|
Exhibit 10.1 SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (the “Agreement”) is made and
entered into this 18th day of December, 2008, between BIMINI
CAPITAL MANAGEMENT, INC., a Maryland corporation (the
“Company”) and ROBERT E. CAULEY
(“Executive”). Certain capitalized terms
used in this Agreement are defined in Section 7.
Background The Company acknowledges that Executive has made
and is expected to make significant contributions to the growth and
success of the Company. The Company also acknowledges
that there exists the possibility of a Change in Control of the
Company. The Company recognizes that the possibility of
a Change in Control may contribute to uncertainty on the part of
senior management and may result in the departure or distraction of
senior management from their operating responsibilities.
Outstanding management of the Company is always essential to
advancing the best interests of the Company and its
shareholders. In the event of a threat or occurrence of
a bid to acquire or change control of the Company or to effect a
business combination, it is particularly important that the
business of the Company be continued with a minimum of
disruption. The Company believes that the objective of
securing and retaining outstanding management will be achieved if
the Company’s key management employees are given certain
assurances so that they will not be distracted by personal
uncertainties and risks created by such circumstances. NOW,
THEREFORE, in consideration of the mutual covenants and obligations
herein and the compensation the Company agrees herein to pay to
Executive, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and
Executive agree as follows:
1. Term
of Agreement. The Effective Date of this Agreement
is the day and year first above written. The Term of
this Agreement begins on the Effective Date and ends on
December 31, 2009. Notwithstanding the preceding
sentence (x) the Term of this Agreement shall be extended for
an additional twelve month period, as of each January 1 beginning
January 1, 2010 (each such January 1 being a “Renewal
Date”), unless the Company gives Executive written notice, at
least ninety days prior to the applicable Renewal Date, that the
Term of this Agreement will not be extended and (y) the Term
of this Agreement shall be extended automatically to the day
preceding the anniversary of a Control Change Date if a Control
Change Date occurs during the Term of this Agreement.
2. Right
to Receive Termination Benefits. Executive shall be
entitled to receive the Termination Benefits described in
Section 3 if during the Term of this Agreement (x) the Company
terminates Executive’s employment with the Company without
Cause or (y) Executive resigns from the employment of the Company
and Executive has Good Reason to resign from the
Company. No amounts will be payable under this Agreement
unless Executive’s employment with the Company is terminated
as described in the preceding sentence.
3. Termination
Benefits. Upon a termination of Executive’s
employment in accordance with Section 2, Executive shall be
entitled to receive the following Termination Benefits:
(a) Payment
of any accrued but unpaid salary from the Company through the date
that Executive’s employment terminates.
(b) Payment
of any bonus that has been approved by the Compensation Committee
of the Board (the “Committee”) but which remains unpaid
as of Executive’s termination of employment.
(c) Reimbursement
for any expenses that Executive incurred on behalf of the Company
prior to termination of employment to the extent that such expenses
are reimbursable under the Company’s standard reimbursement
policies.
(d) A
severance benefit equal to the amount described in either (i), (ii)
or (iii), as applicable.
(i) This
Section 3(d)(i) applies if either (x) the Company terminates
Executive’s employment with the Company without Cause within
six months before or after a Control Change Date or (y) Executive
resigns from the employment of the company within six months after
a Control Change Date and Executive has Good Reason to resign from
the Company. The severance benefit payable under this
Section 3(d)(i) is equal to Executive’s Current Cash
Compensation. The term “Current Cash
Compensation” means the sum of one year of Executive’s
annual base salary from the Company as in effect on the date
Executive’s employment terminates and the average of the
annual cash bonuses paid to Executive for the Company’s two
fiscal years ending before the date Executive’s employment
with the Company terminates; provided that any extraordinary
bonuses shall not be considered in determining Current Cash
Compensation. (For this purpose, a bonus is an
“extraordinary bonus” if it is characterized as such in
a resolution approved by the Committee in connection with the
payment of the bonus.)
(ii) This
Section 3(d)(ii) applies if Executive’s employment terminates
in accordance with Section 2 but the requirements of Section
3(d)(i) are not satisfied and Section 3(d)(iii) does not
apply. The severance benefit payable under this Section
3(d)(ii) is equal to one-half of Executive’s Current Cash
Compensation (as defined in Section 3(d)(i)).
(iii) This
Section 3(d)(iii) applies if, before 2010, either (x) the holders
of the securities of the Company entitled to vote thereon approve a
plan of complete liquidation of the Company (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), (y)
the Company is dissolved or (z) the Company is a party to a
proceeding as a debtor under the United States Bankruptcy
Code. For the avoidance of doubt, this Section 3(d)(iii)
does not apply if the Company ceases to exist as a result of a
merger, recapitalization or reorganization, sale of assets or any
transaction that constitutes a Change in Control. The
severance benefit payable under this Section 3(d)(iii) is equal to
three hundred thousand dollars
($300,000). Notwithstanding the preceding sentences, the
Termination Benefit described in this Section 3(d)(iii) shall not
be paid if the Board determines that the Company had grounds to
terminate Executive for Cause as provided in clause (i) or (ii) of
Section 7(d).
