Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (“Agreement”) is made and entered into by and
between ECC Capital Corp. (the “Company” or
“Encore”) and Roque A. Santi
(“Executive”).
WHEREAS, Executive is currently
employed by the Company;
WHEREAS, the Company and Executive
(the “Parties”) wish to ensure the Company’s
access to Executive’s continued services, and the terms on
which those services will be provided;
THEREFORE, the Parties agree as
follows:
The Company hereby employs Executive
and Executive hereby accepts employment upon the terms and
conditions set forth below.
2.1 Term . The term of this
Agreement shall commence on February 9, 2007 (the
“Effective Date”), and shall continue on the terms and
conditions set forth below for a period of two (2) years
unless Executive’s employment is earlier terminated as
provided in Section 5 (the “Term”). Unless the
Board of Directors of the Company (the “Board”)
notifies Executive in writing that it does not wish to extend the
Term on or before August 11, 2008, the Term shall
automatically be extended for an additional two-year
period.
3.1 Base Compensation .
Executive shall be paid a salary at the annual rate of $375,000
(the “Base Compensation”). The Base Compensation shall
be reviewed at least annually, and may be increased, but not
decreased. In the event that the Base Compensation is increased,
the new salary shall be the Base Compensation for purposes of this
Agreement thereafter.
3.2 Bonus Compensation . The
Company shall pay to Executive a cash bonus at a rate of $375,000
per year, in four equal, quarterly installments (the
“Quarterly Bonus”) for each Bonus Year. Each
“Bonus Year” shall run from February 9 through
February 8 of the following year. The last quarterly
installment for each Bonus Year shall be made not later than
March 15 of the year in which that Bonus Year ends.
The Company shall also pay to
Executive an annual bonus of up to $375,000 (the “Target
Bonus”) in a single lump sum for each Bonus Year on or before
March 15 of the year in which that Bonus Year ends (the
“Annual Bonus”). The portion of the Target Bonus paid
shall be determined by the Board based upon objectives determined
by the Board for each Bonus Year, and Executive’s quarterly
performance evaluation for the relevant periods. Executive’s
performance for each quarter during each Bonus Year shall be
evaluated within thirty days of the end of each quarter.
In order to earn each Annual Bonus,
and each installment of the Quarterly Bonus, Executive must be
employed as of the end of the Bonus Year or quarter of the Bonus
Year, respectively, for which such bonus is paid. However, in the
event there is a Change in Control of the Company, as defined in
Section 5.8, Executive shall be entitled to payment on the
date of such Change in Control, of the Annual Bonus and/or
Quarterly Bonus for any Bonus Year or quarter of any Bonus Year
that he has completed, but for which he has not been paid, and of
the Annual Bonus and/or Quarterly Bonus for any calendar year or
quarter during which he has been employed but that has not been
completed as of the date of the Change in Control. The portion of
the Target Bonus payable as the Annual Bonus shall be based on
Executive’s average quarterly performance ratings provided
prior to the Change in Control. In the event no quarterly
performance rating has been provided, Executive shall be awarded
one hundred (100) percent of the Target Bonus.
Notwithstanding the foregoing, the Company’s payment of the
Annual bonus and/or Quarterly Bonus due to a Change in Control
shall be delayed to the extent necessary to comply with
Section 409A of the Internal Revenue Code.
3.3 Retention Bonus .
Provided that Executive remains employed through August 9,
2008, Executive shall be entitled to a payment of a retention bonus
of $250,000 (the “Retention Bonus”) on August 11,
2008.
3.4 Benefits . The Executive
shall be entitled to participate in all pension, 401(k) and other
employee plans and benefits in accordance with the terms of such
plans or policies as may be in effect from time to time.
3.5 Automobile Allowance .
The Company shall provide Executive with a reimbursement of
expenses in connection with one (1) automobile not to exceed
$2000 per month during the term of Executive’s employment
hereunder.
3.5 Method of Payment . The
monetary compensation payable and any benefits due to Executive
hereunder may be paid or provided in whole or in part, from time to
time, by the Company and/or its respective parents, subsidiaries
and affiliates, but shall at all times remain the responsibility of
the Company.
4.1 Position or Duties .
Executive shall serve as the President and Chief Financial Officer
of the Company, and hold such other positions and have such duties
as assigned to him/her by the Company from time to time.
4.2 Devotion of Time and
Effort . Executive shall use Executive’s good faith best
efforts and judgment in performing Executive’s duties as
required hereunder and to act in the best interests of the Company.
Executive shall devote all of his business time, attention and
energies to the business of the Company.
4.3 Other Activities .
Executive may engage in other activities for Executive’s own
account while employed hereunder, including without limitation,
charitable, community and
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other business activities, provided that in the
judgment of the Board of Directors of the Company (the
“Board”) such other activities do not materially
interfere with the performance of Executive’s duties
hereunder, and do not violate Sections 6 and 7.
4.4 Vacation . Executive
shall be entitled to two (2) weeks paid vacation annually.
