AMENDED AND RESTATED EMPLOYMENT AGREEMENT OF STEVEN R. MUMMA
Exhibit
10.1
AMENDED
AND RESTATED
XXXXXX
X. XXXXX
This
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered
into this 11th day of February, 2009, between New York Mortgage Trust, Inc., a
Maryland corporation (the “Company”), and Xxxxxx X. Xxxxx (the “Executive”).
This Agreement amends, restates and supersedes in all respects that certain
Employment Agreement, dated as of the 18th day of
January, 2008, by and between the Company and the Executive.
The
Executive is presently employed as the Chief Executive Officer, President and
Chief Financial Officer of the Company. The Board of Directors of the
Company (the “Board”) recognizes that the Executive’s contribution to the growth
and success of the Company has been substantial. The Board desires to
provide for the continued employment of the Executive and to make certain
changes in the Executive’s employment arrangements with the Company which the
Board has determined will reinforce and encourage the continued attention and
dedication to the Company of the Executive as a member of the Company’s
management, in the best interest of the Company and its
shareholders. The Executive is willing to commit himself to continue
to serve the Company, on the terms and conditions herein
provided. The Executive’s continued employment with the Company is
contingent on his execution of this Employment Agreement.
In order
to effect the foregoing, the Company and the Executive wish to enter into an
employment agreement on the terms and conditions set forth
below. Accordingly, in consideration of the premises and the
respective covenants and agreements of the parties herein contained, and
intending to be legally bound hereby, the parties hereto agree as
follows:
1. Employment. The
Company hereby agrees to continue to employ the Executive, and the Executive
hereby agrees to continue to serve the Company, on the terms and conditions set
forth herein.
2. Term. The
Term of this Employment Agreement will commence on February 11, 2009 and end on
December 31, 2009, unless further extended or sooner terminated as hereinafter
provided. “Term” shall mean the actual duration of Executive’s
employment hereunder, taking into account any extensions or termination of
employment pursuant to Section 6.
3. Position and
Duties. The Executive shall serve as the Chief Executive
Officer, President and Chief Financial Officer of the Company and shall have
such responsibilities, duties and authority as he may have as of the date hereof
(or any position to which he may be promoted after the date hereof) and as may
from time to time be assigned to the Executive by the Board that are consistent
with such responsibilities, duties and authority. The Executive shall
also serve as a senior executive officer of certain subsidiaries of the Company,
with positions, titles and responsibilities that are suitable for the Chief
Executive Officer, President and Chief Financial Officer of the Company, at the
reasonable request of the Board without additional compensation. The
Executive understands that the Company may hire another person in the future to
assume the position of Chief Financial Officer and that, in such event, the
Executive would be required to resign as Chief Financial Officer. The
Executive shall devote substantially all his working time and efforts to the
business and affairs of the Company; provided, that nothing in this Agreement
shall preclude Executive from serving as a director or trustee in any other firm
or from pursuing personal real estate investments and other personal
investments, as long as such activities do not interfere with Executive’s
performance of his duties hereunder.
4. Place of
Performance. In connection with the Executive’s employment by
the Company, the Executive shall be based at the principal executive offices of
the Company in New York, New York, except for required travel on the Company’s
business to an extent substantially consistent with present business travel
obligations.
5. Compensation
and Related Matters.
(a) Base
Salary. The Company shall pay the Executive a base salary
annually (the “Base Salary”), which shall be payable in periodic installments
according to the Company’s normal payroll practices. The initial Base
Salary shall be $200,000 effective retroactively to January 1,
2009. During the Term, the Board or the Compensation Committee of the
Board (the “Compensation Committee”) shall review the Base Salary at least once
a year to determine whether the Base Salary should be increased effective the
following January 1. Any increase shall be determined before March 31
of each year and shall be retroactive to January 1. The Base Salary,
including any increases, shall not be decreased during the Term. For
purposes of this Agreement, the term “Base Salary” shall mean the amount
established and adjusted from time to time pursuant to this
Section 5(a).
(b) Cash
Incentive Awards.
