**Exhibit 10.19**

 

**EMPLOYMENTAGREEMENT**

 

AGREEMENT made this 1stday of July, 2004, between Falcon Financial Investment Trust, a Maryland RealEstate Investment Trust (the “Trust”), and Ralph L. Miller (the “Executive”).

 

The Executive ispresently employed as Senior Vice President and National Marketing Director ofthe Trust.  The Board of Trustees of theTrust (the “Board”) recognizes that the Executive’s contribution to the growthand success of the Trust has been substantial. The Board desires to provide for the continued employment of theExecutive and to make certain changes in the Executive’s employmentarrangements with the Trust which the Board has determined will reinforce andencourage the continued attention and dedication to the Trust of the Executiveas a member of the Trust’s management, in the best interest of the Trust andits shareholders.  The Executive iswilling to commit himself to continue to serve the Trust, on the terms andconditions herein provided.

 

In order to effect theforegoing, the Trust and the Executive wish to enter into an employmentagreement on the terms and conditions set forth below.  Accordingly, in consideration of thepremises and the respective covenants and agreements of the parties hereincontained, and intending to be legally bound hereby, the parties hereto agreeas follows:

 

1.                                       Employment.  The Trust hereby agrees to continue toemploy the Executive, and the Executive hereby agrees to continue to serve theTrust, on the terms and conditions set forth herein.

 

2.                                       Term.  The employment of the Executive by the Trustas provided in Section 1 will commence on the date hereof and end onDecember 31, 2005 (the “Term”), unless further extended or soonerterminated as hereinafter provided. Commencing on January 1, 2005, and each January 1 thereafter,the Term of the Executive’s employment shall automatically be extended for oneadditional year, unless, not later than the October 31 immediatelypreceding such January 1, the Trust or the Executive shall have givenwritten notice to the other that it does not wish to extend this Agreement.

 

3.                                       Positionand Duties.  The Executive shallserve as Senior Vice President and National Marketing Director of the Trust andshall faithfully exercise such authority and perform such duties on behalf ofthe Company as are normally associated with his title and position as theTrust’s Board of Trustees may determine from time to time or such other dutiesas the Board of Trustees of the Trust shall reasonably request, provided suchother duties are consistent with the duties of a senior executive officer of apublic company serving in a similar capacity. The Executive shall also serve without additional compensation in suchother offices of the Trust or its subsidiaries to which Executive may beelected or

 

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appointed by theBoard of Trustees with the consent of Executive.  The Executive shall devote substantially all his working time,energy, skill and best efforts to the performance of his duties hereunder in amanner that will faithfully and diligently further the business and interestsof the Trust; provided, that, nothing in this Agreement shall precludeExecutive from serving as a director or trustee in any other firm that is not acompetitor of the Trust and its subsidiaries or from pursuing personalinvestments, as long as such activities do not, in the reasonable judgment ofthe independent members of the Board of Trustees with regard to activitiesother than passive investments of less than five percent ownership, interferewith Executive’s performance of his duties hereunder.

 

4.                                       Placeof Performance.  In connection withthe Executive’s employment by the Trust, the Executive shall be based inBethesda, Maryland, provided, however, the Executive shall visit the principalexecutive offices of the Trust in Stamford, Connecticut, on a regular basis andthe Executive shall be expected to travel to the extent necessary for theExecutive to carry out his duties hereunder.

 

5.                                       Compensationand Related Matters.

 

(a)                                  BaseSalary, Annual Bonus and Incentive Compensation.  During the period of the Executive’s employment hereunder, theTrust shall pay to the Executive an annual base salary of $175,000 (“BaseSalary”), such Base Salary to be paid in accordance with the Trust’s standardpayroll practices and subject to all applicable withholdings.  The Base Salary may, subject to the approvalof the Board of Trustees, be increased from time to time in accordance withnormal business practices of the Trust and, if so increased, shall become thenew Base Salary for the calendar year and shall not thereafter during the Termof this Agreement be decreased.  TheExecutive shall be eligible for an annual bonus (“Annual Bonus”) of up to amaximum of $175,000 (with the target bonus being $87,500), based on his performanceand the performance of the Trust as determined by the Compensation Committee ofthe Board.  The Executive shall also beeligible for incentive compensation upon the closing of loans by the Trust inan amount equal to 5 basis points of the amount of the closed loan (“IncentiveCompensation”).

 

(b)                                 Expenses.  During the Term, the Executive shall beentitled to receive prompt reimbursement for all reasonable and customary outof pocket expenses incurred by the Executive in performing his duties hereunder,including all reasonable expenses of travel and reasonable living expenseswhile away from home on business or at the request of and in the service of theTrust, provided that such expenses are incurred and accounted for in accordancewith the policies and procedures established by the Trust.

