2009 CONSULTING
AGREEMENT
THIS 2009
CONSULTING AGREEMENT (this “Agreement”) by and among
ORIGEN FINANCIAL, INC., a Delaware corporation
(“Parent”), ORIGEN FINANCIAL L.L.C., a Delaware limited
liability company (the “Company”) and MARK LANDSCHULZ
(“Consultant”) is made and entered into on May 1,
2009, and for all purposes shall be effective on April 4, 2009
(the “Effective Date”).
A. Company
and Consultant are parties to that certain Employment Agreement
dated December 28, 2006, amended July 1, 2008 and
expiring October 7, 2009 (the “Employment
Agreement”).
B. Company
and Consultant acknowledge that pursuant to the Company’s
Asset Disposition and Management Plan, which was approved by the
Company’s shareholders in June, 2008, and subsequently
implemented by the Company, the nature of the business of the
Company has changed dramatically during 2008, including:
(1) the sale of the Company’s unsecuritized loan
portfolio; (2) the sale of the Company’s servicing
assets and platform; (3) the sale of certain bond assets;
(4) the refinancing of the Company’s senior debt;
(5) the sale of the Company’s origination platform; and
(6) the downsizing of the Company’s workforce from over
300 employees to approximately 23 current employees with the
expectation that the employee force will normalize at 8 employees
with several consultants by the third quarter of 2009.
C. In light
of the dramatic changes to the Company’s business and
consequential changes in its need for management services, Company
and Consultant desire to modify Consultant’s rights, duties
and obligations under the Employment Agreement so that the
Employment Agreement shall terminate in its entirety upon the
effectiveness of this Agreement. From and after the Effective Date
Consultant will be engaged as a consultant of the Company, will
receive payments accrued and owing under the provisions of the
Employment Agreement pursuant to the provisions of this Agreement
and will be compensated for services going forward pursuant to the
terms of this Agreement.
NOW, THEREFORE, in
consideration of the mutual promises contained in this Agreement,
the parties agree as follows:
1.
Termination of Employment Agreement and Payments to
Consultant .
(a) Parent,
the Company and Consultant each hereby agrees that the Employment
Agreement is terminated and of no further force or effect,
effective at the close of business on the day immediately preceding
the Effective Date. From the Effective Date forward all aspects of
the consulting and compensation agreements between the Company and
Consultant will be governed by the provisions of this
Agreement.
(b) In
recognition of Consultant’s performance as Executive Vice
President, Portfolio Management of the Company in preserving the
Company’s and Parent’s assets during the difficult 2008
economic climate, the Board of Directors has granted, and the
Company agrees to pay, to Consultant a bonus of $150,000, to be
paid on October 5, 2009.
(c) The
termination of the Employment Agreement and any termination of this
Agreement shall not in any way negate or relieve the
Company’s obligation to pay Consultant the $825,000
change-of-control payment which was earned in 2008 under the terms
of the Employment Agreement and will be paid to Consultant on
July 1, 2009.
(d) Company
shall pay to Consultant any unpaid accrued salary up to the
Effective Date, shall pay Consultant all accrued vacation pay and
shall pay Consultant monthly for COBRA payments in respect of
medical/dental benefits through September 2010.
(e) The
Company shall pay Consultant the amounts due him under the
Company’s Capital Accumulation Plan in the amount of $280,000
on November 15, 2011.
(a) Subject
to the provisions for termination provided in this Agreement, the
term of Consultant’s engagement under this Agreement (the
“Initial Term,” and, together with any extension
thereto pursuant to Section 2(c) below, the “Term”)
shall commence on the Effective Date and shall continue thereafter
until March 31, 2011 (the “Expiration
Date”).
(b) Company
and Consultant each acknowledges and agrees that, in accordance
with the terms of Section 7 below, Consultant’s
engagement may be terminated, for any reason or for no reason at
all, upon not less than sixty (60) days prior written notice
of termination by Consultant or Company.
