FIRST AMENDMENT TO THE EMPLOYMENT AGREEMENT WITH RONALD A. KLEIN
Exhibit 10.2
FIRST AMENDMENT TO THE
EMPLOYMENT AGREEMENT WITH XXXXXX X. XXXXX
EMPLOYMENT AGREEMENT WITH XXXXXX X. XXXXX
This First Amendment to the Employment Agreement (this “Amendment”) is made by and between Origen
Financial, Inc, a Delaware corporation (“Parent”), Origen Financial, L.L.C, a Delaware limited
liability company (“Company”), and Xxxxxx X. Xxxxx (“Executive”) on July 1, 2008. Capitalized
terms used but not defined herein shall have the meanings set forth in the Employment Agreement
with Executive effective as of July 14, 2006 (the “Agreement”).
RECITALS:
A. The Company and Executive entered into that certain Employment Agreement dated July 14, 2006.
B. The Internal Revenue Service issued final regulations regarding the application of Internal
Revenue Code (“Code”) section 409A to nonqualified deferred compensation, with an effective date of
January 1, 2008.
C. Because the Agreement provides for certain deferrals of compensation, it is subject to Code
section 409A.
D. Section 17(k) of the Agreement provides that the Agreement will be timely amended to comply with
the requirements of Code section 409A and published guidance in a manner that will not have a
material adverse impact to either party of the Agreement.
E. Parent, Company and Executive desire to amend the Agreement to conform to the provisions of
Code section 409A and the accompanying final regulations in compliance with Internal Revenue
Service Notice 2007-86 and generally applicable published guidance.
F. This Amendment shall supersede the provisions of the Agreement to the extent those
provisions are inconsistent with the provisions of this Amendment.
Now, therefore, effective January 1, 2008, the Agreement is hereby amended as follows:
1. Paragraph 2(a) is amended by the addition of the following sentence at the end of the
paragraph:
“Base Salary for each successive one-year extension shall be paid on a
bi-weekly basis as services are rendered.”
2. Paragraph 4(c), entitled “Target Bonus,” is amended by the addition of the following
sentence:
“Any Target Bonus to which Executive shall be entitled will be paid to
Executive during the period February 15 through March 15 each year immediately
following the taxable year to which the Target Bonus relates.”
3. Paragraph 4(f), entitled “Disability,” is amended by deleting the last two sentences of
Paragraph 4(e) in their entirety and replacing them with the following:
“For purposes of this paragraph 4(f) only, Executive shall be deemed to be
‘Disabled,’ and on a bona fide leave of absence, if he is eligible to
receive disability benefits under any disability benefit plan or policy
provided by Company to its employees generally or to Executive specifically
(a ‘Company Sponsored Plan’). If Company does not provide
coverage to Executive under a Company Sponsored Plan, Executive shall be deemed
to be
‘Disabled’ if he is unable to perform the essential functions of his
duties hereunder (with or without reasonable accommodation by the Company)
as a result of incapacity due to physical or mental illness.”
4. Paragraph 7(a)(iii) is amended by deleting it in its entirety and replacing it with the
following:
“(iii) upon Executive’s death or if Executive is Totally Disabled as defined
in paragraph 7(c) below.”
5. Paragraph 7, entitled “Termination of Employment,” is amended by the addition of the
following new paragraph 7(c):
“(c) For purposes of this paragraph 7 and payment of compensation and
benefits pursuant to paragraph 8(d), Executive shall be considered ‘Totally
Disabled’ if, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, (i) he is unable to
engage in any substantial gainful activity, or (ii) he is receiving income
replacement benefits for a period of not less than 3 months under an
accident and health plan covering employees of the Company.”