 

(c)                                  Vacations.  The executive shall be entitled to three (3)weeks’ vacation in each calendar year, or such greater amount of vacation asmay

 

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be determined inaccordance with the Trust’s vacation policy as in effect from time totime.  The Executive shall also beentitled to all paid holidays given by the Trust to its executives, and sickand personal days on an as needed basis.

 

6.                                       Termination.  Each party shall have the right to terminateExecutive’s employment hereunder before the Term expires to the extent, andsubject to the provisions, set forth in this Section 6:

 

(a)                                  Death.  The Executive’s employment hereunder shallterminate upon his death.

 

(b)                                 Disability.  If, in the written opinion of a qualifiedphysician reasonably agreed to by the Trust and the Executive, the Executiveshall become unable to perform his duties hereunder due to Disability, theTrust may terminate the Executive’s employment hereunder.  As used in this Agreement, the term“Disability” shall mean incapacity due to physical or mental illness which has,in the reasonable judgment of the Board, caused the Executive to be unable toperform his duties hereunder on a full-time basis for any period of 180consecutive days and the return of the Executive to his duties hereunder forperiods of 15 days or less shall not interrupt such 180 day period.

 

(c)                                  Cause.  The Trust shall have the right to terminateExecutive’s employment at any time upon delivery of written notice oftermination for Cause (as defined below) to Executive (which notice shallspecify in reasonable detail the basis upon which such termination is made),such employment to terminate immediately upon delivery of such notice unlessotherwise specified by the Board of Trustees of the Trust if a majority of theBoard of Trustees (other than Executive) determines that Executive:(i) has misappropriated, stolen or embezzled funds or property from theTrust or an affiliate of the Trust or secured or attempted to secure personallyany profit in connection with any transaction entered into on behalf of theTrust or any affiliate of the Trust, (ii) has been convicted of a felonyor entered a plea of “*nolo contendre*” which in the reasonableopinion of the Board brings Executive into disrepute or is likely to causematerial harm to the Trust’s (or any affiliate of the Trust) business, customeror supplier relations, financial condition or prospects, (iii) has,notwithstanding not less than 30 days’ prior written notice from the Board ofTrustees, willfully and persistently failed to perform (other than by reason ofillness or temporary disability, regardless of whether such temporarydisability is or becomes total Disability, or by reason of vacation or approvedleave of absence) his material duties hereunder, or (iv) has willfully violatedor breached any provision of this Agreement, any material law or regulation orany written policy or code of business conduct or ethics of the Trust to thematerial detriment of the Trust or any affiliate of the Trust or itsbusiness.  For purposes of thisprovision, no act or failure to act, on the part of the Executive, shall beconsidered “willful” unless it is done, or omitted to be done, by the Executivein

 

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bad faith orwithout reasonable belief that his action or omission was in the best interestsof the Trust.  Any act, or failure toact, based upon authority given pursuant to a resolution duly adopted by theBoard or based upon the advice of counsel for the Trust shall be conclusivelypresumed to be done, or omitted to be done, by the Executive in good faith andin the best interests of the Trust.  Thecessation of employment of the Executive shall not be deemed to be for Causeunless and until there shall have been delivered to the Executive a copy of aresolution duly adopted by the affirmative vote of not less than a majority ofthe membership of the Board (the Executive shall not be counted for the purposeof determining a majority of the membership of the Board if he is a Trustee atthe time of such vote) at a meeting of the Board called and held for suchpurpose (after reasonable notice is provided to the Executive and the Executiveis given an opportunity, together with counsel, to be heard before the Board),finding that, in the good faith opinion of the Board, the Executive was guiltyof the conduct set forth in clause (i), (ii), (iii) or (iv) hereof, andspecifying the particulars thereof in detail.

 

(d)                                 WithoutCause.  The Trust may at any timeterminate the Executive’s employment hereunder without Cause.

 

(e)                                  Terminationby the Executive.

 

(i)                                     TheExecutive may terminate his employment hereunder (A) for Good Reason, or (B)without Good Reason at any time after the date hereof by giving thirty (30)days prior notice of his intention to terminate.

 

(ii)                                  Forpurposes of this Agreement, “Good Reason” shall mean (A) a failure by the Trustto comply with any material provision of this Agreement which has not beencured within thirty (30) days after notice of such noncompliance has been givenby the Executive to the Trust, (B) the assignment to the Executive of anyduties materially inconsistent with the Executive’s position with the Trust ora substantial adverse alteration in the nature of the Executive’sresponsibilities without the consent of the Executive, (C) without the consentof the Executive, a material reduction in employee benefits other than areduction generally applicable to all eligible employees of the Trust, or (D)any purported termination of the Executive’s employment which is not effectedpursuant to a Notice of Termination satisfying the requirements of paragraph(e) hereof (and for purposes of this Agreement no such purported terminationshall be effective).

