EXHIBIT 10.1
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT
(this “ Agreement ”) is made and entered into
this 25th day of October 2006 (the “ Effective
Date ”), by and between New Century Financial
Corporation, a Maryland corporation (the “ Corporation
”) and Tajvinder S. Bindra, an individual (the “
Executive ”).
RECITALS
THE CORPORATION AND THE EXECUTIVE
ENTER INTO THIS AGREEMENT on the basis of the following facts,
understandings and intentions:
A. The Corporation
desires to employ the Executive as Executive Vice President, as of
November 6, 2006, and Chief Financial Officer, as of
November 15, 2006, of the Corporation to carry out the duties
and responsibilities described below, all on the terms and
conditions hereinafter set forth.
B. The Executive desires
to accept employment on such terms and conditions.
C. This Agreement shall
govern the employment relationship between the Executive and the
Corporation during the Period of Employment (as defined in
Section 2 below) and, as of the Effective Date, will supersede
and negate all previous understandings and agreements with respect
to such relationship between the parties.
NOW, THEREFORE , in
consideration of the above recitals incorporated herein and the
mutual covenants and promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are
hereby expressly acknowledged, the Corporation and the Executive
agree as follows:
1. Retention and Duties .
1.1 Effective Date .
This Agreement shall become effective as of the Effective Date.
1.2 Retention . The
Corporation hereby agrees to engage and employ the Executive for
the Period of Employment (as defined in Section 2) on the
terms and conditions expressly set forth in this Agreement. The
Executive hereby accepts and agrees to such engagement and
employment, on the terms and conditions expressly set forth in this
Agreement.
1.3 Duties . During the
Period of Employment (as defined in Section 2 below), the
Executive shall serve the Corporation as its Executive Vice
President and Chief Financial Officer. In such positions, the
Executive shall be principally responsible for the general
supervision, direction and control of the financial aspects of the
business, including, without limitation, being principally
responsible for setting the strategic directions of the
Corporation’s financial initiatives, formulating financial
policy and plans, risk management, budgeting, and leading and
managing strategic initiatives and acquisitions, in each case
subject to the general direction of the Chief Executive Officer of
the Corporation (the “ CEO ”) and the
Corporation’s Board of Directors (the “ Board
”). During the Period of Employment, the Executive shall have
the general powers and duties usually vested in the offices of
executive vice president and chief financial officer of a
corporation of the size and nature of the Corporation and such
other powers and duties commensurate with his positions as the CEO
or Board may assign from time to time. During the Period of
Employment, the Executive shall be a member of the
Corporation’s executive management committee or any successor
thereto (“ EMC ”), if any. The Executive shall
also be subject to the corporate policies of the Corporation as
they are in effect from time to time throughout the Period of
Employment (including, without limitation, the Corporation’s
insider trading policy, Code of Business Conduct and Ethics, and
Code of Ethics for Senior Financial Officers, as they may change
from time to time), but no such provisions of such policies with
regard to termination of employees shall apply to the Executive
except to the extent they constitute Cause hereunder. During the
Period of Employment, the Executive shall report directly to the
CEO.
1.4 No Other Employment;
Minimum Time Commitment . During the Period of Employment,
the Executive shall devote substantially all of the
Executive’s business time, energy and skill to the
performance of the Executive’s duties for the Corporation,
and hold no other employment. Nothing herein shall preclude the
Executive from (i) serving on boards of directors of other
business entities as the Board approves in writing,
(ii) engaging in a reasonable level of charitable activities
and community affairs, including serving on boards of directors or
the equivalent, and (iii) managing his personal and family
investments and affairs, provided that such activities do not
materially interfere with the effective discharge of his duties and
responsibilities to the Corporation. The Corporation hereby agrees
that the Executive’s service on the boards of directors of
any entity approved by the Board shall not be deemed a violation of
the non-competition and non-solicitation provisions of this
Agreement. However, the Corporation shall have the right (upon
written notice) to require the Executive to resign from any board
or similar body on which he may now or in the future serve (or
reduce his involvement) if the Board reasonably determines in good
faith that such service materially interferes with the effective
discharge of the Executive’s duties and responsibilities to
the Corporation or that any business related to such service is
then in material competition with any business of any entity within
the Corporation or any of its affiliates. In the event any such
resignation (or reduction in involvement) is required of the
Executive, the Executive shall so resign (or reduce his
involvement) as soon as he can practicably do so without violating
any fiduciary duty he may have to such other organization.
