Exhibit 10.1

 

MUNICIPAL MORTGAGE & EQUITY, LLC

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is effective as of the 1st day of
January, 2013, by and between Municipal Mortgage & Equity, LLC, a Delaware
limited liability company (“Employer”) and Michael L. Falcone (“Employee”).

 

WHEREAS, Employer is engaged in the business of providing real estate finance
services, with a particular emphasis on tax exempt bonds for the multi-family
housing segment;

 

WHEREAS, Employee has particular skill, experience and background in real estate
finance services of the type in which the Employer primarily engages; and

 

WHEREAS, Employer and Employee desire to enter into an employment relationship,
the terms of which are to be set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Employer and Employee
hereby agree as follows:

 

1. Employment and Duties. Employer agrees to hire Employee, and Employee agrees
to be employed by Employer, as Chief Executive Officer on the terms and
conditions provided in this Agreement. Employee shall perform the duties and
responsibilities reasonably determined from time to time by the Board of
Directors (“Board”) of the Employer consistent with the types of duties and
responsibilities typically performed by a person serving as Chief Executive
Officer of businesses similar to that of Employer. Employee agrees to devote
Employee’s best efforts and full time attention and skill in performing the
duties of this position. Provided that such activity shall not violate any
provision of this Agreement (including the noncompetition provisions of Section
8 below) or materially interfere with his/her performance of Employee’s duties
hereunder, nothing herein shall prohibit Employee (a) from participating in any
other business activities approved in advance by the (“Board”) in accordance
with any terms and conditions of such approval, such approval not to be
unreasonably withheld or delayed, (b) from engaging in charitable, civic,
fraternal or trade group activities, or (c) from investing in other
non-competitive entities or business ventures.

 

2. Compensation. As compensation for performing the services required by this
Agreement, and during the term of this Agreement, Employee shall be compensated
as follows:

 

(a) Base Compensation. Employer shall pay to Employee a salary (“Base
Compensation”) at the annual rate of $530,000 for calendar year 2012 and
$555,000 for calendar year 2013, payable in accordance with the general policies
and procedures of Employer for payment of salaries to executive personnel, but
in any event no less frequently than every two weeks, in substantially equal
installments, subject to withholding for applicable federal, state and local
taxes. Increases in Base Compensation, if any, shall be determined by the
Compensation Committee of the Board of Directors (the “Board”). During the term
of this Agreement, Employee’s annual Base Compensation shall not be reduced
below the initial Base Compensation set forth above.

 

 

 

(b) Incentive Compensation. In addition to Employee’s Base Compensation,
Employee shall be eligible to receive additional compensation (“Incentive
Compensation”), pursuant to this Agreement payable in cash, shares, options or
otherwise as determined by the Compensation Committee based on individual and
company performance.

 

3. Employee Benefits. During the Term of this Agreement, Employee and his/her
eligible dependents shall have the right to participate in any retirement,
pension, insurance, health or other benefit plan or program adopted by Employer
(or in which Employer participates) to the same extent as any other officer of
the Employer, subject, in the case of a plan or program, to all of the terms and
conditions thereof, and to any limitations imposed by law.

 

4. Vacation, Sickness and Leaves of Absence. Employee shall be entitled to the
normal and customary amount of paid vacation provided to officers of Employer,
but in any event not more than five (5) weeks paid vacation during each fiscal
year. Employee shall provide Employer with reasonable notice of anticipated
vacation dates. Any vacation days that are not taken in a given fiscal year
shall not accrue and carryover from year to year. In addition, Employee shall be
entitled to such sick leave and holidays, with pay, as Employer provides to
other officers. Unused sick leave shall not be carried forward or compensated
upon termination of employment.

 

5. Expenses. Employee shall be entitled to receive, within a reasonable period
of time after Employee has delivered to Employer an itemized statement thereof,
and after presentation of such invoices or similar records as the Employer may
reasonably require, reimbursement for all necessary and reasonable expenses
incurred by Employee in connection with the performance of his/her duties.

 

6. Term. The term of this Agreement shall be for three (3) years (the “Term”),
commencing on January 1, 2013 (the “Effective Date”) and ending on December 31,
2015. The term of this Agreement in effect at any given time is herein referred
to as the “Term”. Any termination of this Agreement shall be subject to Section
7 below.

 

7. Termination and Termination Benefits.

 

(a) Termination by Employer.

