EXHIBIT 10.47
EMPLOYMENT AGREEMENT
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This Employment Agreement ("Agreement') is effective as of January 1, 1999
between New Century Financial Corporation, a Delaware corporation (the
"Company"), and _______________ (the "Executive"). In consideration of the
mutual covenants and agreements set forth herein, the parties hereto agree as
follows:
ARTICLE I
EMPLOYMENT
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The Company hereby employs Executive and Executive accepts employment with
the Company upon the terms and conditions herein set forth.
1.1 Employment. The Company hereby employs Executive, and Executive agrees
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to serve, as the Company's ____________________ during the term of this
Agreement. Executive agrees to perform such duties as may be assigned to
Executive from time to time by the Board of Directors. Executive agrees to
devote substantially his full business time and attention and best efforts to
the affairs of the Company during the term of this Agreement.
1.2 Term. The term of employment of Executive hereunder will be for the
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period commencing on the date of this Agreement and ending on the earliest of:
(a) December 31, 2002,
(b) The date of termination of Executive's employment in accordance
with Article IV of this Agreement,
(c) The date of Executive's voluntary retirement in accordance with
the Company's plans and policies; or
(d) The date of Executive's death.
The date set forth in Paragraph (a) above shall automatically be extended
by one (1) year (resulting in a three (3)-year term) on January 1, 2001 and on
each January 1 thereafter (an "Anniversary Date"), unless prior to any such
Anniversary Date either party gives written notice to the other party requesting
non-renewal or renegotiation of this Agreement.
ARTICLE II
COMPENSATION
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2.1 Base Salary. Effective January 1, 1999 and during the employment of
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Executive, the Company shall pay to the Executive a base salary at the rate of
$333,333 per year during 1999, and thereafter at a rate determined by the
Company's Board of Directors (the "Base Salary"); provided, however, that
Executive's Base Salary shall be increased by a minimum of 5.0% per year
commencing January 1, 2000. The Base Salary shall be payable in substantially
equal semi-monthly installments.
2.2 Profit Sharing and Bonuses. Executive shall be eligible to
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participate in the Founding Managers' Incentive Compensation Plan, or any
successor plan established by the Board of Directors. The parties agree that
the performance goals and potential incentive awards for Performance Periods
during 1999 and 2000 under the Founding Managers' Incentive Compensation Plan
shall be as set forth in Exhibit A hereto. The performance goals for
Performance Periods in 2001 and thereafter shall be the same as the goals and
award formulas for 2000, except that the Compensation Committee has the
discretion to reduce the applicable ratio of Before-Tax Net Income to Total
Stockholders' Equity.
2.3 Reimbursement of Expenses. The Executive shall be entitled to receive
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prompt reimbursement of all reasonable expenses incurred by the Executive in
performing services hereunder, including all expenses of travel, car phone,
entertainment and living expenses while away from home on business at the
request of, or in the service of, the Company, provided that such expenses are
incurred and accounted for in accordance with the policies and procedures
established by the Company.
2.4 Automobile Expenses. The Company shall provide Executive with an
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automobile allowance of $500 per month. In addition, the Company shall at
Executive's request enter into a lease agreement to provide an automobile for
Executive's use subject to a reduction in Executive's Base Salary equal to the
amount of all lease and insurance payments. If Executive elects to utilize a
lease agreement, Executive will be responsible for all operating costs of the
vehicle and will provide the Company with records to substantiate the business
use of the vehicle. In such event, the Company will calculate and report an
amount of taxable income to Executive based on Executive's personal use of the
vehicle, such calculation and reporting to be in accordance with applicable IRS
guidelines.
2.5 Benefits. The Executive shall be entitled to participate in and be
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covered by all health, insurance, pension, disability insurance, physical exam
and other employee plans and benefits established by the Company (collectively
referred to herein as the "Company Benefit Plans") on the same terms as are
generally applicable to other senior executives of the Company, subject to
meeting applicable eligibility requirements.
2.6 Vacations and Holidays. During Executive's employment with the
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Company, Executive shall be entitled to an annual vacation leave at full pay,
such vacation to be four weeks in each year of the term hereof or such greater
vacation benefits as may be provided for by the Company's vacation policies
applicable to senior executives. Executive shall be entitled to such holidays
as are established by the Company for all employees.