6. The first sentence of Paragraph 8(a) is amended by deleting it in its entirety and
replacing it with the following:
“If Company terminates this Agreement without Cause pursuant to paragraph
7(a)(i) hereof or if Executive voluntarily terminates this Agreement for
Good Reason (as defined below) then (i) Company shall pay to Executive or
his estate, if applicable, within thirty (30) days after the effective date
of such termination any unpaid Base Salary accrued and earned by him
hereunder up to and including the effective date of such termination plus a
pro rata amount of the Target Bonus (determined by multiplying the Target
Bonus amount by the number of days elapsed in the year of the termination of
this Agreement and dividing by 365) (the ‘Pro Rata Target Bonus Amount’),
(ii) during the Severance Period (as defined below) Company will continue to
pay to Executive the Base Salary plus a pro rata amount of the Target Bonus
(determined by multiplying the applicable Target Bonus amount by the number
of days in each interval period and dividing by 365) (the total Base Salary
plus Target Bonus paid Executive during the Severance Period, the “Severance
Payment”) at the usual payroll intervals, but only if Executive fully
complies with paragraph 10 of this Agreement; provided that, the portion of
the Severance Payment Executive receives during the first six (6) months
following the effective date of such termination does not exceed two (2)
times the limit on compensation set forth in section 401(a)(17) of the Code,
with any excess over that limit being paid with the first payroll
immediately following the six- (6-) month anniversary of the termination
date; (iii) if applicable, during the Severance Period, Company shall pay
the premiums to continue those medical care benefits in effect on
Executive’s termination date (provided, that to the extent permitted under
applicable law, the Severance Period will run concurrently with, and not in
addition to, the applicable statutory maximum COBRA continuation period, and
provided further, any change in
benefits under the medical plan for active executive employees will also apply
to Executive), and continue to provide Executive with such other employee benefits
for which Executive continues to qualify during the Severance Period, but only if Executive fully complies with paragraph 10 of
this Agreement, and (iv) Executive’s outstanding stock options and
restricted shares shall accelerate and be fully vested upon a termination
without ‘Cause.’ ”
7. Paragraph 8(c) is amended by deleting it in its entirety and replacing it with the
following:
“If this Agreement is terminated on a Contract Term Date because Company
notifies Executive that this Agreement will not be renewed pursuant to
paragraph 2(a), (i) Company shall pay to Executive or his estate, if
applicable, within thirty (30) days after the effective date of such
termination any unpaid Base Salary and the Pro Rata Target Bonus Amount
accrued and earned by him hereunder up to and including the effective date
of such termination, (ii) Company will continue to pay to Executive the Base
Salary at the usual payroll intervals until the first anniversary of the
termination date, but only if Executive fully complies with paragraph 10 of
this Agreement; provided that, the portion of the Base Salary Executive
receives during the first six (6) months following the effective date of
such termination does not exceed two (2) times the limit on compensation set
forth in section 401(a)(17) of the Code, with any excess over that limit
being paid with the first payroll immediately following the six- (6-) month
anniversary of the termination date;
Company shall pay to Executive at the usual payroll intervals on the day
that is six (6) months after the effective date of such termination an
amount equal to the Executive’s Base Salary as of the termination date, and
(iii) Executive’s outstanding stock options and restricted shares shall
accelerate and be fully vested.”
8. Paragraph 8 is amended by the addition of the following new paragraph 8(d) and renumbering
existing paragraphs 8(d), 8(e) and 8(f) as paragraphs 8(e), 8(f) and 8(g), respectively.
“If Company terminates this Agreement pursuant to paragraph 7(a)(iii)
hereof, (i) the Company shall pay Executive or his Designated Beneficiary,
as applicable, within thirty (30) days after the effective date of such
termination any unpaid Base Salary, Pro Rata Target Bonus Amount and
benefits accrued and earned by him hereunder up to and including the
effective date of such termination, (ii) in the event this Agreement is
terminated because of Executive’s death, during the Severance Period Company
will continue to pay to Executive’s Designated Beneficiary the Base Salary
plus a pro rata amount of the Target Bonus (determined by multiplying the
applicable Target Bonus amount by the number of days in each interval period
and dividing by 365) at the usual payroll intervals; (iii) in the event this
Agreement is terminated because Executive is Totally Disabled, during the
Severance Period Company will continue to pay to Executive the Base Salary
plus a pro rata amount of the Target Bonus
(determined by multiplying the applicable Target Bonus amount by the number of days in each interval period
and dividing by 365) at the usual payroll intervals, but only if Executive
fully complies with paragraph 10 of this Agreement; provided that, the portion of the Severance Payment
Executive receives during the first six (6) months following the effective
date of such termination does not exceed two (2) times the limit on
compensation set forth in section 401(a)(17) of the Code, with any excess
over that limit being paid with the first payroll immediately following the
six- (6-) month anniversary of the termination date, and (iv) if applicable,
during the Severance Period, Company shall pay the premiums to continue
those medical care benefits in effect on Executive’s termination date
(provided, that, to the extent permitted under applicable law, the Severance
Period will run concurrently with, and not in addition to, the applicable
statutory maximum COBRA continuation period, and provided further, any
change in benefits under the medical plan for active executive employees
will also apply to Executive). Notwithstanding any other provision of this
Agreement to the contrary, (A) Company’s obligations under this paragraph
8(d) shall be contingent, in the case of a termination upon Disability, on
Executive executing and delivering to Company a general release of claims,
substantially in the form attached hereto as Exhibit A, and (B) if Executive
engages in full-time employment after the termination of this Agreement
(whether as an executive or as a self-employed person), any employee benefit
and welfare benefits received by Executive in consideration of such
employment which are similar in nature to the employee benefit and welfare
benefits provided by Company will relieve Company of its obligations under
paragraph 8(d)(iv) to provide comparable benefits to the extent of the
benefits so provided.”
