Document:

Exhibit 10.27

 

	
  PRIVILEGED AND
  CONFIDENTIAL

  	
   

  	
  EXECUTION COPY

  

 

William F. Aldinger

[Address redacted]

 

Dear Mr. Aldinger:

 

We are all
extremely pleased that you have agreed to accept the position of Chief
Executive Officer (“CEO”) of Capmark Financial Group Inc. (the “Company”),
effective June 1, 2006 (“Commencement Date”), in accordance with the terms and
conditions of this letter (the “Letter Agreement”), which shall govern your
employment with the Company. As soon as practicable after this Letter Agreement
is executed, you will enter into other agreements with the Company and the
investors therein, including, but not limited to, a management stockholder’s
agreement (substantially in the form attached hereto as Annex C), a sale
participation agreement (substantially in the form attached hereto as Annex E)
and certain stock option agreements (substantially in the form attached hereto
as Annex D) to be granted pursuant to the 2006 Equity Plan for Key Employees of
the Company and its Affiliates (the “2006 Plan” and, together, with such other
agreements, the “Equity Agreements”), the principal terms of which are
described in Appendix I attached to this Letter Agreement. Such Equity
Agreements will be substantially in the form executed with other executives of
the Company, with such changes as are necessary to reflect the terms herein.
The nature of your employment is at-will, and, subject to Appendix I, your
employment may be terminated by yourself or the Company for any or no reason at
any time.

 

With respect to the
terms of your employment with the Company, you shall have the customary duties,
responsibilities and authorities of a CEO at a corporation of a similar size
and nature. You will report directly to the Board of Directors of the Company
(the “Board”). On the Commencement Date, you will be appointed to the Board.
You shall also receive such office, staffing, and other assistance commensurate
with that received by such CEO, to be provided to you at the Company’s
headquarters, currently located in Horsham, Pennsylvania, for so long as you
are employed as CEO of the Company. However, the parties agree that, within six
to nine months of the Commencement Date, your primary office will be relocated
to a Company headquarters in San Francisco, and the parties anticipate that a
small contingent of the executive team will be selected to accompany you. By
executing this Letter Agreement, you acknowledge that you will devote your full
business time as CEO to the Company and you will perform your duties to the
Company at the current or future designated Company corporate headquarters or
at such other location mutually agreed upon between the Company and you (the “Primary
Office”), unless your duties require that you perform such duties in other
locations.

 

With respect to
compensation for your services as CEO of the Company, you will receive the
following compensation and benefits, from which the Company shall be entitled
to withhold any amount required by law, for so long as you continue to provide
such services:

 

1

 

(i)
The Company shall pay you an annual rate of total cash compensation equal to
$1,500,000 (your “Annual Compensation”). Such Annual Compensation shall be
payable in accordance with the normal payroll practices of the Company. Any
increase in your Annual Compensation shall be in the discretion of the
compensation committee of the Board, provided that no decrease shall be made to
your Annual Compensation. It is neither intended nor expected that you shall be
eligible for or paid any annual cash bonus.

 

(ii)
The Company will provide you with coverage under all retirement and welfare
benefit programs, plans and practices and other fringe benefits which the
Company makes available to its senior management (commensurate with your
position in the Company and to the extent permitted under any such employee
benefit plan) in accordance with the terms thereof.

 

In addition to the
foregoing, the Company shall reimburse you for the operating cost of the use of
your personal airplane at a rate of $4,500 per hour (for the first year of
employment, with any changes to the rate to be mutually agreed upon thereafter,
from time to time, on an annual basis), when such airplane is used for business
travel on behalf of the Company (which business travel shall include its use to
convey you weekly to and from the Primary Office (or at some other location
where your business travel requires you to be) to your residences in either the
Chicago or San Francisco metropolitan area, to the extent you spend your
weekend out of Horsham.

