CENTERLINE HOLDING COMPANY EXECUTIVE EMPLOYMENT AGREEMENT WITH MARC D. SCHNITZER with Section 409A of the Internal Revenue Code
WITH
XXXX X. XXXXXXXXX
___________________________________________
2009
Technical Amendment for Compliance
with
Section 409A of the Internal Revenue Code
___________________________________________
WHEREAS, Centerline Affordable
Housing Advisors LLC (“Company”) and Xxxx X.
Xxxxxxxxx (“Executive”) entered
an Executive Employment Agreement (“Agreement”) effective
January 1, 2007; and
WHEREAS, Section 409A of the
Internal Revenue Code of 1986, as amended (the Code”) imposes a 20%
tax plus interest and other penalties on employees who collect compensation,
severance pay, or reimbursements pursuant to employment agreements that do not
conform with the specific time of payment provisions required under Code Section
409A; and
WHEREAS, the undersigned
parties to the Agreement have mutually agreed that the Agreement should be
amended, effective January 1, 2009, to comply with Code Section 409A and the
final regulations that become effective on such date.
NOW, THEREFORE, the Company
and Executive, acknowledging due and adequate consideration for this 2009
Technical Amendment for Compliance with Section 409A of the Internal Revenue
Code (the “Amendment”), do
hereby agree as follows:
1. Everywhere
in the Agreement, the Company’s former name, “CharterMac Capital LLC,” shall be replaced with
“Centerline Affordable Housing
Advisors LLC.”
2. Everywhere
in the Agreement, the phrases “termination of Executive’s employment,”
“termination,” “termination of the Executive” or “end of his employment” shall
mean Executive’s “separation
from service” (as defined under Treasury Regulation § 1.409A-1(h) and any
successor thereto) with the Company or any affiliate. Pursuant to
such Treasury Regulation and for purposes of this paragraph:
(a) The
term “affiliate” shall have the meaning set forth under Code Sections 414(b) and
(c), provided that fifty (50) percent shall replace eighty (80) percent each
place it appears (i) in Code Section 1563(a)(1), (2) and (3) for purposes of
Code Section 414(b), and (ii) in Treasury Regulation § 1.414(c)-2 for purposes
of Code Section 414(c).
(b) A
“separation from service” will be deemed to occur if the Company and Executive
reasonably anticipate that Executive shall perform no further services for the
Company (whether as an employee or an independent contractor) or that the level
of bona fide services Executive will perform in the future (whether as an
employee or an independent contractor) will permanently decrease to no more than
twenty (20) percent of the average level of bona fide services performed
(whether as an employee or independent contractor) over the immediately
preceding 36-month period.
(c) If
Executive is on an authorized, bona fide leave of absence, Executive shall
experience a “separation from service” on the first day of the seventh (7th)
month of such leave, unless Executive’s right to reemployment with the Company
is provided either by statute or contract. A leave of absence
constitutes a bona fide leave of absence only if there is a reasonable
expectation that Executive will return to perform services for the Company or
any of its Affiliates. For purposes of the 36-month period described
above, (a) if Executive is on a paid bona fide leave of absence, Executive is
treated as providing bona fide services at a level of services equal to that
which Executive would have been required to perform to receive the compensation
paid during the leave of absence, and (b) unpaid bona fide leaves of absence are
disregarded.
3. Section
3(a) of the Agreement shall be amended by revising the first sentence such that
the phrase “payable in equal installments in accordance with the Company’s
procedures” is replaced with the phrase “per annum payable in equal
bi-weekly installments.”
4. Section
3(b) of the Agreement shall be amended such that the phrase “or at such earlier
or later time as the Compensation Committee shall determine” at the end of the
third sentence is replaced with “or at such earlier time as the
Compensation Committee shall determine.”
5. Section
3(j) of the Agreement shall be amended by adding the following new sentence
immediately at its end:
Executive shall apply for all
reimbursements hereunder for a particular calendar year not later than the end
of the following calendar year, and payment shall occur not later than the end
of the calendar year following the calendar year to which the reimbursable
expenses relate.