1.5 No Breach of
Contract . The Executive hereby represents to the
Corporation that: (i) the execution and delivery of this
Agreement by the Executive and the Corporation and the performance
by the Executive of the Executive’s duties hereunder shall
not constitute a breach of, or otherwise contravene, the terms of
any other agreement to which the Executive is a party or otherwise
bound; and (ii) that in the performance of his duties
hereunder the Executive will not use any information (including,
without limitation, confidential information and trade secrets)
which the Executive is not legally and contractually free to
disclose to the Corporation. The Executive represents that any
confidentiality, trade secret or similar agreement to which he is a
party or otherwise bound will not interfere with the effective
performance by the Executive of his duties hereunder.
1.6 Location . The
Executive acknowledges that the Corporation’s principal
executive offices are currently located in Irvine, California. The
Executive’s principal place of employment shall be the
Corporation’s principal executive offices, as (subject to
Section 5.5(e)(vi)) they may be moved from time to time at the
discretion of the Corporation. The Executive agrees that he will be
regularly present at the Corporation’s principal executive
offices, subject to travel in the course of performing his duties
for the Corporation, paid-time off and approved leaves of
absence.
2. Period of Employment . Subject to earlier
termination as provided in this Agreement, the “ Period of
Employment ” shall be the period commencing on
November 6, 2006 (the “ Commencement Date
”) and ending at the close of business on December 31,
2009 (the “ Termination Date ”); provided,
however, that the Period of Employment shall be automatically
extended for one (1) additional year on the Termination Date
and each subsequent anniversary of the Termination Date, unless
either party gives notice, in writing, no less than thirty
(30) days prior to such date that the Period of Employment
shall not be extended (or further extended, as the case may be).
The term “Period of Employment” shall include any
extension thereof pursuant to the preceding sentence and shall
terminate on the Severance Date (as defined in Section 5.3
hereof). Provision of notice that the Period of Employment shall
not be extended or further extended, as the case may be, shall not
constitute a breach of this Agreement.
3. Compensation .
3.1 Base Salary . The
Executive’s base salary for the Period of Employment (the
“ Base Salary ”) shall be at a rate of FIVE
HUNDRED THOUSAND DOLLARS ($500,000) per annum and shall be paid in
accordance with the Corporation’s regular payroll practices
in effect from time to time, but not less frequently than in
monthly installments. During the Period of Employment, the CEO
and/or the Compensation Committee of the Board (the “
Compensation Committee ”), as applicable based on
Corporation practice as in effect from time to time, will review
the Executive’s Base Salary on an annual basis (commencing in
2007) and may increase (but not decrease) the Base Salary from the
rate in effect immediately preceding any such change. For purposes
of this Agreement after any such increase, “Base
Salary” shall mean such increased amount.
3.2 Annual Incentive
Bonus . During the Period of Employment, the Executive
shall be eligible to receive an annual incentive bonus in an amount
to be determined by the CEO and/or the Compensation Committee, as
applicable based on Corporation practice as in effect from time to
time, in good faith, taking into account the performance of the
Corporation and the Executive (the “ Incentive Bonus
”). With respect to each calendar year during the Period of
Employment, the Executive’s target Incentive Bonus
opportunity shall equal TWO HUNDRED AND FIFTY PERCENT (250%) of the
Executive’s Base Salary for that year (the “ Target
Bonus ”), with the actual bonus amount of any such
calendar year based on performance targets and objectives, and
actual performance against those targets and objectives, as
determined in good faith by the CEO and/or the Compensation
Committee, as applicable based on Corporation practice as in effect
from time to time, for such calendar year. Notwithstanding the
foregoing, for calendar year 2006, the Executive shall be entitled
to a pro-rata Incentive Bonus based on the Target Bonus for the
period he is employed by the Corporation during 2006, and for
calendar 2007, the Executive shall be paid an Incentive Bonus of no
less than 200% of the Executive’s Base Salary for that year.
Any Incentive Bonus payable hereunder shall be paid at such times
as such bonuses are generally paid to other senior executives of
the Corporation.