 

In addition to the
foregoing, on the Commencement Date or as soon as practicable thereafter, you
will purchase $15,000,000 worth of shares of Company common stock (“Common
Stock”) all at $5.00 per share, the price paid by the GMACCH Investor, LLC for
such class of stock, pursuant to the execution of a management stockholder’s
agreement with the Company (substantially in the form attached hereto as Annex
C), and subject to your execution of a sale participation agreement with
certain investors in the Company (substantially in the form attached hereto as
Annex E). On the date that you make such an investment, you will also receive a
corresponding stock option grant (substantially in the form attached hereto as
Annex D) to purchase 12,000,000 shares of Company common stock having an
aggregate exercise price equal to $60,000,000 (based on a per share exercise
price equal to $5.00), vesting in equal installments on each of the first three
anniversaries of the Commencement Date, and otherwise as described on Appendix
I attached to this Letter Agreement. All such shares of purchased Common Stock
and any shares received upon exercise of any of the options discussed herein
shall be subject to the restrictions and conditions set forth in the Equity
Agreements. For purposes of the definitions in the Equity Agreements (including
without limitation the definitions of “Cause”, “Good Reason”, “Disability” and “Retirement”),
this Letter Agreement (together with Appendix I) shall constitute an employment
agreement between the Company and you.

 

Any controversy or
claim arising out of or relating to this Letter Agreement or the breach of this
Letter Agreement that cannot be resolved by you and the Company, including any
dispute as to the calculation of your benefits or any payments hereunder, shall
be submitted to arbitration in New York, New York, in accordance with the
procedures of the American Arbitration

 

2

 

Association, which
arbitration shall be a binding and conclusive settlement of any such claims or
disputes. This Letter Agreement and any dispute thereunder shall be construed,
interpreted and governed in accordance with the laws of the State of New York
without reference to rules relating to conflicts of law. Each party shall bear
the costs of any legal fees and other fees and expenses which may be incurred
in respect of enforcing its respective rights under this Letter Agreement.

 

The Company will
pay or reimburse you for the reasonable legal and professional fees and
expenses actually incurred by you in connection with the negotiation and
documentation of this Letter Agreement (including Appendix I and all related
documents) upon presentation of reasonable supporting documentation for such
fees and expenses, in an amount not to exceed $50,000. In the event of any
inconsistency between this Letter Agreement and Appendix I, and any other plan,
program or practice of the Company, the terms of this Letter Agreement and
Appendix I will control unless the Company and you otherwise agree in writing
with specific reference to this provision.

 

The Company will
indemnify you for all acts or omissions occurring while you are an employee of
the Company or a member of the Board to the maximum extent provided under the
Company’s charter, by-laws, and applicable law. The Company will insure you
under a policy of directors and officers liability insurance during your
employment and thereafter to the same extent as provided to active members of
the Board.

 

This Letter
Agreement may be executed in counterparts.

 

If the foregoing
terms and conditions are acceptable and agreed to by you, please sign on the
line provided below to signify such acceptance and agreement and return the
executed copy to the undersigned.

 

	
   

  	
   

  	
  Capmark Financial Group Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Scott Nuttall 

  	
   

  
	
   

  	
   

  	
  Name: Scott Nuttall

  
	
   

  	
   

  	
  Title: Director

  

 

 

	
  Accepted and Agreed

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ William F. Aldinger

  	
   

  	
   

  
	
  William F. Aldinger

  	
   

  
			

 

3

 

Appendix I

 

Capmark Financial Group Inc. (the “Company”)

Term Sheet

for 

Equity Participation of William F. Aldinger (“Executive”)

 

	
  Direct
  Investment 

  by 

  Executive:

  	
   

  	
  Executive will make a $15,000,000 cash investment in
  the common stock of the
  Company (“Common Stock”)  at $5.00 per share, the same effective
  price per share as the Investors(1) paid to invest in the Company (the “Base Price”). Such investment will be made on the
  date Executive commences employment with the Company (the “Commencement Date”), or as soon as practicable thereafter.
  The Common Stock purchased will be subject to a management stockholders’
  agreement with the Company (the “Management Stockholders’ Agreement”)  and a sale participation agreement with
  the Investors (the “Sale
  Participation Agreement”).

  
	
   

  	
   

  	
   

  
	
  Option Grants:

  	
   

