Employment Agreement - Countrywide Credit Industries Inc. and Angelo R. Mozilo
FOURTH RESTATED EMPLOYMENT AGREEMENT
THIS FOURTH RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is entered into as
of September 11, 2000 by and between Countrywide Credit Industries, Inc., a
Delaware corporation ("Employer"), and Angelo R. Mozilo ("Officer").
W I T N E S S E T H:
WHEREAS, Officer currently holds the offices of Chairman of the Board
of Directors, President and Chief Executive Officer of Employer; and
WHEREAS, Employer desires to obtain the benefit of continued services
of Officer and Officer desires to continue to render services to Employer; and
WHEREAS, the Board of Directors of Employer (the "Board") has
determined that it is in Employer's best interest and that of its stockholders
to recognize the substantial contribution that Officer has made and is expected
to continue to make to the Company's business and to retain his services in the
future; and
WHEREAS, Employer and Officer set forth the terms and conditions of
Officer's employment with Employer under an employment agreement entered into as
of March 1, 1991 (the "Original Agreement"); and
WHEREAS, Employer and Officer entered into Amendment No. 1 to
Employment Agreement as of November 5, 1992 ("Amendment No. 1"), entered into
Amendment No. 2 to Employment Agreement as of November 10, 1992 ("Amendment No.
2"), entered into a Restated Employment Agreement as of February 2, 1993 (the
"First Restated Agreement"), entered into a Second Restated Employment Agreement
as of March 26, 1996, as amended by Amendment No. 1 to Employment Agreement
dated as of July 25, 1997 and Amendment No. 2 to Employment Agreement dated as
of February 4, 1998 (the "Second Restated Agreement) and entered into a Third
Restated Employment as of March 1, 2000 (the "Third Restated Agreement"); and
WHEREAS, Employer and Officer desire to set forth the continued terms
and conditions of Officer's employment with Employer under this Agreement;
WHEREAS, the effectiveness of the provisions of Section 4(b) of this
Agreement is subject to the approval by Employer's stockholders of said
provisions as required under Section 162(m) of the Internal Revenue Code of
1986, as amended.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Term. Employer agrees to employ Officer and Officer agrees to serve
Employer, in accordance with the terms hereof, for a term beginning on the
Effective Date (as defined in Section 8(c) hereof) and ending on the expiration
of the third Fiscal Year following Officer's receipt of the Notice of
Termination (as defined in paragraph 5(g) below) from the Board terminating
Officer's employment with Employer, unless earlier terminated in accordance with
the provisions hereof.
2. Specific Position; Duties and Responsibilities. Employer and Officer
hereby agree that, subject to the provisions of this Agreement, Employer will
employ Officer and Officer will serve Employer and its subsidiaries as Chairman
of the Board, President and Chief Executive Officer of Employer. Employer agrees
that Officer's duties hereunder shall be the usual and customary duties of the
offices of Chairman of the Board, President and Chief Executive Officer and such
further duties consistent therewith as may be designated from time to time by
the Board and shall not be inconsistent with the provisions of the charter
documents of Employer or applicable law. Officer shall have such executive power
and authority as shall reasonably be required to enable him to discharge his
duties in the offices that he may hold. All compensation paid to Officer by
Employer or any of its subsidiaries shall be aggregated in determining whether
Officer has received the benefits provided for herein.
3. Scope of this Agreement and Outside Affiliations. During the term of
this Agreement, Officer shall devote his full business time and energy, except
as expressly provided below, to the business, affairs and interests of Employer
and its subsidiaries, and matters related thereto, and shall use his best
efforts and abilities to promote its interests. Officer agrees that he will
diligently endeavor to promote the business, affairs and interests of Employer
and its subsidiaries and perform services contemplated hereby in accordance with
the policies established by the Board, which policies shall be consistent with
this Agreement. Officer agrees to serve without additional remuneration in such
senior executive capacity not below the rank of Vice President for one or more
(direct or indirect) subsidiaries of Employer as the Board may from time to time
request, subject to appropriate authorization by the subsidiary or subsidiaries
involved and any limitation under applicable law. Officer's failure to discharge
an order or perform a function because Officer reasonably and in good faith
believes such would violate a law or regulation or be dishonest shall not be
deemed a breach by him of his obligations or duties pursuant to any of the
provisions of this Agreement, including without limitation pursuant to Section
5(d) hereof.
During the course of Officer's employment as a full-time officer
hereunder, Officer shall not, without the consent of the Board, compete,
directly or indirectly, with Employer in the businesses then conducted by
Employer.
Officer may serve as a director or in any other capacity of any
business enterprise, including an enterprise whose activities may involve or
relate to the business of Employer, provided that such service is expressly
approved by the Board. Officer may, without seeking or obtaining approval by the
Board, (i) make and manage personal business investments of his choice; and (ii)
serve in any capacity with any civic, educational or charitable organization, or
any governmental entity or trade association.
