Exhibit 10.1
May 12, 2007
Xx. Xxxxxxx Xxxxx
BellaVista Capital
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Re: 2007 Compensation Agreement
Dear Xxxx:
This letter will confirm your Compensation Agreement for 2007. Outlined below
you will find the various components:
1. Base Salary - $250,000: Your Base Salary will remain $250,000 per
year.
2. Annual Bonus for Performance to Plan: You will be eligible to earn an
annual bonus based on the company's performance relative to certain
performance metrics as established on an annual basis by the Board of
Directors. For 2007 the three (3) components of this Performance Bonus
will be based on the annual NRV; the management of operating expenses;
and the resolution of PMB Helin Donovan's noted significant
deficiencies disclosed in the September 30, 2006 10-KSB. Outlined in
the three (3) areas below are the trigger points for achieving the
various components of this Performance Bonus. The actual amount earned
for each component will be calculated based on interpolating between
the points listed below.
The Plan Bonus will be paid in the quarter following the calendar year
end in order to ensure that the calendar year-end NRV, and evaluation
of the expenses and Loan portfolio are complete. In addition, you must
be a full time employee of the company in good standing with your
performance rated as fully meeting expectations as determined by the
Board of Directors.
A NRV - Target $40,000:
--------------------------------------------- -----------
NRV less than $5.04 or 10% growth: 0
--------------------------------------------- -----------
NRV equal to $5.04 or 10%: $8,000
--------------------------------------------- -----------
NRV equal to $5.08 or 11%: $22,400
--------------------------------------------- -----------
NRV equal to or greater than $5.12 or 12%: $40,000
--------------------------------------------- -----------
B. Expense Control - Target $8,000:
--------------------------------------------- -----------
103% of 2007 budget or below: $8,000
--------------------------------------------- -----------
Above 103% of 2007 budget: 0
--------------------------------------------- -----------
C. Resolution of Significant Deficiencies - Target $2,000:
Resolve all substantive issues identified by our auditors to our
auditor's satisfaction. This includes implementing a process for
review and oversight of monthly, quarterly and year-end general ledger
and financial statements. This review process is to involve an outside
independent accounting resource. Hire an outside independent
accounting resource to staff this process. Overall process and
accounting resource are to be in place no later than May 1.
3. 2007 NRV Overplan Performance Bonus - $25,000: You will be eligible to
earn an additional one-time bonus of up to $25,000 if the Company's
NRV exceeds $5.12 at December 31, 2007. The amount of the bonus will
be determined by multiplying $961.54 for every $0.01 that the NRV at
December 31, 2007 exceeds $5.12, up to a maximum of $25,000. For
Exhibit 10.1
purposes of determining the Overplan Performance Bonus, the NRV at
December 31, 2007 will not include any increases resulting from share
repurchases made at a discount to NRV.
4. Deferred Compensation if NRV growth is between 10% and 13% Compounded
Annually over the 3-year period beginning January 1, 2006 to December
31, 2008: You have the potential to earn up to 70,588 shares of
restricted stock based on the NRV achieving a compounded annual growth
rate of 13% over this 3-year period. The number of shares of
restricted stock earned will be calculated and vest based on the NRV
as of 12/31/08. 25% of the shares of the restricted stock will be
earned and vest if the NRV at 12/31/08 is determined to be $5.67 per
share. If the NRV at 12/31/08 is determined to be $6.12 per share,
100% of restricted stock will vest. If the NRV falls between $5.67 per
share and $6.12 per share, the number of shares of earned and vested
restricted stock will be calculated based on a straight-line
interpolation between those percentages and NRVs. For the purpose of
this Item No. 4 no shares will be earned/vested for performance below
a 10% compounded annual return ($5.67) and no additional shares will
be earned/vested for performance above a 13% compounded annual growth
rate ($6.12).
5. Deferred Compensation if compounded growth of NRV Exceeds the 13%
target as of 12-31-08: In addition to the deferred compensation
outlined in item No. 4 above, you may earn a discretionary bonus based
on an NRV increase greater than the $6.12 per share at 12/31/08. As a
basis for this discretionary bonus, the Board of Directors will
consider awarding you a number of shares equal to 8% of the marginal
stock value increase above $6.12. The number of shares granted would
be calculated by taking the determined NRV per share at 12/31/08 and
subtracting $6.12 per share, multiplying that result by the number of
shares outstanding to arrive at the Marginal Realizable Value Increase
above $6.12. This Marginal Realizable Value Increase is then
multiplied by 8% with the result then be divided by the NRV per share
at 12/31/08 to arrive at the number of shares subject to the
discretionary award. The actual number of shares awarded will be
determined at the sole discretion of the Board of Directors taking
into account the risk profile of the portfolio and the overall
management of the company. The Board of Directors will contact a
compensation specialist in an attempt to structure any and all
deferred compensation in order to minimize the tax consequence to you.
6. Termination of Employment Without Cause: In the event that your
employment with BellaVista is terminated without cause, the number of
shares of any restricted stock granted under the Deferred Compensation
in Item No. 4 would be determined according to the following
calculation: The NRV from the last publicly filed report prior to your
termination will be used to determine a compounded annual growth rate
based on the NRV per share of $4.25 at December 31, 2005. The granted
percentage of stock (prior to the proration for time below) will be
calculated based on this compounded annual growth rate by
interpolating from the vesting percentages described in Item No. 4.
The vesting percentage is then multiplied by 70,588 shares to
determine the number of shares pre-time-proration. In order to
determine the actual number of shares granted, the pre-time-proration
number of shares is then multiplied by a fraction, the numerator of
which is the number of days from January 1, 2006 to the date of notice
of termination and the denominator of which is 1,095 days. In
addition, you will receive as sole compensation and consideration 6
months severance in the form of salary continuation for that 6-month
period. Issuance of these shares and payment of this severance is
contingent upon your signing a written release of all claims against
the company related in any way to your employment, your termination or
your shareholdings. .
7. Termination of Employment With Cause: In the event that your
employment is terminated for cause, you will receive any salary and
accrued vacation earned as of the date of your termination. All claims
to all bonuses, annual or long term will be forfeited. For the
purposes of this Agreement, "Cause" shall mean the commission of a
felony or a crime involving moral turpitude or the commission of any
other material act or omission involving dishonesty, disloyalty or
fraud with respect to the Company; conduct which tends to bring the
Company into substantial public disgrace or disrepute; a substantial
failure to perform duties as reasonably directed by the Board of
Directors in writing, or a second occurrence of insubordination; gross
negligence or willful misconduct with respect to material duties to
the Company; or any other material breach of this Agreement.
8. Voluntary Termination: In the event that you voluntarily terminate
your employment with BellaVista, you agree to provide 30-day written
notice to the Chairman of the Board of Directors. You will receive
Exhibit 10.1
salary and accrued vacation earned as of the date of your voluntary
termination. All claims for severance pay, annual bonuses or any
deferred compensation will be forfeited.
This 2007 Compensation Agreement supercedes any and all previous agreements and
there are no terms or conditions in effect that are not reflected in this 2007
Compensation Agreement. Your employment is at will. BellaVista and you agree
that either you or BellaVista may at any time, with or without cause and with no
advance notice, terminate the employment relationship.
Please indicate your acceptance of this Agreement by signing in the indicated
space below and forward a copy of the executed Agreement to me.
Sincerely,
/s/ Xxxxxxx Xxxxxxxxx, Chairman
BellaVista Capital
Accepted: /s/ Xxxxxxx Xxxxx
--------------------
Xxxxxxx Xxxxx