  	
  The initial grant of stock
  options to Executive in connection with the Commencement Date will be a
  function of Executive’s direct investment in the Company, such that for each
  share of Common Stock purchased by Executive, he will receive an option
  covering an additional four shares of Common Stock (the “Base Option Grant”). All options granted at the
  Commencement Date shall have an exercise price equal to the Base Price. All
  other options granted after the Commencement Date shall have an exercise
  price equal to the Fair Market Value (as hereinafter defined) on the
  applicable date of grant (barring any unforeseen circumstances it is
  anticipated that the exercise price of options granted in 2006 will continue
  to be the Base Price).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All of the Base Option
  Grant will be subject to time vesting, such that, subject to Executive’s
  continued employment, the Base Option Grant will vest and become exercisable
  as to 33. % of the shares subject to the Base Option Grant on each of the first
  three anniversaries of the Commencement Date; provided, however, if Executive’s
  employment is terminated at any time by the Company without Cause, by the
  Executive for Good Reason or due to Executive’s death or Disability, then a
  pro rata portion (based on the number of whole or partial months of
  employment since the preceding anniversary of the Commencement Date divided
  by 12) of the Base Option Grant that would have vested on the next succeeding
  anniversary of the Commencement Date after the employment termination date,
  shall vest and become exercisable.

  

 

(1)
The term “Investors” includes, as applicable, affiliates of each of
Kohlberg Kravis Roberts & Co., Five Mile Capital Partners, Dune Capital
Management and The Goldman Sachs Group, investing through GMACCH Investor LLC.

 

 

	
   

  	
   

  	
  Unless earlier terminated
  in connection with a Change in Control or a termination of Executive’s
  employment, all as described below, all options will have a term of ten (10)
  years from the date of grant (the last day of such term, the “Maturity Date”).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The registration rights
  described below will apply to the options and all shares of Option Stock (as
  defined below) acquired upon exercise of the options.

  
	
   

  	
   

  	
   

  
	
  Effect of Change in 

  Control:

  	
   

  	
  In addition to the vesting
  set forth above, the Base Option Grant will vest and become exercisable
  immediately prior to a Change in Control (as defined in Exhibit A).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Base
  Option Grant.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All vested options
  (including those that become vested in connection with a Change in Control)
  will, in the discretion of the board of directors of the Company (the “Board”),  be (x) timely exercisable so that the
  underlying shares of Common Stock can be effectively tendered so that the
  Executive may participate in the Change in Control as a shareholder, (y)
  cashed out and terminated at a price equal to the Change in Control price
  minus the option exercise price, or (z) solely in the case of a Change in
  Control where the Investors receive stock, converted into a corresponding
  number of fully vested stock options to acquire new common stock. Any such
  converted options granted pursuant to clause (z) above shall cover an
  adjusted number of shares and have an adjusted exercise price, both to be
  conventionally determined so as to preserve the intrinsic gain at the time of
  the Change in Control, and shall otherwise have (i) exercise rights, a
  Maturity Date and other rights which are not less favorable, and be subject
  to obligations which are not more onerous, than those applicable to the Base
  Option Grant from which they were converted, and (ii) such other terms as are
  necessary for the Executive to avoid penalty taxes under Section 409A of the
  Internal Revenue Code (“Section
  409A”).

  
	
   

  	
   

  	
   

  
	
  Dividend 

  Equivalents:

  	
   

  	
  In the case of an ordinary
  dividend, the Company has established a dividend equivalent rights program on
  a basis consistent with Section 409A, pursuant to which, upon the payment of
  any ordinary cash dividend (or similar distributions) to holders of Common
  Stock, Executive will be credited with dividend equivalent rights with
  respect to all of his then-vested options.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All dividend equivalent
  rights will be credited to a notional account maintained on the books of the
  Company for the benefit of Executive, which account shall accrue interest.
  Executive will become vested in

  

 

 

2

 

	
   

  	
   

