EMPLOYMENT AGREEMENT OF STEVEN R. MUMMA
Exhibit
10.5
XXXXXX
X.
XXXXX
AGREEMENT
made this 18th day of January, 2008, between New York Mortgage Trust, Inc.,
a
Maryland corporation (the "Company"), and Xxxxxx X. Xxxxx (the
"Executive").
The
Executive is presently employed as the Co-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 January 18, 2008 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 Co-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 Co-Chief Executive Officer, President
and Chief Financial Officer of the Company, at the reasonable request of the
Board without additional compensation. 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 $150,000. 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) Milestone
Bonus Payments.
The
Executive shall be entitled to be paid a special bonus of $75,000 with respect
to each of the following events if such events occur:
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A.
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Completion
by the Company of public offering and/or private placements of common
stock (excluding any shares of common stock of the Company issued
upon
conversion of the Company’s Series A Redeemable Convertible Preferred
Stock) raising aggregate gross proceeds of at least $75 million prior
to
December 31, 2008; and
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B.
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Filing
of a registration statement by no later than June 30, 2008, registering
for resale the Company’s Series A Convertible Preferred Stock and the
shares of common stock issuable upon conversion of the outstanding
shares
of the Company’s Series A Convertible Preferred
Stock.
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(iii) Definition
of Incentive Bonus.
For
purposes of this Agreement, the term "Incentive Bonus" shall mean the 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 2008,
assuming both milestones in Section 5(b)(ii) are achieved and 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, is $300,000.
(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.
"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.
"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 cease for any reason to
constitute a majority of the Board; (v) holders of the securities of the Company
entitled to vote thereon approve a plan of complete liquidation of the Company
or an agreement for the sale or liquidation by the Company of all or
substantially all of the Company's assets (or, if such approval is not required
by applicable law and is not solicited by the Company, the commencement of
actions constituting such a plan or the closing of such an agreement); or (vi)
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 and (b) 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.
(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 200% of the Executive's Base
Salary 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.
(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, willfully failed to perform (other than by reason of
illness or temporary disability ) his material duties hereunder, (iv) has
knowingly 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.
For
purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that his action
or omission was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith
and
in the best interests of 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.
(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, (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.
(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:
(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
2008,
the amount shall include the $500,000 plus 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.
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.
(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;
(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.
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.
7th
Floor
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
XX 00000
If
to the
Company:
New
York
Mortgage Trust, Inc.
7th
Floor
0000
Xxxxxx xx xxx Xxxxxxxx
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.
(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,
at the Executive's sole discretion, be settled exclusively by such judicial
remedies as the Executive may seek to pursue or by 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,
including but not limited to that certain Employment Agreement, dated as of
June
29, 2004, by and between the Company and the Executive, as amended.
[Signatures
next page]
IN
WITNESS WHEREOF, the parties have executed this Agreement on the date
and
year first above written.
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NEW
YORK MORTGAGE TRUST, INC.
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Attest:
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| By: /s/ Xxxxxx Xxxxx | By: /s/ Xxxxx X. Xxxx | ||
|
|
Name:
Xxxxx Xxxx
Title:
Co-Chief Executive Officer
|
|
XXXXXX
X. XXXXX
|
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|
Attest:
|
|||
| By: /s/ Xxxxxx Xxxxx | /s/ Xxxxxx X. Xxxxx | ||
|
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