 

(i) Without Cause. Employer may terminate this Agreement and Employee’s
employment at any time upon ninety (90) days prior written notice to Employee,
during which period Employer shall have the option to require Employee to
continue to perform his duties under this Agreement. Employee shall be paid (at
a time consistent with the payment terms for compensation under this Agreement)
his Base Compensation and all other benefits to which he is entitled under this
Agreement up through the effective date of termination. In addition, Employee
shall become fully vested in any and all outstanding or deferred share awards,
share options or other type of award made to Employee but not yet vested at the
time of such termination under the Employer’s Share Incentive Plans.

 

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(ii) With Cause. Employer may terminate this Agreement with “Cause” upon written
notice to Employee. In such event, Employee shall be paid (at a time consistent
with the payment terms for compensation under this Agreement) his/her Base
Compensation and all other benefits to which he/she is entitled under this
Agreement up through the effective date of termination. For purposes of this
Section, termination for “Cause” shall mean (A) acts or omissions by the
Employee with respect to the Employer which constitute intentional misconduct or
a knowing violation of law; (B) receipt by the Employee, in knowing violation of
the law, of more than de minimis money, property or services from the Employer
or from another person dealing with Employer in violation of law or this
Agreement, provided, however that inadvertent expense account errors shall not
constitute a violation of this clause, (C) breach by Employee of the
noncompetition provisions of this Agreement, (D) breach by the Employee of
his/her duty of loyalty to the Employer as set forth in the policy statements of
Employer, (E) gross negligence by the Employee in the performance of his/her
duties, (F) repeated failure by Employee to perform services that have been
reasonably requested of him by the Board and that are ordinarily within the
scope of Employee’s duties, (G) unappealable conviction of a crime (other than
traffic violations). Before terminating Employee’s employment for Cause under
clauses (A) – (G) above, Employer will specify in writing to Employee the nature
of the act, omission, refusal or failure that it deems to constitute Cause.

 

(iii) Disability. If due to illness, physical or mental disability, or other
incapacity, Employee shall fail to perform the duties required by this
Agreement, Employer may terminate this Agreement upon 30 days written notice to
Employee. In such event, Employee shall be paid (at a time consistent with the
payment terms for compensation under this Agreement) his Base Compensation and
receive all benefits owing to him under this Agreement through the effective
date of termination. In addition, Employee shall become fully vested in any and
all outstanding restricted or deferred share awards, share options or other type
of award made to Employee, but not yet vested at the time of such termination
under the Employer’s Share Incentive Plans. Employee shall be considered
disabled under this paragraph if he is unable to work due to disability for a
total of 120 or more business days during any 12-month period. Nothing in this
paragraph shall be construed to limit Employee’s rights to the benefits of any
disability insurance policy provided by Employer and this Section shall not be
construed as varying the terms of any such policy in any manner adverse to
Employee.

 

(iv) Change in Control. Notwithstanding the foregoing, any termination of
Employee during the first six (6) months following a Change in Control shall be
deemed to be without Cause for all purposes under this Agreement, unless the
reason for such termination is a violation of Section 7(a)(ii)(A), (B), (C) or
(G). As used herein, Change in Control shall have the meaning given such term in
the Municipal Mortgage & Equity, LLC 2010 Share Incentive Plan; provided,
however, that this Section 7(a)(iv) shall not apply to any Change in Control
approved by the Board of Directors of the Company as constituted immediately
prior to the date such Change in Control occurs, or is deemed to occur
(whichever is earlier).

 

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(b) Termination by Employee. Employee may terminate this Agreement for good
reason upon 30 days prior written notice to Employer. In such event, Employee
shall be paid (at a time consistent with the payment terms for compensation
under this Agreement) his Base Compensation and shall receive all benefits
through the date of termination. Employee shall become fully vested in any and
all outstanding restricted or deferred share awards, share options or other type
of award made to Employee, but not yet vested at the time of such termination
under the Employer’s Share Incentive Plans. Employee shall have “good reason” to
terminate his employment if (i) Employee’s Base Compensation, as in effect at
any given time, shall be reduced without Employee’s consent, (ii) Employer shall
fail to provide any of the material payments or benefits provided for under this
Agreement; (iii) Employer shall require Employee to take any action which would
be a violation of federal, state or local criminal law. Notwithstanding the
foregoing provisions of the definition of “good reason”, (i) good reason shall
not be deemed to exist unless the Employee provides notice of the good reason
event or condition within 60 days of the occurrence of such event or condition;
and (ii) if there exists (without regard to this clause (ii)) an event or
condition that constitutes good reason, the Employer shall have 30 days from the
date that notice of such a termination is given to cure such event or condition
and, if the Employer does so, such event or condition shall not constitute good
reason under the Agreement.