(i) Annual Cash
Bonus. The Executive shall be eligible to participate in the
Company’s annual cash incentive bonus plan adopted by the Compensation Committee
for each fiscal year (including any partial year) during the Term of this
Agreement (“Bonus Plan”). If the Executive or the Company, as the
case may be, satisfies the performance criteria contained in such Bonus Plan for
a fiscal year, he shall receive an annual Incentive Bonus (as defined below) in
an amount determined by the Compensation Committee and subject to ratification
by the Board, if required. If the Executive or the Company, as the
case may be, fails to satisfy the performance criteria contained in such Bonus
Plan for a fiscal year, the Compensation Committee may determine whether any
Incentive Bonus shall be payable to Executive for that year, subject to
ratification by the Board, if required. The Bonus Plan shall contain
both individual and corporate performance goals for each fiscal year established
by the Compensation Committee. The annual Incentive Bonus shall be
paid to the Executive no later than thirty (30) days after the date the
Compensation Committee determines whether the criteria in the Bonus Plan for
such fiscal year were satisfied.
(ii) Definition of Incentive
Bonus. For purposes of this Agreement, the term “Incentive
Bonus” shall mean any annual cash bonus payable pursuant to
Section 5(b)(i) and any special bonus payable pursuant to
Section 5(b)(ii). The total target Incentive Bonus for 2009,
assuming the Company and Executive achieve the performance goals established in
the Bonus Plan to be established by the Compensation Committee referred to in
Section 5(b)(i) are achieved, shall be in the range of $300,000 to
$600,000.
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(c) Stock Based
Awards. The Company has established the 2004 Stock Incentive
Plan (“Stock Incentive Plan”). Subject to the terms and conditions of
the Stock Incentive Plan, as amended from time to time, the Executive shall be
eligible to participate in the Stock Incentive Plan, and shall be eligible to
receive restricted stock awards under the Stock Incentive Plan. The
Compensation Committee shall approve any such awards made to the Executive
pursuant to the Stock Incentive Plan.
(i) Stock Incentive Plan
Restricted Stock Awards. Any Stock Incentive Plan provides for
the issuance of shares of Company common stock as restricted common stock
(“Restricted Stock Grants”) to the extent that such shares of common stock are
available thereunder. Restricted Stock Grants awarded to the
Executive shall vest such that 1/3 of the awarded shares are vested upon
issuance, 1/3 shall vest on the first anniversary of the date of issuance, and
1/3 shall vest on the second anniversary of the date of
issuance. Notwithstanding the foregoing, the Executive will be 100%
vested and all restrictions on each outstanding Restricted Stock Grant will
lapse upon (i) a Change in Control (as defined herein), (ii) a
termination by the Company without Cause (as defined herein), (iii) a
termination by the Executive for Good Reason (as defined herein), (iv) the
Executive’s death, (v) the Disability (as defined below) of the Executive,
and that the Executive will forfeit all unvested shares if he is terminated for
Cause or he terminates for other than Good Reason. The common stock issued as
Restricted Stock Grants will have voting and dividend rights.
For
purposes of this Agreement:
“Acquiring
Person” means that a Person, considered alone or as part of a “group” within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, is or becomes directly or indirectly the beneficial owner (as defined
in Rule 13d-3 under the Exchange Act) of securities representing at least fifty
percent (50%) of the Company’s then outstanding securities entitled to vote
generally in the election of the Board; provided, however, that JMP Group and
its affiliates shall not be deemed to be an Acquiring Person for purposes of
this Agreement.
“Continuing
Director” means any member of the Board, while a member of the Board and
(i) who was a member of the Board on the closing date of the Company’s
initial public offering of the Common Stock or (ii) whose nomination for or
election to the Board was recommended or approved by a majority of the
Continuing Directors.
“Control
Change Date” means the date on which a Change in Control occurs. If a
Change in Control occurs on account of a series of transactions, the “Control
Change Date” is the date of the last of such transactions.
