|
Exhibit 10.3
EMPLOYMENT AGREEMENT
I, Geoffrey G. Jervis, agree to the terms and
conditions of employment with Capital Trust, Inc. (" CT ")
and CT Investment Management Co., LLC (" CTIMCO ," and
together with CT, the " Company ") set forth in this
Employment Agreement (this " Agreement ") dated as of
September 29, 2006 (" Effective Date ").
(a)
Term. My employment under
this Agreement shall commence effective as of the Effective Date
and shall end on December 31, 2009 (" Expiration Date ") or
such earlier date on which my employment is terminated under
Section 5 of this Agreement (the period from the Effective
Date through the Expiration Date, or such earlier termination as
provided for herein being referred to herein as the " Term
"). If the Company continues to employ me beyond the Expiration
Date without entering into a written agreement extending the term
of this Agreement, except as provided in a new written employment
agreement between the Company and me, I shall continue to receive
the base salary in effect as of the Expiration Date for as long as
I remain employed by the Company, but all other obligations and
rights under this Agreement shall prospectively lapse as of the
Expiration Date, except my right to payment of compensation accrued
or earned prior to the Expiration Date or any other rights which by
their terms extend beyond the Expiration Date, including the
Company’s ongoing indemnification obligation under
Section 4, any post-termination payment provisions under
Section 5(a), my confidentiality and other obligations under
Section 6, and our mutual arbitration obligations under
Section 8, and I thereafter shall be an at-will employee of
the Company.
(b)
Company’s Option to Extend Expiration Date. The
Company shall have the option, but not the obligation, to extend
the Expiration Date by one year ( i.e. , to December 31,
2010) by providing notice of such extension no later than September
1, 2009.
2.
Nature of Duties . I shall be the Company’s Chief
Financial Officer and shall have all of the customary powers and
duties associated with those positions. I shall devote my full
business time and effort to the performance of my duties for the
Company. I shall be subject to the Company’s policies,
procedures and approval practices, as generally in effect from time
to time and made known to me, to the extent consistent with this
Agreement. I shall not, while employed by the Company, engage in,
accept employment from or provide services to any other person,
firm, corporation, governmental agency or other entity; provided,
however, that subject to Section 6(c) hereof, I may
(a) devote a reasonable amount of time to civic activities,
provided that such activities do not conflict with or detract from
my diligent performance of my duties hereunder. I shall report to
the Company’s Chief Executive Officer. I shall not, while
employed by the Company, engage in, accept employment from, or
provide services to any other person, firm, corporation,
organization, governmental agency, or other entity; provided,
however, that subject to Section 6 hereof, I may (a)
serve as an outside director with one company or organization that
does not compete with the Company, subject to the prior consent of
the Company’s Board of Directors (" Board "), which
consent shall not be unreasonably withheld, and (b) serve as a
trustee, consultant, fiduciary, or advisor to family trusts or
foundations, provided with respect to each of (a) and (b) that such
service does not conflict with
or detract from my diligent performance of my
duties hereunder or otherwise compromise the best interests of the
Company.
3.
Place of Performance. I shall be
based in New York City, except for required travel on the
Company’s business.
|
|
4.
|
Compensation and Related
Matters .
|
(a)
Base Salary. The Company
shall pay me base salary at an annual rate of $350,000, subject to
future upward adjustments at the discretion of the Board. My base
salary shall be paid in conformity with the Company’s salary
payment practices generally applicable to senior Company
executives. If the Company elects to extend the Expiration Date in
accordance with Section 1(b), above, my base salary shall be
increased to $425,000 for the calendar year 2010.
(b)
Annual Bonuses. The Company
shall pay me annual bonuses, determined as follows:
(i) For
calendar year 2006, I shall receive an annual cash bonus from the
Company in the amount of $650,000, payable no later than March 15,
2007.
(ii) For
calendar year 2007 and each subsequent full calendar year of the
Term, I shall receive pursuant to Section 10(b) of the
Company’s 2004 Long Term Incentive Plan (the " LTIP
"), a Performance Compensation Award grant that provides for an
annual cash bonus opportunity for that calendar year ranging from
100% of my base salary at threshold performance to 200% of my base
salary at maximum performance (with a target of 150% of my base
salary at target performance) achieved in respect of Annual
Performance Measures (as defined below) established for the
calendar year as the Performance Period. Before March 31 of each
such calendar year, the Performance Measures containing threshold,
target and maximum performance criteria shall be set by the
Compensation Committee of the Board (the " Compensation
Committee "), but only after consultation with me in advance
and only when the performance measures are substantially uncertain
to be satisfied (the " Annual Performance Measures "). Any
cash bonus earned pursuant to such Performance Compensation Award
shall be paid in conformity with the Company’s bonus payment
practices generally applicable to senior Company executives.