9. Paragraph 9, entitled “Change in Control,” is deleted in its entirety and replaced with the
following paragraph 9:
“9. Change in Control.
(a) If there is a Change in Control Event, the Company will pay Executive the
Change in Control Payment upon the first Permissible Payment Event to occur
following the Change in Control Event, subject to any applicable six- (6-) month
delay required under section 409A of the Internal Revenue Code of 1986, as amended.
(b) A ‘Permissible Payment Event’ shall be deemed to have occurred for purposes
of this Agreement upon the first to occur of:
(i) One- (1-) year anniversary of the
Change in Control Event;
(ii) Date Executive resigns for Good Reason during the six- (6-) month
period following the Change in Control Event;
(iii) Date Company terminates Executive’s employment without Cause
during the six- (6-) month period following a Change in Control Event;
(iv) Date Executive becomes Totally Disabled during the one- (1-) year
period following the Change in Control Event; or
(v) Date Executive Dies during the one- (1-) year period following the
Change in Control Event.
(c) In no event will a Change in Control Payment be made to Executive if he is
terminated for Cause or resigns without Good Reason.
(d) ‘Change in Control Payment’ means an amount equal to the product of two and
99/100 (2.99) times the sum of (i) Executive’s Base Salary as of the Change in
Control Event, plus (ii) fifty (50%) percent of Executive’s Target Bonus.
(e) ‘Good Reason’ means the occurrence of any of the following events: (a) a
substantial adverse change, not consented to by Executive, in the nature and scope
of Executive’s responsibilities, authorities or duties hereunder, (b) a substantial
involuntary reduction in Executive’s Base Salary except for an across-the-board
salary reduction similarly affecting all or substantially all employees, or (c) the
relocation of Executive’s principal place of employment to another location of the
Company outside a sixty (60) mile radius from the location of Executive’s principal
place of employment as of the date hereof. Executive must provide notice to the
Company of the existence of a condition, or conditions, described in this paragraph
9(e) within ninety (90) days of the initial existence of such condition(s). Upon
receipt by the Company of Executive’s notice, the Company will have thirty (30) days
to remedy the condition(s). If the Company remedies the condition(s) of which it
received notice from Executive within thirty (30) days, the Executive may not resign
for Good Reason.
(f) Any of the following will be deemed the ‘Change in Control Event,’ which
shall serve as a vesting event only:
(i) The date on which 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’) (other than the Parent, any Parent subsidiary, or any
trustee, fiduciary or other person or entity holding securities under any
employee benefit plan or trust of the Parent), together with all
‘affiliates’ and ‘associates’ (as such terms are defined in Rule 12b-2 of
the Exchange Act) of such person, shall become the ‘beneficial owner’
(within the meaning of Rule 13d-3 under the Exchange Act), directly or
indirectly, through an event or series of events, of more than 50% of the
combined voting power of Parent’s then outstanding securities having the
right to vote in an election of Parent’s Board (other than as a result of an
acquisition of securities directly from Parent);
(ii) The consummation of: (1) any consolidation or merger of Parent in
which the stockholders of Parent immediately prior to the consolidation or
merger would not, immediately after the consolidation or merger,
‘beneficially own’ (as such term is defined in Rule 13d-3 of the Exchange
Act), directly or indirectly, shares representing in the aggregate
more than fifty percent (50%) of the voting shares of the corporation issuing cash or
securities in the consolidation or merger (or of its ultimate parent
corporation, if any), or (2) any sale, lease, exchange or other transfer to
an unrelated party (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of Parent’s assets;
(iii) The date Parent’s stockholders approve any plan or proposal for
the liquidation or dissolution of Parent; or
(iv) Where the persons who, as of the Effective Date, constitute
Parent’s Board of Directors (the ‘Incumbent Directors’) cease for any
reason, including, without limitation, as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least a majority of
the Board, provided that any person becoming a director of Parent subsequent
to such date shall be considered an Incumbent Director if such person’s
election was approved by or such person was nominated for election by either
(1) a vote of at least two-thirds of the Incumbent Directors or (2) a vote
of at least a majority of the Incumbent Directors who are members of a
nominating committee of the Board comprised, in the majority, of Incumbent
Directors; provided further, however, that notwithstanding the foregoing,
any director designated by a person or entity that has entered into an
agreement with the Company to effect a transaction described in clauses (i),
(ii) or (iii) above, shall not be deemed to be an Incumbent Director.