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“Change
in Control” means (i) a Person is or becomes an Acquiring Person;
(ii) holders of the securities of the Company entitled to vote thereon
approve any agreement with a Person (or, if such approval is not required by
applicable law and is not solicited by the Company, the closing of such an
agreement) that involves the transfer of all or substantially all of the
Company’s total assets on a consolidated basis, as reported in the Company’s
consolidated financial statements filed with the Securities and Exchange
Commission; (iii) holders of the securities of the Company entitled to vote
thereon approve a transaction (or, if such approval is not required by
applicable law and is not solicited by the Company, the closing of such a
transaction) pursuant to which the Company will undergo a merger, consolidation,
or statutory share exchange with a Person, regardless of whether the Company is
intended to be the surviving or resulting entity after the merger,
consolidation, or statutory share exchange, other than a transaction that
results in the voting securities of the Company carrying the right to vote in
elections of persons to the Board outstanding immediately prior to the closing
of the transaction continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity) at least 50%
(fifty percent) of the Company’s voting securities carrying the right to vote in
elections of persons to the Company’s Board, or such securities of such
surviving entity, outstanding immediately after the closing of such transaction;
(iv) the Continuing Directors or directors who are affiliated with JMP
Group or its affiliates cease for any reason to constitute a majority of the
Board; or (v) the Board adopts a resolution to the effect that, in its
judgment, as a consequence of any one or more transactions or events or series
of transactions or events, a Change in Control of the Company has effectively
occurred. The Board shall be entitled to exercise its sole and absolute
discretion in exercising its judgment and in the adoption of such resolution,
whether or not any such transaction(s) or event(s) might be deemed, individually
or collectively, to satisfy any of the criteria set forth in subparagraphs
(i) through (v) above. Notwithstanding the foregoing, for
purposes of this Agreement, (a) the issuance and sale by the Company of its
Series A Convertible Preferred Stock and any conversion of such Series A
Convertible Preferred Stock into shares of the Company’s common stock shall not
be deemed to be a Change of Control, (b) any acquisition by JMP Group or one or
more of its affiliates of (A) fifty percent (50%) or more of the voting
securities of the Company entitled to vote in the election of directors, whether
by merger, share exchange, tender offer, stock purchase, consolidation or other
form of business combination, or (B) assets of the Company in a transaction that
involves a transfer of assets that requires approval by the Company’s
shareholders under the Maryland General Corporation Law, shall not be deemed to
be a Change of Control, and (c) any issuance by the Company of newly issued
shares of its capital stock in a private or public offering of securities for
cash shall not be deemed to be a Change of Control.
“Person”
means any human being, firm, corporation, partnership, or other
entity. “Person” also includes any human being, firm, corporation,
partnership, or other entity as defined in sections 13(d)(3) and 14(d)(2) of the
Exchange Act. The term “Person” does not include the Company or any
Related Entity, and the term Person does not include any employee-benefit plan
maintained by the Company or any Related Entity, or any person or entity
organized, appointed, or established by the Company or any Related Entity for or
pursuant to the terms of any such employee-benefit plan, unless the Board
determines that such an employee-benefit plan or such person or entity is a
“Person”.
“Related
Entity” means any entity that is part of a controlled group of corporations or
is under common control with the Company within the meaning of Sections 1563(a),
414(b) or 414(c) of the Code.
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(d) Benefits.
(i) Vacation. The
Executive shall be entitled to four (4) weeks of paid vacation per full calendar
year. The Executive shall be entitled to cash in lieu of any unused
vacation time. The Executive shall not be entitled to carry over any
unused vacation time from year to year.
(ii) Sick and Personal
Days. The Executive shall be entitled to sick and personal
days in accordance with the policies of the Company.
(iii) Employee
Benefits.
(A) Participation in Employee
Benefit Plans. Subject to the terms of any applicable plans,
policies or programs, the Executive and his spouse and eligible dependents, if
any, and their respective designated beneficiaries where applicable, will be
eligible for and entitled to participate in any Company sponsored employee
benefit plans, including but not limited to benefits such as group health,
dental, accident, disability insurance, group life insurance, and a 401(k) plan,
as such benefits may be offered from time to time, on a basis no less favorable
than that applicable to other executives of the Company.
(B) Disability
Insurance. The Company shall reimburse the Executive the
amount of the premiums paid by the Executive on, at the Executive’s cost, a
renewable long-term Disability plan that, subject to the terms of such plan and
any applicable plans, policies or programs, provides for payment of not less
than $240,000.00 for so long as any long-term Disability of the Executive
continues. In addition, the Company shall reimburse the Executive the
amount of the premiums payable by the Executive with respect to a personal
supplemental long-term disability insurance policy providing for benefits equal
to at least 100% of the Executive’s Base Salary for so long as any long-term
Disability of the Executive continues. The Company shall not be
obligated to reimburse the Executive for such amounts until the Executive has
presented the Company with a statement documenting such payments.
(C) Annual
Physical. If the Executive desires an annual physical
examination, the Company shall provide, at its cost, a medical examination for
the Executive on an annual basis by a licensed physician in the New York, New
York metropolitan area selected by the Executive. The results of the
examination and any medical information or records regarding the examination
will be provided by the physician to the executive, and not to the
Company.