4. Compensation and Benefits.
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(a) Base Salary. Employer shall pay to Officer a base salary
in the 2001 Fiscal Year of Employer or portion thereof at the annual rate of
$1,650,000. Employer shall pay to Officer a base salary in the 2002 Fiscal Year
of Employer or portion thereof at the annual rate of $1,750,000; and on March 1
of each Fiscal Year of Employer or portion thereof during the term of this
Agreement following Employer's 2002 Fiscal Year, Officer's base salary shall be
increased for such Fiscal Year or portion thereof by an amount determined by the
Compensation Committee prior to the beginning of the Fiscal Year as to which the
increased base salary is to be paid, provided that such annual increase shall
not be less than $200,000.
(b) Incentive Compensation. Employer shall pay to Officer for
each of the Fiscal Years during the term of this Agreement an incentive
compensation award in the amount of the incentive compensation award paid to
Officer in the previous Fiscal Year, multiplied by a fraction (the "Performance
Ratio") the numerator of which is the earnings per share on a diluted basis of
Employer as reported in the audited Financial Statements included in Employer's
Annual Report on Form 10-K filed with the Securities and Exchange Commission
(the "EPS") during such current Fiscal Year, and the denominator of which is the
EPS for the previous Fiscal Year (adjusted proportionately in the event Employer
(A) declares a stock dividend on its common stock, (B) subdivides its
outstanding common stock, (C) combines the outstanding shares of its capital
stock into a smaller number of common stocks or (D) issues any shares of its
capital stock in a reclassification of the common stock (including any such
reclassification in connection with a consolidation or merger in which Employer
is the continuing or surviving corporation)); provided, however, that the
Compensation Committee of the Board (the "Compensation Committee") may reduce
the amount of any incentive compensation award in the event there is a
substantial distortion in EPS for the Fiscal Year in respect of which the award
is being paid resulting from an acquisition, a divestiture, or a change in
accounting standards. Notwithstanding anything to the contrary contained in this
Agreement, in no event shall the Performance Ratio be less than zero. Employer
shall pay the incentive compensation award described in this Section 4(b) for
each Fiscal Year or portion thereof, as applicable, as early after the end of
such Fiscal Year as practicable but in no event more than 90 days after the end
of such Fiscal Year. In the event Officer's employment hereunder shall
terminate, other than for cause pursuant to Section 5(d) below or as a result of
a voluntary resignation pursuant to Section 5(f) below, on or before the last
day of any Fiscal Year, Officer or his estate shall be entitled to receive an
incentive compensation award for such portion of the Fiscal Year during which
Officer was employed hereunder on the same terms as set forth in sub-paragraphs
(i) and (ii) above except that it shall be calculated as follows: The
compensation award as otherwise calculated pursuant to sub-paragraph (i) above
shall be multiplied by a fraction, the numerator of which is the number of days
during the Fiscal Year that Officer was employed hereunder, and the denominator
of which is 365. Notwithstanding anything to the contrary in this Section 4(b),
payment of any incentive compensation award hereunder must follow a decision by
the Compensation Committee of the Board of Directors to the effect that the
requisite performance levels were achieved.
(c) Stock Options. Employer shall grant to Officer a stock
option in respect of 500,000 shares of the Employer's common stock on or before
June 1, 2000 in respect to Employer's Fiscal Year 2000, such option to become
exercisable as to 166,666, 166,667 and 166,667 shares, respectively, on each of
the first three (3) anniversaries of the date of grant. On each June 1
thereafter during the term of this Agreement (or on such other date following
the expiration of a Fiscal Year of Employer as the Compensation Committee may,
from time to time, designate), Employer shall also grant to Officer stock
options for such number of shares of Employer's common stock as the Compensation
Committee in its sole discretion determines, taking into account Officer's and
Employer's performance in each of such Fiscal Years and the competitive
practices then prevailing regarding the granting of stock options, provided that
any such stock option grant shall not be in an amount less than 350,000 shares
of Employer's common stock. All stock options granted in accordance with this
Section 4(c) shall be granted pursuant to the Countrywide Credit Industries,
Inc. 2000 Stock Option Plan (the "2000 Plan"), or such other stock option plan
or plans as may be or come into effect during the term of this Agreement, shall
have a per share exercise price equal to the fair market value (as defined in
the 2000 Plan or such other plan or plans) of the common stock at the time of
grant, and shall be subject to vesting, expiration and other provisions as
determined by the Compensation Committee. In the event of a merger,
consolidation or reorganization in which Employer is not the surviving
corporation or in which it survives as a subsidiary of another corporation or
entity (a "Transaction"), and the shares of equity securities of the surviving
corporation or entity or parent thereof are publicly traded on a recognized
stock exchange or over the counter market, the stock options to be granted
pursuant to this Section 4(c) after the date of the Transaction shall be granted
in accordance herewith with respect to securities of the surviving corporation
or entity or parent thereof, as applicable, with the number of shares subject to
options to be granted to equal the product of (x) the amount of shares subject
to the options set forth in this Section 4(c) and (y) a fraction the numerator
of which is the per share fair market value of the Employer's securities and the
denominator of which is the per share fair market value of the publicly-traded
common or ordinary equity securities of the surviving corporation or entity or
parent thereof, in each case as of the date of consummation of the Transaction,
and to give effect to the intent of the parties as set forth in this Section
4(c). The stock options granted pursuant to this Section shall consist of
incentive stock options to the extent permitted by law or regulation. Any stock
options granted hereunder in respect of any Fiscal Year from and after Fiscal
Year 2001 shall occur not later than one hundred days following the Fiscal Year
to which the grant relates. In order to qualify for any grant pursuant hereto,
Officer must be employed by Employer on the last day of the fiscal year to which
such grant relates. From and after the Termination Date, the Officer shall no
longer be entitled to receive additional options under this Section 4(c) other
than those which were due for previously completed fiscal years.