  	
  such account to the same extent as Executive
  exercises any vested options and/or Executive’s vested options are
  repurchased by the Company in connection with Executive’s termination of
  employment (in the event of a termination of employment by Executive without
  Good Reason, however, Executive will only become vested in such account if
  the call price for the option (as described below) is greater than zero (such
  vesting event is hereinafter referred to as a “Qualifying Resignation”).  Executive will also become fully vested
  in the account upon the first to occur of a Change in Control or a
  termination of Executive’s employment with the Company due to his death or
  Disability (as defined in Exhibit A).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Unvested amounts (including any interest accrued
  thereon) held in such account shall be forfeited by Executive upon the date
  that his vested options otherwise expire in accordance with their terms.
  Vested amounts held in such account (including any interest accrued thereon)
  will be paid to Executive in cash on the earliest to occur of: (i) the tenth
  anniversary of the Commencement Date, (ii) any termination of Executive’s
  employment with the Company (other than a termination by the Company with
  Cause or by Executive without Good Reason) or (iii) a Change in Control (that
  otherwise complies with Section 409A), in each such case, prior to the tenth
  anniversary of the Commencement Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In the case of the payment of any extraordinary
  dividend (in cash or in Common Stock), the Company shall adjust the exercise
  price of all outstanding options in a manner permitted under Section 409A and
  which does not give rise to adverse accounting consequences to the Company.
  To the extent such adjustment is not permitted under Section 409A or does
  give rise to adverse accounting consequences, Executive shall then receive
  dividend equivalents in the manner described above, except that such amounts
  shall be vested, and shall vest, at the same time as the options to which the
  dividend equivalents relate become exercisable and shall be paid in the same
  manner and at the same time as the dividend equivalents described in the
  preceding paragraph.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In addition to the foregoing, any payments to be
  made to Executive on or after a public offering of the Company, if Executive
  is a “specified employee” (as defined in Section 409A), in connection with a
  termination of Executive’s employment with the Company shall not be paid
  until the date that is six months and one day following the date of Executive’s
  termination of employment (or such earlier date as may be permitted under
  Section 409A).

  
	
   

  	
   

  	
   

  
	
  Stock
  Option Plan:

  	
   

  	
  Except to the extent otherwise provided herein or in
  the Letter Agreement to which the Appendix I is attached, (1) all options
  will be subject to the terms of the 2006 Equity Plan for Key Employees of

  

 

3

 

	
   

  	
   

  	
  Capmark Financial Group Inc. and its Affiliates (the
  “Stock
  Option Plan”) and
  (2) shares received by Executive upon exercise of any options will be subject
  to the Management Stockholders’ Agreement and the Sale Participation
  Agreement, the material terms of which are described below.

  
	
   

  	
   

  	
   

  
	
  Future
  Grants; 

  Cashless Exercise 

  Rights:

  	
   

  	
  Executive may receive future grants of options based
  upon individual and Company performance in the discretion of the Board.
  Shares of Common Stock covered by options that are forfeited shall be
  restored to the option pool and be available for future option grants. All
  options will be priced at Fair Market Value on the grant date. The Company
  will allow Executive to exercise his vested options using a “cashless
  exercise” method that is compliant with Regulation T, Section 220.3(e)(4) and
  the Sarbanes-Oxley Act of 2002 (“Cashless Exercise”)  and may, in the Board’s discretion,
  include the right to apply shares of Common Stock received upon exercise of
  options to meet Executive’s minimum withholding tax obligation; provided,
  however, in the event of any termination of employment (other than by
  the Company for Cause or by the Executive without Good Reason prior to the
  third anniversary of the Commencement Date), then on or after the fifth
  anniversary of the Commencement Date and prior to the expiration of the vested
  options, unless exercised or repurchased sooner, to the extent that a public
  offering of Common Stock shall have not occurred and a Cashless Exercise is
  accordingly unavailable to Executive, Executive will be allowed to use a Net
  Exercise method to exercise his vested options. A “Net Exercise”  shall mean that Executive may direct
  the Company to deduct from the shares of Common Stock issuable upon exercise
  of his options a number of shares having an aggregate Fair Market Value equal
  to the sum of the aggregate exercise price therefor plus the amount of
  Executive’s minimum withholding tax obligation, and the Company shall
  thereupon issue to Executive the net remaining number of shares after such
  deductions. In the event of a Net Exercise, Executive shall also have the
  right to put to the Company such number of shares of Purchased Stock as have
  an aggregate Fair Market Value equal to the balance of his actual tax
  liability remaining after the deduction of shares to satisfy his minimum
  withholding tax liability in respect of such Net Exercise.

  
	
   

  	
   

  	
   

  
	
  Securities
  

  Exemption:

  	
   

  	
  Options will be granted using the exemption
  available under Rule 701, and immediately following any Qualified Public
  Offering, the Company will register all Common Stock underlying the options
  granted under the Stock Option Plan on a Form S-8.

  
	
   

  	
   

  	
   

  
	
  Treatment
  of 

  Options on 

  Termination of Employment/

  	
   

  	
   

  
	
  Death:

  	
   

  	
  The portion of any outstanding stock option that is
  vested at termination 

  

 

4

 

	
  Disability/
  

  Retirement 

  (as defined 

  in

  Exhibit A):

  	
   

  	
  (whether by time-vesting or by acceleration as
  provided herein) shall remain exercisable until the date that is 5 years and
  90 days following the Commencement Date, unless exercised or repurchased
  sooner. The unvested portion of any then-outstanding stock option will be
  forfeited upon such termination.

