EXHIBIT 10.1
New Century Financial
Corporation
Deferred Compensation
Plan
Amended and Restated July 1,
2004
ARTICLE 1
In recognition of the services
provided by certain key employees, the Board of Directors of New
Century Financial Corporation hereby adopts a deferred compensation
plan (the “Plan”) to make additional retirement
benefits and increased financial security, on a tax favored basis,
available to those individuals effective January 1, 1999 and
amended effective July 1, 2004. This Plan shall be unfunded for tax
purposes and for purposes of Title I of ERISA.
ARTICLE 2
DEFINITIONS
Affiliate . “Affiliate” means any firm,
partnership, or corporation that directly or indirectly through one
or more intermediaries, controls, is controlled by, or is under
common control with the Company. “Affiliate” also
includes any other organization similarly related to the Company
that is designated as such by the Board.
Annual Bonus
. “Annual Bonus” means
any compensation, in addition to Base Annual Salary, paid in
respect of a Plan Year to a Participant as an Employee under the
Company’s Incentive Plan, or otherwise as a bonus in the
discretion of the Company.
Annual Deferral Amount
. “Annual Deferral
Amount” shall mean that portion of a Participant’s Base
Salary, Annual Bonus, Commissions, and/or Excess Deferrals that a
Participant elects to have, and is, deferred, in accordance with
Article 4 for any one Plan Year. In the event of Retirement,
Disability, death or a Termination of Employment prior to the end
of a Plan Year, such year’s Annual Deferral Amount shall be
the actual amount withheld prior to such event.
Base Annual Salary
. “Base Annual Salary”
means the annual compensation (excluding bonuses, commissions,
overtime, incentive payments, welfare benefits, including, without
limitation, severance benefits, non-monetary awards or payments,
Directors Fees and other fees, stock options and phantom stock
grants, and car allowances) paid to a Participant for services
rendered to any Employer, before reduction for compensation
deferred pursuant to all tax-qualified, non-qualified and Code
Section 125 plans (other than compensation deferred under
individual employment Contracts) of any Employer. The Committee
may, in its discretion, with respect to any one or more
Participants establish for any Plan Year a limit on the amount of
Base Annual Salary to be taken into account under this
Plan.
Beneficiary
. “Beneficiary” means
the person or persons designated as such in accordance with Section
15.2.
Board . “Board” means the Board of
Directors of the Corporation.
Change in Control
. “Change in Control”
means any of the following:
(a) The acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (a
“Person”)) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under
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the Securities Exchange Act of 1934,
as amended) of 25% or more of either (1) the then-outstanding
shares of common stock of the Corporation (the “Outstanding
Company Common Stock”) or (2) the combined voting power of
the then-outstanding voting securities of the Corporation entitled
to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided,
however, that, for purposes of this definition, the following
acquisitions shall not constitute a Change in Control; (A) any
acquisition directly from the Corporation, (B) any acquisition by
the Corporation, (C) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Corporation or
any affiliate of the Corporation or a successor, or (D) any
acquisition by any entity pursuant to a transaction that complies
with Sections (a), (b), and (c) below;
(b) Individuals who, as of July 1,
2004, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to July 1, 2004 whose election, or nomination for
election by the Corporation’s stockholders, was approved by a
vote of at least two-thirds of the directors then comprising the
Incumbent Board (including for these purposes, the new members
whose election or nomination was so approved, without counting the
member and his predecessor twice) shall be considered as though
such individual were a member of the Incumbent Board, 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 of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the
Board;
(c) Consummation of a
reorganization, merger, statutory share exchange or consolidation
or similar corporate transaction involving the Corporation or any
of its subsidiaries, a sale or other disposition of all or
substantially all of the assets of the Corporation, or the
acquisition of assets or stock of another entity by the Corporation
or any of its subsidiaries (each, a “Business
Combination”), in each case unless, following such Business
Combination, (1) all or substantially all of the individuals and
entities that were the beneficial owners of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then-outstanding
shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without
limitation, an entity that, as a result of such transaction, owns
the Corporation or all or substantially all of the
Corporation’s assets directly or through one or more
subsidiaries (a “Parent”)) in substantially the same
proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (2) no
Person (excluding any entity resulting from such Business
Combination or a Parent or any employee benefit plan (or related
trust) of the Corporation or such entity resulting from such
Business Combination or Parent) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then-outstanding
shares of common stock of the entity resulting from such Business
Combination or the combined voting power of the then-outstanding
voting securities of such entity, except to the extent that the
ownership in excess of 25% existed
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prior to the Business Combination,
and (3) at least a majority of the members of the board of
directors or trustees of the entity resulting from such Business
Combination or a Parent were members of the Incumbent Board at the
time of the execution of the initial agreement or of the action of
the Board providing for such Business Combination; or
(d) Approval by the stockholders of
the Corporation of a complete liquidation or dissolution of the
Corporation other than in the context of a transaction that does
not constitute a Change in Control under clause (c)
above.
