Exhibit 10.19
EMPLOYMENT
AGREEMENT
I, Stephen D. Plavin, agree to the
terms and conditions of employment with Capital Trust, Inc.
(the “ Company ”) set forth in this Employment
Agreement (this “ Agreement ”) dated as of
December 28, 2005 (“ Effective Date
”).
1.
Term of Employment.
(a)
Term. My employment under
this Agreement shall commence effective as of the Effective Date
and shall end on December 31, 2008 (“ 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, 2009) by so notifying
me in writing no earlier than June 30, 2008 and no later than
September 1, 2008.
2.
Nature of Duties . I shall be the
Company’s Chief Operating Officer and shall have all of the
customary powers and duties associated with that position. I
shall manage the origination, closing, and asset management for all
of the Company’s (including controlled affiliates and
subsidiaries acquired or established during the term of the
Agreement) subordinate real estate loan and securities investment
activities. All of the employees engaged in such activities
shall (directly or indirectly) report to me. I shall report
directly to the Company’s Chief Executive Officer (“
CEO ”), and 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 and
(b) maintain not more than two outside board positions with
companies which do 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, provided that such activities do not conflict with or
detract from my diligent performance of my duties
hereunder.
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 $450,000 for the remainder of
calendar year 2005. As of January 1, 2006, my base
salary shall be increased to $500,000, 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.
(b)
Annual Bonuses; Annual Long Term
Equity Incentive Grants. The Company shall pay
me annual bonuses and grant me annual long term equity incentives,
determined as follows:
(i)
For calendar year
2005, I shall receive a cash bonus in the amount of
$750,000.
(ii)
For each calendar
year of the Term commencing with January 1, 2006, 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.
(c)
Stock Options, Restricted Stock, and
Incentive Plans.
(i)
As of the
Effective Date, pursuant to the LTIP, the Company shall grant to me
90,000 Restricted Shares of Class A common stock of the
Company (the “ Initial Grant ”). The
Initial Grant shall (unless my employment has 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 2007 and 2008, 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 the Expiration Date, subject to satisfaction of the
Grant
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Performance Hurdle (as
defined below), measured for the three-year period commencing on
the Effective Date and ending on the third anniversary of the
Effective Date. For purposes of this Agreement, “
Grant Performance Hurdle ” shall mean a total
shareholder return of 13% per annum (consisting of dividends, plus
share price growth, plus any other property or consideration
received by shareholders in connection with their ownership of
Class A common stock of the Company). 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, 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 ten trading
day periods which end on the Effective Date and on the third
anniversary of the Effective Date.
(ii)
If the Company
exercises its option to extend the Expiration Date to
December 31, 2009 under Section 1(b), above, the Company
shall grant to me on or about January 1, 2009, pursuant to the
LTIP, an additional 30,000 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, 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, measured for the one-year period commencing on
January 1, 2009 and ending on December 31, 2009.
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 ten trading day periods which
end on 1/1/09 and 12/31/09. 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)
Performance Compensation
Award. As of the Effective Date,
pursuant to the LTIP, the Company shall grant to me a Performance
Compensation Award that provides for cash payments to me equal to
2% of any payments received by the Company as incentive management
fees paid by CT Mezzanine Partners III, Inc. (“ Fund
III ”) (representing 5% of the fees allocated to
employees of the Company). The Performance Compensation Award
shall (unless otherwise provided for herein) vest as follows: 65%
shall be vested as of the Effective Date and the remaining 35%
shall be vested upon the Company’s receipt of the incentive
management fees.
(e)
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, including,
without limitation, continued coverage for me under the term life
insurance policy as in effect immediately prior to the Effective
Date.
(f)
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
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and the same level of
Directors and Officers insurance coverage as were in effect
immediately prior to the Effective Date.
(g)
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
(h)
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.
5.
Termination .
(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.
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DISCHARGE FOR CAUSE
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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.
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DISABILITY
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Same as for “Discharge for Cause”
EXCEPT that (I) 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, (II) I
shall be entitled to receive a pro-rated bonus determined for the
year in which my disability became effective hereunder, and
calculated at “target,” (III) 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
(IV) 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
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continue to exercise my options that vested on
or before December 31, 2004 for up to one year following my
termination, or if later, up until the expiration date of such
options, and 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).
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DISCHARGE OTHER THAN FOR CAUSE OR
DISABILITY
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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 base salary and cash bonus payable through December 31,
2008 (with the cash bonus based on target and assuming the
satisfaction of all Annual Performance Measures or (y) 1.5 times
the sum of (I) my base salary then payable and (II) the highest
annual bonus paid to me during the Term, (2) all restricted
stock grants made prior thereto and the Initial Grant shall
immediately vest in full, (3) the Performance Compensation
Award described in Section 4(d), above, shall immediately vest
in full, (4) I may continue to exercise my options that vested
on or before December 31, 2004 for up to one year following my
discharge or, if later, up until the expiration date of such
options, (5) 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
(6) 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.
In addition, if the Company exercises its option
to extend the Expiration Date to December 31, 2009 under
Section 1(b), above, and I am discharged other than for Cause
or Disability between January 1, 2009 and December 31,
2009, the Additional Grant shall immediately vest in
full.
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RESIGNATION WITHOUT GOOD REASON
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Same as for “Discharge for
Cause.”
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RESIGNATION WITH GOOD REASON
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Same as for “Discharge Other Than for
Cause or Disability.”
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DEATH
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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
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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, (4) my options that vested on or before
December 31, 2004 may continue to be exercised for up to one
year following my death, or if later, up until the expiration date
of such options, and (5) 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
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(b)
Discharge for Cause.
The Company may
terminate my employment at any time if the Board has Cause to
terminate me. “ Cause ” shall include, but not
be limited to:
(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.
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(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. I am assigned any
duties, responsibilities or title materially inconsistent with my
rights under this Agreement.
(ii)
Compensation Reduction.
My
compensation provided for under this Agreement is materially
reduced (other than any reduction resulting from the good faith
application by the Compensation Committee of performance factors
under the LTIP).
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(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 all executives of similar status
employed by the Company and any entity in control of the
Company.
(vi)
Change of Control
. The
Company is involved in:
(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
pursua
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