Such vacation shall be subject to the Company’s policies
concerning accrual, use and scheduling of vacation, as such
policies may be in effect from time to time.
4.5 Business Expenses .
Executive shall be entitled to reimbursement of reasonable business
expenses in accordance with Company policies, as they may be in
effect from time to time.
5.1 Due to Death .
Executive’s employment shall terminate as of the date of
his/her death.
5.2 Due to Disability . The
Company may terminate Executive’s employment if he/she
becomes “disabled”, as defined below, upon written
notice to Executive. For purposes of this Agreement, the term
“Disability” shall mean a physical or mental incapacity
as a result of which Executive becomes unable to continue to
perform the essential functions of the job with or without
accommodation hereunder for six consecutive calendar months or for
shorter periods aggregating 180 business days in any 12 month
period, or, if this provision is inconsistent with any applicable
law, to the extent not prohibited by law.
5.3 By the Company Without
“Cause” . The Company may terminate
Executive’s employment without “Cause” as defined
in Section 5.5 below at any time following the Effective Date,
upon written notice to Executive.
5.4 By Executive Without
“Good Reason” . Executive may terminate his/her
employment hereunder without Good Reason, as defined in
Section 5.6 below, at any time upon written notice to the
Company.
5.5 By The Company For Cause
. The Company may terminate Executive’s employment for
“Cause” at any time, upon written notice to Executive.
For purposes of this Agreement, “Cause” shall
mean:
(a) Executive’s conviction of
or plea of nolo contender to a felony or any crime involving moral
turpitude;
(b) Executive’s commission of
any act of theft, embezzlement or misappropriation against the
Company;
(c) Executive’s failure to
substantially perform Executive’s duties hereunder (other
than such failure resulting from Executive’s incapacity due
to physical or mental illness), which failure is not remedied
within thirty (30) days after written demand for substantial
performance is delivered by the Company which specifically
identifies the manner in which the Company believes that Executive
has not substantially performed Executive’s duties;
or
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(d) Executive’s material
breach of his obligations under this Agreement, which breach is not
remedied within thirty (30) days after written notice is
delivered by the Company which specifically identifies the breach
that the Company believes has occurred.
5.6 By Executive For Good
Reason . Executive may terminate his employment for good reason
upon at least thirty (30) days prior written notice to the
Company. For purposes of this Agreement, “Good Reason”
shall mean the Company’s material breach of the salary and
benefit obligations hereunder and either such breach is incurable
or, if curable, has not been cured within fifteen (15) days
following receipt of written notice by Executive to the Company of
such breach by the Company; Executive being required by the Company
to establish his primary residence outside of the State of Maryland
without his prior written consent; or a relocation of
Executive’s primary office location outside of Orange County,
California, without Executive’s prior written consent.
Executive shall be deemed to have waived Executive’s right to
terminate for “good reason” with respect to a breach if
Executive does not notify the Company in writing of such breach
within fifteen (15) days of such breach, or, if such breach is
not immediately known to him, and could not reasonably be expected
to be know by him, within fifteen (15) days of his discovery
of such breach. Following a Change in Control, as defined below,
“Good Reason” shall also mean: (a) a material
reduction in the authority of Executive; or
(b) Executive’s assignment to a position other than an
officer position with the Company and any of its subsidiaries. The
fact that the Company becomes a subsidiary of another entity, or
that the Company’s status changes from publicly-traded to
privately-held, as a result of the Change in Control, shall not, by
itself, constitute a material reduction in the authority of
Executive. In addition, provided that Executive remains employed by
the Company for ninety (90) days following a Change in
Control, during the thirty (30) days following the ninety
(90) day period after the Change in Control, if Executive
elects to terminate his employment with the Company for any reason
or no reason, he shall be deemed to have “Good
Reason”.
5.7 Severance Payment . In
the event Executive’s employment terminates pursuant to
Sections 5.1 (Death), 5.4 (Without Good Reason), or 5.5 (For
Cause), Executive (or Executive’s estate, as applicable)
shall have the right to receive Executive’s compensation as
otherwise provided under this Agreement through the termination
date, including payment of any Annual Bonus or Quarterly Bonus for
any Bonus Year or quarter of a Bonus Year completed prior to the
termination date and the Retention Bonus if the termination occurs
after August 9, 2007, but the Retention Bonus has not yet been
paid. Executive shall have no further right to receive
compensation, benefits or other consideration from the Company, and
Executive shall not be entitled to any severance payments or
benefits, except as required by applicable law. In the event that
Executive’s employment is terminated pursuant to
Section 5.2 (Due to Disability), Section 5.3 (Without
Cause), or Section 5.6 (For Good Reason), Executive shall
continue to render services to the Company pursuant to this
Agreement until the date of termination and shall continue to
receive compensation, as provided in this Agreement, through the
termination date, including payment of any Annual Bonus or
Quarterly Bonus for any Bonus Year or quarter of a Bonus Year
completed prior to the termination date and the Retention Bonus if
the termination occurs after August 9, 2007, but the Retention
Bonus has not yet been paid. Thereafter, Executive shall be
entitled to severance pay and benefits as set forth in
subparagraph (a) through (c) below, provided that
Executive executes and delivers (and does not revoke, if a
revocation period is required by law) a general release of claims
in a form acceptable to the Company in its sole and absolute
discretion, and is not in material breach of any of the provisions
of this Agreement.