ARTICLE III
NON-COMPETITION, CONFIDENTIALITY AND NONDISCLOSURE
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3.1 Confidentiality. Executive will not during Executive's employment by
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the Company or thereafter at any time disclose, directly or indirectly, to any
person or entity or use for Executive's own benefit any trade secrets or
confidential information relating to the Company's business operations,
marketing data, business plans, strategies, employees, negotiations and
contracts with other companies, or any other subject matter pertaining to the
business of the Company or any of its clients, customers, consultants,
licensees, or affiliates,
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known, learned, or acquired by Executive during the period of Executive's
employment by the Company (collectively "Confidential Information"), except as
may be necessary in the ordinary course of performing Executive's particular
duties as an employee of the Company.
3.2 Return of Confidential Material. Executive shall promptly deliver to
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the Company on termination of Executive's employment with the Company, whether
or not for cause and whatever the reason, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings, blueprints,
and any other documents of a confidential nature belonging to the Company,
including all copies of such materials which Executive may then possess or have
under Executive's control. Upon termination of Executive's employment by the
Company, Executive shall not take any document, data, or other material of any
nature containing or pertaining to the proprietary information of the Company.
3.3 No Competing Employment. During the term of this Agreement and, if
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Executive terminates this Agreement, for a period ending one year thereafter,
or, if longer, for any period during which Executive receives any compensation
from the Company hereunder (subject to the right of Executive to waive any right
to receive further compensation from the Company) (the "Restricted Period"), the
Executive shall not, unless he receives the prior written consent of the
Company, directly or indirectly own an interest in, manage, operate, join,
control, lend money or render financial assistance to, as an officer, employee,
partner, stockholder, consultant or otherwise, any individual, partnership,
firm, corporation or other business organization or entity that, at such time
directly competes with, or intends to compete with, the Company or its
affiliates in the business of, underwriting, purchasing, securitizing, selling
or servicing subprime credit grade secured loans or any other principal line of
business engaged in by the Company at the time of such termination (a "Competing
Company"). Notwithstanding the foregoing, Executive shall be entitled to own
securities of any entity if such securities are registered under Section 12(b)
or (g) of the Securities Exchange Act of 1934, as amended, and, upon approval of
the Company's Board of Directors, Executive shall be entitled to purchase
securities of a Competing Company entity if such securities are offered to
investors irrespective of any employment or other participation in the entity by
the investor.
3.4 Prohibition on Solicitation of Customers. During the term of
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Executive's employment with the Company and for a period of one year thereafter
or, if longer, for any period during which Executive receives any compensation
from the Company hereunder, Executive shall not, directly or indirectly, either
for Executive or for any other person or entity, solicit any person or entity to
terminate such person's or entity's contractual and/or business relationship
with the Company, nor shall Executive interfere with or disrupt or attempt to
interfere with or disrupt any such relationship.
3.5 Prohibition on Solicitation of the Company's Employees or Independent
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Contractors After Termination. For a period of one year following the
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termination of Executive's employment with the Company or, if longer, for any
period during which Executive receives any compensation from the Company
hereunder, Executive will not directly or indirectly solicit any of the
Company's employees, agents, or independent contractors to leave the employ of
the Company for a competitive company or business.
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3.6 Right to Injunctive and Equitable Relief. Executive's obligations not
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to disclose or use Confidential Information and to refrain from the
solicitations described in this Article III are of a special and unique
character which gives them a peculiar value. The Company cannot be reasonably
or adequately compensated in damages in an action at law in the event Executive
breaches such obligations. Therefore, Executive expressly agrees that the
Company shall be entitled to injunctive and other equitable relief without bond
or other security in the event of such breach in addition to any other rights or
remedies which the Company may possess. Furthermore, the obligations of
Executive and the rights and remedies of the Company under this Article III are
cumulative and in addition to, and not in lieu of, any obligations, rights, or
remedies created by applicable law relating to misappropriation or theft of
trade secrets or confidential information.