 

(f)                                    Anytermination of the Executive’s employment by the Trust or by the Executive(other than termination pursuant to subsection (a) or (b) hereof) shall becommunicated by written Notice of Termination to the other party hereto inaccordance with Section 12.  Forpurposes of this Agreement, a “Notice of Termination” shall mean a notice whichshall indicate the specific termination provision in this Agreement relied uponand shall set forth in reasonable detail the

 

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facts andcircumstances claimed to provide a basis for termination of the Executive’semployment under the provision so indicated.

 

(g)                                 “Dateof Termination” shall mean (i) if the Executive’s employment is terminated byhis death, the date of his death, (ii) if the Executive’s employment isterminated pursuant to subsection (b) above, the date as of which thephysician’s written opinion is received by the Trust, (iii) if the Executive’semployment is terminated pursuant to subsection (c) above, the datespecified in the Notice of Termination, and (iv) if the Executive’s employmentis terminated for any other reason, the date thirty (30) days following thedate on which a Notice of Termination is given.

 

7.                                       CompensationUpon Termination, Death or During Disability.

 

(a)                                  Disability.  During any period that the Executive failsto perform his duties hereunder as a result of his incapacity due to a physicalor mental illness (“disability period”), the Executive shall continue toreceive his full Base Salary at the rate then in effect for such period (andshall not be eligible for payments under the disability plans, programs andpolicies maintained by the Trust or in connection with employment by the Trust(“Disability Plans”)) until his employment is terminated pursuant toSection 6(b) hereof, and upon such termination, the Executive shall,within ten (10) days of such termination, be entitled to all amounts to whichthe Executive is entitled pursuant to short-term Disability Plans.  The Executive’s rights under any long-termDisability Plan shall be determined in accordance with the provisions of suchplan.  In addition, upon the Executive’stermination in accordance with Section 6(b) hereof, all share options,restricted share awards and any other equity awards granted by the Trust to theExecutive shall become fully vested and exercisable as of the Date ofTermination and the Executive shall be paid a pro-rata portion of his AnnualBonus at the target level based on the number of days he was employed in theyear in which the Date of Termination occurs and shall also be paid IncentiveCompensation on all loans closed as of the Date of Termination.

 

(b)                                 Death.  If the Executive’s employment is terminatedby his death, the Trust shall within ten (10) days following the date of theExecutive’s death, pay any amounts due to the Executive under Section 5through the date of his death, an amount equal to one-half (1/2) of theExecutive’s annual Base Salary for the year in which the termination tookplace, and an amount equal to one-half (1/2) of the Executive’s target AnnualBonus for the year in which the termination took place, together with any otheramounts to which the Executive is entitled pursuant to death benefit plans, programsand policies.  In addition, all shareoptions, restricted share awards and any other equity awards granted by theTrust to the Executive shall become fully vested and exercisable as of the Dateof Termination.

 

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(c)                                  Causeor other than Good Reason.  If theExecutive’s employment shall be terminated by the Trust for Cause or by theExecutive for other than Good Reason, the Trust shall pay the Executive hisfull Base Salary through the Date of Termination at the rate in effect at thetime Notice of Termination is given, pay the Executive Incentive Compensationon all loans closed prior to the Date of Termination and reimburse theExecutive for all reasonable and customary expenses incurred by the Executivein performing services hereunder prior to the Date of Termination in accordancewith Section 5(b), and the Trust shall have no further obligations to theExecutive under this Agreement.

 

(d)                                 Terminationby the Trust without Cause (other than for death or Disability) or Terminationby the Executive for Good Reason. If the Trust shall terminate the Executive’s employment other than fordeath, Disability pursuant to Section 6(b) or Cause, or the Executiveshall terminate his employment for Good Reason, then:

 

(i)                                     theTrust shall pay the Executive any earned and accrued but unpaid installment ofBase Salary through the Date of Termination at the rate in effect at the timeNotice of Termination is given and all other unpaid and pro rata amounts towhich the Executive is entitled as of the Date of Termination under anycompensation plan or program of the Trust, including without limitation, apro-rata portion of the Annual Bonus at target level, any earned and accruedbut unpaid Incentive Compensation payments and all accrued vacation time; suchpayments to be made in a lump sum on or before the fifth day following the Dateof Termination;

 

(ii)                                  inaddition to the Incentive Compensation payments set forth in (d)(i) above, theTrust shall pay the Executive, Incentive Compensation on all loans closed bythe Trust within the sixty (60) day period following the Date of Termination;such payment to be made in a lump sum on the sixty-fifth day following the Dateof Termination;