3.3 Annual Long-Term Incentive
Awards . During the Period of Employment commencing in the
first fiscal quarter of each calendar year (commencing in 2007),
the Executive shall receive long-term incentive award opportunities
that the CEO and/or the Compensation Committee, as applicable based
on Corporation practice as in effect from time to time, determines
to have an approximate aggregate value at the time of grant equal
to at least TWO HUNDRED FIFTY PERCENT (250%) of the
Executive’s Base Salary in effect at that time. Such awards
shall be subject to such other terms and conditions as the CEO or
the Compensation Committee, as applicable, may provide at the time
of grant of each applicable award (including, without limitation,
vesting requirements). The awards may be in such form(s) as the CEO
or the Compensation Committee, as applicable, deems appropriate at
the time of grant (such as, without limiting other types of awards
that may be granted, stock options, restricted stock, restricted
stock units, performance stock or units, and dividend equivalents),
and the aggregate grant for any one year may consist of more than
one form of award. Notwithstanding the foregoing, the
Executive’s awards shall be in a form and have terms and
conditions that are generally consistent with the form and terms
and conditions applicable to other members of the EMC or, if there
is no EMC, other senior executives of the Corporation (“Peer
Executives”). For purposes of clarity, the CEO is not a Peer
Executive. The CEO or the Compensation Committee, as applicable,
may determine the grant date aggregate value of the awards based on
such methodology, and taking into account such facts and
circumstances, as it in good faith considers appropriate at the
time of grant of the awards. The methodology and facts considered
may change from year to year but in all events shall be generally
consistent with the method and/or facts applicable to the same or
similar type of award made to other Peer Executives.
Notwithstanding anything else to the contrary, Section 7.7 of
the Corporation’s 2004 Performance Incentive Plan (the
“Plan”) (or any similar type of provision whether in an
equity award agreement or other plan) shall not apply to the
Executive’s outstanding equity awards.
3.4 Sign-On Equity
Award . No later than December 1, 2006, the
Corporation shall grant the Executive 15,000 restricted stock units
(“ Unit Grant ”) pursuant to the Plan, with each
unit representing the right to receive one share of the
Corporation’s common stock (subject to adjustments for stock
splits, stock dividends and similar events consistent with the
terms of the Plan). Except as otherwise provided in Section 5
hereof or to the extent earlier vesting is provided in the Plan or
the applicable award agreement, the Unit Grant shall vest over
time, with 25% vesting on each of the first, second, third and
fourth anniversaries of the Commencement Date so long as the
Executive is continuously employed with the Corporation through the
applicable vesting date; and once vested shall not, except as
required by applicable law, be subject to forfeiture by the
Corporation or repayment by the Executive for any reason. The Unit
Grant will carry dividend equivalents from the grant date as
provided in, and the Unit Grant shall be granted pursuant to, the
form of award agreement attached hereto as Exhibit A
.
4. Benefits and Other Entitlements .
4.1 Retirement, Welfare and
Fringe Benefits . During the Period of Employment, the
Executive shall be entitled to participate in all employee
retirement, pension, deferred compensation, supplemental
retirement, change in control severance, and welfare benefit plans
and programs, and fringe benefit plans and programs, made available
by the Corporation to the Corporation’s senior executives
generally on a basis that is generally consistent with the level
and terms of such benefits as provided to other Peer Executives,
provided such participation shall be in accordance with the
eligibility and participation provisions of such plans and as such
plans or programs may be in effect from time to time.
Notwithstanding anything else to the contrary, with respect to any
change in control severance, the Executive shall be treated no less
favorably than any other Peer Executive and, further, the Executive
shall be designated a participant on Schedule A of the Change
in Control Severance Policy as in effect on the Effective Date and
such designated cannot be changed or modified without the
Executive’s prior written consent; provided that the
foregoing shall not otherwise limit the Corporation’s ability
to amend or terminate such policy from time to time in accordance
with its terms.
4.2 Reimbursement of Business
Expenses . The Corporation shall reimburse the Executive
for all reasonable business expenses the Executive incurs during
the Period of Employment in connection with carrying out his duties
to the Corporation under this Agreement, subject to the
Corporation’s expense reimbursement policies in effect from
time to time. In addition, the Corporation shall reimburse the
Executive for or pay the reasonable legal fees incurred by the
Executive relating to the negotiation and preparation of this
Agreement up to a maximum reimbursement of $25,000.
