Exhibit 10.9
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), effective as of the 1st day
of November 1997, is entered into by and between Xxxxxxx X. Xxxxx (the
"Executive") and Annaly Mortgage Management, Inc., a Maryland corporation (the
"Company").
The Company desires to establish its right to the continued services
of the Execu tive, in the capacity described below, on the terms and conditions
and subject to the rights of termination hereinafter set forth, and the
Executive is willing to accept such employment on such terms and conditions.
In consideration of the mutual agreements hereinafter set forth, the
Executive and the Company have agreed and do hereby agree as follows:
1. Employment as Treasurer and Chief Financial Officer of the Company.
-------------------------------------------------------------------
The Company does hereby employ, engage and hire the Executive as Treasurer and
Chief Financial Officer of the Company, and the Executive does hereby accept and
agree to such hiring, engage ment, and employment. The Executive's duties as
Treasurer and Chief Financial Officer shall be such executive and managerial
duties as the Board of Directors of the Company shall from time to time
prescribe and as provided in the Bylaws of the Company. The Executive shall
devote such time, energy and skill to the performance of her duties for the
Company and for the benefit of the Company as may be necessary or required for
the effective conduct and operation of the Company's business. Furthermore, the
Executive shall exercise due diligence and care in the performance of her duties
to the Company under this Agreement.
2. Term of Agreement. The term ("Term") of this Agreement shall
------------------
commence as of the date of the closing under the Offering (the "Effective Date")
and shall continue through December 31, 1999. From and after December 31, 1999,
and each anniversary thereafter, the Term of the Agreement shall automatically
be extended for additional successive one-year periods unless, not later than
three months prior to December 31, 1999 or any such anniversary, as applicable,
either party shall have given written notice to the other that it does not wish
to extend the Term of the Agreement.
3. Compensation. (a) Base Salary. The Company shall pay the Executive,
------------- ------------
and the Executive agrees to accept from the Company, in payment for her services
to the Company a base salary at the rate determined below ("Base Salary"),
payable in equal biweekly installments or at such other time or times as the
Executive and Company shall agree. Base Salary shall (i) equal a per annum
amount of 0.10% times the book value (as defined below) of the Company, (ii) be
reviewed quarterly and upon the raising of additional equity through the
placement of securities, and (iii) be subject to a maximum per annum amount of
$125,000 ("Salary Cap"). The Salary Cap can be raised at any time by the Board
of Directors of the Company in its sole discretion. In determining the Base
Salary, the "book value" of the Company shall be the aggregate amounts reported
on the Company's balance sheet prepared in accordance with generally accepted
accounting principles as Stockholders' Equity but excluding any adjustments for
valuation reserves (i.e., changes in the value of the Company's portfolio of
investments as a result of xxxx-to-market valuation changes), all determined as
of the close of business on the Effective Date and thereafter on the closing
date of any placements of securities resulting in additional equity and on the
last day of each fiscal quarter. In consideration of the cash flow needs of the
Company, the Base Salary can be lowered at management's discretion.
-2-
(b) Performance Bonus - Board of Directors Discretion. The Executive
--------------------------------------------------
shall be eligible to receive an incentive performance bonus based upon a
percentage of her Base Salary. Except as provided in Section 7, any such bonus
awarded to the Executive shall be payable in the amount, in the manner, and at
the time determined by the Company's Board of Directors in its sole and absolute
discretion.
(c) Annual Review. The Board of Directors of the Company shall, at
--------------
least annually, review the Executive's entire compensation package to determine
whether it continues to meet the Company's compensation objectives. Such annual
review will include a determina tion of (i) whether to increase the Salary Cap
in accordance with Section 3(a) and (ii) the incen tive performance bonus to be
awarded in accordance with Section 3(b).
4. Fringe Benefits. The Executive shall be entitled to participate in
----------------
any benefit programs adopted from time to time by the Company for the benefit of
its executive employees, and the Executive shall be entitled to receive such
other fringe benefits as may be granted to her from time to time by the
Company's Board of Directors.
(a) Benefit Plans. The Executive shall be entitled to participate in
--------------
any benefit plans relating to stock options, stock purchases, awards, pension,
thrift, profit sharing, life insurance, medical coverage, education, or other
retirement or employee benefits available to other executive employees of the
Company, subject to any restrictions (including waiting periods) specified in
such plans. The Company shall make commercially reasonable efforts to obtain
medical and disability insurance, and such other forms of insurance as the Board
of Directors shall from time to time determine, for its employees.