 

(iii)                               inlieu of any further salary payments to the Executive for periods subsequent tothe Date of Termination, the Trust shall pay as liquidated damages to theExecutive an amount equal to the product of (A) the sum of (1) the Executive’sBase Salary in effect as of the Date of Termination and (2) the greater of theExecutive’s highest Annual Bonus earned in the last three fiscal years or theExecutive’s target Annual Bonus for the current year, and (B) two; such paymentto be made in a lump sum on or before the fifth day following the Date ofTermination.  In addition, all shareoptions, restricted share awards and any other equity awards granted by theTrust to the Executive shall become fully vested and exercisable as of the Dateof Termination;

 

(e)                                  Inthe case of a termination of the Executive’s employment by the Trust withoutCause or for Disability, or by the Executive for

 

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Good Reason, theTrust shall pay the full cost for the Executive to participate in the healthinsurance plan in which the Executive was enrolled immediately prior to theDate of Termination for a period of twelve (12) months, provided that theExecutive’s continued participation is possible under the general terms andprovisions of such plans and programs. In the event that the Executive’s participation in any such plan orprogram is barred, the Trust shall arrange to provide the Executive withbenefits substantially similar to those which the Executive would otherwisehave been entitled to receive under such plan from which his continuedparticipation is barred.

 

(f)                                    Anypayment by the Trust required hereunder following termination of theExecutive’s employment for any reason, other than pursuant toSection 6(b), shall be conditioned on and shall not be payable until receiptof a written release in form and substance reasonably acceptable to the Trustof any and all past and present claims that the Executive may have against theTrust or any of its affiliates and any of their respective officers, directors,members, managers or trustees arising out of his employment relationship withthe Trust or any of its affiliates.

 

8.                                       Nondisclosure.  The Executive shall hold in a fiduciarycapacity for the benefit of the Trust all Confidential Information relating tothe Trust or any of its affiliated companies, and their respective businesses,which shall have been obtained by the Executive during the Executive’semployment by the Trust or any of its affiliated companies.  For the purposes of this Agreement,“Confidential Information” means any data or information with respect to thebusiness conducted by the Trust or its affiliates, that is material to theTrust’s business operations and is not generally known by the public, includingbusiness and trade secrets.  To theextent consistent with the foregoing definition, Confidential Informationincludes without limitation: (a) reports, pricing, underwriting and pricingprocedures, and financing methods of the Company, together with any specificand proprietary techniques utilized by the Company in designing, developing,and marketing its loan products or in performing services for customers andaccounts of the Company; (b) the business plans and financial statements,reports, data and projections of the Company; (c) identities and addresses ofconsultants, borrowers or customers or any other confidential informationrelating to or dealing with the business operations or activities of the Trustand its affiliates; and (e) information concerning trade secrets of the Trustand its affiliates.  After terminationof the Executive’s employment with the Trust, the Executive shall not, withoutthe prior written consent of the Trust or as may otherwise be required by lawor legal process, communicate or divulge any such Confidential Information toanyone other than the Trust and those designated by it.  The agreement made in this Section 8shall be in addition to, and not in limitation or derogation of, anyobligations otherwise imposed by law or by separate agreement upon theExecutive in respect of Confidential Information of the Trust.

 

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9.                                       Non-Competitionand Non-Solicitation.  During theExecutive’s employment with the Trust and for a period of eighteen (18) monthsfollowing the Executive’s Date of Termination, the Executive shall not, withoutthe prior written consent of the Trust, for himself or on behalf of or inconjunction with any other person, persons, company, firm, partnership,corporation, business, group or other entity (each, a “Person”), work within a100 mile radius of any location where the Trust is doing business or has plansfor commencing business as of the Date of Termination, in the principal line ofbusiness engaged in, or planned to be engaged in, by the Trust at the Date ofTermination.  The Executive’s passiveownership of less than five percent (5%) of the securities of a company shallnot be treated as an action in competition with the Trust.