(c) The
Term of this Agreement shall be extended upon sixty (60) days
prior notice to Consultant from the Company for one (1) year
beginning (i) at the end of the Initial Term (the “First
Extended Term”), (ii) at the end of the First Extended
Term (the “Second Extended Term”), and (iii) at
the end of the Second Extended Term (the “Third Extended
Term”). The last day of the Initial Term, the First Extended
Term, the Second Extended Term and the Third Extended Term are each
referred to in this Agreement as a “Contract Term
Date”.
3.
Consulting Services and Duties .
(a) Company
agrees to engage Consultant, and Consultant accepts the engagement,
on the terms and subject to the conditions set forth below. During
the Term, Consultant shall perform consulting services (the
“Services”) for the Company, and shall do and perform
diligently all such services, acts and things and duties as
reasonably may be requested from time to time by the Board of
Directors of Company (the “Board”) or by the CEO of the
Company, which duties shall be consistent with Consultant’s
range of responsibilities as set forth below:
• While not a regimented program
without flexibility, the nature and types of the principal specific
functional activities of the Company are portfolio management as
set forth in the attached Appendix B (“Portfolio
Management”). Consultant will have general oversight
responsibility for Portfolio Management and will report to the CEO.
Consultant is responsible to make sure that these functions are
carried out, supervise their execution and meet with the portfolio
team to strategize and deal with issues affecting the
Company’s assets as they arise.
• “Eye on the market"-
Consultant will keep himself informed and will observe and follow
all material developments in relevant markets that could affect the
Company’s business and assets.
• Consultant will maintain
relationships for the Company with financing sources, rating
agencies and potential buyers of the Company’s assets. This
may require meetings, travel, regular calls and direct written
communications as prudent and necessary.
• Consultant will seek and promote
strategic initiatives-such as replacement or termination of Ambac
guarantees, servicing performance by Green Tree Servicing LLC or
any successor servicer, sale or refinancing of the Citi bonds,
sales of residual interests, a possible sale of the Company,
refinancing of debt, managing securitization calls, and other asset
preservation or
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disposition
opportunities, and will report on these activities to the CEO and
the Board regularly.
(b) In
his position as a consultant during the Term, Consultant agrees to
discharge the same fiduciary duties of loyalty and care and to
conduct his activities in good faith in the same manner and to the
same standard as is required of an officer of the Company and
Parent.
(c) For
service as a senior consultant to the Company and Parent, the
Company and Parent each hereby indemnifies Consultant to the full
extent of the indemnities provided to officers and directors of the
Company and Parent, respectively, under the applicable
indemnification provisions of the Certificate of Formation of
Company and the Certificate of Incorporation of the Parent,
respectively, as each may be amended from time to time, and to the
fullest extent permitted under Delaware law. Company agrees that,
to the extent reasonably available, Consultant will be named as an
additional insured under Company’s Directors’ and
Officers’, Errors and Omissions and other similar insurance
policies during the Term and Company will provide verification of
such coverage to Consultant.
4.
Devotion to Company’s and Parent’s Business .
The Consultant shall devote his best efforts, knowledge, skill, and
such portion of his productive time, ability and attention to the
business of the Company during the Term as may be necessary to
adequately and professionally discharge his duties and
responsibilities under this Agreement; provided, however, nothing
in this Agreement shall require Consultant to perform services at
specific regular times or amounts of time or at a specific place or
places, nor prohibit Consultant from taking employment or from any
other activities, so long as Consultant adequately performs his
duties and responsibilities under this Agreement and observes his
fiduciary duties to the Company, Parent and Parent’s
shareholders.
5.