(g) Anything to the contrary in this Agreement notwithstanding, in no event
shall more than one Change in Control Payment be made to Executive under this
Agreement, regardless of whether more than one Change in Control Event occurs during
the term of this Agreement.
(h) If Executive is entitled to any payments that vest upon a Change in Control
Event or other substantially similar event pursuant to the Origen Financial, Inc.
Retention Plan or any other plan, program, agreement or arrangement with Parent, the
Company or their subsidiaries, the Company shall not be obligated to make such
payments to Executive under both this Agreement and the other plan, program,
agreement or arrangement. Instead, the Company shall be obligated to pay Executive
only the greater of the amounts payable as determined under this Agreement and such
other plan, program, agreement or arrangement.
(i) Except as set forth in paragraph 9(h) above, if payable, the Change in
Control Payment shall be in addition to, and not in lieu of, the severance payments
to which Executive may be entitled under paragraph 8 above, the non-compete payments
to which Executive may be entitled under paragraph 10 below or payments from any
other plan, program, agreement or arrangement with Parent, the Company or their
subsidiaries
(j) Prior to and as a condition of any payment under this paragraph 9,
Executive shall execute and deliver to Company a general release of claims to
other change in control payments in a form acceptable to the Company and, if Executive’s
employment has been terminated, a general release of claims, substantially in the
form attached hereto as Exhibit A.”
10. Paragraph 11 is amended by deleting it in its entirety and replacing it with the following
paragraph 11:
“11. Excise Tax Payments. Anything in this Agreement to the contrary
notwithstanding, if any of the payments or benefits received or to be received by
Executive following a Change in Control Event and/or Executive’s termination or
resignation of employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with Parent, the Company or their subsidiaries)
(the ‘Aggregate Payment’) is determined to constitute a ‘parachute payment’ as such
term is deemed in Section 280G(b)(2) of the Internal Revenue Code of 1986, as
amended (the ‘Code’), the Company shall pay to Executive an additional amount which,
after the imposition of all income and excise taxes thereon, is equal to the excise
tax imposed by Section 4999 of the Code with respect to the Aggregate Payment. The
determination of whether the Aggregate Payment constitutes a parachute payment and,
if so, the amount to be paid to Executive shall be made by a nationally recognized
United States public accounting firm selected by the Company which has not, during
the two years preceding the date of its selection, acted in any way on behalf of
Parent, the Company or any affiliate thereof. The Company shall pay Executive the
amount payable to him under this paragraph 11 by the end of the taxable year in
which Executive remits these amounts to the taxing authority(s).”
11. Paragraph 17(k) is amended by deleting it in its entirety and replaced with “Intentionally
left blank.”
12. Paragraph 17, entitled “Miscellaneous,” is amended by the addition of the following new
paragraph 17(m):
“(m) Executive may, on a form prescribed by the Company, designate a
beneficiary or beneficiaries (his ‘Designated Beneficiary’) to receive the benefits
under this Agreement in the event of his death. If Executive does not designate a
beneficiary, his benefits will be paid first to his spouse, if surviving him, and if
unmarried or if his spouse does not survive him, in equal shares to his children
surviving him, and if neither his spouse nor children survive him, to his estate.”
13. Unless otherwise modified by this Amendment, all provisions of the Agreement shall remain
in full force and effect. Copies (whether photostatic, facsimile or otherwise) of this Amendment
may be made and relied upon to the same extent as an original.
[Signatures on next page]
In witness whereof, the parties have executed this First Amendment to the Amended and Restated
Employment Agreement by and between Origen Financial, Inc, Origen Financial, L.L.C and Xxxxxx X.
Xxxxx on the date first above written.
| Parent: | ||||
| Origen Financial, Inc., | ||||
| a Delaware corporation: | ||||
| By: | /s/ X. Xxxxxxxx Xxxxxx, Jr. | |||
| Its: | Chief Financial Officer | |||
| Company: | ||||
| Origen Financial, L.L.C., | ||||
| a Delaware limited liability company: | ||||
| By: | /s/ X. Xxxxxxxx Xxxxxx, Jr. | |||
| Its: | Chief Financial Officer | |||
| Executive: | ||||
| /s/ Xxxxxx X. Xxxxx | ||||
| Xxxxxx X. Xxxxx | ||||