(d) Additional Benefits. Officer shall also be entitled to all
rights and benefits for which he is otherwise eligible under any bonus plan,
stock purchase plan, participation or extra compensation plan, executive
compensation plan, pension plan, profit-sharing plan, life and medical insurance
policy, second-to-die life insurance coverage, executive medical examination
program, executive long-term disability policy, financial planning services
program or other plans or benefits, which Employer or its subsidiaries may
provide for him, or provided he is eligible to participate therein, for senior
officers generally or for employees generally, during the term of this Agreement
(collectively, "Additional Benefits"). This Agreement shall not affect the
provision of any other compensation, retirement or other benefit program or plan
of Employer.
(e) Continuation of Benefits. If Officer's employment is
terminated hereunder, pursuant to Section 5(a), 5(b) or 5(e) hereof, Employer
shall continue for the period specified in Section 5(a) or 5(b) hereof or three
years in the case of a termination pursuant to Section 5(e) hereof, as the case
may be, to provide benefits that are no less favorable in the aggregate than
those Additional Benefits (other than qualified pension or profit sharing plan
benefits and option, equity or stock appreciation or other incentive plan
benefits as distinguished from health, disability and welfare type benefits)
which were being provided to the Officer and his dependents and beneficiaries
immediately prior to Officer's Termination Date (or in the case of a termination
after a Change in Control, those benefits which were being provided immediately
preceding the Change in Control), but only to the extent that Officer is not
entitled to comparable benefits from other employment. For a period of two years
after the Termination Date, Employer shall provide the Officer outplacement
services at its cost.
(f) Deferral of Amounts Payable Hereunder. In the event
Officer should desire to defer receipt of any cash payments to which he would
otherwise be entitled hereunder, he may do so in accordance with the terms and
conditions of the Countrywide Credit Industries, Inc. Amended and Restated
Deferred Compensation Plan (the "Deferred Compensation Plan"), or in the absence
of such Deferred Compensation Plan or any successor plan that is substantially
similar to the Deferred Compensation Plan, he may present such a written request
to the Compensation Committee which, in its sole discretion, may enter into a
separate deferred compensation agreement with Officer.
5. Termination. The compensation and benefits provided for herein and the
employment of Officer -----------
by Employer shall be terminated only as provided for below in this Section 5:
(a) Disability. In the event that Officer shall fail, because
of illness, injury or similar incapacity ("Disability"), to render for four (4)
consecutive calendar months, or for shorter periods aggregating eighty (80) or
more business days in any twelve (12) month period, services contemplated by
this Agreement, Officer's full-time employment hereunder may be terminated, by
written Notice of Termination from Employer to Officer; and thereafter, Employer
shall continue, from the Termination Date until Officer's death or the fifth
anniversary of such notice, whichever first occurs (the "Disability Payment
Period"), (i) to pay compensation to Officer, in the same manner as in effect
immediately prior to the Termination Date, in an amount equal to (1) fifty
percent (50%) of the then existing base salary payable immediately prior to the
termination, minus (2) the amount of any cash payments to him under the terms of
Employer's disability insurance or other disability benefit plans or Employer's
tax-qualified Defined Benefit Pension Plan, and any compensation he may receive
pursuant to any other employment, and (ii) to provide during the Disability
Payment Period the benefits specified in Section 4(e) hereof.
The determination of Disability shall be made only after 30
days notice to Officer and only if Officer has not returned to performance of
his duties during such 30-day period. In order to determine Disability, both
Employer and Officer shall have the right to provide medical evidence to support
their respective positions, with the ultimate decision regarding Disability to
be made by a majority of Employer's disinterested directors.