6. Sections
4(d), 4(e), and 4(f) of the Agreement shall be amended by adding the following
new paragraph immediately at its end:
Notwithstanding
any other provision of this subsection: (i) the form of Release that the Company
requires as a condition for severance benefits to Executive hereunder shall be
delivered in final form by the Company to Executive within ten (10) days after
Executive’s termination of employment; (ii) the time period within which
Executive must deliver an executed Release (in such form as the Company has
provided) to the Company ends 60 days after Executive’s termination of
employment; and (iii) the Company’s payment of any severance benefits due upon
receipt of Executive’s executed Release shall occur within 75 days after
Executive’s termination of employment (subject to Section 10(e) of the
Agreement).
7. Section
4(d) of the Agreement shall be amended be deleting its third sentence and by
replacing that sentence with the following (in order to track the time periods
and right to cure provisions set forth in the “good reason” safe harbor set
forth in final Code Section 409A regulations):
Executive
may resign if Good Reason exists, and shall do so by providing written notice
thereof to the Company not less than ten (10) days after the end of the 30-day
cure period that is set forth within the “Good Reason” definition under Exhibit
A hereof (as amended hereby); provided such resignation may not occur more than
two (2) years after the initial existence of the condition that gives rise to
the Good Reason.
8. Section
4(f) of the Agreement shall be amended by revising clause (iii) of its first
sentence such that the phrase “a cash payment shall be made in lieu of such
benefits” is replaced with “a
cash payment shall be made monthly in lieu of such
benefits.”
9. Section
10(f) of the Agreement shall be amended by adding the following sentence to the
end the paragraph:
Any amounts payable to the Executive
pursuant to this Section 10(f) shall be paid to the Executive no later than the
end of the calendar year following the end of the calendar year to which the
income relates.
10. Section
11(e) of the Agreement shall be amended by deleting its fourth sentence (which
begins “Nevertheless, if the Company reasonably determines. . .”), and by replacing that
sentence with the following sentences:
If, at the time of Executive’s
Separation from Service, the Executive is a “specified employee” (within the
meaning of Code Section 409A and Treas. Reg. §1.409A-3(i)(2)), the Company will
not pay or provide any “Specified Benefits” (as defined herein) during the
six-month period (the “409A Suspension Period”) beginning immediately after the
Executive’s Separation from Service. For purposes of this Agreement,
“Specified Benefits” are any amounts or benefits that would be subject to Code
Section 409A penalties if the Company were to pay them, pursuant to this
Agreement, on account of the Executive’s Separation from
Service.
11. Section
11(e) of the Agreement shall be further amended by revising the start of the
former fifth sentence of its first paragraph, such that the phrase “As soon as
reasonably practicable” is replaced with the phrase “Within fourteen (14)
days”.
12. Section
11(e) of the Agreement shall be further amended by inserting the following new
paragraph immediately after its first paragraph:
All
payments and benefits being provided pursuant to this Agreement are intended to
comply with (or be exempt from) Code Section 409A, and the Company shall have
complete discretion to interpret and construe this Agreement and any associated
documents in any manner that establishes an exemption from (or otherwise
conforms them to) the requirements of Code Section 409A. If, for any reason
including imprecision in drafting, the Agreement does not accurately reflect its
intended establishment of an exemption from (or compliance with) Code Section
409A, as demonstrated by consistent interpretations or other evidence of intent,
the provision shall be considered ambiguous and shall be interpreted by the
Company in a fashion consistent herewith, as determined in the sole and absolute
discretion of the Company. The Company reserves the right to
unilaterally amend this Agreement without the consent of any Executive in order
to accurately reflect its correct interpretation and operation, as well as to
maintain an exemption from or compliance with Code Section 409A. Furthermore,
with respect to any and all reimbursements to which Executive may be entitled
under this Agreement, Executive shall apply for reimbursement not later than one
year after incurring the underlying expense, and payment shall occur as soon as
practicable thereafter, but not later than two and one-half months after the end
of the calendar year in which Executive applies for reimbursement.
13. All other
provisions of the Agreement shall remain in full force and effect, subject only
to the specific changes set forth above.
WHEREFORE, the undersigned parties to
the Agreement hereby agree to and execute this Amendment, effective January 1,
2009.
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Date: December
___, 2008
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Centerline
Affordable Housing Advisors LLC
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By
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Its
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Date: December
___, 2008
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Executive
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Printed
Name: Xxxx X. Xxxxxxxxx
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Signature:
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