3.7 No Violation of Other Agreements. Executive represents that his
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performance of all the terms of this Agreement and as an employee of the Company
does not and will not breach any agreement to (i) not compete or interfere with
the business of a former employer (which term for purposes of this Section 3.7
shall also include persons, firms, corporations and other entities for which
Executive has acted as an independent contractor or consultant), (ii) not
solicit employees, customers or vendors of any former employer or (iii) keep in
confidence proprietary information acquired by Executive in confidence or in
trust prior to Executive's employment with the Company. Executive represents
and warrants to and covenants with the Company that Executive will not bring to
the Company any materials or documents of a former employer containing
confidential or proprietary information that is not generally available to the
public, unless Executive shall have obtained express written authorization from
any such former employer for their possession and use.
ARTICLE IV
TERMINATION
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4.1 Definitions. For purposes of this Article IV, the following
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definitions shall apply to the terms set forth below:
(a) Cause. "Cause" shall be defined as follows:
(i) Executive's conviction of any felony (whether or not
involving the Company) which constitutes a crime of moral
turpitude or which is punishable by imprisonment in a
state or federal correction facility;
(ii) Actions by Executive during the term of this Agreement
involving willful malfeasance or gross negligence;
(iii) Executive's commission of an act of fraud or dishonesty,
whether prior or subsequent to the date hereof, upon the
Company,
(iv) Executive's repeated, willful failure or refusal to
perform his duties as required by this Agreement on an
exclusive and full-time basis; provided that termination
of Executive's employment pursuant to this subparagraph
(iv) shall not constitute valid termination for cause
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unless Executive shall have first received written notice
from the Board of Directors of the Company stating the
nature of such failure or refusal and affording Executive
at least ten (10) days to correct the act or omission
complained of to the satisfaction of the Board of
Directors;
(v) Executive's willful violation of any reasonable rule or
regulation of the Board of Directors applicable to all
senior executives if such violation is not cured to the
satisfaction of the Board of Directors promptly following
notice to Executive; and
(vi) Any knowing or intentional material misrepresentation made
in connection with the transactions contemplated by that
certain Investment Agreement dated November 21, 1995 to
which the Company is a party.
(b) Disability. "Disability" shall mean a physical or mental
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incapacity as a result of which the Executive becomes unable to continue the
proper performance of his duties hereunder in substantially a full time capacity
(reasonable absences because of sickness for up to six (6) consecutive months
excepted, provided, however, that any new period of incapacity or absences shall
be deemed to be part of a prior period of incapacity or absences if the prior
period terminated within ninety (90) days of the beginning of the new period of
incapacity or absence and the new capacity or absence is determined by the
Company's Board of Directors, in good faith, to be related to the prior
incapacity or absence.) A determination of Disability shall be subject to the
certification of a qualified medical doctor agreed to by the Company and the
Executive or, in the event of the Executive's incapacity to designate a doctor,
the Executive's legal representative. In the absence of agreement between the
Company and the Executive, each party shall nominate a qualified medical doctor
and the two doctors so nominated shall select a third doctor, who shall make the
determination as to Disability.
(c) Good Reason. "Good Reason" shall mean any of the following:
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(i) the assignment to Executive by the Company's Board of
Directors of duties substantially inconsistent with
Executive's position, duties, responsibilities or status
with the Company as of the date of this Agreement;
(ii) any substantial change in Executive's titles or offices
with the Company, except in connection with a termination
of Executive's employment for Cause, Disability,
retirement or Executive's death;
(iii) any assignment to Executive of duties that would require
him to relocate or transfer his current principal place of
residence in Southern California, or would make the
continuance of such current principal place of residence
unreasonably difficult; or
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(iv) any failure by the Company to comply with any material
provision of this Agreement which has not been cured
within 30 days after notice of such noncompliance has been
given by Executive to the Company.