(iii) I
shall be eligible for such other bonuses and other incentive
compensation under bonus and incentive stock plans (including plans
that provide for performance compensation tied to carried interest
and incentive investment management fees from funds under
management) generally available to other senior Company executives
as the Compensation Committee determines in its sole
discretion.
(i) As
of the Effective Date, pursuant to the 2004 Long Term Incentive
Plan (the " LTIP "), the Company shall grant to me 50,000
Restricted Shares of Class A common stock of CT (the " Initial
Grant "). The Initial Grant shall (unless my employment has
earlier terminated or as otherwise provided for herein) vest as
follows: (I) 50% of the shares
shall vest in eight equal installments at the
end of each calendar quarter in 2008 and 2009, and (II) 50% of
the shares shall be structured as a "Performance Compensation
Award" pursuant to Section 10(b) of the LTIP, and shall vest on
December 31, 2009, subject to satisfaction of the Grant Performance
Hurdle (as defined below), measured for the period commencing on
the Effective Date and ending on December 31, 2009. For purposes of
this Agreement, " Grant Performance Hurdle " shall mean a
total shareholder return of 13% per annum (consisting of declared
dividends, plus share price growth (or minus share price loss, as
the case may be), plus any other property or consideration received
by shareholders in connection with their ownership of Class A
common stock of CT). All dividends that are earned and accrue with
respect to all vested and unvested Restricted Shares issued
pursuant to the Initial Grant shall be currently paid to me. For
the purpose of calculating whether the Grant Performance Hurdle has
been achieved for purposes of this Initial Grant, the starting and
ending share price shall be determined based on the average closing
price of the Class A common stock of CT for the 60 trading-day
periods which end on the Effective Date and on December 31, 2009,
respectively.
(ii) If
the Company exercises its option to extend the Expiration Date to
December 31, 2010 under Section 1(b), above, the Company shall
grant to me on or about January 1, 2010, pursuant to the LTIP, an
additional 16,875 Restricted Shares of Class A common stock of the
Company (the " Additional Grant "). The Additional Grant
shall (unless my employment has terminated or as otherwise provided
for herein) vest as follows: (I) 50% of the shares shall vest
on December 31, 2010, and (II) 50% of the shares shall be
structured as a "Performance Compensation Award" pursuant to
Section 10(b) of the LTIP, and shall vest on December 31, 2010,
subject to satisfaction of the Grant Performance Hurdle, measured
for the one-year period commencing on January 1, 2010 and ending on
December 31, 2010. For the purpose of calculating whether the Grant
Performance Hurdle has been achieved, the starting and ending share
price shall be determined based on the average closing price of the
Class A common stock of the Company for the 60 trading-day periods
which end on January 1, 2010 and December 31, 2010, respectively.
All dividends that are earned and accrue with respect to all vested
and unvested Restricted Shares issued pursuant to the Additional
Grant shall be paid to me upon issuance.
(d)
Standard Benefits. During my
employment, I shall be entitled to participate in all employee
benefit plans and programs, including paid vacations, to the same
extent generally available to other senior Company executives, in
accordance with the terms of those plans and programs.
(e)
Indemnification. The Company
shall extend to me the same indemnification arrangements as are
generally provided to other senior Company executives, including
after the termination of my employment. Notwithstanding the
foregoing, during the Term, the Company shall continue in effect,
at a minimum, the same level of indemnification and the same level
of Directors and Officers insurance coverage as were in effect
immediately prior to the Effective Date.
(f)
Expenses. I shall be entitled to
receive prompt reimbursement, which the Company shall make within
two and one-half months after I submit adequate documentation, for
all reasonable and customary travel and business expenses I incur
in
connection with my employment but I must incur
and account for those expenses in accordance with the policies and
procedures established by the Company.
(g)
Sarbanes-Oxley Act Loan Prohibition.
To the extent that any Company benefit, program,
practice, arrangement, or this Agreement would or might otherwise
result in my receipt of an illegal loan (" Loan "), the
Company shall use reasonable efforts to provide me with a
substitute for the Loan that is lawful and of at least equal value
to me.
(h)
Legal Fees. The Company shall
reimburse Executive for up to $5,000 in reasonable and customary
legal expenses incurred in connection with the review, revision,
and negotiation of this Agreement.