(D) Directors and Officers
Insurance. During the Term and for a period of 24 months
thereafter, the Executive shall be entitled to director and officer insurance
coverage for his acts and omissions while an officer and director of the Company
on a basis no less favorable to him than the coverage provided to current
officers and directors.
(E) Life
Insurance. The Company shall reimburse the Executive the
amount of the premiums paid by the Executive on a whole life policy for the
benefit of the Executive or the Executive’s designated beneficiaries with a
death benefit of $3.0 million. The Executive shall be entitled to
reimbursement of any income tax that the Executive incurs with respect to the
Company’s payment of premiums. The Company shall not be obligated to
reimburse the Executive for such amounts until the Executive has presented the
Company with a statement documenting such payments.
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(F) Key Man Life
Insurance. The Company may purchase on the life of the
Executive up to $15.0 million of key man life insurance with the Company as the
beneficiary of the death benefit.
(iv) Expenses, Office and Systems
Support. The Executive shall be entitled to reimbursement of
all reasonable expenses, in accordance with the Company’s policy as in effect
from time to time and on a basis no less favorable than that applicable to other
executives of the Company, including, without limitation, telephone, reasonable
travel and reasonable entertainment expenses incurred by the Executive in
connection with the business of the Company, upon the presentation by the
Executive of appropriate documentation. The Executive shall also be
entitled to appropriate office space, systems support and other critical
services necessary for the performance of the Executive’s duties.
6. Termination. The
Executive’s employment hereunder may be terminated without any breach of this
Agreement only under the following circumstances:
(a) Death. The
Executive’s employment hereunder shall terminate upon his death.
(b) Disability. If,
in the written opinion of a qualified physician reasonably agreed to by the
Company and the Executive, the Executive shall become unable to perform his
duties hereunder due to Disability, the Company may terminate the Executive’s
employment hereunder. As used in this Agreement, the term
“Disability” shall mean inability of the Executive, due to physical or mental
condition, to perform the essential functions of the Executive’s job, after
consideration of the availability of reasonable accommodations, for more than
180 total calendar days during any period of 12 consecutive months.
(c) For
Cause. The Company may terminate the Executive’s employment
hereunder for Cause. For purposes of this Agreement, the Company
shall have “Cause” to terminate the Executive’s employment hereunder upon a
determination by at least a majority of the members of the Board (other than
Executive) at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive of such meeting, the purpose
thereof and the particulars of the basis for such meeting and the Executive is
given an opportunity, together with counsel, to be heard before the Board) that
Executive (i) has committed fraud or misappropriated, stolen or embezzled
funds or property from the Company or an affiliate of the Company or secured or
attempted to secure personally any profit in connection with any transaction
entered into on behalf of the Company or any affiliate of the Company,
(ii) has been convicted of, or entered a plea of guilty or “nolo contendre”
to, a felony which in the reasonable opinion of the Board brings Executive into
disrepute or is likely to cause material harm to the Company’s (or any affiliate
of the Company) business, financial condition or prospects, (iii) has,
notwithstanding not less than 30 days’ prior written notice from the Board,
failed to perform (other than by reason of illness or temporary disability ) his
material duties hereunder, (iv) has violated or breached any material law
or regulation to the material detriment of the Company or any affiliates of the
Company or its business, or (v) has breached any non-disclosure agreement
between Executive and the Company which causes or is reasonably likely to cause
material harm to the Company. Any notice of termination delivered by
the Company to Executive that purports to notify Executive of a termination for
Cause, but where the Company has not otherwise followed the procedures set forth
in the definition of “Cause” above, shall be deemed to constitute a notice of
termination without Cause pursuant to Section 6(d)
hereof. Neither a notice from the Company to Executive that a meeting
of the Board has been scheduled to determine whether grounds for a termination
for “Cause” exist, nor the holding of such a meeting, shall itself be construed
as a notice of termination for such purpose.
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(d) Without
Cause. The Company may at any time terminate the Executive’s
employment hereunder without Cause.
(e) Termination
by the Executive.
(i) The
Executive may terminate his employment hereunder (A) for Good Reason, or (B) at
any time after the date hereof by giving sixty (60) days prior notice of his
intention to terminate.
