Exhibit 10.1
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (this
“ Agreement ”) is made and entered into as of
November 28, 2006 by and between CharterMac Capital LLC , a
Delaware limited liability company (the “ Company
”), and Alan P. Hirmes (the “ Executive
”).
W I T N E S S E T
H :
WHEREAS, the Company wishes to
employ the Executive upon the terms and subject to the conditions
set forth herein, and the Executive desires to enter into this
Agreement and accept such employment upon such terms and
conditions;
WHEREAS, the Company and the
Executive have previously entered into an Employment Agreement
dated November 17, 2003, and the parties now desire to enter into a
new Employment Agreement upon the terms and conditions set forth
herein that will supersede the prior Employment
Agreement;
WHEREAS, Executive desires to work a
reduced workload and the Company agrees to accommodate the
Executive;
WHEREAS, the Company, in addition to
managing its own business operations, provides management services
for various of its Affiliates (as defined below), including
CharterMac, a Delaware statutory trust (“ CharterMac
”); and
WHEREAS, the governance of the
Company is controlled by CharterMac and the management of
CharterMac is vested in its Board of Trustees (the “
Board ”).
NOW, THEREFORE, in consideration of
the mutual covenants and promises contained herein, the parties
hereto, each intending to be legally bound hereby, agree as
follows:
Section 1. Employment
.
(a) During
the Employment Term, Executive will serve as the Chief Operating
Officer (“ COO ”) of CharterMac and will report
to Marc Schnitzer, or his successor as the Chief Executive Officer
of CharterMac (the “ CEO ”) and the Executive
accepts such employment for the Employment Term (as defined below).
Executive will also hold the title of Managing Director (or the
same titled position as Marc Schnitzer) of the Company. Executive
will perform such related and other duties as shall be reasonably
assigned to Executive from time to time by the CEO that are
consistent with Executive’s role as a member of senior
management of the Company and Executive shall be a member of all
Senior Management committees of the Company. Upon the request of
the Board, or its designee, the Executive shall also serve as an
officer, director or trustee of any entity controlled by,
controlling or under common control (within the meaning of Rule
12b-2 promulgated under the Securities Exchange Act of 1934, as
amended (the “ Exchange Act ”)) with, the
Company (an “ Affiliate ”) for no additional
compensation. Any compensation paid to the Executive by any
Affiliate shall reduce the Company’s obligations hereunder by
the amount of such compensation (but shall be deemed to have been
paid by the Company for purposes of calculating any severance
obligations to the Executive under this Agreement).
(b) At
the request of the Company, the Executive will resign his current
title as Chief Financial Officer (“ CFO ”) of
CharterMac and American Mortgage Acceptance Company (“
AMAC ”).
Section 2. Performance .
During the Employment Term, the Executive will serve the Company
faithfully and to the best of his ability and will devote a
reasonable amount of his time, energy, experience, and talents to
the business of the Company and its Affiliates. During 2006,
Executive is expected to be in the office or readily available on a
full-time basis and perform typical duties of a Chief Operating
Officer. During 2007, Executive is expected to be in the office or
readily available no less than 80% of the time (assuming that 100%
of the time is the equivalent of working on a full-time basis). It
is further understood that nothing herein shall prevent the
Executive from managing his passive personal investments and from
participating in charitable and civic endeavors, so long as such
activities do not interfere in any significant manner with the
Executive’s performance of his duties hereunder. In addition,
pursuant to and in accordance with that certain Service Agreement
dated as of November 17, 2003 between Relcap Holding Company LLC
(“ Mirror Entity ”) and CharterMac Capital
Company, LLC, a Delaware limited liability company (“
CCC ”), it is understood that the Executive shall
provide services at no additional compensation for Mirror Entity
with respect to the Excluded Assets (as defined in the Contribution
Agreement dated as of December 17, 2002 among CCC and the other
parties identified therein (the “ Contribution
Agreement ”)). Executive understands that his job
responsibilities will include reasonable and customary travel on
behalf of the Company.
Section 3. Employment Term .
Unless earlier terminated pursuant to Section 6 hereof, the
employment term shall begin upon the date hereof (the “
Effective Date ”) and shall continue up to and through
December 31, 2007 (the “ Employment Term
”).
Section 4. Compensation and
Benefits .