Claimant . “Claimant” shall have the meaning
set forth in Section 13.1.
Code . “Code” means the Internal Revenue
Code of 1986, as amended from time to time.
Commissions
. “Commissions” means an
Eligible Employee’s commissions for any Plan Year, as
determined in accordance with an Employer’s policies and
procedures regarding compensation.
Committee . “Committee” means the persons
appointed by the Plan Administrator, and which also may act for the
Company or the Board in making decisions and performing specified
duties under the Plan.
Company . “Company” means the Corporation
and any Affiliate which is authorized by the Plan Administrative
Committee to adopt the Plan and cover its Eligible Employees and
whose designation as such has become effective upon acceptance of
such status by the board of directors of the Affiliate. An
Affiliate may revoke its acceptance of such designation at any
time, but until such acceptance has been revoked, all the
provisions of the Plan and amendments thereto shall apply to the
Eligible Employees of the Affiliate. In the event the designation
is revoked by the board of directors of an Affiliate, the Plan
shall be deemed terminated only with respect to such
Affiliate.
Compensation
. “Compensation” means
the total amount of cash remuneration paid by the Company to an
Eligible Employee for any calendar year of employment as wages,
commissions, bonuses and other monetary incentives, including the
Participant’s contributions under this Plan and under any
other plan of deferred compensation maintained by the Company or an
Affiliate but not taking into account any Company contributions to
benefit plans, all fringe benefits, moving and relocation expenses
and other forms of welfare benefits.
Compensation Deferral
. “Compensation
Deferral” means that portion of Compensation as to which a
Participant has made an annual irrevocable election to defer
receipt until the date specified under the In-Service Distribution
Option or the Retirement Option.
Corporation
. “Corporation” means
New Century Financial Corporation, a Delaware corporation, and any
successor.
Deduction Limitation
. “Deduction
Limitation” means the following described limitation on the
annual benefit that may be distributed pursuant to the provisions
of this Plan. The limitation shall be applied to distributions
under this Plan as expressly set forth in this Plan. If the Company
determines in good faith prior to a Change in Control that there is
a reasonable
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likelihood that any compensation paid to a
Participant for a taxable year of the Company would not be
deductible by the Company solely by reason of the limitation under
Code Section 162(m), then to the extent deemed necessary by the
Company to ensure that the entire amount of any distribution to the
Participant pursuant to this Plan prior to the Change in Control is
deductible, the Company may, in its sole discretion, defer all or
any portion of the distribution. Any amounts deferred pursuant to
this limitation shall continue to be credited (or debited) with
earnings, gains, losses, and changes in value of the Deemed
Investment Options in accordance with Section 5.3. The amounts so
deferred and interest thereon shall be distributed to the
Participant or his or her Beneficiary (in the event of the
Participant’s death) at the earliest possible date, as
determined by the Company in good faith, on which the deductibility
of compensation paid or payable to the Participant for the taxable
year of the Company during which the distribution is made will not
be limited by Section 162(m), or if earlier, the effective date of
a Change in Control
Disabled . “Disabled” means a mental or
physical condition which qualifies a Participant for benefits under
the Company’s Long-Term Disability Plan.
Discretionary Company
Contribution .
“Discretionary Company Contribution” are those credited
to the Participant’s Retirement Distribution Account and/or
In-Service Distribution Account by the Company pursuant to Section
4.4.
Discretionary Company
Contribution Account .
“Discretionary Company Contribution Account” shall mean
the sum of (i) the Participant’s Discretionary Company
Contribution Amount plus (ii) earnings, gains, losses, and changes
in value of the Earnings Crediting Options hereon credited (or
debited) in accordance with Section 5.3, net of all distributions
from such account. This account shall be a bookkeeping entry only
and shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to the Participant pursuant
to the Plan.
Discretionary Matching
Contribution .
“Discretionary Matching Contribution” are those
credited to the Participant’s Retirement Distribution Account
and/or In-Service Distribution Account by the Company pursuant to
Section 4.5.
Discretionary Matching
Contribution Account .