(ii) For
purposes of this Agreement, “Good Reason” shall mean (A) a failure by the
Company to comply with any material provision of this Agreement (other than the
Company’s payment obligations referred to in clause (E) below) which has
not been cured within thirty (30) days after notice of such noncompliance has
been given by the Executive to the Company, (B) the assignment to the
Executive of any material duties inconsistent with the Executive’s position with
the Company or a substantial adverse alteration in the nature or status of the
Executive’s responsibilities without the consent of the Executive, except that
(i) removal of the Executive from the position of Chief Financial Officer,
(ii) a determination by the Nominating and Corporate Governance Committee
of the Board of Directors not to nominate the Executive for re-election as a
director of the Company or (iii) a failure by the Company’s stockholders to
elect the Executive as a director of the Company shall not be deemed to be “Good
Reason,” (C) without the consent of the Executive, a material reduction in
employee benefits other than a reduction generally applicable to similarly
situated executives of the Company, (D) without the consent of the
Executive, relocation of the Company’s principal place of business outside of
the Borough of Manhattan in the City of New York, or (E) any failure by the
Company to pay the Executive Base Salary or any Incentive Bonus to which he is
entitled under the Bonus Plan which failure has not been cured within ten (10)
days after notice of such noncompliance has been given by the Executive to the
Company or any failure of the Compensation Committee to approve a Bonus Plan for
any fiscal year.
(f) Any
termination of the Executive’s employment by the Company or by the Executive
(other than termination pursuant to subsection (a) or (b) of this
Section 6) shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 12. For purposes
of this Agreement, a “Notice of Termination” shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment under the
provision so indicated.
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(g)
“Date of Termination” shall mean (i) if the Executive’s employment is
terminated by his death, the date of his death, (ii) if the Executive’s
employment is terminated pursuant to subsection (b) above, the date as of which
the physician’s written opinion is received by the Company, (iii) if the
Executive’s employment is terminated pursuant to subsection (c) above, the
date specified in the Notice of Termination, and (iv) if the Executive’s
employment is terminated for any other reason, the date sixty (60) days
following the date on which a Notice of Termination is given.
7. Compensation
Upon Termination, Death or During Disability.
(a) Death. If
the Executive’s employment is terminated by his death, the Company shall within
ten (10) days following the date of the Executive’s death, pay to the
Executive’s designated beneficiary(ies) an amount equal to the Executive’s
annual Base Salary for the year in which the termination took place, and an
amount equal to the Executive’s target Bonus for the year in which the
termination took place, together with any other amounts to which the Executive
is entitled pursuant to death benefit plans, programs and policies. In addition,
all stock options, restricted stock awards and any other equity awards granted
by the Company to the Executive shall become fully vested, unrestricted and
exercisable as of the Date of Termination.
(b) Disability. During
any period that the Executive fails to perform his duties hereunder as a result
of his incapacity due to a physical or mental condition (“disability period”),
the Executive shall continue to receive his full Base Salary at the rate then in
effect for such disability period (and shall not be eligible for payments under
the disability plans, programs and policies maintained by the Company or in
connection with employment by the Company (“Disability Plans”)) until his
employment is terminated pursuant to Section 6(b) hereof, and upon such
termination, the Executive shall, within ten (10) days of such termination, be
entitled to all amounts to which the Executive is entitled pursuant to the
Disability Plans. The Executive’s rights under any long-term Disability Plan
shall be determined in accordance with the provisions of such plan, but in no
event will the Company maintain a long-term Disability plan that provides for
payment of less than 200% of the Executive’s Base Salary. In
addition, upon the Executive’s termination in accordance with Section 7(b)
hereof, all stock options, restricted stock grants awards and any other equity
awards granted by the Company to the Executive shall become fully vested,
unrestricted and exercisable as of the Date of Termination.
(c) Cause or other than Good
Reason. If the Executive’s employment shall be terminated by
the Company for Cause or by the Executive for other than Good Reason, the
Company shall pay the Executive his full Base Salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given and
reimburse the Executive for all reasonable and customary expenses incurred by
the Executive in performing services hereunder prior to the Date of Termination
in accordance with Section 6(d), and the Company shall have no further
obligations to the Executive under this Agreement.