(b) Death. In the event that Officer shall die during the term
of this Agreement, Officer's employment shall terminate subject to the
provisions of this Section 5(b). In such event, Employer shall pay Officer's
base salary for a period of twelve (12) months following the date of Officer's
death and in the manner otherwise payable hereunder, to such person or persons
as Officer shall have directed in writing or, in the absence of a designation,
to his estate (the "Beneficiary"). Employer shall also provide to the
Beneficiary during the twelve-month period following the date of the Officer's
death the benefits specified in Section 4(e) hereof. If Officer's death occurs
while he is receiving payments for Disability under Section 5(a)(i) above, such
payments shall cease and the Beneficiary shall be entitled to the payments and
benefits under this Subsection (b), which shall continue for a period of twelve
months thereafter at the full rate of compensation in effect immediately prior
to the Disability. This Agreement in all other respects will terminate upon the
death of Officer; provided, however, that the termination of the Agreement shall
not affect Officer's entitlement to all other benefits in which he has become
vested or which are otherwise payable in respect of periods ending prior to its
termination.
(c) Expiration of Term. Officer's employment hereunder shall
terminate at the end of the third Fiscal Year of Employer following Officer's
receipt of a Notice of Termination (as defined in Section 5(g) hereof)
terminating Officer's employment with Employer. Following the expiration of
Officer's employment pursuant to this Section 5(c), all of Employer's
obligations hereunder shall terminate, provided, however, that the termination
of Officer's employment pursuant to this Section 5(c) shall not affect Officer's
entitlement to his incentive compensation payable pursuant to Section 4(b)
hereof in respect of the final Fiscal Year of Employer during the term hereof
and to all other benefits in which he has become vested or which are otherwise
payable in respect of periods ending prior to his termination of employment.
(d) Cause. Employer may terminate Officer's employment under
this Agreement for "Cause." A termination for Cause is a termination by reason
of (i) a material breach of this Agreement by Officer (other than as a result of
incapacity due to physical or mental illness) which is committed in bad faith or
without reasonable belief that such breach is in the best interests of Employer
and which is not remedied within a reasonable period of time after receipt of
written notice from Employer specifying such breach, or (ii) Officer's
conviction by a court of competent jurisdiction of a felony, or (iii) entry of
an order duly issued by any federal or state regulatory agency having
jurisdiction in the matter removing Officer from office of Employer or its
subsidiaries or permanently prohibiting him from participating in the conduct of
the affairs of Employer or any of its subsidiaries. If Officer shall be
convicted of a felony or shall be removed from office and/or temporarily
prohibited from participating in the conduct of Employer's or any of its
subsidiaries' affairs by any federal or state regulatory authority having
jurisdiction in the matter, Employer's obligations under Sections 4(a), 4(b) and
4(c) hereof shall be automatically suspended; provided, however, that if the
charges resulting in such removal or prohibition are finally dismissed or if a
final judgment on the merits of such charges is issued in favor of Officer, or
if the conviction is overturned on appeal, then Officer shall be reinstated in
full with back pay for the removal period plus accrued interest at the rate then
payable on judgments. During the period that Employer's obligations under
Sections 4(a), 4(b) and 4(c) hereof are suspended, Officer shall continue to be
entitled to receive Additional Benefits under Section 4(d) until the conviction
of the felony or removal from office has become final and non-appealable. When
the conviction of the felony or removal from office has become final and
non-appealable, all of Employer's obligations hereunder shall terminate;
provided, however, that the termination of Officer's employment pursuant to this
Section 5(d) shall not affect Officer's entitlement to all benefits in which he
has become vested or which are otherwise payable in respect of periods ending
prior to his termination of employment.
(e) Good Reason. Officer may terminate his employment for Good
Reason. For purposes of this Agreement, "Good Reason" shall be deemed to occur
if Employer notifies Officer of a termination of his employment other than for
Cause or pursuant to Section 5(c) hereof, or if Employer breaches this Agreement
in any material respect, or if the Board (i) elects a person other than Officer
as Employer's President, Chairman of the Board or Chief Executive Officer
without Officer's consent, (ii) reorganizes management so as to require him to
report to a person or persons other than the Board, (iii) requires that Officer
be based anywhere but fifty (50) miles from the office where Officer is located
as of the date hereof, (iv) takes any action that results in the Officer not
being able to travel domestically by private aircraft at the Company's expense,
or (v) takes any other action which, in Officer's reasonable judgment, results
in the diminution in Officer's status, title, position and responsibilities
other than an insubstantial action not taken in bad faith and which is remedied
by Employer promptly after receipt of notice by Officer. Notwithstanding the
foregoing, the Officer shall not have Good Reason to terminate employment with
the Employer (or otherwise have the right to claim that he or she has been
constructively terminated from employment) due solely to the fact that the
Employer shall cease to be a public company and shall become a subsidiary of
another publicly-traded corporation. Notwithstanding the foregoing, Officer may
terminate his employment for any or no reason within two years following a
"Change in Control" (as defined in Appendix A to this Agreement) and such
termination shall be considered a termination for Good Reason hereunder. If
Officer's employment shall be terminated by Employer other than for Cause or by
Officer for Good Reason, then Employer shall pay Officer in a single payment, as
severance pay and in lieu of any further salary and incentive compensation for
periods subsequent to the Termination Date, an amount in cash equal to three
times the sum of (A) Officer's annual base salary at the Termination Date and
(B) the greater of (x) the average of the aggregate bonus and/or incentive
award, if any, paid or payable to the Officer for each of the two (2) Fiscal
Years preceding the Fiscal Year in which the Officer's termination of employment
occurs (or such fewer number of Fiscal Years for which the Officer was eligible
to receive a bonus and/or incentive award) and (y) the bonus and/or incentive
award paid for the Fiscal Year immediately preceding the date of the Change in
Control.