Compensation . As compensation for the services to be
performed by Consultant under this Agreement, Company shall pay to
Consultant, during the Term, a monthly consulting fee payable, in
accordance with Company’s usual pay practices (and in any
event no less frequently than monthly), at the rate of:
(a) Twenty-five
Thousand and 00/100 Dollars ($25,000.00) per month for the period
beginning on the Effective Date and ending at expiration of the
Initial Term;
(b) A
retention bonus (“Retention Bonus”) in the amount of
$365,000.00 on the Expiration Date; provided, however, that if
Consultant terminates this Agreement pursuant to
Section 7(a)(i) below before the Expiration Date, Consultant
shall not be entitled to receive the Retention Bonus;
(c) If,
and only if, the Company elects to extend Consultant’s
engagement pursuant to Section 2(c)(i), Fifteen Thousand Dollars
($15,000.00) per month during the First Extended Term;
(d) If,
and only if, the Company elects to extend Consultant’s
engagement pursuant to Section 2(c)(ii), Thirty Thousand Dollars
($20,000.00) per month during the Second Extended Term;
and
(e) If,
and only if, the Company elects to extend Consultant’s
engagement pursuant to Section 2(c)(iii), Twenty-five Thousand
Dollars ($25,000.00) per month during the Third Extended
Term.
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6.
Reimbursement of Business Expenses . Company shall reimburse
Consultant during the term of this Agreement for travel,
entertainment, business development, data access, telephone and
other expenses reasonably and necessarily incurred by Consultant in
connection with Company’s business. Consultant shall furnish
such documentation with respect to reimbursement to be paid
hereunder as Company shall reasonably request.
7.
Termination of Engagement .
(a) This
Agreement and Consultant’s engagement hereunder may be
terminated:
(i)
by either Consultant or Company at any time for any reason
whatsoever or for no reason upon not less than sixty (60) days
written notice;
(ii)
by Company at any time for “Cause” without prior
notice; and
(iii)
upon Consultant’s death or if Consultant is Totally Disabled
as defined in Section 7(c) below.
(b) For
purposes of this Agreement, for “Cause” means
(i) a material breach of any provision of this Agreement by
Consultant (if the breach is curable, it will constitute Cause only
if it continues uncured for a period of twenty (20) days after
Consultant’s receipt of written notice of such breach from
Company), (ii) Consultant’s failure or refusal, in any
material manner, to perform all lawful services required of him
pursuant to this Agreement, which failure or refusal continues for
more than twenty (20) days after Consultant’s receipt of
written notice of such deficiency, (iii) Consultant’s
commission of fraud, embezzlement or theft, or a crime constituting
moral turpitude, in any case whether or not involving Company, that
in the reasonable good faith judgment of the Board of Parent or the
Board of Company, renders Consultant’s continued engagement
harmful to Company, (iv) Consultant’s misappropriation
of Company assets or property, including, without limitation,
obtaining reimbursement through fraudulent vouchers or expense
reports, (v) Consultant’s conviction or the entry of a plea
of guilty or no contest by Consultant with respect to any felony or
other crime that, in the reasonable good faith judgment of the
Board of Parent or the Board of Company, adversely affects Company,
Parent and/or either of its reputation or business, or
(vi) any breach by Consultant of his fiduciary duties under
Section 2(b) or under applicable law.
(c) For
purposes of this Section 7 and payment of compensation and
benefits pursuant to Section 8(c), Consultant 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 and/or consultants of the Company.
8.
Compensation Upon Termination .
(a) If
Company terminates this Agreement during the Initial Term, for any
reason or for no reason at all, Company shall pay to Consultant or
his estate, if applicable, a monthly payment of $15,000.00 through
and including the Expiration Date, the Retention Bonus at the time,
and in the manner, described in Section 5(b) and all unpaid amounts
required by Sections 1(b) through 1(e) (which shall not be
considered compensation upon termination under this
Section 8). Notwithstanding any other provision of this
Agreement to the contrary, except in the case of termination as a
result of Consultant’s death, Company’s obligations
under this Section 8(a) shall
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be contingent
on Consultant executing and delivering to Company a general release
of claims, substantially in the form attached hereto as
Appendix A.