“Discretionary Matching Contribution Account” shall
mean the sum of (i) the Participant’s Discretionary Matching
Contribution Amount plus (ii) earnings, gains, losses, and changes
in value of the Earnings Crediting Options hereon credited (or
debited) in accordance with Section 5.3, net of all distributions
from such account. This account shall be a bookkeeping entry only
and shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to the Participant pursuant
to the Plan.
Distribution Option
. “Distribution Option”
means the two (2) distribution options which are available under
the Plan, consisting of the Retirement Distribution Option and the
In-Service Distribution Option.
Distribution Option
Account .
“Distribution Option Account” or “Accounts”
means, with respect to a Participant, the Retirement Distribution
Account and/or the In-Service Distribution Account established on
the books of account of the Company, pursuant to Section 5.1, for
each Distribution Option Period.
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Distribution Option
Period .
“Distribution Option Period” means a period of five (5)
Plan Years for which an Eligible Employee elects, in the Enrollment
Agreement, the time and manner of payment of amounts credited to
the Eligible Employee’s In-Service Distribution Option
Account for such Plan Years.
Earnings Crediting
Options . “Earnings
Crediting Options” means the deemed investment options
selected by the Participant from time to time pursuant to which
deemed earnings are credited to the Participant’s
Distribution Option Accounts pursuant to Section 5.2
Effective Date
. “Effective Date” means
the effective date of the Amended Plan which is July 1,
2004.
Elective Deferral
Account . “Elective
Deferral Account” shall mean the sum of (i) a
Participant’s Deferral Amount, plus (ii) earnings, gains,
losses, and changes in value of the Earnings Crediting Options
hereon credited (or debited) in accordance with Section 5.3, net of
all distributions from such account. This account shall be a
bookkeeping entry only and shall be utilized solely as a device for
the measurement and determination of the amounts to be paid to the
Participant pursuant to the Plan.
Eligible Employee
. “Eligible Employee”
means an Employee who is a member of the group of selected
management and/or highly compensated Employees of the Company and
who is designated by the Committee as eligible to participate in
the Plan for a Plan Year.
Employee . “Employee” means any individual
employed by the Company on a regular, full time basis (in
accordance with the personnel policies and practices of the
Employer), including citizens of the United States employed outside
of their home country and resident aliens employed in the United
States; provided, however, that to qualify as an
“Employee” for purposes of the Plan, the individual
must be a member of a group of “key management or other
highly compensated employees” within the meaning of Sections
201, 301 and 401 of the Employee Retirement Income Security Act of
1974, as amended.
End Termination Date
. “End Termination
Date” means the date of termination of a Participant’s
Service with the Company and its Affiliates and shall be determined
without reference to any compensation continuation arrangement or
severance benefit arrangement that may be applicable.
Enrollment Agreement
. “Enrollment
Agreement” means a written agreement, as may be amended from
time to time, which is entered into by and between the Company and
a Participant. The terms of any Enrollment Agreement may vary any
of the terms set forth in this Plan and such changes shall be
binding on the Company and the Participant if the Enrollment
Agreement is signed by the Participant and accepted by the
Committee. Each Enrollment Agreement executed by a Participant
shall provide for the entire benefit to which such Participant is
entitled to under the Plan, and shall specify, the Company liable
for the Participant’s benefits hereunder and the magnitude or
extent of such liability. The Enrollment Agreement bearing the
latest date of acceptance by the Committee shall govern such
entitlement and each Employer’s liability. Upon the complete
payment of a Participant’s Account Balance, each
individual’s Enrollment Agreement and his or her status as a
Participant shall terminate.
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ERISA . “ERISA” means the Employee
Retirement Income Security Act of 1974, as it may be amended from
time to time.
Excess Deferrals
. “Excess Deferrals”
means amounts equal to the amounts of a Participant’s
Employee Before-Tax Contributions under the 401(k) Plan (i) which
are limited to Section 402(g) of the Code but which would otherwise
have been made to the 401(k) Plan pursuant to a Participant’s
election under the 401(k) Plan, and/or (ii) which are distributed
to a Participant from the 401(k) Plan in order to satisfy the
limitations of Section 401(k) of the Code.
In-Service Distribution
Account .
“In-Service Distribution Account” means the Account
maintained for a Participant for each Distribution Option Period to
which compensation Deferrals are credited pursuant to the
In-Service Distribution Option.
In-Service Distribution
Option .
“In-Service Distribution Option” means the Distribution
Option pursuant to which benefits are payable in accordance with
Section 7.2.
Participant
. “Participant” means an
Eligible Employee who has filed a completed and executed Enrollment
Agreement with the Committee or its designee and is participating
in the Plan in accordance with the provisions of Article 4. In the
event of the death or incompetency of a Participant, the term shall
mean his personal representative or guardian. An individual shall
remain a Participant until that individual has received full
distribution of any amount credited to the Participant’s
Account.