 

(a)                                  Duringthe term of Executive’s employment by the Trust, and for the eighteen (18)months following the Date of Termination, the Executive shall not, for anyreason whatsoever, directly or indirectly, for himself or on behalf of or inconjunction with any other Person:

 

(i)                                     solicitand/or hire any Person who is on the Date of Termination, or has been withintwelve (12) months prior to the Date of Termination, an officer or managerlevel employee of the Trust or its affiliates, for the purpose or with theintent of enticing such Person away from or out of the employ of the Trust or itsaffiliates;

 

(ii)                                  inorder to protect the Confidential Information and proprietary rights of Trust,solicit, induce or attempt to induce any Person who is, at the Date ofTermination, or has been within twelve (12) months prior to the Date ofTermination, an actual customer, borrower, client, business partner, or aprospective customer, borrower, client, business partner (i.e., a customer,borrower, client or business partner who is party to a written proposal orletter of intent with Trust, in each case written less than six (6) monthsprior to the Date of Termination) of the Trust, for the purpose or with theintent of (A) inducing or attempting to induce such Person to cease doingbusiness with Trust or its affiliates, (B) enticing or attempting to enticesuch Person to do business with Executive or any affiliate of Executive, or (C)in any way interfering with the relationship between such Person and Trust orits affiliates; or

 

(iii)                               solicit,induce or attempt to induce any Person who is or that is, at the time of theDate of Termination, or has been within twelve (12) months prior to the Date ofTermination, a supplier, licensee or consultant of, or provider of goods orservices to Trust or its affiliates, for the purpose or with the intent of (A) inducingor attempting to induce such Person to cease doing business with Trust or itsaffiliates or (B) in any way interfering with the relationship between suchPerson and Trust or its affiliates.

 

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(b)                                 Becauseof the difficulty of measuring economic losses to Trust as a result of a breachof the foregoing covenants, and because of the immediate and irreparable damagethat could be caused to Trust for which it would have no other adequate remedy,Executive agrees that the foregoing covenants in this Section 9, inaddition to and not in limitation of any other rights, remedies or damagesavailable to Trust at law, in equity or under this Agreement, may be enforcedby Trust in the event of the breach or threatened breach by Executive, byinjunctions and/or restraining orders.

 

(c)                                  Itis agreed by the parties that the covenants contained in this Section 9impose a fair and reasonable restraint on Executive in light of the activitiesand business of Trust on the date of the execution of this Agreement and thecurrent plans of Trust; but it is also the intent of Trust and Executive thatsuch covenants be construed and enforced in accordance with the changingactivities, business and locations of Trust and its affiliates throughout theterm of these covenants.

 

(d)                                 Itis further agreed by the parties hereto that, in the event that Executive shallcease to be employed hereunder, and enters into a business or pursues otheractivities within twelve months from such Date of Termination that, at suchtime, are not in competition with the Trust or its affiliates or with anybusiness or activity which the Trust or its affiliates contemplated pursuing,as of the Date of Termination, or similar activities or business in locationsthe operation of which, under such circumstances, does not violate thisSection 9 or any of Executive’s obligations under this Section 9,Executive shall not be chargeable with a violation of this Section 9 ifthe Trust or its affiliates subsequently enter the same (or a similar)competitive business, course of activities or location, as applicable (exceptas to business or activities actively contemplated by the Trust at the Date ofTermination).

 

(e)                                  Thecovenants in this Section 9 are severable and separate, and theunenforceability of any specific covenant shall not affect the provisions ofany other covenant.  Moreover, in theevent any court of competent jurisdiction shall determine that the scope, timeor territorial restrictions set forth herein are unreasonable, then it is theintention of the parties that such restrictions be enforced to the fullestextent that such court deems reasonable, and the Agreement shall thereby bereformed to reflect the same.

 

(f)                                    Allof the covenants in this Section 9 shall be construed as an agreementindependent of any other provision in this Agreement, and the existence of anyclaim or cause of action of Executive against Trust whether predicated on thisAgreement or otherwise shall not constitute a defense to the enforcement byTrust of such covenants.  It isspecifically agreed that the duration of the period during which the agreementsand covenants of Executive made in this Section 9

 

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shall be effectiveshall be computed by excluding from such computation any time during whichExecutive is in violation of any provision of this Section 9.

 

(g)                                 Notwithstandingany of the foregoing, if any applicable law, judicial ruling or order shallreduce the time period during which Executive shall be prohibited from engagingin any competitive activity described in Section 9 hereof, the period oftime for which Executive shall be prohibited pursuant to Section 9 hereofshall be the maximum time permitted by law

 

10.                                 Successors;Binding Agreement.  The rights andobligations of the parties to this Agreement shall not be assignable ordelegable, except that (i) in the event of the Executive’s death, the personalrepresentative or legatees or distributees of the Executive’s estate, as thecase may be, shall have the right to receive any amount owing and unpaid to theExecutive hereunder and (ii) the rights and obligations of the Trust hereundershall be assignable and delegable in connection with any subsequent merger,consolidation, sale of all or substantially all of the assets or stock of theTrust or similar transaction involving the Trust or a successor corporation.