(d) Termination by the Company
without Cause (other than for death or Disability) or Termination by the
Executive for Good Reason. If the Company shall terminate the
Executive’s employment other than for death, Disability pursuant to
Section 6(b) or Cause, or the Executive shall terminate his employment for
Good Reason, then:
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(i) the
Company shall pay the Executive any earned and accrued but unpaid installment of
Base Salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given and all other unpaid and pro rata amounts to
which the Executive is entitled as of the Date of Termination under any
compensation plan or program of the Company, including without limitation, the
approved annual Bonus Plan for the year in which the Date of Termination occurs
and all accrued but unused vacation time, such payments to be made in a lump sum
on or before the tenth day following the Date of Termination;
(ii) in
lieu of any further salary payments to the Executive for periods subsequent to
the Date of Termination, the Company shall pay as liquidated damages to the
Executive $500,000, except that in the event of a Change of Control during 2009,
the amount shall include the $500,000 plus the the Executive’s target Bonus for
the year in which the Change of Control occurs; such payment to be made in a
lump sum on or before the tenth day following the Date of
Termination. In addition, all stock options, restricted stock awards
and any other equity awards granted by the Company to the Executive shall become
fully vested, unrestricted and exercisable as of the Date of
Termination;
(iii) In
the case of a termination of the Executive’s employment by the Company without
Cause or for Disability, or by the Executive for Good Reason, the Company shall
pay the full cost for the Executive to participate in the health insurance plan
in which the Executive was enrolled immediately prior to the Date of Termination
for a period of eighteen (18) months, provided that the Executive’s continued
participation is possible under the general terms and provisions of such plans
and programs. In the event that the Executive’s participation in any
such plan or program is barred, the Company shall arrange to provide the
Executive with benefits substantially similar to those which the Executive would
otherwise have been entitled to receive under such plan from which his continued
participation is barred; and
(iv) The
obligations of the Company to make any payments to Executive required under
Section 7(d)(ii) hereof shall be conditioned on the execution and
delivery by the Executive of a general release of claims in form and substance
reasonably satisfactory to the Company.
8. Nondisclosure. The
Executive shall hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to the Company or
any of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive’s employment by the
Company or any of its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the
Executive’s employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. The
agreement made in this Section 8 shall be in addition to, and not in
limitation or derogation of, any obligations otherwise imposed by law or by
separate agreement upon the Executive in respect of confidential information of
the Company.
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9. Successors; Binding
Agreement. This Agreement shall be binding upon and inure to
the benefit of successors and permitted assigns of the parties. This
Agreement may not be assigned, nor may performance of any duty hereunder be
delegated, by either party without the prior written consent of the other;
provided, however, the Company may assign this Agreement to any successor to its
business, including but not limited to in connection with any subsequent merger,
consolidation, sale of all or substantially all of the assets or stock of the
Company or similar transaction involving the Company or a successor
corporation.
10. Additional
Payments by the Company.
(a) If
it is determined (as hereafter provided) that any payment or distribution by the
Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any option, share appreciation
right or similar right, or the lapse or termination of any restriction on or the
vesting or exercisability of any of the foregoing (a “Payment”), would be
subject to the excise tax imposed by Section 4999 of the Code (or any
successor provision thereto) or to any similar tax imposed by state or local
law, or any interest or penalties with respect to such excise tax (such tax or
taxes, together with any such interest and penalties, are hereafter collectively
referred to as the “Excise Tax”), then Executive will be entitled to receive an
additional payment or payments (a “Gross-Up Payment”) in an amount such that,
after payment by Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax, imposed upon the
Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments.
(b) All
determinations required to be made under this Section 10, including whether
an Excise Tax is payable by Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
will be made by the Company’s then current outside auditors; provided that if
that firm is unwilling or unable to provide such services, another accounting
firm may be selected by the Company (such accounting firm the “Accounting
Firm”). The Company will direct the Accounting Firm to submit its
determination and detailed supporting calculations to both the Company and
Executive within 30 calendar days after the date of the change in control or the
date of Executive’s termination of employment, if applicable, and any other such
time or times as may be requested by the Company or Executive. If the
Accounting Firm determines that any Excise Tax is payable by Executive, the
Company will pay the required Gross-Up Payment to Executive no later than five
calendar days prior to the due date for Executive’s income tax return on which
the Excise Tax is included. If the Accounting Firm determines that no
Excise Tax is payable by Executive, it will, at the same time as it makes such
determination, furnish Executive with an opinion that he has substantial
authority not to report any Excise Tax on his federal, state, local income or
other tax return. Any determination by the Accounting Firm as to the
amount of the Gross-Up Payment will be binding upon the Company and
Executive. As a result of the uncertainty in the application of
Section 4999 of the Code (or any successor provision thereto) and the
possibility of similar uncertainty regarding applicable state or local tax law
at the time of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made (an “Underpayment”), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts
or fails to pursue its remedies pursuant to Section 10(f) hereof and
Executive thereafter is required to make a payment of any Excise Tax, Executive
shall so notify the Company, which will direct the Accounting Firm to determine
the amount of the Underpayment that has occurred and to submit its determination
and detailed supporting calculations to both the Company and Executive as
promptly as possible. Any such Underpayment will be promptly paid by
the Company to, or for the benefit of, Executive within five business days after
receipt of such determination and calculations.