(f) Resignation. Except as provided in Section 5(e) hereof, if
during the term of this Agreement, Officer shall resign voluntarily, all of his
rights to payment or benefits hereunder shall immediately terminate; provided,
however, that the termination of Officer's employment pursuant to this Section
5(f) shall not affect Officer's entitlement to all benefits in which he has
become vested or which are otherwise payable in respect of periods ending prior
to his termination of employment.
(g) Notice of Termination. Any purported termination by
Employer or by Officer shall be communicated by a written Notice of Termination
to the other party hereto which indicates the specific termination provision in
this Agreement, if any, relied upon and which sets forth in reasonable detail
the facts and circumstances, if any, claimed to provide a basis for termination
of Officer's employment under the provision so indicated. For purposes of this
Agreement, no such purported termination shall be effective without such Notice
of Termination. The "Termination Date" shall mean the date specified in the
Notice of Termination, which, except as provided in Section 5(c) hereof, shall
be no less than 30 or more than 60 days from the date of the Notice of
Termination. Notwithstanding any other provision of this Agreement, in the event
of any termination of Officer's employment hereunder for any reason, in addition
to any incentive compensation awards or stock option grants to which Officer may
otherwise be entitled pursuant to the express provisions of this Agreement,
Employer shall pay Officer his full base salary through the Termination Date,
plus any Additional Benefits which have been earned or become payable, but which
have not yet been paid as of such Termination Date.
(h) Payments. All payments required under this Agreement
(other than the Additional Benefits payable pursuant to Section 4(e) hereof) as
a result of the termination of Officer's employment hereunder shall be made
within 15 days of the Termination Date or, if any portion is not then reasonably
determinable, within five (5) days after such portion is so determinable. In the
event of a dispute concerning the validity of a purported termination which is
maintained in good faith, the Termination Date shall mean the date the dispute
is finally resolved and Employer will continue to provide Officer with the
compensation and benefits provided for under this Agreement, until the dispute
is finally resolved without any obligation by Officer to repay any of such
amounts to Employer, notwithstanding the final outcome of the dispute. Payments
required to be made by this Section 5(h) are in addition to all other amounts
due under Section 5 of this Agreement and shall not be offset against or reduce
any other amounts due under Section 5 of this Agreement. Officer shall be
required to render services to Employer during the period following his
Termination Date but before the dispute concerning the termination is finally
determined unless Employer fails to provide Officer with a reasonable
opportunity to perform his duties under this Agreement during such period.
(i) Excise Tax Gross-Up.
-------------------
(A) Except as provided in subsection (B), in the event it shall be determined
that any payment or distribution of any type, including accelerated vesting, to
or
for the benefit of the Officer, by the Employer, any "affiliate" (as defined in
Rule 405 of the Securities Act of 1933, as amended) of the Employer, any
"person" (as the term "person" is used for purposes of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended) who acquires ownership or
effective control of the Employer or ownership of a substantial portion of the
Employer's assets (within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), and the regulations thereunder) or any
"affiliate" of such "person," whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the
"Payments"), is or will be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are collectively
referred to as the "Excise Tax"), then the Officer shall be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Officer of all taxes (including any interest or penalties imposed
with respect to such taxes), including any income tax, employment tax or Excise
Tax imposed upon the Gross-Up Payment, the Officer retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(B) Notwithstanding subsection (A) or any other provision of this Agreement to
the contrary, in the event that the Payments (excluding the payment provided for
in subsection (A)) exceed by less than 10% or $100,000, the maximum amount of
Payments which if made or provided to the Officer would not be subject to an
Excise Tax, the Officer will not be entitled to a Gross-Up Payment and the
Payments shall be reduced (but not below zero) to the extent necessary so that
no Payment to be made or benefit to be provided to the Officer shall be subject
to the Excise Tax; it being the intent of the parties that the Payments shall be
reduced only if the economic detriment to the Officer (on a pre-tax basis) is
less than the greater of $100,000 or 10% of the Payments. Unless the Officer
shall have given prior written notice specifying a different order to the
Employer to effectuate the foregoing, the Employer shall reduce or eliminate the
Payments, by first reducing or eliminating the portion of the Payments which are
not payable in cash and then by reducing or eliminating cash payments, in each
case in reverse order beginning with payments or benefits which are to be paid
the farthest in time from the "Determination" (as defined below). Any notice
given by the Officer pursuant to the preceding sentence shall take precedence
over the provisions of any other plan, arrangement or agreement governing the
Officer's rights and entitlements to any benefits or compensation.