(b) If
Consultant terminates this Agreement during the Initial Term, for
any reason or for no reason at all, Consultant shall be entitled to
no further compensation or other benefits under this Agreement,
other than any unpaid consulting fees earned by Consultant
hereunder for the period up to and including the effective date of
such termination and other than all unpaid amounts required by
Sections 1(b) through 1(e) (which shall not be considered
compensation upon termination under this
Section 8).
(c) Except
as otherwise specified in this Section 8, and Sections 1(b)
through 1(e), Consultant shall not be entitled to any other
compensation or benefits upon the termination of his engagement
with Company for any reason whatsoever.
(d) Immediately
upon the cessation of Consultant’s engagement with the
Company for any reason whatsoever, notwithstanding anything else to
the contrary contained in this Agreement or otherwise, Consultant
will stop serving the functions of his terminated or expired
position(s) and shall be without any of the authority or
responsibility for such position(s).
(e) Notwithstanding
anything to the contrary in this Section 8, Company’s
obligation to pay, and Consultant’s right to receive, any
compensation under this Section 8, shall terminate upon
Consultant’s breach of any provision of Section 9
hereof. In addition, Consultant shall promptly forfeit any
compensation received from Company under this Section 8 upon
Consultant’s breach of any provision of Section 9
hereof.
9.
Covenant Not To Compete and Confidentiality.
(a) Consultant
acknowledges Company’s and Parent’s reliance and
expectation of Consultant’s continued commitment to
performance of his duties and responsibilities under this
Agreement. In light of such reliance and expectation on the part of
Company and Parent, Consultant, in consideration of the
compensation and other payments to be made by Company under this
Agreement, and without expectation for any additional payments or
compensation, agrees to the provisions set forth below.
(i)
Consultant shall not compete with Company or Parent, as defined in
Section 9(a)(ii) below, for a period commencing on the
Effective Date and ending:
(A) if
this Agreement terminates on a Contract Term Date having run its
full course, the date that is 12 months after the termination
date,
(B) if
this Agreement is terminated by Company under Section 7(a)(ii)
or by Consultant under Section 7(a)(i), the later to occur of
(I) the Contract Term Date or (II) the date that is
12 months after the date of termination, or
(C) if
Company terminates this Agreement under Section 7(a)(i), the
date that is 12 months after the termination date.
(ii)
The phrase “shall not compete with Company or Parent”
means that Consultant shall not, directly or indirectly, engage in,
or have an interest in or be associated with (whether as an
officer, director, stockholder, partner, associate, employee,
consultant, owner or otherwise) any corporation, firm or enterprise
which, in a manner that is competitive with and adverse to the
business of Company or Parent, is
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engaged in the
management of manufactured housing finance assets anywhere within
the continental United States or Canada (a “Competitive
Business”); provided, however, that (A) Consultant shall not
be prohibited from serving as an employee of, independent
contractor of, or consultant to, a company that has a subsidiary or
affiliate that is a Competitive Business, so long as Consultant
(x) does not serve as an employee, independent contractor or
consultant for such subsidiary or affiliate engaged that is a
Competitive Business, and (y) is not otherwise involved in any way
in the Competitive Business on behalf of such company,
(B) Consultant shall be permitted to make investments that do
not interfere or conflict with the performance of
Consultant’s duties or directly compete with the business of
the Company and Parent, (C) Consultant shall be permitted to
make passive investments in the stock of any publicly traded
business (including a Competitive Business), so long as the stock
investment in any Competitive Business does not rise above one
percent (1%) of the outstanding shares of such Competitive Business
and (D) Consultant shall be entitled, without further
obligation to the Company, to pursue directly or indirectly any
transaction or opportunity that might be competitive to, or within
the business of, the Company so long as that transaction or
opportunity first is fully presented to the Board of Directors of
Parent and the Board of Directors determine
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