(d) Change in Control. "Change in Control" shall mean any of the
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following:
(i) consummation of a merger, consolidation, or other
reorganization, with or into, or the sale of all or
substantially all of the Company's business and/or assets
as an entirety to, one or more entities that are not
subsidiaries of the Company (a "Business Combination"),
unless (A) as a result of the Business Combination at
least 50% of the outstanding securities voting generally
in the election of directors of the surviving or resulting
entity or a parent thereof (the "Successor Entity")
immediately after the reorganization are, or will be,
owned, directly or indirectly, by stockholders of the
Company immediately before the Business Combination; and
(B) no "person" (as such term is defined for purposes of
clause (ii) below and excluding the Successor Entity)
beneficially owns, directly or indirectly, more than 40%
of the outstanding shares of the combined voting power of
the outstanding voting securities of the Successor Entity,
after giving effect to the Business Combination;
(ii) any "person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more
than 40% of the combined voting power of the Company's
then outstanding securities entitled to then vote
generally in the election of directors of the Company; or
(iii) during any period not longer than two consecutive years,
individuals who at the beginning of such period
constituted the Board of Directors of the Company cease to
constitute at least a majority thereof, unless the
election, or the nomination for election by the Company's
stockholders, of each new Board member was approved by a
vote of at least two-thirds of the Board members then
still in office who were Board members at the beginning of
such period (including for these purposes, new members
whose election or nomination was so approved), but
excluding for this purpose, any such individual whose
initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the
election or removal or directors or other actual or
threatened solicitation of proxies or consents by or on
behalf of a person other than the Board.
4.2 Termination by Company. The Company may terminate the Executive's
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employment hereunder immediately for Cause. Subject to the other provisions
contained in this
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Agreement, the Company may terminate this Agreement for any reason other than
Cause upon 30 days' written notice to Executive.
4.3 Termination by Executive. The Executive may terminate this Agreement
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upon 30 days' written notice to the Company.
4.4 Benefits Received Upon Termination.
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(a) If the Executive's employment is terminated by the Company for
Cause, or if this Agreement is terminated by Executive without Good Reason, then
the Company shall pay the Executive his Base Salary through the effective date
of such termination plus credit for any vacation earned but not taken and the
Company shall thereafter have no further obligations to Executive under this
Agreement; provided, however, that the Company will continue to honor any
obligations that may have vested or accrued under the existing Company Benefit
Plans or any other Agreements or arrangements applicable to the Executive.
(b) If the Executive's employment is terminated by the Company
without Cause, or if this Agreement is terminated by Executive for Good Reason,
then the Company shall:
(i) pay to the Executive within two business days following
the date of termination his Base Salary through the end of
the month during which such termination occurs plus credit
for any vacation earned but not taken;
(ii) pay to the Executive as severance pay (a) the Executive's
Base Salary in effect as of the date of termination, such
payments to be made in accordance with the Company's usual
payroll periods for a minimum of six (6) months or, if
longer, through the expiration of the term of employment
then in effect under this Agreement, without additional
renewals as otherwise provided hereunder, plus (b) an
amount equal to the cash portion of the most recent annual
profit sharing and/or incentive bonus received by the
Executive from the Company or, if more, the cash amount
which would be due under the profit sharing and/or
incentive bonus plans applicable to Executive for the then
current year calculated as of the effective date of
termination; such payment to be made in substantially
equal installments in accordance with the Company's usual
payroll periods over such time period as Executive
receives Base Salary payments hereunder;
(iii) maintain, at the Company's expense, in full force and
effect, for the Executive's continued benefit until the
earlier of (i) the expiration of the term of employment
then in effect, or (ii) the Executive's commencement of
full time employment with a new employer, all Company
medical insurance and reimbursement plans and other
programs or arrangements in which the Executive was
entitled to participate immediately prior to the date of
termination, provided
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that the Executive's continued participation is possible
under the general terms and provisions of such plans and
programs. In the event that the Executive's participation
in any such plan or program is barred, the Company shall
arrange to provide the Executive with medical benefits
substantially similar to those which the Executive was
entitled to receive under such plans or programs; and
(iv) pay, for the benefit of Executive, all costs, up to a
maximum of $20,000, related to Executive's participation
in a senior executive outplacement program at Xxx Xxxxx
Xxxxxxxx or a similar outplacement firm.
Notwithstanding the foregoing, if, within twelve (12) months of a Change
in Control, Executive's employment with the Company is terminated without Cause,
Executive terminates this Agreement for Good Reason, or the Company provides
Executive notice of non-renewal or renegotiation of this Agreement pursuant to
Section 1.2 above, then the six (6)-month period referred to in subsection
(b)(ii) above shall be extended to eighteen (18) months for purposes of this
Section 4.4(b).