(C) The determination of whether the Payments shall be reduced pursuant to this
Agreement and the amount of such reduction, all mathematical determinations, and
all determinations as to whether any of the Payments are "parachute payments"
(within the meaning of Section 280G of the Code), that are required to be made
under this Section, including determinations as to whether a Gross-Up Payment is
required, the amount of such Gross-Up Payment and amounts relevant to the last
sentence of this subsection (C), shall be made by an independent accounting firm
selected by the Officer from among the five (5) largest accounting firms in the
United States or any nationally recognized financial planning and benefits
consulting company (the "Accounting Firm"), which shall provide its
determination (the "Determination"), together with detailed supporting
calculations regarding the amount of any Gross-Up Payment and any other relevant
matter, both to the Employer and the Officer by no later than ten (10) days
following the Termination Date, if applicable, or such earlier time as is
requested by the Employer or the Officer (if the Officer reasonably believes
that any of the Payments may be subject to the Excise Tax). If the Accounting
Firm determines that no Excise Tax is payable by the Officer, it shall furnish
the Officer and the Employer with an opinion reasonably acceptable to the
Officer and the Employer that no Excise Tax is payable (including the reasons
therefor) and that the Officer has substantial authority not to report any
Excise Tax on his federal income tax return. If a Gross-Up Payment is determined
to be payable, it shall be paid (including through withholding of taxes) to the
Officer no later than the due date for payment of the Excise Tax. Any
determination by the Accounting Firm shall be binding upon the Employer and the
Officer, absent manifest error. As a result of uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments not made by the
Employer should have been made ("Underpayment"), or that Gross-Up Payments will
have been made by the Employer which should not have been made ("Overpayment").
In either such event, the Accounting Firm shall determine the amount of the
Underpayment or Overpayment that has occurred. In the case of an Underpayment,
the amount of such Underpayment (together with any interest and penalties
payable by the Officer as a result of such Underpayment) shall be promptly paid
by the Employer to or for the benefit of the Officer. In the case of an
Overpayment, the Officer shall, at the direction and expense of the Employer,
take such steps as are reasonably necessary (including the filing of returns and
claims for refund), follow reasonable instructions from, and procedures
established by, the Employer, and otherwise reasonably cooperate with the
Employer to correct such Overpayment, provided, however, that (i) the Officer
shall not in any event be obligated to return to the Employer an amount greater
than the net after-tax portion of the Overpayment that he has retained or has
recovered as a refund from the applicable taxing authorities and (ii) if a
Gross-Up Payment is determined to be payable, this provision shall be
interpreted in a manner consistent with an intent to make the Officer whole, on
an after-tax basis, from the application of the Excise Tax, it being understood
that the correction of an Overpayment may result in the Officer repaying to the
Employer an amount which is less than the Overpayment. The cost of all such
determinations made pursuant to this Section shall be paid by the Employer.
6. Reimbursement of Business Expenses. During the term of this
Agreement, Employer shall reimburse Officer promptly for all expenditures
(including travel, entertainment, parking, business meetings, and the monthly
costs (including dues) of maintaining memberships at appropriate clubs) to the
extent that such expenditures meet the requirements of the Code for
deductibility by Employer for federal income tax purposes or are otherwise in
compliance with the rules and policies of Employer and are substantiated by
Officer as required by the Internal Revenue Service and rules and policies of
Employer.
7. Indemnity. To the extent permitted by applicable law, the
Certificate of Incorporation and the By-Laws of Employer (as from time to time
in effect) and any indemnity agreements entered into from time to time between
Employer and Officer, Employer shall indemnify Officer and hold him harmless for
any acts or decisions made by him in good faith while performing services for
Employer, and shall use reasonable efforts to obtain coverage for him under
liability insurance policies now in force or hereafter obtained during the term
of this Agreement covering the other officers or directors of Employer.