 

11.                                 AdditionalPayments by the Trust.

 

(a)                                  Ifit is determined (as hereafter provided) that any payment or distribution bythe Trust to or for the benefit of the Executive, whether paid or payable ordistributed or distributable pursuant to the terms of this Agreement orotherwise pursuant to or by reason of any other agreement, policy, plan,program or arrangement, including without limitation any option, shareappreciation right or similar right, or the lapse or termination of anyrestriction on or the vesting or exercisability of any of the foregoing (a“Payment”), would be subject to the excise tax imposed by Section 4999 ofthe Code (or any successor provision thereto) or to any similar tax imposed bystate or local law, or any interest or penalties with respect to such excisetax (such tax or taxes, together with any such interest and penalties, arehereafter collectively referred to as the “Excise Tax”), then Executive will beentitled to receive an additional payment or payments (a “Gross-Up Payment”) inan amount such that, after payment by Executive of all taxes (including anyinterest or penalties imposed with respect to such taxes), including any ExciseTax, imposed upon the Gross-Up Payment, Executive retains an amount of theGross-Up Payment equal to the Excise Tax imposed upon the Payments.

 

(b)                                 Alldeterminations required to be made under this Section 11, includingwhether an Excise Tax is payable by Executive and the amount of such Excise Taxand whether a Gross-Up Payment is required and the amount of such Gross-UpPayment, will be made by the Trust’s then current outside auditors; providedthat if that firm is unwilling or unable to provide such services, theAccounting Firm may be selected by the Trust. The Trust will direct theAccounting

 

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Firm to submit itsdetermination and detailed supporting calculations to both the Trust andExecutive within 30 calendar days after the date of the change in control orthe date of Executive’s termination of employment, if applicable, and any othersuch time or times as may be requested by the Trust or Executive. If theAccounting Firm determines that any Excise Tax is payable by Executive, theTrust will pay the required Gross-Up Payment to Executive no later than fivecalendar days prior to the due date for Executive’s income tax return on whichthe Excise Tax is included. If the Accounting Firm determines that no ExciseTax is payable by Executive, it will, at the same time as it makes suchdetermination, furnish Executive with an opinion that he has substantialauthority not to report any Excise Tax on his federal, state, local income orother tax return. Any determination by the Accounting Firm as to the amount ofthe Gross-Up Payment will be binding upon the Trust and Executive. As a resultof the uncertainty in the application of Section 4999 of the Code (or anysuccessor provision thereto) and the possibility of similar uncertaintyregarding applicable state or local tax law at the time of any determination bythe Accounting Firm hereunder, it is possible that Gross-Up Payments which willnot have been made by the Trust should have been made (an “Underpayment”),consistent with the calculations required to be made hereunder. In the eventthat the Trust exhausts or fails to pursue its remedies pursuant toSection 11(f) hereof and Executive thereafter is required to make apayment of any Excise Tax, Executive shall so notify the Trust, which willdirect the Accounting Firm to determine the amount of the Underpayment that hasoccurred and to submit its determination and detailed supporting calculationsto both the Trust and Executive as promptly as possible. Any such Underpaymentwill be promptly paid by the Trust to, or for the benefit of, Executive withinfive business days after receipt of such determination and calculations.

 

(c)                                  TheTrust and Executive will each provide the Accounting Firm access to and copiesof any books, records and documents in the possession of the Trust orExecutive, as the case may be, reasonably requested by the Accounting Firm, andotherwise cooperate with the Accounting Firm in connection with the preparationand issuance of the determination contemplated by Section 11(b) hereof.

 

(d)                                 Thefederal, state and local income or other tax returns filed by Executive will beprepared and filed on a consistent basis with the determination of the AccountingFirm with respect to the Excise Tax payable by Executive. To the extent theExcise Tax has not been previously withheld from amounts paid to the Executive,Executive will make proper payment of the amount of any Excise Tax, and at therequest of the Trust, provide to the Trust true and correct copies (with anyamendments) of his federal income tax return as filed with the Internal RevenueService and corresponding state and local tax returns, if relevant, as filedwith the applicable taxing authority, and such other documents reasonablyrequested by the Trust, evidencing such payment. If prior to the filing of

 

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Executive’sfederal income tax return, or corresponding state or local tax return, ifrelevant, the Accounting Firm determines that the amount of the Gross-UpPayment should be reduced, Executive will within five business days pay to theTrust the amount of such reduction.

 

(e)                                  Thefees and expenses of the Accounting Firm for its services in connection withthe determinations and calculations contemplated by Sections 11(b) and 11(d)hereof will be borne by the Trust. If such fees and expenses are initiallyadvanced by Executive, the Trust will reimburse Executive the full amount ofsuch fees and expenses within five business days after receipt from Executiveof a statement therefore and reasonable evidence of his payment thereof.