4.3 Vacation and Other
Leave . During the Period of Employment, the Executive
shall accrue and be entitled to take paid vacation at a rate of
four (4) weeks per year (or such greater vacation benefits as
may be provided under the vacation policies generally applicable to
other Peer Executives in effect from time to time), subject to the
Corporation’s policies regarding vacation accruals
(including, without limitation, limits on the amount of vacation
that may be accrued and untaken before future accruals cease). The
Executive shall also be entitled to all other holiday and leave pay
generally available to other Peer Executives.
4.4 Relocation . The
Corporation shall pay the Executive’s reasonable expenses
related to the relocation of his primary residence to Southern
California (such relocation to be completed not later than the
first anniversary of the Commencement Date) as a Tier I
executive in accordance with the Corporation’s relocation
policy for such executives as in effect as of the Effective Date
(“ Relocation Policy ”), with the following
additions and modifications:
(a) The miscellaneous allowance
under the Relocation Policy shall equal no less than three (3)
months of the Executive’s Base Salary;
(b) If the Executive’s
employment is terminated for Cause, he shall not be required to
repay any amounts paid to him pursuant to the Relocation Policy
and, upon all terminations, other than a voluntary resignation by
the Executive other than for Good Reason or Disability, the
Corporation shall pay the Executive any amounts due to him under
such Policy which remain unpaid; and
(c) The application of any time
limits in the Relocation Policy shall be extended to take into
account the fact the Executive and his family will not be required
to relocate permanently to California until the first anniversary
of the Commencement Date.
5. Termination .
5.1 Termination by the
Corporation . The Executive’s employment by the
Corporation, and the Period of Employment, may be terminated at any
time by the Corporation: (i) with Cause (as defined in
Section 5.5), or (ii) on no less than thirty
(30) days prior written notice to the Executive, without
Cause, or (iii) in the event of the Executive’s death,
or (iv) in the event the Executive has a Disability (as
defined in Section 5.5). In addition, if the Corporation
provides a notice of non-renewal of the Period of Employment in
accordance with Section 2 hereof, the Executive’s
employment shall terminate upon the expiration of the Period of
Employment and, unless the Corporation shall have offered the
Executive a new employment agreement on terms substantially similar
to those set forth herein no later than fourteen (14) days
prior to the expiration of the Period of Employment, executed by
the Corporation and irrevocable by the Corporation unless and until
the Executive has failed to deliver to the Corporation an executed
copy of such agreement on or prior to the date the Period of
Employment expires, such termination shall be deemed to have been a
termination by the Corporation without Cause.
5.2 Termination by the
Executive . The Executive’s employment by the
Corporation, and the Period of Employment, may be terminated at any
time with or without Good Reason by the Executive, on no less than
thirty (30) days prior written notice to the Corporation.
5.3 Benefits Upon
Termination . If the Executive’s employment by the
Corporation is terminated during the Period of Employment for any
reason by the Corporation or by the Executive, or upon or following
the expiration of the Period of Employment (in any case, the date
that the Executive’s employment by the Corporation terminates
in accordance with this Agreement is referred to as the “
Severance Date ”), the Corporation shall have no
further obligation to make or provide to the Executive, and the
Executive shall have no further right to receive or obtain from the
Corporation, any payments or benefits except:
(a) the Corporation shall pay
the Executive (or, in the event of his death, the Executive’s
estate) any Accrued Obligations (as defined in Section 5.5)
and the Executive (or, in the event of his death, the
Executive’s estate) shall be entitled to the provisions of
Section 5.3(d) hereof;
(b) if, during the Period of
Employment (but not following the expiration of the Period of
Employment), the Executive’s employment is terminated by the
Corporation without Cause (including a deemed termination of the
Period of Employment by the Corporation without Cause as provided
in the last sentence of Section 5.1) or by the Executive for
Good Reason (as defined in Section 5.5) (and, in each case,
other than due to either (i) the Executive’s death, or
(ii) the Executive’s Disability), the Corporation shall,
subject to the following provisions of this Section 5.3 and
the provisions of Section 5.4, pay (in addition to the Accrued
Obligations) and/or provide the Executive the following severance
benefits:
(i) The
Corporation shall pay the Executive, subject to Section 23, an
amount in cash, subject to tax withholding and other authorized
deductions, equal to (A) two (2) times the
Executive’s Base Salary at the highest annualized rate in
effect during the one (1) year period immediately prior to the
Severance Date (determined without regard to any reduction in Base
Salary giving rise to a termination for Good Reason by the
Executive hereunder), plus (B) either (x) in the event
the Executive’s Severance Date is prior to the payment of all
quarterly bonuses for 2007, one (1) times the
Executive’s Target Bonus for 2007 (based on the Base Salary
as determined in clause A hereof ) or (y) in the event the