8. Miscellaneous.
-------------
(a) Succession. This Agreement shall inure to the benefit of
and shall be binding upon Employer, its successors and assigns, but without the
prior written consent of Officer, this Agreement may not be assigned other than
in connection with a merger or sale of substantially all the assets of the
Employer or similar transaction. Employer shall not agree to any such
transaction unless the successor to or assignee of the Company's business and/or
assets in such transaction expressly assumes all obligations of the Employer
hereunder. The obligations and duties of Officer hereby shall be personal and
not assignable.
(b) Notices. Any notices provided for in this Agreement shall
be sent to Employer at 4500 Park Granada, Calabasas, CA 91302 Attention: General
Counsel/Secretary, with a copy to the Chairman of the Compensation Committee at
the same address, or to such other address as Employer may from time to time in
writing designate, and to Officer at his home address as reflected in Employer's
records or at such other address as he may from time to time in writing
designate. All notices shall be deemed to have been given two (2) business days
after they have been deposited as certified mail, return receipt requested,
postage paid and properly addressed to the designated address of the party to
receive the notices.
(c) Effective Date. This Agreement shall become effective on August ___, 2000
(the --------------
"Effective Date").
(d) Entire Agreement. This instrument contains the entire
agreement of the parties relating to the subject matter hereof, and it replaces
and supersedes any prior agreements between the parties relating to said subject
matter, including, but not limited to, the Third Restated Agreement. No
modifications or amendments of this Agreement (including, but not limited to the
provisions of Section 4 hereof) shall be valid unless made in writing and signed
by the parties hereto.
(e) Waiver. The waiver of the breach of any term or of any
condition of this Agreement shall not be deemed to constitute the waiver of any
other breach of the same or any other term or condition.
(f) California Law. This Agreement shall be construed and interpreted in
accordance with -------------- the laws of California.
(g) Attorneys' Fees in Action on Contract. If any litigation
shall occur between the Officer and Employer, which litigation arises out of or
as a result of this Agreement or the acts of the parties hereto pursuant to this
Agreement, or which seeks an interpretation of this Agreement, the prevailing
party in such litigation, in addition to any other judgment or award, shall be
entitled to receive such sums as the arbitrator hearing the matter shall find to
be reasonable as and for the attorneys' fees of the prevailing party.
(h) Confidentiality. Officer agrees that he will not divulge
or otherwise disclose, directly or indirectly, any trade secret or other
confidential information concerning the business or policies of Employer or any
of its subsidiaries which he may have learned as a result of his employment
during the term of this Agreement or prior thereto as an employee, officer or
director of or consultant to Employer or any of its subsidiaries, except to the
extent such use or disclosure is (i) necessary or appropriate to the performance
of this Agreement and in furtherance of Employer's best interests, (ii) required
by applicable law, (iii) lawfully obtainable from other sources, or (iv)
authorized by Employer. The provisions of this subsection shall survive the
expiration, suspension or termination, for any reason, of this Agreement.
(i) Remedies of Employer. Officer acknowledges that the
services he is obligated to render under the provisions of this Agreement are of
a special, unique, unusual, extraordinary and intellectual character, which
gives this Agreement peculiar value to Employer. The loss of these services
cannot be reasonably or adequately compensated in damages in an action at law
and it would be difficult (if not impossible) to replace these services. By
reason thereof, Officer agrees and consents that if he violates any of the
material provisions of this Agreement, Employer, in addition to any other rights
and remedies available under this Agreement or under applicable law, shall be
entitled during the remainder of the term to seek injunctive relief, from a
tribunal of competent jurisdiction, restraining Officer from committing or
continuing any violation of this Agreement, or from the performance of services
to any other business entity, or both.
(j) Severability. If any provision of this Agreement is held
invalid or unenforceable, the remainder of this Agreement shall nevertheless
remain in full force and effect, and if any provision is held invalid or
unenforceable with respect to particular circumstances, it shall nevertheless
remain in full force and effect in all other circumstances.
(k) No Obligation to Mitigate. Officer shall not be required
to mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise and, except as provided in Section 5(a)(i)(2)
hereof, no payment hereunder shall be offset or reduced by the amount of any
compensation or benefits provided to Officer in any subsequent employment.
(l) Arbitration. The parties acknowledge that they have
previously entered into a Mutual Agreement to Arbitrate Claims (the "Arbitration
Agreement"). The parties hereby incorporate herein by reference the terms of the
Arbitration Agreement. Any dispute arising regarding this Agreement and/or any
other matter covered by the Arbitration Agreement shall be subject to binding
arbitration pursuant to the terms of the Arbitration Agreement, except as
expressly provided herein.