  
	
   

  	
   

  	
   

  
	
  Cause
  (as 

  defined in 

  Exhibit A):

  	
   

  	
  All options (vested and unvested) will be forfeited
  immediately upon termination.

  
	
   

  	
   

  	
   

  
	
  By
  

  Company 

  Without 

  Cause, By Executive 

  with Good 

  Reason (as 

  defined in 

  Exhibit A):

  	
   

  	
  Upon any such termination, then vested options
  (whether by time-vesting or acceleration as provided herein) will remain
  exercisable until the date that is 5 years and 90 days following the Commencement
  Date, unless exercised or repurchased sooner. The unvested portion of any
  then-outstanding stock option will be forfeited upon such termination.

  
	
   

  	
   

  	
   

  
	
  By
  

  Executive 

  Without 

  Good 

  Reason:

  	
   

  	
  Upon such termination prior to the third anniversary
  of the Commencement Date, then vested options will be exercisable for 30 days
  following such termination. Upon such termination on or following the third
  anniversary of the Commencement Date, then vested options (whether by
  time-vesting or acceleration as provided herein) will remain exercisable
  until the date that is 5 years and 90 days following the Commencement Date,
  unless exercised or repurchased sooner. The unvested portion of any
  then-outstanding stock option will be forfeited upon such termination.

  
	
   

  	
   

  	
   

  
	
  Extension
  of 

  Exercise 

  Period

  	
   

  	
  Notwithstanding the foregoing, in all termination
  events other than a termination of Executive’s employment for Cause, if the
  last day to exercise vested options occurs after the date on which the Common
  Stock is publicly traded on a national stock exchange and during a lock-up
  period or securities law blackout period, the otherwise applicable
  post-termination option exercise period shall be extended, but not beyond the
  Maturity Date, until 15 days after the first day when the Executive is no
  longer precluded from selling stock acquired upon exercise of options for
  either of such reasons.

  
	
   

  	
   

  	
   

  
	
  Management
  

  Stockholders’ 

  Agreement and 

  Sale Participation 

  Agreement:

  	
   

  	
  Except to the extent otherwise provided herein, or
  in the Letter Agreement to which this Appendix I is attached, all shares
  acquired upon exercise of options (the “Option Stock”)  and shares of Common Stock purchased
  directly from the Company as described above (the “Purchased Stock”, collectively with Option Stock, the “Management
  Stock”)  and, where applicable, the options,
  will be subject to the terms of

  

 

5

 

	
   

  	
   

  	
  the Management Stockholders’ Agreement, and other
  related equity documents, which will provide as follows:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Transfer Restrictions.
  Management Stock will be subject to a restriction on transfer until the
  first to occur of (i) the occurrence of a Change of Control or (ii) five
  years from the Commencement Date (the first to occur being, the “Lapse Date”). The transfer restriction shall not
  apply to (1) sales to the Company or sales to the Investors or their
  affiliates, (2) sales in accordance with the drag-along, tag-along,
  registration, call and put rights (described below), or (3) transfers to
  family members or family trusts, partnerships or similar entities for estate
  planning purposes.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Right of First Refusal.
  The Company will have a right of first refusal on any proposed sale of
  Management Stock until the first occurrence of a Lapse Date. The right of first
  refusal shall not apply to (1) sales to the Company or sales to the Investors
  or their affiliates, (2) sales in accordance with the drag-along, tag-along,
  registration, call and put rights (described below), or (3) transfers to
  family members or family trusts, partnerships or similar entities for estate
  planning purposes.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Drag-Along. As
  provided for in the Sale Participation Agreement, the Investors will have the
  right to drag along (i.e., force Executive to sell his shares) Management
  Stock in the event of any private sale by the Investors of 50% or more of the
  outstanding Common Stock to a third party in the same proportion as the
  Investors’ shares are sold.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tag Along. As
  provided for in the Sale Participation Agreement, Executive shall have the
  right to tag along (i.e., force the Investors to sell Management Stock) in
  the event of any private sale by the Investors to a third party in the same
  proportion as the Investors’ shares are sold or, if such sale occurs after a
  Qualified Public Offering, and if Executive elects not to tag along in such
  sale, the number of shares that Executive could have sold in such private
  sale under the tag-along right shall cease to be subject to the transfer
  restrictions described above (but, for the avoidance of doubt, shall continue
  to be subject to the right of first refusal, drag-along rights, and put and
  call rights (described below)). The tag-along right shall apply to all sales
  (other than those that would trigger piggyback registration rights).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Co Investment Right.
  Executive shall have the right to invest in the future in any new
  securities of the Company on the same terms as the Investors, on a pro rata
  basis based on his Purchased Stock, except that any such investment by
  Executive shall be subject to the transfer restrictions applicable generally
  to Management Stock, and not entitled to any more favorable terms than those
  granted to the Investors.