10
(c) The
Company and Executive will each provide the Accounting Firm access to and copies
of any books, records and documents in the possession of the Company or
Executive, as the case may be, reasonably requested by the Accounting Firm, and
otherwise cooperate with the Accounting Firm in connection with the preparation
and issuance of the determination contemplated by Section 10(b)
hereof.
(d) The
federal, state and local income or other tax returns filed by Executive will be
prepared and filed on a consistent basis with the determination of the
Accounting Firm with respect to the Excise Tax payable by
Executive. To the extent the Excise Tax has not been previously
withheld from amounts paid to the Executive, Executive will make proper payment
of the amount of any Excise Tax, and at the request of the Company, provide to
the Company true and correct copies (with any amendments) of his federal income
tax return as filed with the Internal Revenue Service and corresponding state
and local tax returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by the Company,
evidencing such payment. If prior to the filing of Executive’s federal income
tax return, or corresponding state or local tax return, if relevant, the
Accounting Firm determines that the amount of the Gross-Up Payment should be
reduced, Executive will within five business days pay to the Company the amount
of such reduction.
(e) The
fees and expenses of the Accounting Firm for its services in connection with the
determinations and calculations contemplated by Sections 10(b) and 10(d) hereof
will be borne by the Company. If such fees and expenses are initially
advanced by Executive, the Company will reimburse Executive the full amount of
such fees and expenses within five business days after receipt from Executive of
a statement therefore and reasonable evidence of his payment
thereof.
(f) Executive
will notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of a Gross-Up
Payment. Such notification will be given as promptly as practicable
but no later than ten (10) business days after Executive actually receives
notice of such claim and Executive will further apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid
(in each case, to the extent known by Executive). Executive will not
pay such claim prior to the earlier of (x) the expiration of the
30-calendar-day period following the date on which he gives such notice to the
Company and (y) the date that any payment of amount with respect to such claim
is due. If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim, Executive
will:
(i) provide
the Company with any written records or documents in his possession relating to
such claim reasonably requested by the Company;
11
(ii) take
such action in connection with contesting such claim as the Company reasonably
requests in writing from time to time, including without limitation accepting
legal representation with respect to such claim by an attorney competent in
respect of the subject matter and reasonably selected by the
Company;
(iii) cooperate
with the Company in good faith in order effectively to contest such claim;
and
(iv) permit
the Company to participate in any proceedings relating to such claim; provided,
however, that the Company will bear and pay directly all costs and expenses
(including interest and penalties) incurred in connection with such contest and
will indemnify and hold harmless Executive, on an after-tax basis, for and
against any Excise Tax or income tax, including interest and penalties with
respect thereto, imposed as a result of such representation and payment of costs
and expenses. Without limiting the foregoing provisions of this
Section 10(f), the Company will control all proceedings taken in connection
with the contest of any claim contemplated by this Section 10(f) and, at
its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim (provided that Executive may participate therein at his own cost and
expense) and may, at its option, either direct Executive to pay the tax claimed
and xxx for a refund or contest the claim in any permissible manner, and
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company will determine; provided, however, that if the
Company directs Executive to pay the tax claimed and xxx for a refund, the
Company will advance the amount of such payment to Executive on an interest-free
basis and will indemnify and hold Executive harmless, on an after-tax basis,
from any Excise Tax or income tax, including interest or penalties with respect
thereto, imposed with respect to such advance; and provided further, however,
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company’s control of any such contested claim will be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and Executive
will be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing
authority.