(a)
Base Salary . As compensation for services hereunder and in
consideration of the Executive’s other agreements hereunder,
during the Employment Term the Company shall pay the Executive a
base salary, payable in equal installments in accordance with the
Company’s procedures, at an annual rate of $539,988, less
such deductions or amounts to be withheld as required by applicable
law and regulations and deductions authorized by the Executive in
writing, subject to review by the compensation committee of the
Board (the “ Compensation Committee ”), which in
its discretion may increase, but not decrease, the base salary
(such base salary, and if so increased from time to time by the
Compensation Committee being hereinafter referred to as the
(“ Base Salary ”); provided, however, that if he
has not already received a salary increase in 2006, on or about
November 17, 2006, the Executive shall receive a minimum annual
increase in Base Salary equal to the lesser of 5% or the percentage
equal to the increase, if any, in the Consumer Price Index measured
for the twelve (12) month period immediately preceding the
effective date of the increase. For purposes of this Section 4(a),
“ Consumer Price Index ” shall mean the Consumer
Price Index for Urban Wage Earners and Clerical Workers (1982
— 1984 = 100) for the New York Metropolitan area published by
the United States Department of Labor, Bureau of
Statistics.
-2-
|
|
(b)
|
Bonuses and Incentive
Compensation .
|
(i)
Bonus for 2006 : Executive shall receive a bonus equal to
the bonus paid by the Company to Marc Schnitzer for 2006. Any
portion of the bonus that is not paid in cash, shall be paid in
fully-vested, registered and unrestricted stock.
(ii)
Bonus for 2007 : At the end of the Employment Term, the
Executive shall receive a bonus provided that: Executive’s
employment has not been terminated by the Company for Cause (as
defined in Section 6) or the employment of Executive has not been
terminated by him without Good Reason (as defined in Section 6).
The amount of the bonus (which shall be paid in cash and/or in
fully vested stock) shall be determined by the Compensation
Committee in its sole discretion, but in no event shall the bonus
be less than 80% of the bonus Executive received for 2006. The
bonus shall consist of a minimum of $750,000 in cash, and the
balance in fully-vested, registered and unrestricted
stock.
(c)
Medical, Dental, Disability, Life Insurance, Pension and Other
Benefits . During the Employment Term, the Executive shall, in
accordance with the terms and conditions of the applicable plan
documents and all applicable laws, be eligible to participate in
the various medical, dental, disability, life insurance, pension
and other employee benefit plans, made available by the Company,
from time to time, for its senior executives, which benefit package
shall include those items identified on Exhibit A, subject to
adjustments hereto applicable to all senior executives as
determined by the Compensation Committee in its discretion from
time to time.
(d)
Vacation . During the Employment Term, the Executive shall
be entitled to a vacation period or periods of four (4) weeks per
year taken in accordance with the vacation policy of the Company
during each year of the Employment Term, without any reduction in
the vacation period for the Executive’s reduced hours in
2007; provided, that the Executive may carry forward up to two (2)
weeks of unused vacation to the subsequent year. In addition, the
Executive shall be entitled to religious holidays.
(e)
Car Allowance . During the Employment Term, the Company will
purchase or lease a company car for the Executive’s use and
will pay the reasonable expenses of operating and maintaining the
car, including parking and insurance costs. The company car shall
be agreed upon between the Executive and the Company from time to
time and shall be a current model (not more than three (3) years
old) that is similar to the car, or most recent car, provided to
the Executive by the Company during the twelve-month period
preceding the Effective Date. If the Executive elects not to have
the Company purchase or lease a car for the Executive, the Company
will make an annual payment to the Executive in an amount
reasonably determined by the Company as the approximate cost to
have been incurred by the Company in providing the car allowance
benefit.
(f)
Secretarial Service . During the Employment Term, the
Executive shall be entitled to secretarial service that is
reasonably equivalent to that provided to the Executive by the
Company during the twelve-month period preceding the Effective
Date.
-3-
(g)
Expenses . The Company shall pay for or reimburse the
Executive for all reasonable expenses actually incurred by or paid
by the Executive during the Employment Term in the performance of
the Executive’s services under this Agreement (including,
without limitation, out-of-pocket expenses in connection with the
Executive’s ownership of Interests (but not including capital
contributions payable in connection with the acquisition of such
Interests) or serving as an officer, director or trustee of an
Affiliate) upon presentation of expense statements or vouchers or
such other supporting information as the Company customarily may
require of its officers.
Section 5. Share Options,
Deferred Compensation and Restricted Shares .
(a)
Eligibility . CharterMac maintains an incentive share option
plan (the “ Incentive Plan ”) for the benefit of
directors, officers, and employees of CharterMac and its
Affiliates. Subject to any applicable terms of the Incentive Plan
(as in effect from time to time), the Executive shall be eligible
for the receipt of options as the same may be awarded from time to
time in the discretion of the Compensation Committee.