  

 

6

 

	
   

  	
   

  	
  Registration Rights.
  In the event of any public offerings of the shares of Common Stock held
  by the Investors, Executive will be entitled to customary piggyback
  registration rights to participate in sales of Common Stock by the Investors
  by disposing of shares of Executive’s Management Stock and unexercised vested
  options by Cashless Exercise in the same percentage as the percentage
  Investors dispose of their Common Stock or, at the Investors’ election,
  Executive will be entitled to sell the same number of his shares directly
  into the public market, that he could have sold if he had exercised his
  piggyback registration rights. The Company will promptly register, using
  reasonable commercial efforts, pursuant to Form S-8, all options then issued
  to Executive and outstanding on the date of any public offering of Company
  common stock.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Put and Call Rights.
  Except as specifically provided below, upon any termination of Executive’s
  employment with the Company prior to fifth anniversary of the Commencement
  Date, the put and call rights (if any) described below shall apply for
  one-year following such termination (or through the occurrence of a Change of
  Control, if earlier) the Company shall have the right to require Executive to
  sell the Management Stock (and vested options as applicable) back to the Company
  (i.e., a call right) (provided that in any such case involving a termination
  without Cause or for Good Reason, the Company shall give notice to Executive
  or his representative of whether it will exercise its call right on Option
  Stock, not less than 10 business days prior to expiration of Executive’s
  vested options), and Executive shall have the right to require the Company to
  repurchase the Management Stock and vested options (i.e., a put right), as
  follows:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •          Termination by reason of Death or Disability:
  Executive put right on all (i) Management Stock held at least six months and
  one day and (ii) vested options,(2) in all cases, with the purchase price
  equal to the Fair Market Value on the date of repurchase. The Company will
  have a call right on all vested options, with the purchase price equal to the
  Fair Market Value on the date of repurchase, less, the applicable
  option exercise price.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •          Termination by reason of Retirement: No
  Executive put right (other than the Special Liquidity Put Right, as described
  below).

  

 

(2) With respect to the vested options, Executive (or
his estate, as applicable) would be permitted to (i) sell to the Company all of
such options or (ii) exercise the options using a “net settlement” exercise
mechanism, which resulting shares received by Executive (or his estate, as
applicable) must then be held for six months and one day before such shares can
be put back to the Company.

 

7

 

	
   

  	
   

  	
  Company call right on
  all Management Stock and vested options, with a purchase price equal to the
  Fair Market Value on the date of repurchase, less, in the case of
  options, the applicable option exercise price.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •          Termination by the Company without
  Cause/Termination by Executive with Good Reason; No Executive put
  right (other than the Special Liquidity Put Right, as described below).
  Company call right on the Management Stock and the vested options with a
  purchase price equal to the Fair Market Value on the date of repurchase, less,
  in the case of options, the applicable option exercise price.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •          Termination by the Company for Cause: No
  Executive put right. Company call right on all Management Stock, with the
  purchase price equal to the lesser of (i) the book value of the Management
  Stock or (ii) Fair Market Value, in either case on the date of repurchase.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •          Termination by Executive without Good Reason. Prior
  to the third anniversary of the Commencement Date, no Executive put right and
  a Company call right on all Management Stock and vested options with the
  purchase price equal to the lesser of (i) the book value of the Management
  Stock or (ii) Fair Market Value, in either case on the date of repurchase, less,
  in the case of options, the applicable option exercise price. Such a
  termination on or following the third anniversary of the Commencement Date
  shall be treated as a termination by reason of Retirement.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •          Special Liquidity Put Right. In the
  event of a termination: (i) by reason of Retirement, (ii) without Cause by
  the Company, (iii) by Executive with Good Reason, or (iv) by Executive
  without Good Reason on or after three years of employment with the Company,
  if the Company does not call the Management Stock or unexercised vested
  option such that Executive has received proceeds equal to the lesser of
  $10,000,000 or one-half of the Fair Market Value of his Purchased Stock,
  reduced by any proceeds received from any prior disposition of Purchased
  Stock, Option Stock or vested options (the “Minimum Liquidity Amount”),  then, and only then, Executive will
  have a right to put to the Company on or after the third anniversary of the
  Commencement Date, a number of shares of Purchased Stock such that he will
  receive proceeds equal to the Minimum Liquidity Amount.