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(a) Amount .
The Company shall pay Executive an amount equal to 200 percent of
Executive’s Base Compensation, and the Annual Bonus and
Quarterly Bonus for any Bonus Year or quarter of any Bonus Year
during which Executive’s employment terminates (collectively,
the “Severance Amount”). The portion of the Target
Bonus payable as the Annual Bonus shall be based on
Executive’s average quarterly performance ratings provided
prior to the termination. In the event no quarterly performance
rating has been provided, Executive shall be awarded
one hundred (100) percent of the Target Bonus. If the
termination occurs on or before August 9, 2007, the Severance
Amount shall also include an amount equal to the Retention Bonus.
The Severance Amount shall be subject to withholding under
applicable law. The Severance Amount will be paid as follows: no
later than the tenth (10 th
)
business day after Executive delivers a signed general release in
the form acceptable to the Company and returns all company property
as required in Section 9.9, twenty-five (25) percent of
the Severance Amount shall be paid to Executive; the remaining
seventy-five (75) percent of the Severance Amount shall be
paid in substantially equal sums over the following twelve
(12) months, in accordance with the Company’s regular
payroll practices (the “Severance Payments”).
Notwithstanding the foregoing, the Severance Payments shall be
delayed to the extent necessary to comply with Section 409A of
the Internal Revenue Code.
(b) Vesting .
In addition to the Severance Payments, any unvested stock options
or restricted stock held by Executive shall vest as follows:
1/12 th
of the
unvested stock options and/or restricted stock held by Executive as
of the termination date shall vest at the end of each one-month
period following the date of termination for the twelve-month
period following the date of termination (the
“Vesting”). Any stock option or restricted stock vested
in accordance with this Section 5.7(b) shall be exercisable
within ninety (90) days following the twelve-month vesting
period
(c) Benefits . In addition to
the Severance Payments and the Vesting, provided that Executive is
eligible for and timely elects COBRA healthcare coverage
continuation, the Company shall pay the portion of the COBRA
premium equal to the difference between the COBRA premium and
Executive’s monthly contribution towards health care benefits
immediately prior to the data of termination, for Executive to
continue his (and, if applicable, his family’s) health care
coverage, which was in effect as of the date of termination for up
to eighteen (18) months from the date of termination, provided
that Executive (and, if applicable, his family) remains eligible
for such coverage (the “Severance Benefits”).
Notwithstanding the foregoing, the Company’s payment of
portions of the COBRA premium shall be delayed to the extent
necessary to comply with Section 409A of the Internal Revenue
Code.
5.8 Change in Control
.
For purposes of this Agreement, a
“Change in Control” shall mean the occurrence of any of
the following events:
(a) within twenty-four
(24) months of the Effective Date, the individuals
constituting the Board as of the Effective Date (the
“Incumbent Board”) cease for any reason to constitute
at least two-thirds (2/3rds) of the Board; provided, however,
that if the election, or nomination for election by the
Company’s stockholders, of any new director was approved by a
vote of at least two-thirds (2/3rds) of the Incumbent Board,
such new director shall be considered a member of the Incumbent
Board; or
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(b) an acquisition of any voting
securities of the Company (the “Voting Securities”) by
any “person” (as the term “person” is used
for purposes of Section 13(d) or Section 14(d) of the
Securities Exchange Act of 1934, as amended (the “1934
Act”)) immediately after which such person has
“beneficial ownership” (within the meaning of
Rule 13d-3 promulgated under the 1934 Act) (“Beneficial
Ownership”) of 35% or more of the combined voting power of
the Company’s then outstanding Voting Securities;
or
(c) approval by the stockholders of
the Company of:
(i) a merger, consolidation, share
exchange or reorganization involving the Company, unless
(A) the stockholders of the Company,
immediately before such merger, consolidation, share exchange or
reorganization, own, directly or indirectly immediately following
such merger, consolidation, share exchange or reorganization, at
least 80% of the combined voting power of the outstanding voting
securities of the corporation that is the successor in such merger,
consolidation, share exchange or reorganization (the
“Surviving Company”) in substantially the same
proportion as their ownership of the Voting Securities immediately
before such merger, consolidation, share exchange or
reorganization; provided, however, that a merger, consolidation,
share exchange or reorganization of the Company shall not
constitute a “change in control” if such merger,
consolidation, share exchange or reorganization of the Company is
approved by the Board and is recommended by Executive to the Board
for its approval; and
(B) the individuals who were members
of the Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation, share exchange
or reorganization constitute at least