(c) Termination Because of Employee Disability. Should Executive
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become disabled from performing his duties hereunder as defined above, Executive
acknowledges that his employment may be terminated anytime thereafter if such
disability continues; provided that, during the period of the disability prior
to such termination of employment, Executive shall continue to receive all
compensation and benefits as if he were actively employed less any sums received
directly by the Executive, if any, under any policy or policies of disability
income insurance purchased by the Company. In the event of such termination,
Executive's rights to receive any salary or payments under this Agreement shall
terminate but Executive shall have the right to continue to receive any and all
payments made by an insurance company under any and all policies of disability
insurance purchased by the Company. Executive's rights under any Company
Benefit Plans will be those rights accorded to any terminated employee under the
plan provisions and applicable law. Executive will remain entitled to receive
any benefits under state disability or worker's compensation laws.
(d). Any termination for cause hereunder will only be effective if
approved by at least a majority vote of the entire Board of Directors, pursuant
to votes casts in person at a meeting at which Executive shall be entitled to be
present to answer any charges which might be asserted as cause for his
termination.
4.5 Effect of Termination. Upon any termination of this Agreement, for
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any reason, Executive shall be deemed to have immediately resigned as a director
of the Company and all subsidiaries, if applicable, without the giving of any
notice or the taking of any other action.
ARTICLE V
ASSUMPTION OF OBLIGATIONS BY SUCCESSOR TO COMPANY
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5.1 Assumption of Obligations. The Company will require any successor or
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assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or
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substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement. As used in this
Agreement, "Company" shall mean the Company as herein before defined and any
successor or assign to its business and/or assets as aforesaid which executes
and delivers the agreement provided for in this Article V or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law. If at any time during the term of this Agreement the Executive is employed
by any corporation a majority of the voting securities of which is then owned by
the Company, "Company" as used in this Agreement shall in addition include such
employer.
5.2 Beneficial Interests. This Agreement shall inure to the benefit of
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and be enforceable by the Executive's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts are still payable to
him or her hereunder, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there be no such designee, to the
Executive's estate.
ARTICLE VI
GENERAL PROVISIONS
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6.1 Notice. For purposes of this Agreement, notices and all other
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communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company: New Century Financial Corporation
00000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: President
If to the Executive: ______________
New Century Financial Corporation
00000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
6.2 No Waivers. No provision of this Agreement may be modified, waived or
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discharged unless such waiver, modification or discharge is agreed to in writing
signed by the Executive and the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be
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performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
6.3 Governing Law. This agreement shall be governed by and construed in
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accordance with the laws of the State of California.
6.4 Severability or Partial Invalidity. The invalidity or
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unenforceability of any provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
6.5 Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
6.6 Legal Fees and Expenses. Should any party institute any action or
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proceeding to enforce this Agreement or any provision hereof, or for damages by
reason of any alleged breach of this Agreement or of any provision hereof, or
for a declaration of rights hereunder, the prevailing party in any such action
or proceeding shall be entitled to receive from the other party all costs and
expenses, including reasonable attorneys' fees, incurred by the prevailing party
in connection with such action or proceeding.
6.7 Entire Agreement. This Agreement constitutes the entire agreement of
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the parties and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings, and negotiations between the parties with
respect to the subject matter hereof. This Agreement is intended by the parties
as the final expression of their agreement with respect to such terms as are
included in this Agreement and may not be contradicted by evidence of any prior
or contemporaneous agreement. The parties further intend that this Agreement
constitutes the complete and exclusive statement of its terms and that no
extrinsic evidence may be introduced in any judicial proceeding involving this
Agreement.
6.8 Assignment. This Agreement and the rights, duties, and obligations
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hereunder may not be assigned or delegated by any party without the prior
written consent of the other party and any such attempted assignment and
delegation shall be void and be of no effect. Notwithstanding the foregoing
provisions of this Section 6.8, the Company may assign or delegate its rights,
duties, and obligations hereunder to any person or entity which succeeds to all
or substantially all of the business of the Company through merger,
consolidation, reorganization, or other business combination or by acquisition
of all or substantially all of the assets of the Company; provided that such
person assumes the Company's obligations under this Agreement in accordance with
Section 5. 1.