 

(c) Termination Compensation for Termination Without Cause or for Good Reason.
In the event of a termination of this Agreement prior to the end of the Term,
pursuant to Section 7(a)(i), 7(a)(iii) or 7(b), Employer, in addition to the
Base Compensation and benefits (if any) payable as provided in such sections,
shall pay to Employee additional compensation (“Termination Compensation”) of
$1,000,000. Subject to Section 10(f), Termination Compensation shall be paid in
four equal quarterly payments beginning on the first day of the first calendar
month following the termination date. In addition, Employee shall become fully
vested in any and all outstanding deferred share awards, share options or any
other type of award made to Employee.

 

(d) Death Benefit. Notwithstanding any other provision of this Agreement, this
Agreement shall terminate on the date of Employee’s death. In such event,
Employee’s estate shall be paid $1,000,000 (the “Death Benefit”). To the extent
of any insurance carried by Employer on Employee’s life, the lesser of the Death
Benefit or the full amount of the insurance shall be payable in a lump sum
within five (5) business days of Employer’s receipt of the insurance proceeds;
twenty-five percent (25%) of any portion of the Death Benefit not covered by
insurance shall be paid immediately upon the Employee’s death, but in no event
later than 90 days following the date of such death, and the remaining
seventy-five percent (75%) of the Death Benefit shall be paid in equal
installments payable on the first day of each calendar quarter following
Employee’s death. Employer shall carry as much life insurance on Employee’s life
as the Board may from time to time determine, but shall not be obligated to
carry any insurance. In addition, upon Employee’s death, all outstanding
restricted or deferred share awards, share options or other type of award made
to Employee, but not yet vested at the time of death under the Employer’s Share
Incentive Plans shall be considered vested and paid out to Employee’s estate.
Employer shall use reasonable efforts to structure any such insurance policy so
as to minimize taxes on the Death Benefit, but the failure to do so shall not
entitle Employee’s estate or any beneficiary to make any claim against Employer
for any tax payment or loss.

 

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8. Covenant Not to Compete.

 

(a) Noncompetition. From and after the Effective Date and continuing for the
longer of (i) twelve (12) months following the expiration or termination of this
Agreement or (ii) the remainder of the Term of this Agreement, Employee shall
not without the prior written consent of the Board (w) become employed by, or
undertake to work for, directly or indirectly, whether as an advisor, principal,
agent, partner, officer, director, employee, shareholder, associate or
consultant of or to, any person, partnership, corporation or other business
entity which is in the business of investing in or providing Asset Management
services on debt and equity investments in multifamily real estate (“Business of
the Company”), (x) solicit any employee of Employer to change employment or (y)
solicit in connection with any matter that relates to the Business of the
Company any client, customer or investor of Employer or any of its subsidiaries
which closed (in any capacity) a transaction with Employer or any of its
subsidiaries during the thirty-six (36) months preceding Employee’s termination,
or (z) disclose proprietary or confidential information of the Employer or its
subsidiaries, including without limitation, tax, deal structuring, pricing,
customer, client, revenue, expense, or other similar information; provided,
however, if Employer terminates Employee without cause under Section 7(a)(i) or
as a result of a disability under Section 7(a)(iii), or if Employee terminates
his employment for good reason under Section 7(b), clause (w) of this paragraph
(a) shall not apply.

 

(b) Reasonable Restrictions. Employee acknowledges that the restrictions of
subparagraph (a) above are reasonable, fair and equitable in scope, term and
duration, are necessary to protect the legitimate business interests of
Employer, and are a material inducement to Employer to enter into this
Agreement. Employer and Employee both agree that in the event a court shall
determine any portion of the restrictions in subparagraph (a) are not
reasonable, the court may change such restrictions, including without limitation
the geographical restrictions and the duration restrictions, to reflect a
restriction which the court will enforce as reasonable.

 

(c) Specific Performance. Employee acknowledges that the obligations undertaken
by him/her pursuant to this Agreement are unique and that if Employee shall fail
to abide by any of the restrictions set forth in subparagraph (a), Employer will
suffer harm for which there is no adequate remedy at law. Employee therefore
confirms that Employer shall have the right, in the event of a violation of
subparagraph (a), to injunctive relief to enforce the terms of this Section 8 in
addition to any other remedies available at law or in equity.

