, the Chairman of Employer), increase the Annual Rate by no less than 5%
and no greater than 10% each year. Any such increase shall be effective not
later than June 1 of the fiscal year in which the increase is granted.
(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 terms and conditions
of the Countrywide Credit Industries, Inc. Annual Incentive Plan (the "Annual
Incentive Plan") and set out in the Incentive Matrix attached hereto as Appendix
B; provided, however, that the effectiveness of the incentive compensation award
for the final Fiscal Year ending during the term of this Agreement is subject to
the approval by Employer's stockholders of an annual incentive plan containing
substantially the terms of the Annual Incentive Plan on or before the Employer's
2001 Annual Meeting of Stockholders in accordance with Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
promulgated thereunder.
(c) Stock Options. Employer shall grant to Officer stock
options in respect of each of the Fiscal Years ending during the term of this
Agreement for such number of shares of Employer's common stock as the
Compensation Committee in its sole discretion determines, taking into account
Officer's and Employer's performance in each of such Fiscal Years and the
competitive practices then prevailing regarding the granting of stock options;
provided, however, that the number of shares in respect of each annual stock
option grant shall be no less than 100,000 and no greater than 250,000. The
numbers 100,000 and 250,000 in the preceding sentence shall be adjusted
proportionately in the event Employer (A) declares a stock dividend on its
common stock, (B) subdivides its outstanding common stock, (C) combines the
outstanding shares of its capital stock into a smaller number of common stock,
or (D) issues any shares of its capital stock in a reclassification of the
common stock (including any such reclassification in connection with a
consolidation or merger in which Employer is the continuing or surviving
corporation). The stock options described in this Section 4(c) in respect of a
Fiscal Year shall be granted at the same time as Employer grants stock options
to its other senior executives in respect of such Fiscal Year (but in no event
later than June 30 following the end of such Fiscal Year).
All stock options granted in accordance with this
Section 4(c): (i) shall be granted pursuant to the Countrywide Credit
Industries, Inc. 1993 Stock Option Plan, as amended (the "1993 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 1993 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 and (iv) shall be subject to such other terms and
conditions as may be determined by the Compensation Committee and set forth in
the agreement evidencing the award. The stock options granted pursuant to this
Section shall consist of incentive stock options to the extent permitted by law
or regulation.
(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.
(e) Continuation of Benefits. 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) to 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.
(f) 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.
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 the fifth
anniversary of such notice, 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 Plan, and any compensation he may receive
pursuant to any other employment, and (ii) to provide during the Disability
Payment Period the benefits specified in Section 4(e) 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 provide during the twelve-month period
following the date of the Officer's death the benefits specified in Section 4(e)
hereof. If Officer's death occurs while he is receiving payments for Disability
under Section 5(a)(i) above, such payments shall cease and the Beneficiary shall
be entitled to the payments and benefits under this Subsection (b), which shall
continue for a period of twelve months thereafter at the full rate of
compensation in effect immediately prior to the Disability. This Agreement in
all other respects will terminate upon the death of Officer; provided, however,
that 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.
(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
subsidiaries or permanently prohibiting him from participating in the conduct of
the affairs of Employer or any of its subsidiaries. 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
subsidiaries' affairs by any federal or state regulatory authority having
jurisdiction in the matter, Employer's obligations under Sections 4(a), 4(b) and
4(c) 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) and 4(c) 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.
(d) Severance. (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 (A) until February 28, 2002 or the second
anniversary of the Termination Date, whichever is later (the "Severance
Period"), Employer shall (1) continue to pay Officer his annual base salary, at
the rate in effect on the Termination Date, and (2) provide the benefits
specified in Section 4(e) hereof, (B) Employer shall pay Officer, within ten
(10) days after the end of each Fiscal Year ending during the Severance Period,
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") (such
amount to be pro-rated for any Fiscal Year ending during the Severance Period
that is less than 12 months); provided, however, that in the event the Severance
Period ends on a date prior to the end of a Fiscal Year, Employer shall also pay
Officer an amount equal to the product of (1) the Bonus Rate and (2) the
fraction obtained by dividing (x) the number of days elapsed since the end of
the immediately preceding Fiscal Year through the end of the Severance Period by
(y) 365, and (C) all stock options held by Officer on the Termination Date shall
become immediately and fully exercisable.