6.9 Arbitration. Any controversy, dispute, claim or other matter in
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question arising out of or relating to this Agreement shall be settled, at the
request of either party, by binding arbitration in accordance with the National
Rules for the Resolution of Employment Disputes of the American Arbitration
Association ("AAA"), and judgment upon the award rendered by the arbitrators may
be entered in any court having jurisdiction thereof, subject to the following
terms, conditions and exceptions:
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EXHIBIT A
(a) Notice of the demand for arbitration shall be filed in writing
with the other party and with the AAA. There shall be a panel of three (3)
arbitrators whose selection shall be made in accordance with the procedures then
existing for the selection of such arbitrators by the AAA.
(b) Reasonable discovery shall be allowed in arbitration.
(c) The costs and fees of the arbitration shall be allocated by the
arbitrators.
6.10 Indemnification. To the extent permitted by law, applicable statutes
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and the Articles of Incorporation, Bylaws or resolutions of the Company in
effect from time to time, the Company shall indemnify Executive against
liability or loss arising out of Executive's actual or asserted misfeasance or
nonfeasance in the performance of Executive's duties or out of any actual or
asserted wrongful act against, or by, the Company including but not limited to
judgments, fines, settlements and expenses incurred in the defense of actions,
proceedings and appeals therefrom. The Company shall endeavor to obtain
Directors and Officers Liability Insurance to indemnify and insure the Company
and Executive from and against the aforesaid liabilities. The provisions of
this paragraph shall apply to the estate, executor, administrator, heirs,
legatees or devisees of Executive.
6.11 Termination of Prior Agreement. The Employment Agreement dated June
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1, 1997 and amended November 24, 1998 between Executive and Company is hereby
terminated.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
NEW CENTURY FINANCIAL CORPORATION _____________________________
By:_______________________________ _____________________________
("Executive")
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EXHIBIT A
PERFORMANCE GOALS
FOR
FOUNDING MANAGERS OF NEW CENTURY FINANCIAL CORPORATION
ESTABLISHED FEBRUARY 10, 1999
SIX-MONTH PERFORMANCE PERIOD - JANUARY 1, 1999 THROUGH JUNE 30, 1999
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Each Founding Manager shall be entitled to receive an Incentive Award for
the 6-Month Performance Period based on the following ratio, and calculated
according to the table set forth below:
Before-Tax Net Income for the 6-Month Performance Period
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Total Stockholders' Equity
Amount of
Ratio Incentive Award
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If ratio is less than 10% 0
If ratio is at least 10% but less than 20% 1.25% of Before-Tax Net Income for the
6-Month Performance Period in excess of 10%
of Total Stockholders' Equity
If ratio is at least 20% 1.25% of Before-Tax Net Income for the
6-Month Performance Period in excess of 10%
of Total Stockholders' Equity, plus 0.50%
of Before-Tax Net Income for the 6-Month
Performance Period in excess of 20% of
Total Stockholders' Equity
However, in no event shall the Incentive Award paid to any Founding Manager for
the 6-Month Performance Period exceed 80% of his base salary for the calendar
year in which the 6-Month Performance Period falls.
TWELVE-MONTH PERFORMANCE PERIOD - JANUARY 1, 1999 THROUGH DECEMBER 31, 1999
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Each Founding Manager shall be entitled to receive an Incentive Award for
the 12-Month Performance Period based on the following ratio, and calculated
according to the table set forth below:
12
Before-Tax Net Income for the 12-Month Performance Period
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Total Stockholders' Equity
Amount of
Ratio Incentive Award
------------------------------------------ --------------------------------------------
If ratio is less than 20% 0
If ratio is at least 20% but less than 40% 1.25% of Before-Tax Net Income for the
12-Month Performance Period in excess of
20% of Total Stockholders' Equity
If Ratio is at least 40% 1.25% of Before-Tax Net Income for the
12-Month Performance Period in excess of
20% of Total Stockholders' Equity, plus
0.50% of Before-Tax Net Income for the
12-Month Performance Period in excess of
40% of Total Stockholders' Equity
The amount of any Incentive Award paid for the 12-Month Performance Period
shall be reduced by amounts previously paid to the Founding Manager for the 6-
Month Performance Period.