(b) Executive
may also be awarded additional deferred compensation under one or
more plans or programs established by the Company or CharterMac and
its affiliates from time to time (the “Deferred Compensation
Plans”). Amounts, if any, payable to Executive under the
terms of the Deferred Compensation Plans shall be governed solely
by the terms of the Deferred Compensation Plans and awards made
thereunder.
(c)
Special Option Vesting/Exercise . At the end of the
Employment Term, other than as a result of termination for Cause,
any unvested options, deferred compensation, and restricted shares
awarded to the Executive under the Incentive Plan, Deferred
Compensation Plans, bonus arrangement or any other plan or
arrangement of CharterMac, the Company or any Affiliate shall fully
vest upon the day following the date of termination, and
notwithstanding the terms of his option grants, Executive shall be
entitled to exercise such options until the earlier of:
(y) ten (10) years from the last day of the Employment Term or
(z) the expiration of the term of the options.
Section 6. Termination
.
(a)
Termination of Employment . Subject to this Section 6(a),
the employment of the Executive hereunder shall terminate at the
end of the Employment Term. The employment of the Executive
hereunder may be terminated at any time during the Employment Term:
(i) by the Company with or without Cause (as defined herein) by
notice of termination delivered to the Executive; (ii) by the
Executive with or without Good Reason (as defined herein) by notice
of resignation delivered to the Company; (iii) upon death of the
Executive; or (iv) by the Company at any time after the last day of
the sixth consecutive month of the Executive’s Disability (as
defined herein) or the day on which the shorter periods of
Disability shall have equaled an aggregate of six (6) months during
any twelve (12) month period, by written notice to the Executive
(but before the Executive has recovered from such Disability). If
the Executive’s employment terminates for any reason prior to
the end of the Employment Term or as a result of the termination of
this Agreement, at the Company’s request, Executive agrees
to
-4-
resign all offices, board seats,
directorships, and trusteeships that he may hold with the Company,
CharterMac, AMAC or any of their affiliated entities.
|
|
(b)
|
Certain Definitions
. For purposes of this
Agreement,
|
(i) “
Cause ” shall mean: (A) the Executive’s
conviction of, plea of nolo contendere to, plea of guilty
to, or written admission of the commission of, a felony;
(B) any breach by the Executive of any material provision of
this Agreement; (C) any act by the Executive involving
dishonesty, moral turpitude, fraud or misrepresentation with
respect to his duties for the Company or its Affiliates, which has
caused material harm to the Company; or (D) gross negligence or
willful misconduct on the part of the Executive in the performance
of his duties, responsibilities or obligations as set forth in this
Agreement; provided, that in the case of a breach set forth in
clause (B) above, such breach shall continue for a period of thirty
(30) days following written notice thereof by the Company to the
Executive.
(ii) “
Change in Control ” shall be deemed to have occurred
if: (A) any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act),
which is not an Affiliate of CharterMac or CCC is or becomes the
“beneficial owner” (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of
securities of CharterMac representing 50.1% or more of the combined
voting power of CharterMac’s then outstanding securities or
becomes the managing member of CCC; (B) any consolidation or merger
of CharterMac or CCC with or into any other corporation or other
entity or person (other than an Affiliate of CharterMac or CCC) in
which the shareholders of CharterMac prior to such consolidation or
merger own or owns less than 50.1% of CharterMac’s voting
power immediately after such consolidation or merger, or in which
the managing member of CCC or another Affiliate of CharterMac
ceases to be the controlling person of the surviving entity or
person (excluding any consolidation or merger effected exclusively
to change the domicile of CharterMac or CCC); (C) a sale of all or
substantially all of the assets of CharterMac or CCC; or (D) a
liquidation or dissolution of CharterMac or CCC; provided, that no
change in control shall be deemed to occur with respect to any of
the above-referenced events involving CCC if after such event the
Executive continues to be an employee of a company that is an
Affiliate of CharterMac and continues to have the same titles,
duties and functions and compensation consistent with those
referenced in Sections 1 through 5 of this Agreement.
(iii) “
Disability ” shall be deemed to have occurred if in
the judgment of the a physician jointly selected by the Company and
the Executive, the Executive shall become physically or mentally
disabled, whether totally or partially, such that the Executive is
unable to perform the Executive’s principal services
hereunder for (A) a period of six consecutive months or (B) for
shorter periods aggregating six months during any twelve- month
period.