(a)
Rights and Duties. If my
employment is terminated, I shall be entitled to the amounts or
benefits shown on the applicable row of the following table,
subject to the balance of this Section 5 and to the terms and
conditions set forth in Section 13, below. The Company and I shall
have no further obligations to each other, except the
Company’s ongoing indemnification obligation under
Section 4, my confidentiality and other obligations under
Section 6, and our mutual arbitration obligations under
Section 8, or as set forth in any written agreement I
subsequently enter into with the Company.
|
DISCHARGE
FOR CAUSE
|
Payment or provision when due of
(1) any unpaid base salary, expense reimbursements, and
vacation days accrued prior to termination of employment, and
(2) other unpaid vested amounts or benefits under Company
compensation, incentive, and benefit plans (including, without
limitation vested interests I may have with respect to Fund II and
Fund III or any previous grant of equity). In addition, I may
continue to exercise my vested options for up to the earlier of (a)
the expiration date of such options or (b) the date 90 days
following my termination.
|
|
DISABILITY
|
Same as for "Discharge for Cause"
EXCEPT that (1) my base salary, less any payments I receive
under any state-mandated or other disability insurance policy,
shall continue for six months following my termination, (2) I
shall be entitled to receive a pro-rated annual bonus under Section
4(b), above, for the year in which my disability became effective
hereunder, based on the number of days I worked for the Company
that year (and, if in respect of calendar year 2007 or later,
calculated at "target"), (3) the Company shall pay the COBRA
premiums associated with continuing medical insurance coverage for
my benefit and the benefit of my spouse and dependent children for
one year following my disability effective date, and (4) I
will continue to vest for one year following my disability
effective date in all awards previously granted to me, and in
determining the Grant Performance Hurdle for any remaining
performance vesting period, I will be credited with the shareholder
return for the full year preceding the year of my disability
effective date. In addition, I may continue to exercise
|
|
|
my options that are granted or
first vest after 2004 until the later of December 31 of the year in
which my employment terminates and the date two and one-half months
after my employment terminates (but in no event after the
expiration date of such options).
|
|
DISCHARGE OTHER THAN
FOR CAUSE
OR
DISABILITY
|
Same as for "Discharge for Cause"
EXCEPT that, in exchange for my execution of a release in
accordance with this section, (1) I shall be entitled to
receive a lump-sum payment equal to the greater of (x) the sum of
my then-current base salary and annual bonus (calculated at
"target" with respect to 2007 and later) payable through December
31, 2009 or (y) the sum of (I) one year of my then-current base
salary and (II) the highest annual bonus paid to me during the Term
(or during the extended Term, if the Company elects to extend the
Expiration Date in accordance with Section 1(b)), (2) all
restricted stock grants made prior thereto, the Initial Grant, and,
if already granted to me, the Additional Grant, shall immediately
vest in full, (3) I may continue to exercise my options that
are granted or first vest after 2004 until the later of December 31
of the year in which my employment terminates and the date two and
one-half months after my employment terminates (but in no event
after the expiration date of such options, and (4) the Company
shall pay the COBRA premiums associated with continuing medical
insurance coverage for my benefit and the benefit of my spouse and
dependent children for 18 months following my date of discharge or
such earlier time I shall obtain comparable coverage through
another employer.
|
|
RESIGNATION WITHOUT GOOD REASON
|
Same as for "Discharge for
Cause."
|
|
RESIGNATION WITH GOOD REASON
|
Same as for "Discharge Other Than
for Cause or Disability."
|
|
DEATH
|
Same as for "Discharge for Cause"
EXCEPT that (1) my legal representative shall be entitled to
receive any death benefits payable under the life insurance
maintained on my behalf by the Company as well as any earned but as
of yet unpaid bonus amounts from the year preceding the date of my
death, (2) any equity and performance compensation awards I
have shall continue to vest for one year following the date of my
death, and in determining the Grant Performance Hurdle for any
remaining performance vesting period, my estate will be credited
with the shareholder return for the full year preceding the year of
my death, (3) the Company shall pay the COBRA premiums
associated with continuing medical insurance coverage for the
benefit of my spouse and dependent children for one year following
my date of death, and (4) my options that are granted or first vest
after 2004 may continue to be exercised until the later of December
31 of the year in which my employment terminates and the date two
and one-half months after my employment terminates (but
in
|
|
|
no event after the expiration date of such
options.
|
(b)
Discharge for Cause. The Company
may terminate my employment at any time if the Board has Cause to
terminate me. For purposes of this Agreement, " Cause " is
defined as:
(i)
Fraud and Dishonesty. My
commission of a willful act of fraud, embezzlement or
misappropriation of any money or properties of the Company or its
affiliates (other than an insubstantial and unintentional
misappropriation that has been remedied within 10 days after the
Company provides me with notice of such
misappropriation).
