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EXHIBIT 10.26
FIRST AMENDMENT TO THE
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This First Amendment to the Amended and Restated Employment Agreement
(this "AMENDMENT"), dated as of May 18, 1999, is entered into by and among LONG
BEACH FINANCIAL CORPORATION, a Delaware corporation ("LBFC"), and LONG BEACH
MORTGAGE COMPANY, a Delaware corporation ("LBMC") (collectively, the "COMPANY"),
and _____________ ("EXECUTIVE").
R E C I T A L S
WHEREAS, the Company and Executive have entered into an Amended and
Restated Employment Agreement dated January 1, 1998 (the "AGREEMENT"), which
provides the terms and conditions of Executive's employment with the Company.
WHEREAS, the Company and Executive desire to amend the terms of the
Agreement, and, pursuant to resolutions duly adopted on May 18, 1999, the Board
of Directors of the Company has determined that this Amendment is in the best
interests of the Company and its stockholders;
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree that the Agreement shall be amended as follows:
A M E N D M E N T
1. Unless otherwise defined in this Amendment, capitalized terms used
herein shall have the meanings given to them in the Agreement, as amended
hereby.
2. Immediately following Section 3.6, a new Section 3.7 shall be added
as follows:
"3.7 GROSS-UP PAYMENT. If Executive becomes entitled to payments in the
nature of compensation, including without limitation the Change in Control
Payment described in Section 3.6 of the Agreement, all wages and salary,
bonuses, severance pay, fringe benefits and the accelerated vesting of options
or other equity-based compensation (including any accelerated vesting of options
as described in Section 7.2 of the Incentive Plan) that constitute a "parachute
payment" under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), or any successor statute then in effect (collectively, the
"Aggregate Change in Control Payments"), then the Company shall pay an
additional amount (the "Gross-Up Payment") to Executive at the time specified in
the following paragraph. The Gross-Up Payment shall be equal to the amount
necessary so that the net amount of the Aggregate Change in Control Payments
retained by Executive, after subtracting the parachute excise tax imposed by
Section 4999 of the Code, as amended, or any successor statute then in effect
(the "Excise Tax"), and after also subtracting all federal, state or local
income tax, FICA tax and Excise Tax on the
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Gross-Up Payment, shall be equal to the net amount of the Aggregate Change in
Control Payments that Executive would have retained if no Excise Tax had been
imposed and no Gross-Up Payment had been paid. The amount of the Gross-Up
Payment shall be determined in good faith by independent accountants or tax
counsel selected by the Company and acceptable to Executive, who shall apply the
following assumptions: (i) Executive shall be treated as paying federal income
taxes at the highest marginal rate in the calendar year in which the Gross-Up
Payment is made, and (ii) Executive shall be treated as paying state and local
income taxes at the highest marginal rate(s) in the calendar year in which the
Gross-Up Payment is made in the locality of Executive's residence as of the
effective date of Executive's termination or resignation, net of the maximum
reduction in federal income taxes that could be obtained from deducting those
state and local taxes.
The Gross-Up Payment shall be made within five business days after the
effective date of Executive's termination or resignation, provided that if the
Gross-Up Payment cannot be determined within that time, the Company shall pay
Executive within that time an estimate, determined in good faith by the Company,
of the minimum amount of the Gross-Up Payment and shall pay the remainder (plus
interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as
the amount can be determined but in no event later than the 30th day after the
effective date of Executive's termination or resignation. If the estimated
payment is more than the amount later determined to have been due, the excess
(plus interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall
be repaid by Executive within five business days after written demand.
If the actual Excise Tax imposed is more than the amount that was taken
into account in determining the amount of the Gross-Up Payment, the Company
shall make an additional gross-up payment in respect of such excess (plus
interest at the rate provided in Section 1274(b)(2)(B) of the Code) at the time
that the amount of the excess is finally determined."
3. This Amendment shall be construed and enforced in accordance with the
laws and decisions of the State of California.
4. Except as specifically modified by this Amendment, all provisions of
the Agreement shall remain in full force and effect.
5. In the event of any inconsistency between the provisions of this
Amendment and any provision in the Agreement, the terms and provisions of this
Amendment shall govern.
6. This Amendment may be executed in identical counterpart copies, each
of which shall be an original, but all of which taken together shall constitute
one and the same agreement. Delivery of an executed counterpart of a signature
page to this Amendment by facsimile transmission shall be effective as delivery
of a manually executed counterpart of this Amendment.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the date and year first written above.
The "Company":
LONG BEACH FINANCIAL CORPORATION
By:
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Name:
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Title:
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LONG BEACH MORTGAGE COMPANY
By:
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Name:
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Title:
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"Executive":
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Name:
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