Executive’s Severance Date occurs after the payment of such
bonuses, one (1) times the highest annual Incentive Bonus paid
to the Executive by the Corporation for any one of the three
calendar years preceding the calendar year in which the Severance
Date occurs. For purposes of subclause (y) of the foregoing
clause (B), the amount of the annual Incentive Bonus paid to the
Executive for any calendar year shall include the portion of any
such Incentive Bonus that was paid in cash and any portion that was
deferred at the election of the Executive pursuant to a deferred
compensation plan maintained by the Corporation. Except as provided
in the next two sentences, any amounts payable pursuant to this
Section 5.3(b)(i) shall be paid in a series of substantially
equal monthly installments over a period commencing with the
Executive’s Severance Date and continuing through the second
anniversary of the Severance Date (the “ Severance
Period ”). In the event the Executive’s employment
terminates in circumstances that entitle the Executive to payments
pursuant to this Section 5.3(b)(i), and a Special Change in Control
Event (as defined below) occurs after such payments commence but
before all such payments have been made, any remaining payments
otherwise due to the Executive pursuant to this
Section 5.3(b)(i) after the date of such Special Change in
Control Event shall be paid in a single non-discounted lump sum
payment no later than thirty (30) days after the date of the
Special Change in Control Event. To the extent payment in a lump
sum following a Special Change in Control Event would be in
violation of Section 409A of the of the Internal Revenue Code
of 1986, as amended (the “ Code ”), such
payments shall instead be paid in a series of substantially equal
monthly installments during the Severance Period. A “
Special Change in Control Event ” means a Change in
Control Event that also constitutes a “change in the
ownership or effective control” of the Corporation or a
change “in the ownership of a substantial portion of the
assets” of the Corporation that is a permissible distribution
event under Section 409A(a)(2)(A)(v) of the Code and any
regulations and other guidance promulgated thereunder.
(ii) The
Corporation will pay or reimburse the Executive for his premiums
charged to continue medical coverage pursuant to the Consolidated
Omnibus Budget Reconciliation Act (“ COBRA ”),
at the same or reasonably equivalent medical coverage for the
Executive (and, if applicable, the Executive’s eligible
dependents) as in effect immediately prior to the Severance Date,
to the extent that the Executive elects such continued coverage;
provided that the Corporation’s obligation to make any
payment or reimbursement pursuant to this clause (ii) shall
cease upon the first to occur of (A) eighteen (18) months
after the Severance Date; (B) the Executive’s death;
(C) the date the Executive becomes eligible for coverage under
the health plan of a future employer; or (D) the date the
Corporation ceases to offer any group medical coverage to its
active executive employees or the Corporation is otherwise under no
obligation to offer COBRA continuation coverage to the
Executive.
(iii) The
Corporation, subject to Section 23, shall provide the
Executive and his family with the same benefits as set forth in
Section 4.4 hereof to relocate to the Tri-State area; provided
the Executive relocates to Tri-State area promptly after (and in no
event more than twelve (12) months after) the Severance
Date.
(iv) Any and
all equity-based awards, including, without limitation, the Unit
Grant (which shall be deemed to have been granted as of the
Severance Date if such grant has not been made by such date), any
restricted stock, restricted stock units, performance units,
dividend equivalents or stock options, granted by the Corporation
to the Executive and outstanding immediately prior to such
termination of employment shall continue to vest pursuant to their
original vesting schedule as if the Executive had remained employed
through the applicable vesting date; provided, however, that any
such equity awards that are subject to performance based vesting
conditions with no opportunity to vest based solely on continued
employment for a period of time shall remain outstanding until the
conclusion of the applicable performance period and shall vest only
(and to the extent) that the applicable performance criteria are
satisfied. Any exercise period applicable to any such award that
vests shall terminate no earlier than the thirtieth (30
th ) day following the date of such portion of the award
vests, subject to accelerated vesting and termination in connection
with a change in control of the Corporation or similar event
pursuant to the terms of the plan under which the awards were
granted and/or the applicable award agreement. The preceding
provisions of this Section 5.3(b)(iv) do not limit the
Executive’s right to any accelerated vesting upon any other
event or in any other circumstances (such as upon a change in
control event itself or retirement, to the extent provided for
under the terms of the applicable plan and/or award agreement), and
shall control over any contrary provision of any such plan or award
agreement (whether entered into before or after the date hereof)
that does not provide for such accelerated vesting in such
circumstances. Except as provided in this Section 5.3(b)(iv),
the effect of a termination of the Executive’s employment on
the Executive’s stock options and other equity-based awards
granted by the Corporation shall be determined under the terms of
the award agreement evidencing such option or other award or as
otherwise provided herein.