(ii) If after a "Change in Control" (as defined in
Appendix A 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, 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 three times the
sum of (1) Officer's annual base salary 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, (B) Employer shall continue to provide for
three years from the Termination Date the benefits specified in Section 4(e)
hereof and (C) all stock options held by Officer on the Termination Date shall
become immediately and fully exercisable. 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 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 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) if and to the extent that such
reduction would result in Officer retaining a larger amount, on an after-tax
basis (taking into account federal, state and local income taxes and the
imposition of the Excise Tax), than if Officer received all of the Payments. If
the application of the preceding sentence should require a reduction in Payments
or other "parachute payments" (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 to the extent necessary
and, second, by reducing any cash benefits 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
(the "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.
(g) Disputes. In the event of a dispute concerning the
validity of a purported termination which is maintained in good faith, the
Termination Date shall mean the date the dispute is finally resolved and
Employer will continue to provide Officer with the compensation and benefits
provided for under this Agreement, until the dispute is finally resolved without
any obligation by Officer to repay any of such amounts to Employer,
notwithstanding the final outcome of the dispute. Payments required to be made
by this Section 5(g) are in addition to all other amounts due under Section 5 of
this Agreement and shall not be offset against or reduce any other amounts due
under Section 5 of this Agreement. Officer shall be required to render services
to Employer during the period following his Termination Date but before the
dispute concerning the termination is finally determined unless Employer fails
to provide Officer with a reasonable opportunity to perform his duties under
this Agreement during such period.
6. Reimbursement of Business Expenses. During the term of this
Agreement, Employer shall reimburse Officer promptly for all expenditures
(including travel, entertainment, parking, business meetings, and the monthly
costs (including dues) of maintaining memberships at appropriate clubs) 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 the
Employer or similar transaction. Employer shall not agree to any such
transaction unless the successor to or assignee of the Company's business and/or
assets in such transaction expressly assumes all obligations of the Employer
hereunder. 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 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000,
Attention: General 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) Effective Date. This Agreement is effective as
of March 1, 1999.
(d) 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.
(e) 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.
(f) California Law. This Agreement shall be construed
and interpreted in accordance with the laws of California.
(g) Attorneys' Fees in Action on Contract. If any litigation
shall occur between the Officer and Employer, which litigation arises out of or
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.
(h) 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, (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.
(i) 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, or from the performance of services
to any other business entity, or both.
(j) 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.
(k) 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.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
ATTEST:
By:
Secretary Title:
OFFICER:
Xxxxxxxx X. Xxxxxxx, in his individual capacity
126026.06
APPENDIX A
To Xxxxxxxx X. Xxxxxxx Employment Agreement
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, or (iii) any
Person in connection with a "Non-Control Transaction" (as hereinafter
defined);
(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 beconsidered 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
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, or (iv) any Person who, immediately prior to such
merger, consolidation or reorganization had Beneficial Ownership
of twenty five percent (25%) or more of the then outstanding
Voting Securities or common stock of Employer, has 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).
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 Persons; provided, however,
that if a Change in 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.
APPENDIX B
INCENTIVE MATRIX
To Determine Fiscal 2000, 2001 and 2002 Awards
% of Target Bonus Paid
(Target Bonus = $800,000)
EPS
Less
XXX than $2.16 $2.16 $2.47 $2.78 $3.09 $3.40 $3.71 $4.02 $4.33 $4.64 $4.94 and
more
------ ------------- -------------- ------------- ------------- ------------- ------------- -------------
18% or more 45% 65% 85% 105% 125% 150% 175% 200% 225% 250% 250%
---------------- ------------- -------------- ------------- ------------- ------------- ------------- -------
15% 20% 40% 60% 80% 100% 125% 150% 175% 200% 225% 250%
---------------- ------------- -------------- ------------- ------------- ------------- ------------- -------
10% 0% 15% 35% 55% 75% 100% 125% 150% 175% 200% 225%
5% 0% 0% 10% 30% 50% 75% 100% 100% 100% 100% 100%
Less than 5% 0 0 0 0 0 0 0 0 0 0 0
---------------- ------------- -------------- ------------- ------------- ------------- ------------- -------
* Payouts interpolated between points.
* XXX calculated on quarterly average equity.
* For new equity infusions, first year return target at 10% rather than 15%.