(e) The
Company shall pay the cost of continued health plan coverage for
Executive and his qualified beneficiaries through the end of the
month that includes the earlier of (i) either (x) the first
anniversary of the date Executive’s employment terminates (if
Executive is entitled to receive the severance benefit described in
Section 3(d)(i), or (y) the 90th day after the date
Executive’s employment terminates (if Executive is entitled
to receive the severance benefit described in Section 3(d)(ii)) and
(ii) the date that Executive or Executive’s qualified
beneficiaries, as applicable, become eligible for other health plan
coverage.
The Termination Benefits described in Sections 3(a), 3(b), 3(c),
and 3(d)(ii) shall be payable in a single cash sum within thirty
days after Executive’s termination of employment and the
Termination Benefit described in Section 3(d)(iii) shall be payable
in a single cash sum on the date of an event described therein;
provided, however, that any amount payable under Section 3(a),
3(b), 3(c), 3(d)(ii) or 3(d)(iii) that is subject to Code Section
409A shall be payable in a single cash sum on the date that is six
months after Executive’s termination of
employment. Sixty-five percent of the Termination
Benefit described in Section 3(d)(i) shall be payable in a single
cash sum on the date that is six months after Executive’s
termination of employment and, subject to Executive’s
compliance with the provisions of Section 5 hereof, the balance of
the Termination Benefit described in Section 3(d)(i) shall be
payable in a single sum on the first anniversary of
Executive’s termination of employment. The
Termination Benefit described in Section 3(e) shall be paid by the
Company to the insurance provider or health plan as the premium or
contribution for the continued health plan coverage is
due. The payment of the Termination Benefits shall be
reduced by amounts required to be withheld for applicable income
and employment taxes.
In addition to the Termination Benefits described in this
Section 3, Executive also shall be entitled to receive any
benefits or payments that Executive is entitled to receive under
any employee benefit plans or other arrangements or agreements,
including by way of example, restricted stock and stock option
awards, that cover Executive. If (and only if) Executive
is entitled to receive the Termination Benefits pursuant to Section
2 hereof, nonvested restricted stock, stock options and other
equity awards will become automatically vested on the date of
Executive’s termination of employment.
4. Excise
Tax Indemnification. Executive shall be entitled to a
payment under this Agreement if any payment or benefit provided
under this Agreement or any other plan or agreement with the
Company constitutes a “parachute payment” (as defined
in Section 280G(b)(2)(A) of the Internal Revenue Code of 1986
(the “Code”), but without regard to Code
Section 280G(b)(2)(A)(ii)) and Executive incurs a liability
under Code Section 4999. The amount payable to
Executive under this Section 4 shall be the amount required to
indemnify Executive and hold him harmless from the application of
Code Sections 280G and 4999 with respect to benefits, payments,
accelerated exercisability and vesting and other rights under this
Agreement or otherwise, and any income, employment,
hospitalization, excise and other taxes attributable to the
indemnification payment. The benefit payable under this
Section 4 shall be calculated and paid not later than the date
(or extended filing date) on which the tax return reflecting
liability for the Code Section 4999 excise tax is required to
be filed with the Internal Revenue Service. To the
extent that any other plan or agreement requires that Executive be
indemnified and held harmless from the application of Code Sections
280G and 4999, any such indemnification and the amount required to
be paid to Executive under this Section 4 shall be coordinated
so that such indemnification is paid only once and the
Company’s obligations under this Section 4 shall be
satisfied to the extent of any such other payment (and vice
versa). Executive shall be entitled to the benefit
described in Section 4 without regard to whether he becomes
entitled to receive the Termination Benefits described in
Section 3.
5. Covenants
of the Executive. Executive acknowledges that
(i) the principal business of the Company (which expressly
includes for purposes of this Section 5 and any related
enforcement provisions hereof, its successors and assigns) is the
acquiring, owning and selling of residential mortgage-related
securities and/or debt securities issued or guaranteed by the U.S.
government, U.S. government sponsored or chartered enterprises or
U.S. government agencies (such business herein being referred to as
the “Business”); (ii) the Company is one of a
limited number of persons who have developed such a business;
(iii) the Company’s Business is, in part, national in
scope; (iv) Executive’s work for the Company has given and
will continue to give him access to the confidential affairs and
proprietary information of the Company; (v) the covenants and
agreements of Executive contained in this Section 5 are
essential to the business and goodwill of the Company; and
(vi) the Company would not have entered into this Agreement
but for the covenants and agreements set forth in this
Section 5. Accordingly, the Executive covenants and
agrees that:
(a) By
and in consideration of the benefits to be provided by the Company
hereunder, including the change in control severance arrangements
set forth herein, and further in consideration of Executive’s
exposure to the proprietary information of the Company, Executive
covenants and agrees that, during the period commencing on the date
hereof and ending one year following the date upon which Executive
shall cease to be an employee of the Company, he shall not in the
United States, directly or indirectly, except with the prior
approval of the Board, (i) engage in the Business with or on
behalf of a real estate investment trust (other than for the
Company or its affiliates) or otherwise compete with the Company or
its affiliates, (ii) render any services to any real estate
investment trust (other than the Company or its affiliates) engaged
in the elements of the Business, or (iii) become interested in
any real estate investment trust (other than the Compa
|