(b) Vacation. The Executive shall be entitled to (i) four (4) weeks
---------
of paid vacation per calendar year for the first two years of service to the
Company, and (ii) five (5)
-3-
Weeks of paid vacation per calendar year for the next two years of service to
the Company, with such vacation to be scheduled and taken in accordance with the
Company's standard vacation policies. After four years of service to the
Company, the Executive shall be entitled to such number of weeks of paid
vacation per calendar year as determined by the Board of Directors of the
Company after review of industry standards, but shall in no event be entitled to
fewer than five weeks of paid vacation per calendar year.
5. Business Expenses. The Company shall reimburse the Executive for
------------------
any and all necessary, customary and usual expenses, properly receipted in
accordance with Company policies, incurred by Executive on behalf of the
Company.
6. Termination of Executive's Employment. (a) Death. If the Executive
-------------------------------------- ------
dies while employed by the Company, her employment shall immediately terminate.
The Company's obligation to pay the Executive's Base Salary shall cease as of
the date of Executive's death. Thereafter, Executive's beneficiaries or her
estate shall receive benefits in accordance with the Company's retirement,
insurance and other applicable programs and plans then in effect.
(b) Disability. If, as a result of the Executive's incapacity due to
-----------
physical or mental illness ("Disability"), Executive shall have been absent from
the full-time performance of her duties with the Company for six (6) consecutive
months, and, within thirty (30) days after written notice is provided to her by
the Company, she shall not have returned to the full-time performance of her
duties, the Executive's employment under this Agreement may be terminated by the
Company for Disability. During any period prior to such termination during
which the Executive is absent from the full-time performance of her duties with
the Company due to Disability, the Company shall continue to pay the Executive
her Base Salary at the rate in effect at the commencement of such period of
Disability. Subsequent to such termination, the
-4-
Executive's benefits shall be determined under the Company's retirement,
insurance and other compensation programs then in effect in accordance with the
terms of such programs.
(c) Termination by the Company for Cause. The Company may terminate
-------------------------------------
the Executive's employment under this Agreement for "Cause," at any time prior
to expiration of the Term of the Agreement, only in the event of (i) the
Executive's material breach of this Agree ment, including without limitation
the failure to substantially perform the reasonable and lawful duties of her
position for the Company, which breach shall continue for 60 days after notice
thereof by the Company to the Executive, which notice shall specify in detail
the Executive's breach, (ii) acts or omissions constituting recklessness or
wilful misconduct on the part of the Executive in respect of her fiduciary
obligations or otherwise relating to the business of the Com pany, or (iii) the
Executive's conviction for fraud, misappropriation or embezzlement. In the case
of clauses (ii) and (iii), the Executive's employment under this Agreement may
be terminated immediately without any advance written notice, and the Company's
obligation to pay the Execu tive's Base Salary, any bonus and benefits shall
cease as of the termination date.
(d) Termination by the Executive. The Executive may at any time during
-----------------------------
the Term of this Agreement terminate her employment hereunder for any reason or
no reason by giving the Company notice in writing not less than one hundred
twenty (120) days in advance of such termination. The Executive shall have no
further obligations to the Company after the effective date of termination, as
set forth in the notice. In the event of a termination by the Executive under
this paragraph, the Company will pay only the portion of Base Salary or
previously awarded Bonus unpaid as of the termination date. Benefits which have
accrued and/or vested on the termination date will continue in effect according
to their terms, but no additional accrual or vesting will take place.
-5-
7. Compensation Upon Termination by the Company Other Than for Cause.
------------------------------------------------------------------
If the Executive's employment shall be terminated by the Company other than for
Cause, the Executive shall be entitled to the following benefits:
(a) Payment of Unpaid Base Salary. The Company shall immediately pay
------------------------------
the Executive any portion of the Executive's Base Salary or previously awarded
bonus not paid prior to the termination date.