(g) If,
after the receipt by Executive of an amount advanced by the Company pursuant to
Section 10(f) hereof, Executive receives any refund with respect to such
claim, Executive will (subject to the Company’s complying with the requirements
of Section 10(f)) hereof) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by Executive of an amount
advanced by the Company pursuant to Section 10(f) hereof, a determination
is made that Executive will not be entitled to any refund with respect to such
claim and the Company does not notify Executive in writing of its intent to
contest such denial or refund prior to the expiration of 30 calendar days after
such determination, then such advance will be forgiven and will not be required
to be repaid and the amount of such advance will offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid pursuant to this
Section 10. If, after the receipt by Executive of a Gross-Up Payment but
before the payment by Executive of the Excise Tax, it is determined by the
Accounting Firm that the Excise Tax payable by Executive is less than the amount
originally computed by the Accounting Firm and consequently that the amount of
the Gross-Up Payment is larger than that required by this Section 10,
Executive shall promptly refund to the Company the amount by which the Gross-Up
Payment initially made to Executive exceeds the Gross-Up Payment required under
this Section 10.
12
11. Continued
Performance. Provisions of this Agreement shall survive any
termination of Executive’s employment hereunder if so provided herein or if
necessary or desirable fully to accomplish the purposes of such provisions,
including, without limitation, the obligations of the Executive under the terms
and conditions of Sections 8 and 9. Any obligation of the Company to
make payments to or on behalf of the Executive under Section 7 is expressly
conditioned upon the Executive’s continued performance of the Executive’s
obligations under Sections 8 and 9 for the time periods stated in Sections 8 and
9. The Executive recognizes that, except to the extent, if any,
provided in Section 7, the Executive will earn no compensation from the
Company after the Date of Termination.
12. Notices. For
the purposes of this Agreement, notices, demands and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified) mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:
If to the
Executive:
Xxxxxx X.
Xxxxx
c/o New
York Mortgage Trust, Inc.
00
Xxxxxxxxxx Xxx.
Xxxxx
000
Xxx Xxxx,
XX 00000
If to the
Company:
New York
Mortgage Trust, Inc.
00
Xxxxxxxxxx Xxx.
Xxxxx
000
Xxx Xxxx,
XX 00000
Attn:
Compensation Committee
or to
such other address as any party may have furnished to the others in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
13. Miscellaneous. No
provisions of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by the
Executive and such officer of the Company as may be specifically designated by
the Board. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of New York without regard to its conflicts
of law principles.
13
(a) Validity. The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
(b) Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall
deemed to be in an original but all of which together will constitute one and
the same instrument.
(c) Disputes. Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by binding arbitration conducted before a panel of three
arbitrators in New York, New York in accordance with the rules of the American
Arbitration Association then in effect; provided, however, that the Company
shall be entitled to seek a restraining order or injunction in any court of
competent jurisdiction with respect to any violation or threatened violation of
the provisions of Section 9 of this Agreement and the Executive hereby
consents that such restraining order or injunction may be granted without the
necessity of the Company’s posting any bond. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction. The expenses of
arbitration shall be borne by the Company.
(d) Executive’s Legal
Expenses. In the event that the Executive institutes any
proceeding to enforce his rights under, or to recover damages for breach of this
Agreement, the Executive, if he is the prevailing party, shall be entitled to
recover from the Company any actual expenses for attorney’s fees and
disbursements incurred by him.
(e) Indemnification. The
Company shall indemnify and hold Executive harmless to the maximum extent
permitted by the laws of the State of Maryland (and the law of any other
appropriate jurisdiction after any reincorporation of the Company) against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys’ fees incurred by Executive, in connection with the defense of, or as
a result of any action or proceeding (or any appeal from any action or
proceeding) in which Executive is made or is threatened to be made a party by
reason of the fact that he is or was an officer or trustee of the Company,
regardless of whether such action or proceeding is one brought by or in the
right of the Company to procure a judgment in its favor (or other than by or in
the right of the Company); provided, however, that this indemnification
provision shall not apply to any action or proceeding relating to a dispute
between the Company and the Executive based on any alleged breach or violation
of this Agreement.
(f) Entire
Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, with
respect to the subject matter hereof.
[Signatures
on next page]
14
IN
WITNESS WHEREOF, the parties have executed this Agreement on the date and year
first above written.
|
NEW
YORK MORTGAGE TRUST, INC.
|
|||
|
By:
|
/s/
Xxxxx X. Xxxxxx
|
||
|
Name:
|
Xxxxx
X. Xxxxxx
|
||
|
Title:
|
Chairman
of the Board
|
||
|
XXXXXX
X. XXXXX
|
|||
|
/s/
Xxxxxx X. Xxxxx
|
|||
15