(ii)
Criminal Act. My conviction of a
felony or any material violation of any federal or state securities
law (whether by plea of nolo contendere or otherwise) or my
being enjoined from violating any federal or state securities law
or being determined to have violated any such law.
(iii)
Reckless Conduct. My engaging in
willful or reckless misconduct in connection with any property or
activity, the purpose or effect of which materially and adversely
affects the Company and/or its subsidiaries and affiliates, and/or
their predecessors and successors (collectively, the " Group
").
(iv)
Substance Abuse. My repeated and
intemperate use of alcohol or illegal drugs after written notice
from the Board that such use, if continued, would result in the
termination of my employment hereunder.
(v)
Breach of Agreement. My failure
to cure my material breach of any of my obligations under this
Agreement (other than by reason of physical or mental illness,
injury, or condition) after having received 10 days’ notice
from the Board of the breach.
(vi)
Barred from Office. My becoming
barred or prohibited by the SEC from holding my position with the
Company.
(vii)
Material Breach of Company Policy or Code of Ethics.
My material breach of any Company
policy (provided that I have been provided with a copy of or access
to, or am otherwise aware of, the policy) or of the Company’s
Code of Ethics.
(viii) Failure
to Perform Duties . My continued
failure or refusal to perform any material duty or responsibility
under this Agreement (other than by reason of physical or mental
illness, injury, or condition) after having received 10 days’
notice from the Board.
(c)
Termination for Disability. Except as prohibited by applicable law, the Company may
terminate my employment on account of Disability, or may transfer
me to inactive employment status, which shall have the same effect
under this Agreement as a termination for Disability. "
Disability " means a physical or mental illness, injury, or
condition
that prevents me from performing substantially
all of my duties under this Agreement for at least 120 consecutive
calendar days or for at least 180 calendar days, whether or not
consecutive, in any 365 calendar day period, or is likely to do so,
as certified by a physician selected by the Board.
(d)
Discharge Other Than for Cause or Disability.
The Company may terminate my employment at any time
for any reason, and without advance notice. If I am terminated by
the Company other than for Cause under Section 5(b) or
Disability under Section 5(c), I will only receive the special
benefits provided for a Discharge other than for Cause or
Disability under Section 5(a) if I sign a separation agreement
and general release in the form attached hereto as Schedule A and
do not thereafter revoke the release.
(e)
Resignation. If I resign other
than for Good Reason, the Company may accept my resignation
effective on the date set forth in my notice or any earlier date.
If I resign other than for Good Reason, I agree that the Restricted
Period (as defined in Section 6(b)) shall begin on the date of
my resignation. If I resign for Good Reason, my employment will end
on my last date of work and I will receive the benefits to which I
am entitled under Section 5(a), but only if I sign the
separation agreement and general release described in
Section 5(d), above, and I do not thereafter revoke the
release. " Good Reason " means that, without my express
written consent and through no fault of my own, one or more of the
following events occurred after my execution of this
Agreement:
(i)
Demotion. My title and
responsibilities are substantially and adversely diminished during
the Term.
(ii)
Compensation Reduction. My cash
compensation provided for under this Agreement is materially
reduced.
(iii)
Relocation. The Company requires
me, without my consent, to be based at any office or location
outside of a 40-mile radius of midtown Manhattan, New York, New
York.
(iv)
Breach of Promise. The Company
fails to cure its material breach of this Agreement within thirty
business days after I give it written notice thereof.
(v)
Discontinuance of Benefits. The
Company stops providing me with benefits that, in the aggregate,
are substantially as valuable to me as those I enjoyed immediately
prior to the Effective Date, other than a result of
across-the-board benefit reductions affecting similarly-situated
employees.
(vi)
No Comparable Offer Following Change of Control .
The Company is involved in a Change in
Control (as defined below) and I am not offered a position by the
acquiring entity (or the Company’s successor, as the case may
be) comparable to the position I held with the Company prior to the
Change in Control, including with respect to general
responsibilities, and with the same title. For purposes of this
section, "Change in Control" shall mean:
(1) a
merger or acquisition in which 50% or more of the Company’s
voting stock outstanding after the merger or acquisition is held by
holders different from those who held the Company’s voting
stock immediately prior to such merger or acquisition;
(2) the
sale, transfer or other disposition of all or substantially all of
the assets of the Company in liquidation or dissolution of the
Company;
(3) a
transfer of all or substantially all of the Company’s assets
pursuant to a partnership or joint venture agreement or similar
arrangement where the Company’s resulting interest is or
becomes less than 50%;
(4) on
or after the Effective Date, a change in ownership of the
Compan
|