(iv) “
Good Reason ” shall mean the occurrence of the
following events without the Executive’s prior written
consent, provided that such occurrence is not cured within thirty
(30) days of the Executive giving the Company written notice (which
describes in detail the occurrence) thereof: (A) without the
Executive’s consent (i) assignment of the Executive to
duties materially inconsistent with the Executive’s positions
as described in Section 1 hereof, or (ii) any significant
diminution in the Executive’s duties or responsibilities,
other than in connection with the termination of the
Executive’s employment for Cause or Disability or by
the
-5-
Executive other than for Good
Reason; (B) any material breach by the Company of its
obligations under this Agreement; (C) a change in the location
of the Executive’s principal place of employment to a
location outside of the general New York metropolitan area;
(D) there is a reduction in the Executive’s Base Salary
or a material reduction in the aggregate package of benefits
provided to the Executive under Sections 4(c) through 4(g) of this
Agreement; or (E) the removal of the Executive as a member of
the Board of Trustees of CharterMac or a member of the Board of
Directors of AMAC.
Section 7. Severance
.
(a)
Termination by the Executive for Good Reason or by the Company
without Cause . If, during the Employment Term, the Executive
terminates his employment with the Company for Good Reason or the
Executive’s employment is terminated by the Company without
Cause, the Company shall have no liability or further obligation to
the Executive except as follows: the Executive shall be entitled to
receive (i) within thirty (30) days of signing the Release
referenced below, any earned but unpaid Base Salary and any accrued
car allowance and expense reimbursement entitlements for the period
prior to termination and any declared but unpaid bonuses for prior
periods which have ended at the time of such termination (“
Entitlements ”), (ii) any rights to which he is
entitled in accordance with plan provisions under any employee
benefit plan, fringe benefit or incentive plan (“ Benefit
Rights ”), (iii) severance compensation equal to
Executive’s Base Salary calculated from Executive’s
last day of employment with the Company until December 31, 2007,
and payable in a lump sum within thirty (30) days of the date of
termination of employment (the “ Severance Pay
”), (iv) within thirty (30) days of the date of
termination of employment, Executive’s 2007 bonus, pursuant
to Section 4(b)(ii) above provided further that if at the time of
the termination of employment, Executive’s 2006 bonus has not
been announced and/or paid, Executive will also receive a 2006
bonus pursuant to Section 4(b)(i) (the “ Bonus
Severance ”), and (v) continued email address and
access at the Company, and reasonable secretarial assistance, for a
period of twelve (12) months following the date of termination of
employment; provided, however, that the Company at its option may
provide such secretarial assistance at a location other than its
offices (the “Email Rights”). As a condition of
receiving the Severance Pay and the Bonus Severance under this
Section 7(a)(iii) and (iv), the Executive agrees to execute the
Release. If the Executive revokes the Release, he will not be
eligible to receive the Severance and Bonus Severance
payments.
(b)
Termination in Anticipation of, or Within One Year After a
Change in Control . If, during the Employment Term, the
Executive’s employment is terminated by the Company in
anticipation of, or within one year after a Change in Control
(other than as a result of Cause, death or Disability), or by the
Executive for Good Reason within one year after a Change in
Control, the Company shall have no liability or further obligation
to the Executive except as follows: the Executive shall be entitled
to receive (i) within 30 days of such signing the Release
referenced below, all Entitlements, (ii) all Benefit Rights, (iii)
the Severance Pay (calculated and payable as provided in Section
7(a)), (iv) the Bonus Severance (calculated and payable as
provided in Section 7(a)) and the Email Rights. As a condition of
receiving the Severance Pay and Bonus Severance under this Section
7(b), the Executive agrees to execute the Release. If the Executive
revokes the Release, he will not be eligible to receive the
Severance and Bonus Severance payments.
-6-
(c)
Death; Disability . If during the Employment Term, the
Executive’s employment is terminated due to death or
Disability, the Company shall have no liability or further
obligation to the Executive except as follows: the Executive (and
his estate or designated beneficiaries under any Company-sponsored
employee benefit plan in the event of his death) shall be entitled
to receive: (i) all Entitlements, (ii) all Benefit Rights, (iii)
the Severance Pay (calculated and payable as provided in Section
7(a)), and (iv) the Bonus Severance (calculated and payable as
provided in Section 7(a)).