(b) Severance Payment. The Company shall pay the Executive an amount
------------------
(the "Severance Amount") equal to three times the higher of (i) the Executive's
combined Salary Cap and actual bonus compensation for the preceding fiscal year
or (ii) the average for the three preceding years of the Executive's combined
actual Base Salary and bonus compensation; provided, however, that the Severance
Amount shall not be less than $250,000, nor more than 1.0% of book value (as
defined in Section 3(a)) to the extent the Severance Amount is greater than
$250,000. The Severance Amount shall be payable 50% within five (5) days after
the termination date and the remaining 50% shall be payable in twelve (12) equal
consecutive monthly installments beginning on the first day of the month
following the termination date.
(c) Immediate Vesting of Stock Options. The Company shall take all
-----------------------------------
appropri ate action to ensure that all stock options on the Company's stock
owned by the Executive as of the Effective Date and which have not been
exercised prior to the termination date become immediately exercisable by the
Executive, whether or not the right to exercise such stock options would
otherwise then be vested in the Executive, provided, however, an option that is
-------- -------
an incen tive stock option (within the meaning of Code Section 422(b)) shall not
be exercisable for the first time in a calendar year to the extent that the
aggregate fair market value of stock (as deter mined under Code Section
422(b)(3)) with respect to which ISO's are exercisable by the Execu-
-6-
tive during such calendar year exceeds $100,000. The provisions of this Section
7(c) shall con stitute an amendment to any existing stock option agreements
(including award certificates) of the Company as of the Effective Date. All
other stock options owned by the Executive as of the termination date shall be
exercisable in accordance with the Company's stock option plan and the
applicable stock option agreements.
8. Noncompetition Provisions. (a) Noncompetition. The Executive
-------------------------- ---------------
agrees that during the Term of this Agreement prior to any termination of her
employment hereunder and, in the event of termination of the Executive's
employment by the Company for Cause or voluntary termination of employment by
the Executive, for a period of one year following such termination, she will
not, directly or indirectly, without the prior written consent of the Company,
manage, operate, join, control, participate in, or be connected as a stockholder
(other than as a holder of shares publicly traded on a stock exchange or the
NASDAQ National Market System), partner, or other equity holder with, or as an
officer, director or employee of, any real estate investment trust whose
business strategy is competitive with that of the Company, as determined by a
majority of the Company's Independent Directors ("Competing REIT"). It is
further expressly agreed that the Company will or would suffer irreparable
injury of the Company in violation of the preceding sentence of this Agreement
and that the Company would by reason of such competition be entitled to
injunctive relief in a court of appropriate jurisdiction, and the Executive
further consents and stipulates to the entry of such injunctive relief in such a
court prohibiting the Executive from competing with the Company or any
subsidiary or affiliate of the Company, in the areas of business set forth
above, in violation of this Agreement.
(b) Right to Company Materials. The Executive agrees that all styles,
---------------------------
designs, lists, materials, books, files, reports, correspondence, records, and
other documents ("Company
-7-
Materials") used, prepared, or made available to the Executive in connection
with her employ ment by the Company shall be and shall remain the property of
the Company. Upon the termina tion of employment or the expiration of this
Agreement, all Company Materials shall be returned immediately to the Company,
and the Executive shall not make or retain any copies thereof.
(c) Soliciting Executives. The Executive promises and agrees that she
----------------------
will not directly or indirectly solicit any of the Company Executives to work
for any Competing REIT.
(d) Maryland Law. The Executive agrees, in accordance with Maryland
-------------
law, to first offer to the Company corporate opportunities learned of solely as
a result of her service as an officer and director of the Company.
9. Notices. All notices and other communications under this Agreement
--------
shall be in writing and shall be given by fax or first class mail, certified or
registered with return receipt requested, and shall be deemed to have been duly
given three (3) days after mailing or twenty-four (24) hours after transmission
of a fax to the respective persons named below:
If to the Company: Xxxxxxx X. X. Xxxxxxx
Chairman and Chief Executive Officer
Annaly Mortgage Management, Inc.
0000 Xxxxxx Xxxx.
Xxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the Executive: Xxxxxxx X. Xxxxx
Treasurer and Chief Financial Officer
Annaly Mortgage Management, Inc.
0000 Xxxxxx Xxxx.
Xxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
-8-
A copy of any notice pursuant to this Agreement shall be sent to Xxxxxx, Xxxxx &
Xxxxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X.
Xxxxxxxxx. Either party may change such party's address for notices by notice
duly given pursuant hereto.
10. Attorneys' Fees. In the event judicial determination is necessary
----------------
of any dispute arising as to the parties' rights and obligations hereunder, each
party shall have the right, in addition to any other relief granted by the
court, to attorneys' fees based on a determination by the court of the extent to
which each party has prevailed as to the material issues raised in determination
of the dispute.
