Exhibit 10.1
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July 29, 2008
 
Mr. Peter H. Rothschild
Interim Chairman of the Board of Directors
Deerfield Capital Corp.
6250 N. River Road
Rosemont, IL 60018
 
Dear Mr. Rothschild:
     This letter agreement (the “Agreement”) sets forth the fees that Deerfield
Capital Corp., or DFR, proposes to pay you for your services as Interim Chairman
of the Board of Directors, or the Board, of DFR for the 2008 calendar year. By
your execution and delivery to DFR of a copy of this Agreement, this Agreement
will become a binding legal obligation of the parties, and will replace in its
entirety the temporary arrangement established by the Board on December 13, 2007
for the payment of additional compensation to you as Board Chairman (the
“Temporary Arrangement”).
     The proposed fees reflect the discussions that the Compensation Committee
of the Board, or the Committee, began in early 2008 with you and the Committee’s
compensation consultant to develop a fee structure for you for 2008 that would
be in the best interests of DFR shareholders. The Committee determined that the
proposed structure—which consists of a guaranteed fee and two types of success
fees the Committee has discretion to award—would meet that objective.
     The factors considered by the Committee in that regard included your
devotion of a major amount of your professional time to your services as
non-executive Board Chairman upon your appointment as such in April 2007; your
commitment to continue this level of service, which has significantly exceeded
that of a non-executive chairman, in 2008; your continued active involvement in
the management of DFR and its subsidiaries; the exceedingly high level of skill
you have demonstrated as Board Chairman; the major challenges faced by DFR in
recovering from the recent unprecedented
Deerfield Capital Corp.
6250 North River Road
Rosemont, Illinois 60018
Phone: (773) 380-1600
Facsimile: (773) 380-1695
 
www.deerfieldcapitalcorp.com
 
Board of Directors
Peter Rothschild
Interim Chairman
Robert E. Fischer
Robert B. Machinist
Peter May
Howard Rubin
Jonathan W. Trutter
 
Officers
Jonathan W. Trutter
Chief Executive Officer
Robert C. Grien
President
Richard G. Smith
Senior Vice President,
Chief Financial Officer
and Treasurer
Frederick L. White
Senior Vice President,
General Counsel
and Secretary

 

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dislocations in the credit markets and the Committee’s view that your services
are vital to overcoming those challenges; the recommendation of the Committee’s
compensation consultant that the guaranteed portion of the proposed fee
structure is commensurate with the fees paid by comparable financial service
companies to non-executive board chairs who actively participate in the
company’s management and closely support the company’s chief executive officer;
the fact that the proposed fee structure will disqualify you from continuing to
receive the independent director fees you have been receiving, as the Board will
no longer be able to make the affirmative determination that you meet the DFR
and New York Stock Exchange standards for independent director status; and the
enhanced alignment of your interests with those of DFR shareholders in
connection with the success fees that are part of the proposed fee structure.
     1. Base Fee
          a. Base Fee. Subject to b. below, DFR shall pay you a fee, or the Base
Fee, for 2008 of $500,000 (less the $20,000 that has been paid to you in 2008 as
your additional compensation for your services as Board Chairman under the
Temporary Arrangement). The Base Fee will be paid in cash, on a monthly basis,
in accordance with payroll practices of DFR’s subsidiary, Deerfield Capital
Management LLC, or DCM. The Base Fee for the period from January 1, 2008 to the
date of the first periodic payment shall be paid in a lump sum on the date of
the first periodic payment. The payments of the Base Fee amounts shall be
subject to customary tax withholding.
          b. Termination of Base Fee. DFR shall terminate the Base Fee
immediately upon your (i) voluntary resignation as Board Chairman, (ii) death or
Disability (as defined below), (iii) removal as a Board member pursuant to the
Director removal provision in Section 4.8 of DFR’s Charter as in effect on the
date hereof or (iv) failure to be re-elected as a Director by the DFR
stockholders at the DFR 2008 annual stockholders meeting. Disability means your
physical or mental incapacity as a result of which you are unable for a period
of 90 days during any 180-day period to perform your duties as Board Chairman
with substantially the same level of quality as immediately before the
incapacity.
          c. Equity Participation. There shall be no prohibition against the
Committee, in the exercise of its discretion, granting you all or part of the
equity awards granted to the independent directors of the Board (upon the same
terms and conditions as the grants to such directors).
     2. Success Fees
          a. General. You shall be eligible for a discretionary success fee in
either or both of the two situations specified below. The Committee shall have
complete discretion as to whether a success fee is awarded in either situation,
and, if awarded, the amount of the fee (subject to the ceilings on each fee
specified below), as well as the fee

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portion, if any, payable in cash and the portion, if any, payable in Performance
Shares (as defined in the DFR Stock Incentive Plan, or the Plan, in effect on
the date hereof) or other non-cash compensation specified in the Plan. The
Committee shall also have complete discretion as to the vesting and other
provisions relating to such non-cash awards, subject to the condition that such
provisions shall generally be comparable to those relating to the awards of
non-cash compensation to DCM employees for their 2008 services.
          b. Capital Transaction Success Fee. You shall be eligible for a
Capital Transaction Success Fee, not to exceed $1,000,000, if the following
conditions are met: (i) in your capacity as Board Chairman, you are instrumental
in causing DFR to execute agreement(s) for a Capital Transaction, as defined
below, in 2008 that substantially increases DFR shareholder value; and (ii)
after the Capital Transaction the surviving entity does not offer you a position
with DFR that is acceptable to you.
          A Capital Transaction means (i) the ownership or acquisition by any
person of more than 50% of the outstanding common stock of DFR; (ii) the merger
or consolidation of DFR with or into any person; or (iii) any one or a series of
related sales or conveyances to any person of all or substantially all of DFR’s
assets.
          c. Other Success Fee. You shall also be eligible for the Other Success
Fee, not to exceed $500,000, if the following conditions are met: (i) in your
capacity as Board Chairman you are instrumental in causing DFR to engage in
actions other than a Capital Transaction that increase DFR shareholder value,
such as strategic partnerships or joint ventures, and (ii) such actions result
in a substantial increase in DFR shareholder value in 2008.
          d. Committee Discretion. You acknowledge and agree that the awards of
the Capital Transaction Success Fee and/or the Other Success Fee are wholly
within the discretion of the Committee, as are the amounts of any such awards
and the cash or stock components of such awards; that the Committee may award
you both or one of the success fees and not the other; and that the Committee
may not award you either of the fees.

            Deerfield Capital Corp.
      By:   /s/ Jonathan W. Trutter         Name:   Jonathan W. Trutter       
Its: Chief Executive Officer     

Agreed and Acknowledged:
/s/ Peter H. Rothschild
Peter H. Rothschild

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