(m) Pooling Transactions. Notwithstanding anything contained
in this Agreement to the contrary, in the event of a Change in Control of the
Employer in a transaction which is intended to be treated as a "pooling of
interests" under generally accepted accounting principles (a "Pooling
Transaction"), the Board shall take such actions, if any, as are specifically
recommended by an independent accounting firm retained by the Employer to the
extent reasonably necessary in order to assure that the Pooling Transaction will
qualify as such, including but not limited to (a) deferring the vesting,
exercise, payment, settlement or lapsing of restrictions with respect to any
option or award, (b) providing that the payment or settlement in respect of any
option or award be made in the form of cash, shares of common stock or
securities of a successor or acquirer of the Employer, or a combination of the
foregoing, (c) providing for the extension of the term of any option or award to
the extent necessary to accommodate the foregoing, but not beyond the maximum
term permitted for any option or award and (d) amending, deleting or making
inapplicable to the Officer any provision in this Agreement or other arrangement
pursuant to which he receives compensation, payments or benefits.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
COUNTRYWIDE CREDIT INDUSTRIES, INC. ATTEST:
By: ------------------------------------------
----------------------------------------------------
Secretary
Title: -------------------------------------------------
OFFICER
Angelo R. Mozilo, in his
individual capacity
342883.3
<PAGE>
- 18 - 342897.09
342897.09
APPENDIX A
To Angelo R. Mozilo Employment Agreement
A "Change in Control" shall mean the occurrence during the
term of the Agreement, of any one of the following events:
(a) An acquisition (other than directly from Employer) of any common stock or
other "Voting Securities" (as hereinafter defined) of Employer by any "Person"
(as the term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), immediately
after which such Person has "Beneficial Ownership" (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of twenty five percent (25%) or more
of the then outstanding shares of Employer's common stock or the combined voting
power of Employer's then outstanding Voting Securities; provided, however, in
determining whether a Change in Control has -------- ------- occurred, Voting
Securities which are acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute an acquisition which would cause a Change in
Control. For purposes of this Agreement, (1) "Voting Securities" shall mean
Employer's outstanding voting securities entitled to vote generally in the
election of directors and (2) a "Non-Control Acquisition" shall mean an
acquisition by (i) an employee benefit plan (or a trust forming a part thereof)
maintained by (A) Employer or (B) any corporation or other Person of which a
majority of its voting power or its voting equity securities or equity interest
is owned, directly or indirectly, by Employer (for purposes of this definition,
a "Subsidiary"), (ii) Employer or any of its Subsidiaries, or (iii) any Person
in connection with a "Non-Control Transaction" (as hereinafter defined); (b) The
individuals who, as of the date of the Agreement are members of the Board (the
"Incumbent Board"), cease for any reason to constitute at least two-thirds of
the members of the Board; provided, however, that if the election, or nomination
for -------- ------- election by Employer's common stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent Board,
such new director shall, for purposes of this Agreement, be considered as a
member of the Incumbent Board; provided further, however, that no individual
shall be considered a member of the -------- ------- ------- Incumbent Board if
such individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board (a "Proxy Contest") including
by reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization
involving Employer, unless such merger,
consolidation or reorganization is a
"Non-Control Transaction." A "Non-Control
Transaction" shall mean a merger,
consolidation or reorganization of Employer
where:
(A) the stockholders of Employer, immediately before such merger, consolidation
or reorganization, own directly or indirectly immediately following such merger,
consolidation or reorganization, at least seventy percent (70%) of the combined
voting power of the outstanding Voting Securities of the corporation resulting
from such merger, consolidation or reorganization (the "Surviving Corporation")
in substantially the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization;
(B) the individuals who were members of the Incumbent Board immediately prior to
the execution of the agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the members of the board of
directors of the Surviving Corporation, or in the event that, immediately
following the consummation of such transaction, a corporation beneficially owns,
directly or indirectly, a majority of the Voting Securities of the Surviving
Corporation, the board of directors of such corporation; and
(C) no Person other than (i) Employer, (ii) any Subsidiary, (iii) any employee
benefit plan (or any trust forming a part thereof) maintained by Employer, the
Surviving Corporation, or any Subsidiary, or (iv) any Person who, immediately
prior to such merger, consolidation or reorganization had Beneficial Ownership
of twenty five percent (25%) or more of the then outstanding Voting Securities
or common stock of Employer, has Beneficial Ownership of twenty five percent
(25%) or more of the combined voting power of the Surviving Corporation's then
outstanding Voting Securities or its common stock;
(ii) A complete liquidation or dissolution of Employer; or
(iii) The sale or other disposition of all or
substantially all of the assets of Employer
to any Person (other than a transfer to a
Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then outstanding
common stock or Voting Securities as a result of the acquisition of common stock
or Voting Securities by Employer which, by reducing the number of shares of
common stock or Voting Securities then outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Persons; provided, however,
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of common stock or Voting Securities by Employer,
and after such share acquisition by Employer, the Subject Person becomes the
Beneficial Owner of any additional common stock or Voting Securities which
increases the percentage of the then outstanding common stock or Voting
Securities Beneficially Owned by the Subject Person, then a Change in Control
shall occur.