(c) if, during the Period of
Employment, the Executive’s employment is terminated by the
Corporation without Cause, by the Executive for Good Reason, or due
to the Executive’s death or Disability, or if the
Executive’s employment is terminated by the Corporation or by
the Executive for any reason (other than by the Corporation for
Cause) upon or at any time following the Termination Date, the
Corporation shall pay the Executive a pro-rated share of any bonus
(including, without limitation, the Incentive Bonus) otherwise
payable to the Executive, for the period from the beginning of the
fiscal year in which the Severance Date occurs through the
Severance Date, based on the actual performance for such fiscal
year. Notwithstanding the foregoing, if the Severance Date occurs
prior to January 1, 2008, the pro-rata bonus pursuant to this
Section 5.3(d) shall be deemed to be no less than the
guaranteed bonus for 2007 (to the extent any such amount remains
unpaid) as set forth in Section 3.2 hereof. The bonus
hereunder shall, subject to Section 23, be paid when bonuses
for such year are paid generally to the Corporation’s active
executives.
(d) The foregoing provisions of
this Section 5.3 shall not affect: (i) the
Executive’s receipt of benefits otherwise due terminated
employees under group insurance coverage consistent with the terms
of the applicable Corporation welfare benefit plan; (ii) the
Executive’s rights under the Consolidated Omnibus Budget
Reconciliation Act to continue participation in medical, dental,
hospitalization and life insurance coverage; (iii) the
Executive’s receipt of benefits otherwise due in accordance
with the terms of the Corporation’s 401(k) plan (if any), or
any deferred compensation and/or any supplemental executive
retirement plan; (iv) any rights that the Executive may have
under and with respect to a stock option, restricted stock or other
equity-based award, to the extent that such award was granted
before the Severance Date and to the extent expressly provided in
the written agreement evidencing such award; or (v) any right
to indemnification the Executive may have from the Corporation or
the Executive’s right to be covered under any applicable
insurance policy, with respect to any liability the Executive
incurred or might incur as an employee, officer or director of the
Corporation or its affiliates, including, without limitation,
pursuant to Section 22.
5.4 Release; Exclusive
Remedy .
(a) This Section 5.4 shall
apply notwithstanding anything else contained in this Agreement to
the contrary. As a condition precedent to any Corporation
obligation to the Executive pursuant to Section 5.3(b), the
Executive shall, upon or promptly following his last day of
employment with the Corporation, provide the Corporation with a
valid, executed, written release of claims (in the form attached
hereto as Exhibit B or such other form as the
Corporation may reasonably require in the circumstances, which
other form shall be as attached hereto as Exhibit B but
with such changes as may be required or reasonably advisable in
order to make the release enforceable and otherwise compliant with
applicable laws) and such release shall have not been revoked by
the Executive pursuant to any revocation rights afforded by
applicable law. The Corporation shall have no obligation to make
any payment to the Executive pursuant to Section 5.3(b) unless
and until the release contemplated by this Section 5.4 becomes
irrevocable by the Executive in accordance with its provisions.
(b) The Executive agrees that
the payments, benefits and entitlements contemplated by Section 5.3
shall, if the release contemplated by Section 5.4(a) is signed
and the amounts, benefits or entitlements paid or provided,
constitute the exclusive and sole remedy for any termination of his
employment and in such case the Executive covenants not to assert
or pursue any other remedies, at law or in equity, with respect to
any termination of employment (other than with respect to those
claims not released by the Executive in Exhibit B). The
Corporation and the Executive acknowledge and agree that there is
no duty of the Executive to mitigate damages under this Agreement,
and there shall be no offset against any amounts due to the
Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that the Executive may
obtain. All amounts paid to the Executive pursuant to
Section 5.3 shall be paid without regard to whether the
Executive has taken or takes actions to mitigate damages and,
subject to all applicable laws and regulations, shall not be
subject to setoff, counterclaim, recoupment, defense or other right
which the Corporation may have against the Executive or others.