 

(f)                                    Executivewill notify the Trust in writing of any claim by the Internal Revenue Servicethat, if successful, would require the payment by the Trust of a Gross-UpPayment. Such notification will be given as promptly as practicable but nolater than ten (10) business days after Executive actually receives notice ofsuch claim and Executive will further apprise the Trust of the nature of suchclaim and the date on which such claim is requested to be paid (in each case,to the extent known by Executive). Executive will not pay such claim prior tothe earlier of (x) the expiration of the 30-calendar-day period following thedate on which he gives such notice to the Trust and (y) the date that anypayment of amount with respect to such claim is due. If the Trust notifiesExecutive in writing prior to the expiration of such period that it desires tocontest such claim, Executive will:

 

(i)                                     providethe Trust with any written records or documents in his possession relating tosuch claim reasonably requested by the Trust;

 

(ii)                                  takesuch action in connection with contesting such claim as the Trust willreasonably request in writing from time to time, including without limitationaccepting legal representation with respect to such claim by an attorneycompetent in respect of the subject matter and reasonably selected by theTrust;

 

(iii)                               cooperatewith the Trust in good faith in order effectively to contest such claim; and

 

(iv)                              permitthe Trust to participate in any proceedings relating to such claim; provided,however, that the Trust will bear and pay directly all costs and expenses(including interest and penalties) incurred in connection with such contest andwill indemnify and hold harmless Executive, on an after-tax basis, for andagainst any Excise Tax or income tax, including interest and penalties withrespect thereto, imposed as a result of such representation and payment ofcosts and expenses. Without limiting the foregoing provisions of thisSection 11(f), the

 

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Trust will controlall proceedings taken in connection with the contest of any claim contemplatedby this Section 11(f) and, at its sole option, may pursue or forego anyand all administrative appeals, proceedings, hearings and conferences with thetaxing authority in respect of such claim (provided that Executive mayparticipate therein at his own cost and expense) and may, at its option, eitherdirect Executive to pay the tax claimed and sue for a refund or contest theclaim in any permissible manner, and Executive agrees to prosecute such contestto a determination before any administrative tribunal, in a court of initialjurisdiction and in one or more appellate courts, as the Trust will determine;provided, however, that if the Trust directs Executive to pay the tax claimedand sue for a refund, the Trust will advance the amount of such payment toExecutive on an interest-free basis and will indemnify and hold Executiveharmless, on an after-tax basis, from any Excise Tax or income tax, includinginterest or penalties with respect thereto, imposed with respect to suchadvance; and provided further, however, that any extension of the statute oflimitations relating to payment of taxes for the taxable year of Executive withrespect to which the contested amount is claimed to be due is limited solely tosuch contested amount. Furthermore, the Trust’s control of any such contestedclaim will be limited to issues with respect to which a Gross-Up Payment wouldbe payable hereunder and Executive will be entitled to settle or contest, asthe case may be, any other issue raised by the Internal Revenue Service or any othertaxing authority.

 

(g)                                 If,after the receipt by Executive of an amount advanced by the Trust pursuant toSection 11(f) hereof, Executive receives any refund with respect to suchclaim, Executive will (subject to the Trust’s complying with the requirementsof Section 11(f)) hereof) promptly pay to the Trust the amount of suchrefund (together with any interest paid or credited thereon after any taxesapplicable thereto). If, after the receipt by Executive of an amount advancedby the Trust pursuant to Section 11(f) hereof, a determination is madethat Executive will not be entitled to any refund with respect to such claimand the Trust does not notify Executive in writing of its intent to contestsuch denial or refund prior to the expiration of 30 calendar days after suchdetermination, then such advance will be forgiven and will not be required tobe repaid and the amount of such advance will offset, to the extent thereof,the amount of Gross-Up Payment required to be paid pursuant to thisSection 11. If, after the receipt by Executive of a Gross-Up Payment butbefore the payment by Executive of the Excise Tax, it is determined by theAccounting Firm that the Excise Tax payable by Executive is less than theamount originally computed by the Accounting Firm and consequently that theamount of the Gross-Up Payment is larger than that required by thisSection 11, Executive shall promptly refund to the Trust the amount bywhich the Gross-Up Payment initially made to Executive exceeds the Gross-UpPayment required under this Section 11.

 

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12.                                 ContinuedPerformance.  Provisions of thisAgreement shall survive any termination of this Agreement if so provided hereinor if necessary or desirable fully to accomplish the purposes of suchprovisions, including, without limitation, the obligations of the Executiveunder the terms and conditions of Section 8 and Section 9.  Any obligation of the Trust to make paymentsto or on behalf of the Executive under Section 7 is expressly conditionedupon the Executive’s continued performance of the Executive’s obligations underSection 8 and Section 9.  TheExecutive recognizes that, except to the extent, if any, provided in Section 7,the Executive will earn no compensation from the Trust after the Date ofTermination.