 

9. Indemnification and Liability Insurance. Employer hereby agrees to defend,
indemnify and hold Employee harmless, to the maximum extent allowed by law, from
any and all liability for acts or omissions of Employee performed in the course
of Employee’s employment (or reasonably believed by Employee to be within the
scope of his/her employment). Employer shall at all times carry Director and
Officer liability insurance in commercially reasonable amounts, but in any event
not less than Five Million Dollars ($5,000,000).

 

10. Miscellaneous.

 

(a) Complete Agreement. This Agreement constitutes the entire agreement among
the parties with respect to the matters set forth herein and supersedes all
prior understandings and agreements between the parties as to such matters. No
amendments or modifications shall be binding unless set forth in writing and
signed by both parties.

 

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(b) Successors and Assigns. Neither party may assign its rights or interest
under this Agreement without the prior written consent of the other party,
except that Employer’s interest in this Agreement may be assigned to a successor
by operation of law or to a purchaser purchasing substantially all of Employer’s
business, and Employee’s benefits under this Agreement may be assigned by
operation of law to Employee’s heirs, devisees and personal representatives.
This Agreement shall be binding upon and shall inure to the benefit of each of
the parties and their respective permitted successors and assigns.

 

(c) Severability. Each provision of this Agreement is severable, such that if
any part of this Agreement shall be deemed invalid or unenforceable, the balance
of this Agreement shall be enforced so as to give effect as to the intent of the
parties.

 

(d) Representations of Employer. Employer represents and warrants to Employee
that it has the requisite limited liability company power to enter into this
Agreement and perform the terms hereof and that the execution, delivery and
performance of this Agreement have been duly authorized by all appropriate
company action.

 

(e) Construction. This Agreement shall be governed in all respects by the
internal laws of the State of Maryland (excluding reference to principles of
conflicts of law). As used herein, the singular shall include the plural, the
plural shall include the singular, and the use of any pronoun shall be construed
to refer to the masculine, feminine or neuter, all as the context may require.

 

(f) Compliance with Section 409A. Notwithstanding any other provision in this
Agreement to the contrary, the Employee shall not be entitled to any payment
pursuant to this Agreement prior to the earliest date permitted under Section
409A of the Code. To the extent that any severance amount payable in this
Agreement constitutes deferred compensation that is subject to Section 409A of
the Code, payments shall commence on the first day of the first calendar month
following the Employee’s “Separation form Service”, as defined below. To the
extent such payments are required to be delayed six months pursuant to the
special rules of Section 409A of the Code related to “specified employees,” each
affected payment shall be delayed until six months after the Employee’s
termination of employment, with the first such payment being a lump sum equal to
the aggregate payments the Employee would have received during such six-month
period if no payment delay had been imposed. Any such delayed payments or
distributions shall be paid to the Employee on the first business day of the
seventh month following the Employee’s termination of employment. A “Separation
from Service” means an anticipated permanent reduction in the level of services
performed by the Employee to 20% or less of the average level of services
performed by the Employee over the immediately preceding 36 month period (or the
full period during which the Employee performed services for the Employer, if
that is less than 36 months) (treating all members of the controlled group of
corporations or group of trades or business under common control with the
Employer as a single employer for this purpose).

 

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(g) Other Awards, Options or Equity Based Compensation. To the extent Employee
shall become vested in outstanding deferred share awards, options or other
equity-based compensation in connection with certain terminations of employment,
unless otherwise specified in this Agreement, such awards shall remain payable
or exercisable under the terms of the applicable award agreement.

 

(h) Notices. All notices required or permitted under this Agreement shall be in
writing and shall be deemed given on the date sent if delivered by hand or by
facsimile, and on the next business day if sent by overnight courier or by
United States mail, postage prepaid, to each party at the following address (or
at such other address as a party may specify by notice under this section):

  

If to Employer:

 

Municipal Mortgage & Equity, LLC
621 East Pratt Street
Suite 300
Baltimore, Maryland 21202
Facsimile: (410) 727-5387
Attention: Chairman of the Board

 

If to Employee:

 

Michael L. Falcone
8 Edgewood Road
Baltimore, Maryland 21210

 

(i) Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute one instrument.

 

 

(Signatures appear on following page)

 

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IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed
this Agreement on the date and year written below.

 

  EMPLOYER:       MUNICIPAL MORTGAGE & EQUITY, LLC       By: /s/ Lisa M. Roberts
  Name: Lisa M. Roberts   Title: Chief Financial Officer         Date: November
26, 2012               EMPLOYEE:       By: /s/ Michael L. Falcone   Name:
Michael L. Falcone         Date: November 26, 2012

 

 

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