5.5 Certain Defined
Terms .
(a) As used herein,
“Accrued Obligations” means:
(i) any Base
Salary that had accrued but had not been paid (including accrued
and unpaid vacation time) prior to the Severance Date;
(ii) any
Incentive Bonus payable pursuant to Section 3.2 with respect
to the calendar year preceding the year in which the Severance Date
occurs (if the Executive was employed by the Corporation on the
last day of that calendar year) that had not previously been
paid;
(iii) any
reimbursement due to the Executive pursuant to Section 4.2 or
Section 4.4 for expenses incurred by the Executive prior to
the Severance Date; and
(iv) any
other amounts or benefits required to be paid or provided by law or
under any employee benefit plan, program, policy or practice of the
Corporation (other than benefits in the nature of severance pay
under any such plan, program, policy or practice).
Subject to Section 23, all
amounts in (i), (ii) and (iii) shall be paid promptly
after the Severance Date and the amounts and benefits in
(iv) shall be paid or provided in accordance with their
terms.
(b) As used herein,
“Cause” shall mean that, during the Period of
Employment, any of the following events or contingencies exists or
has occurred:
(i) the
Executive is convicted of, or pleads guilty or nolo
contendre to, a felony (whether or not involving the
Corporation or any of its affiliates), which constitutes a crime of
moral turpitude and is punishable by imprisonment in a state or
federal correction facility; or
(ii) the
Executive commits an act involving willful misconduct of a material
nature or gross negligence with regard to the Corporation or any of
its affiliates; or
(iii) the
Executive commits an act of material fraud or material dishonesty
with regard to the Corporation or any of its affiliates; or
(iv) the
Executive willfully and repeatedly fails or refuses to perform his
duties as required by this Agreement; provided that there shall be
no determination of Cause pursuant to this subparagraph
(iv) unless the Executive shall have received written notice
from the CEO and/or the Board stating the nature of such failure or
refusal and affording the Executive at least ten (10) days to
correct the act or omission asserted to constitute Cause; or
(v) the
willful and material violation by the Executive of any reasonable
written rule, regulation or policy of the Corporation applicable to
senior executives of the Corporation unless such violation is cured
following written notice by the Board to the Executive.
However, no act or failure to act, on
the Executive’s part shall be considered
“willful” unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the
Executive’s action or omission was in the best interest of
the Corporation. A determination by the Board that Cause exists
shall be effective only if approved by at least a majority of the
Board (not counting the Executive if he is then a member of the
Board) voting in person at a meeting at which Executive is entitled
to be present (with counsel) and respond to any basis that may be
asserted as constituting Cause (a summary of which shall be
supplied to the Executive in writing at least five (5) days
before any such meeting).
(c) As used herein,
“Change in Control Event” shall have the meaning
ascribed to the such term in the Plan.
(d) As used herein,
“Disability” shall mean a physical or mental impairment
which has rendered the Executive unable to perform the essential
functions of his employment with the Corporation, even with
reasonable accommodation that does not impose an undue hardship on
the Corporation, for more than 180 calendar days in any 12-month
period, unless a longer period is required by federal or state law,
in which case that longer period would apply. The determination of
whether or not a Disability exists for purposes of this Agreement
shall be based upon the findings of a qualified medical doctor
reasonably agreed to by the Corporation and the Executive (or, in
the event of the Executive’s incapacity, his legal
representative). In the absence of agreement between the
Corporation and the Executive, each party shall nominate a
qualified medical doctor, and the two doctors so nominated shall
select a third qualified medical doctor, who shall make the
determination as to Disability.
(e) As used herein, “Good
Reason” shall mean the occurrence of one or more of the
following without the Executive’s written consent:
(i) a
material breach of this Agreement by the Corporation (with any
reduction in the Executive’s rate of Base Salary or Target
Bonus or target equity opportunity as a percentage of Base Salary
as set forth in Section 3.3 hereof from the rate then in
effect or any other failure of the Corporation to pay the
compensation due pursuant to this Agreement or otherwise provide
the annual and long-term incentives required pursuant to
Sections&n