 

13.                                 Notice.  For the purposes of this Agreement, notices,demands and all other communications provided for in this Agreement shall be inwriting and shall be deemed to have been duly given when delivered or (unlessotherwise specified) mailed by United States certified or registered mail,return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:

 

Ralph L. Miller

 

 

 

If to the Trust:

 

Falcon FinancialInvestment Trust

15 Commerce Road

Stamford, CT 06902

Tel: (203) 967-0000

Fax: (203) 967-1717

 

Attn: CompensationCommittee

 

or to such other address as any party may have furnished to the othersin writing in accordance herewith, except that notices of change of addressshall be effective only upon receipt.

 

14.                                 Miscellaneous.  No provisions of this Agreement may bemodified, waived or discharged unless such waiver, modification or discharge isagreed to in writing signed by the Executive and such officer of the Trust asmay be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the otherparty hereto of, or compliance with, any condition or provision of thisAgreement to be performed by such other party shall be deemed a waiver ofsimilar or dissimilar provisions or conditions at the same or at any prior

 

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or subsequenttime.  No agreements or representations,oral or otherwise, express or implied, with respect to the subject matterhereof have been made by either party which are not set forth expressly in thisAgreement.  The validity,interpretation, construction and performance of this Agreement shall begoverned by the laws of the State of Connecticut without regard to itsconflicts of law principles.

 

15.                                 Validity.  The invalidity or unenforceability of anyprovision or provisions of this Agreement shall not affect the validity orenforceability of any other provision of this Agreement, which shall remain infull force and effect.

 

16.                                 Counterparts.  This Agreement may be executed in one ormore counterparts, each of which shall deemed to be in an original but all ofwhich together will constitute one and the same instrument.

 

17.                                 Disputes.  Any dispute or controversy arising under orin connection with this Agreement shall, at the Executive’s sole discretion, besettled exclusively by such judicial remedies as the Executive may seek topursue or by arbitration conducted before a panel of three arbitrators inStamford, Connecticut  in accordancewith the rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitrator’saward in any court having jurisdiction; provided, however, that the Trust shallbe entitled to seek a restraining order or injunction in any court of competentjurisdiction to prevent any continuation of any violation of the provisions ofSection 8 and Section 9 of this Agreement and the Executive herebyconsents that such restraining order or injunction may be granted without thenecessity of the Trust’s posting any bond, and provided further that theExecutive shall be entitled to seek specific performance of his right to bepaid until the Date of Termination during the pendency of any dispute orcontroversy arising under or in connection with this Agreement.  The expense of such arbitration shall beborne by the Trust.

 

18.                                 Indemnification.  The Trust shall indemnify and hold Executiveharmless to the maximum extent permitted by the laws of the State of Maryland(and the law of any other appropriate jurisdiction after an a reincorporation)against judgments, fines, amounts paid in settlement and reasonable expenses,including attorneys’ fees incurred by Executive, in connection with the defenseof, or as a result of any action or proceeding (or any appeal from any actionor proceeding) in which Executive is made or is threatened to be made a partyby reason of the fact that he is or was an officer or trustee of the Trust,regardless of whether such action or proceeding is one brought by or in theright of the Trust to procure a judgment in its favor (or other than by or inthe right of the Trust). Notwithstanding the foregoing, the Executive shall not be entitled to beindemnified to the extent he has acted in bad faith or in manner that constitutesgross negligence or willful or intentional misconduct.

 

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19.                                 EntireAgreement.  This Agreement setsforth the entire agreement of the parties hereto in respect of the subjectmatter contained herein and supersedes all prior agreements, promises,covenants, arrangements, communications, representations or warranties, whetheroral or written, by any officer, employee or representative of any partyhereto; and any prior agreement of the parties hereto in respect of the subjectmatter contained herein.

 

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IN WITNESS WHEREOF, theparties have executed this Agreement on the date and year first above written.

 
|     | FALCON FINANCIAL  INVESTMENT  TRUST |
|----------|-------------------------------------|
|     |                                |
| Attest:  |                                |
|     |                                |
| By:      |                                |   | By: | /s/ Vernon B. Schwartz |   |
|     |                                | Name: | Vernon B. Schwartz |
|     |                                | Title: | Chief Executive Officer |
|     |                                |
|     |                                |
| Witness: |                                |
|     |                                |
| By:      |                                |   | /s/ Ralph L. Miller |   |
|     | RALPH L. MILLER                     |
|          |                                     |  |  |  |  |  |  |

 

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