Any Incentive Award amount up to 200% of a Founding Manager's base salary
for the applicable year will be paid in cash. Any Incentive Award amount
exceeding 200% of a Founding Manager's base salary will be paid in the form of
restricted stock. However, the Compensation Committee has the discretion to
allow Founding Managers to elect what portion of any Incentive Award to receive
in cash and what portion in restricted stock.
SIX-MONTH PERFORMANCE PERIOD - JANUARY 1, 2000 THROUGH JUNE 30, 2000
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Each Founding Manager shall be entitled to receive an Incentive Award for
the 6-Month Performance Period based on the following ratio, and calculated
according to the table set forth below:
13
Before-Tax Net Income for the 6-Month Performance Period
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Total Stockholders' Equity
Amount of
Ratio Incentive Award
------------------------------------------ --------------------------------------------
If ratio is less than 9% 0
If ratio is at least 9% but less than 18% 1.25% of Before-Tax Net Income for the
6-Month Performance Period in excess of 9%
of Total Stockholders' Equity
If ratio is at least 18% 1.25% of Before-Tax Net Income for the
6-Month Performance Period in excess of 9%
of Total Stockholders' Equity, plus 0.50%
of Before-Tax Net Income for the 6-Month
Performance Period in excess of 18% of
Total Stockholders' Equity
However, in no event shall the Incentive Award paid to any Founding Manager for
the 6-Month Performance Period exceed 80% of his base salary for the calendar
year in which the 6-Month Performance Period falls.
TWELVE-MONTH PERFORMANCE PERIOD - JANUARY 1, 2000 THROUGH DECEMBER 31, 2000
---------------------------------------------------------------------------
Each Founding Manager shall be entitled to receive an Incentive Award for
the 12-Month Performance Period based on the following ratio, and calculated
according to the table set forth below:
Before-Tax Net Income for the 12-Month Performance Period
----------------------------------------------------------------------
Total Stockholders' Equity
Amount of
Ratio Incentive Award
------------------------------------------ --------------------------------------------
If ratio is less than 18% 0
If ratio is at least 18% but less than 35% 1.25% of Before-Tax Net Income for the
12-Month Performance Period in excess of
18% of Total Stockholders' Equity
If Ratio is at least 35% 1.25% of Before-Tax Net Income for the
14
12-Month Performance Period in excess of
18% of Total Stockholders' Equity, plus
0.50% of Before-Tax Net Income for the
12-Month Performance Period in excess of
35% of Total Stockholders' Equity
The amount of any Incentive Award paid for the 12-Month Performance Period
shall be reduced by amounts previously paid to the Founding Manager for the 6-
Month Performance Period.
Any Incentive Award amount up to 200% of a Founding Manager's base salary
for the applicable year will be paid in cash. Any Incentive Award amount
exceeding 200% of a Founding Manager's base salary will be paid in the form of
restricted stock. However, the Compensation Committee has the discretion to
allow Founding Managers to elect what portion of any Incentive Award to receive
in cash and what portion in restricted stock.
DEFINITIONS:
-----------
"BEFORE-TAX NET INCOME" shall mean the Company's net income for operations
before reduction for income taxes as shown on the Company's financial statements
with the following adjustments: (i) benefits payable under the Company's
employee incentive compensation plans for the Performance Period for employees
other than the Founding Managers shall be deducted, but amounts payable to the
Founding Managers for the Performance Periods described above shall not be
deducted, and (ii) the inclusion or exclusion of any income or loss from
discontinued operations or extraordinary items shall be determined by the
Compensation Committee in its discretion. The amount of Before-Tax Net Income
for the 6-Month Performance Period shall be based on the Company's unaudited
financial statements for the six-months ended June 30 of the applicable year.
The amount of Before-Tax Net Income for the 12-Month Performance Period shall be
determined by the Company's independent certified public accountants based on
the audited financial statements for the 12-months ended December 31 of the
applicable year.
"TOTAL STOCKHOLDERS' EQUITY" means the Company's total stockholders' equity
as shown on the Company's audited financial statements as of the first day of a
Performance Period, increased for equity issued during the Performance Period in
the manner described in the next sentence. The amount of such increase shall be
equal to the amount of equity issued during the Performance Period multiplied by
a fraction, the numerator of which is the number of days remaining in the
Performance Period and the denominator of which is the total number of days is
365.
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