Plan . “Plan” means this plan, called the
New Century Financial Corporation Deferred Compensation Plan, as
amended from time to time.
Plan Administrator
. “Plan Administrator”
means the Compensation Committee of the Board when acting as the
administrator of the Plan.
Plan Year . “Plan Year” means the 12 month
period beginning on each January 1 and ending on the following
December 31, except that the first Plan Year shall begin on the
Effective Date, and end on December 31.
Retirement
. “Retirement” means the
termination of the Participant’s Service with the Employer
(for reasons other than death) at or after age 65, or, if the
Participant has 5 or more years of Service, at or after age
55.
Retirement Distribution
Account .
“Retirement Distribution Account” means the Account
maintained for a Participant to which compensation Deferrals and
Company Matching Contributions are credited pursuant to the
Retirement Distribution Option.
Retirement Distribution
Option .
“Retirement Distribution Option” means the Distribution
Option pursuant to which benefits are payable in accordance with
Section 7.1.
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Savings Plan
. “Savings Plan” means
the New Century Financial Corporation Employee 401(k) Plan, as it
may be amended from time to time.
Trust . “Trust” shall mean the trust
established pursuant to that certain Trust Agreement between the
Company and the trustee named therein, as amended from time to
time.
Years of Service
. “Years of Service”
means the period of time during which an employment relationship
exists between an Employee and the Company, including any period
during which the Employee is on an approved leave of absence,
whether paid or unpaid. “Years of Service” also
includes employment with an Affiliate if an Employee transfers
directly between the Company and the Affiliate. For purposes of
this definition, a year of employment shall be a 365 day period (or
366 day period in the case of a leap year) that, for any subsequent
year, commences on an anniversary of that hiring date. Any partial
year of employment shall not be counted. Notwithstanding the
previous sentence, a Participant’s first Year of Service
shall be treated as a full Year of Service for purposes of this
definition, even if it is only a partial Year of
Service.
ARTICLE 3
ADMINISTRATION OF THE PLAN AND
DISCRETION
3.1 The Plan Administrator shall
have full power and authority to interpret the Plan, to prescribe,
amend and rescind any rules, forms and procedures as it deems
necessary or appropriate for the proper administration of the Plan
and to make any other determinations and to take any other such
actions as it deems necessary or advisable in carrying out its
duties under the Plan. All action taken by the Plan Administrator
arising out of, or in connection with, the administration of the
Plan or any rules adopted thereunder, shall, in each case, lie
within its sole discretion, and shall be final, conclusive and
binding upon the Company, the Board, the Committee, all Employees,
all Beneficiaries of Employees and all persons and entities having
an interest therein.
3.2 Members of the Committee and the
Plan Administrator shall serve without compensation for their
services unless otherwise determined by the Board. All expenses of
administering the Plan shall be paid by the Company.
3.3 The Company shall indemnify and
hold harmless each member of the Committee and the Plan
Administrator from any and all claims, losses, damages, expenses
(including counsel fees) and liability (including any amounts paid
in settlement of any claim or any other matter with the consent of
the Board) arising from any act or omission of such member, except
when the same is due to gross negligence or willful
misconduct.
3.4 Any decisions, actions or
interpretations to be made under the Plan by the Company, the Board
or Committee shall be made in its respective sole discretion, not
as a fiduciary and need not be uniformly applied to similarly
situated individuals and shall, except as expressly provided in
Section 13.6 with respect to an arbitrator’s de novo review
of determinations related to claims arising upon or following the
occurrence of a Change in Control, be final, binding and conclusive
on all persons interested in the Plan.
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ARTICLE 4
PARTICIPATION
4.1 Deferred Compensation .
For each Plan Year, a Participant may elect to defer Base Salary,
Annual Bonus, Commissions, and/or Compensation. If no election is
made, the amount deferred shall be zero.
In no event shall the maximum amount
of Base Salary that a Participant may defer to this Plan in any one
year exceed (i) the Participant’s total Base Salary, less
(ii) the sum of the maximum amount that the Participant could elect
to defer to the Savings Plan for that year plus the amount(s) that
the Participant may elect to contribute to any qualified welfare
benefit plan of the Company for that year for medical, healthcare,
insurance, or similar benefits coverage. The minimum deferral
limits of Section 4.1 shall not apply with respect to a Participant
for a Plan Year if the amount determined pursuant to the preceding
sentence is less than the applicable minimum amount determined in
accordance with Section 4.1.