11. Termination of Prior Agreements. This Agreement terminates and
--------------------------------
supersedes any and all prior agreements and understandings between the parties
with respect to employment or with respect to the compensation of the Executive
by the Company.
12. Assignment; Successors. This Agreement is personal in its nature
-----------------------
and neither of the parties hereto shall, without the consent of the other,
assign or transfer this Agree ment or any rights or obligations hereunder;
provided that, in the event of the merger, consolida tion, transfer, or sale of
all or substantially all of the assets of the Company with or to any other
individual or entity, this Agreement shall, subject to the provisions hereof, be
binding upon and inure to the benefit of such successor and such successor shall
discharge and perform all the promises, covenants, duties, and obligations of
the Company hereunder.
13. Governing Law. This Agreement and the legal relations thus created
--------------
between the parties hereto shall be governed by and construed under and in
accordance with the laws of the State of New Jersey.
14. Entire Agreement; Headings. This Agreement embodies the entire
---------------------------
agree ment of the parties respecting the matters within its scope and may be
modified only in writing.
-9-
Section headings in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
15. Waiver; Modification. Failure to insist upon strict compliance
---------------------
with any of the terms, covenants, or conditions hereof shall not be deemed a
waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any right
or power hereunder at any one or more times be deemed a waiver or relinquish
ment of such right or power at any other time or times. This Agreement shall
not be modified in any respect except by a writing executed by each party
hereto.
16. Severability. In the event that a court of competent jurisdiction
-------------
determines that any portion of this Agreement is in violation of any statute or
public policy, only the por tions of this Agreement that violate such statute
or public policy shall be stricken. All portions of this Agreement that do not
violate any statute or public policy shall continue in full force and effect.
Further, any court order striking any portion of this Agreement shall modify the
stricken terms as narrowly as possible to give as much effect as possible to the
intentions of the parties under this Agreement.
17. Indemnification. The Company shall indemnify and hold Executive
----------------
harm less to the maximum extent permitted by Section 2-418 of the Maryland
General Corporations Law or its successor statute.
18. Counterparts. This Agreement may be executed in several
-------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
19. Successor Sections. References herein to sections or rules of the
-------------------
Code or Exchange Act shall be deemed to include any successor sections or rules.
-10-
20. Arbitration. Any dispute, claim or controversy arising out of or
------------
in relation to this Agreement, which the Executive and the Company are unable to
resolve shall be deter mined by the decision of a board of arbitration
consisting of three (3) members (the "Board of Arbitration") selected by the
American Arbitration Association upon application made to it for such purpose by
either the Company or the Executive. The arbitration proceedings shall take
place in New York, New York or such other place as shall be agreed to by the
parties. The Board of Arbitration shall reach and render a decision in writing.
In connection with rendering its decision, the Board of Arbitration shall adopt
and follow such rules and procedures as a majority of the members of the Board
of Arbitration deems necessary or appropriate. Any award shall be rendered on
the basis of the substantive law governing this Agreement and shall be con
curred in by a majority of the arbitrators. To the extent practical, decisions
of the arbitrators shall be rendered no more than thirty (30) calendar days
following commencement of the arbitra tion proceedings with respect thereto.
Any decision made by the Board of Arbitration (either prior to or after the
expiration of such thirty (30) calendar day period) shall be final, binding and
conclusive on the Executive and the Company and entitled to be enforced to the
fullest extent permitted by law and entered in any court of competent
jurisdiction. Each party to the arbitration shall bear its own expense in
relation thereto, including but not limited to such party's attorneys' fees, if
any, and the expenses and fees of the member of the Board of Arbitration
appointed by such party; provided, however, that the expenses and fees of the
-------- -------
third member of the Board of Arbitration and any other expenses of the Board of
-11-
Arbitration not capable of being attributed to any one member shall be borne in
equal parts by Executive and the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be exe
cuted by its duly authorized officer, and the Executive has hereunto signed this
Agreement, as of the date first above written.
ANNALY MORTGAGE MANAGEMENT, INC.
By: /s/ Xxxxxxx X.X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X.X. Xxxxxxx
Title: Chairman and Chief Executive Officer
/s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Xxxxxxx X. Xxxxx
-12-