(d)
Termination by the Company for Cause; Termination by the
Executive Without Good Reason . If the Executive’s
employment is terminated by the Company for Cause or the Executive
terminates employment with the Company without Good Reason, the
Company shall have no liability or further obligations to the
Executive except as follows: the Executive shall be entitled to
receive (i) all Entitlements, (ii) all Benefit Rights and
(iii) the Bonus Severance apportioned through the date of
termination.
(e)
Pension and Benefit Calculations . The payments made
pursuant to this Section 7 shall be excluded from all pension and
benefit calculations under the employee benefit plans of the
Company and its Affiliates, except that Entitlements shall be
included in such benefit calculations to the extent provided in the
applicable employee benefit plan.
(f)
Continuation of Insurance Coverage . In the event of
termination of the Executive’s employment by the Executive or
the Company, for any reason, disability and life insurance then
provided to senior executives of the Company shall be continued
following the date of termination for a period of twelve (12)
months, or at the discretion of the Company, a cash payment shall
be made in lieu of such benefits. Lifetime medical and dental
coverage shall be continued at the expense of the Company as set
forth in Exhibit A hereto.
Section 8. Covenants of the
Executive .
(a)
Non-Competition . During the Employment Term and for a
period of twelve (12) months thereafter (the “
Non-Competition Period ”), the Executive shall not
(except when acting for and on behalf of the Company and its
Affiliates), for Executive’s own account or for others, in
any capacity, including as an employee, officer, director, trustee,
member, manager, investor, consultant, agent, owner, stockholder or
partner, engage in a Competitive Business anywhere in the United
States or its territories or possessions. As used herein, “
Competitive Business ” shall mean arranging for or
providing, directly or indirectly, debt and/or equity financing
products or services to developers and owners of multi-family
housing. Without limitation, Competitive Business includes
(i) the Acquired Businesses (as defined in the Contribution
Agreement) and any businesses which have been conducted by the
Company or any of the Subject Entities (as defined in the
Contribution Agreement); (ii) any business now conducted, or
conducted as of the date of termination of employment by
CharterMac, American Mortgage Acceptance Company (“
AMAC ”) or any of their respective Affiliates; (iii)
the syndication and sale of housing tax credits, historic
rehabilitation tax credits, new markets tax credits or home
ownership tax credits (“ Tax Credits ”), (iv)
the syndication and sale of real estate developments which have
been allocated Tax Credits (“ Tax Credit Properties
”) or direct or indirect ownership interests in partnerships,
limited liability companies or other entities that have been formed
to provide a pass-through of Tax Credits and tax losses from Tax
Credit Properties
-7-
(“ Tax Credit Syndication
Interests ”), (v) the acquisition of Tax Credits or Tax
Credit Syndication Interests through tender offers or other
methods, (vi) providing credit enhancement by insurance, credit
support, guaranties or otherwise with respect to tax-exempt bond
financing for multi-family housing, (vii) the business of
guaranteeing a specified internal rate of return in connection with
the sale of Tax Credit Syndication Interests, (viii) providing
bridge lending, mezzanine lending, pre-development lending,
financial guarantees, default swaps, credit derivative products or
other derivative products in connection with Tax Credit Properties
or Tax Credit Syndication Interests and (ix) co-development of Tax
Credit Properties. Notwithstanding the above, nothing herein shall
prevent the Executive from (i) owning, as a passive investor,
securities of a publicly traded corporation, provided such interest
is less than 2% of the equity of the corporation; or (ii) acting as
a consultant to (a) The Arker Companies (or affiliates thereof) or
(b) Roizman Development, Inc. (or affiliates thereof).
(b) During
the Employment Term and for a period of twelve (12) months
following the termination of the Executive’s employment
hereunder, the Executive shall not, directly or indirectly, hire or
solicit for hire, for the account of the Executive or any other
person or entity, any person who is or was an employee of the
Company or any Affiliate of the Company to work in a Competitive
Business (other than any secretary to the Executive) so long as
such person is an employee of the Company or any of its Affiliates
and for a period of 180 days after such person has ceased to be an
employee of the Company or any of its Affiliates.
(c) During
the Employment Term and for a period of twelve (12) months
following the termination of the Executive’s employment
hereunder, the Executive shall not, without the consent of the
Company, directly or indirectly, alone or with others contact,
solicit or do business of any kind in any Competitive Business
with, or assist any other person to contact, solicit or do business
of any kind in any Competitive Business with, any person who,
during the two-year period preceding the date of the
Executive’s termination of employment, sold or developed, or
owned an interest in, a Tax Credi
|