4.2 Election to Participate .
Each Employee who is an Eligible Employee for a Plan Year will be
offered the opportunity to defer Compensation to be earned in that
Plan Year. Any Eligible Employee may enroll in the Plan effective
as of the first day of that Plan Year by filing a completed and
fully executed Enrollment Agreement with the Committee by a date
set by the Committee but in any event prior to the first day of
that Plan Year. Pursuant to said Enrollment Agreement, the Eligible
Employee shall irrevocably elect (a) the percentages, in whole
percentages, by which (as a result of payroll reduction) an amount
equal to any whole percentage of the Participant’s
Compensation to be earned during that Plan Year, in each case after
required nondeferrable payroll tax deductions, will be deferred,
and (b) the Distribution Option Accounts to which such amounts will
be credited, and shall provide such other information as the Plan
Administrator shall require. The first Enrollment Agreement filed
by an Eligible Employee during any Distribution Option Period must
also set forth the Participant’s election as to the time and
manner of distribution from the Retirement Distribution Account and
In-Service Distribution Account and of amounts credited for that
Distribution Option Period and related earnings. The Committee may
establish minimum or maximum amounts that may be deferred under
this Section and may change such standards from time to time. Any
such limits shall be communicated by the Committee to the Plan
Administrator and by the Plan administrator to the Participants
prior to the commencement of a Plan Year.
4.3 New Eligible Employees .
The Committee may, in its discretion, permit individuals who first
become Employees after the beginning of a Plan Year and who are
selected as Eligible Employees to enroll in the Plan for that Plan
Year by filing a completed and fully executed Enrollment Agreement,
in accordance with Section 4.1, as soon as practicable following
the date the individual first becomes an Eligible Employee but, in
any event, within 30 days after such date. Notwithstanding the
foregoing, however, any election by an Eligible Employee, pursuant
to this Section, to defer Compensation shall apply only to such
amounts as are earned by the Eligible Employee after the date on
which such Enrollment Agreement is filed.
4.4 Discretionary Company
Contributions . The Company, in its sole discretion, may, but
is not required to, credit any amount it desires to any
Participant’s Retirement Distribution Account and/or
In-Service Distribution Account under this Plan. The amount so
credited to a
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Participant may be smaller or larger than the
amount credited to any other Participant, and the amount credited
to any Participant for a Plan Year may be zero (0). Any
Discretionary Company Contributions approved by the Company will be
credited as frequently as determined by the Committee acting on
behalf of the Company.
4.5 Discretionary Matching
Contributions . If a Participant has deferred Compensation
during any Plan Year, the Company shall reserve the right to credit
to such Participant’s Retirement Distribution Account and/or
In-Service Distribution Account a Matching Contribution, as defined
above. Any Discretionary Matching Contributions approved by the
Company will be credited as frequently as determined by the
Committee, acting on behalf of the Company.
ARTICLE 5
DISTRIBUTION OPTION
ACCOUNTS
5.1 Distribution Option
Accounts . The Committee shall establish and maintain separate
Distribution Option Accounts with respect to a Participant for each
Distribution Option Period.
A Participant’s Distribution
Option Accounts shall consist of the Retirement Distribution
Account and/or one or more In-Service Distribution Accounts. The
amount of Compensation deferred pursuant to Sections 4.1, 4.2 or
4.3 shall be credited by the Company to the Participant’s
Distribution Option Accounts as soon as administratively
practicable after such compensation would otherwise have been paid,
but in no event later than the fifteenth day of the month following
the month in which such Compensation would otherwise have been
paid, in accordance with the Distribution Option irrevocably
elected by the Participant in the Enrollment Agreement. Any amount
once taken into account as Compensation for purposes of this Plan
shall not be taken into account thereafter. The Participant’s
Distribution Option Accounts shall be reduced by the amount of the
payments made by the Company to the Participant or the
Participant’s Beneficiary pursuant to this Plan.
5.2 Earnings on Distribution
Option Accounts . A Participant’s Distribution Option
Accounts shall be credited with earnings according to the Earnings
Crediting Options elected by the Participant. Participants may
allocate their Retirement Distribution Account and/or each of their
In-Service Distribution Accounts among the Earnings Crediting
Options available under the Plan only in whole percentages of not
less than five percent (5%) for any one Earnings Crediting Option
and provided that allocation must total 100%. The Committee shall
select the Earnings Crediting Options whose performance will
measure the amounts to be credited under Section 5.3 to the
Distribution Option Accounts of Participants. The selection of
Earnings Crediting Options shall be for bookkeeping purposes only,
and the Company shall not be obligated actu