  

 

8

 

	
  Confidentiality/ 

  Non-Solicitation/ 

  Non-Competition

  	
   

  	
  Executive will be subject at all times during and
  after employment to a confidentiality covenant prohibiting Executive from
  disclosing or using at any time any non-public confidential or proprietary
  information concerning the Company, any of the Investors, or any of their
  respective affiliates, except as required by law.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In addition, while employed with the Company and for
  one year thereafter, Executive is to be bound by covenants not to solicit or
  hire for the benefit of anyone, other than the Company or its subsidiaries,
  any individual who is, or was during the 12 months preceding the time of the
  solicitation or hiring, employed by the Company or any of its subsidiaries.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Furthermore, while employed with the Company and for
  one year thereafter, Executive is bound by a covenant not to compete,
  prohibiting Executive from directly or indirectly, owning (other than less
  than 2% of a publicly traded company), managing, controlling, being employed
  by, participating in or being connected in any manner with the ownership,
  management, operation or control of one of the top ten (10) (measured on the
  basis of assets) United States commercial mortgage companies or their
  subsidiaries or affiliates.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In the event that Executive breaches these covenants
  during the one-year period following any termination of employment, in
  addition to other remedies, the Company will be entitled to recover any
  payments made by the Company to Executive in respect of the repurchase of
  Executive’s Management Stock and options, in excess of amounts paid by
  Executive for such stock (whether upon exercise of vested options or
  otherwise).

  

 

9

 

Exhibit A 

Definitions

 

“Cause”  shall exist if the Board reasonably determines that any one
or more of the following events has occurred while employed by the Company: (i)
the Executive’s willful and continued failure (except where due to a physical
or mental incapacity) to substantially perform his material duties with respect
to the Company which continues beyond ten (10) days after a written demand for
substantial performance is delivered to the Executive by the Company (such
ten-day period, the “Cure Period”); (ii) any gross misconduct of the Executive
that causes material and demonstrable injury, monetarily or otherwise, to the
Company; (iii) conviction of, or plea of guilty or nolo contendere to,
the commission of (x) a felony by the Executive or (y) any misdemeanor
involving theft, fraud, misappropriation or moral turpitude (other than in
connection with any traffic violations); (iv) Executive’s disqualification or
bar by any governmental or self-regulatory authority from serving in his
position with the Company or Executive’s loss of any governmental or
self-regulatory license that is reasonably necessary for Executive to perform
his material duties with respect to the Company, in any such case, as a result
of misconduct by the Executive; (v) Executive’s willful obstruction of, or
willful failure to cooperate with (except where due to a physical or mental
incapacity), any investigation authorized by the Board; provided that exercise
by the Executive of his constitutional rights under the Fifth Amendment of the
United States Constitution in the event of any criminal investigation of
Executive shall not be treated as obstruction of or failure to cooperate with
any such investigation; (vi) Executive’s material breach of the Company’s
written code of conduct and business ethics, which breach is customarily
punishable by termination of employment by the Company, which continues beyond
the Cure Period (to the extent that, in the Board’s reasonable judgment, such
breach can be cured); or (vii) a material breach by the Executive of the
restrictive covenants applicable to the Executive pursuant to the Executive’s
Management Stockholders’ Agreement or other agreements, if any, which continues
beyond the Cure Period (to the extent that, in the Board’s reasonable judgment,
such breach can be cured).

 

“Change of Control”  shall mean (i) the sale of all or
substantially all of the assets of GMACCH Investor LLC, the Company, or Capmark
Finance Inc. to a person who is not an Investor or an affiliate of any of the
Investors; or (ii) a sale by the Company or GMACCH Investor LLC, in a single
transaction or in a related series of transactions, resulting in more than 50%
of the voting stock of the Company being held by a person or group (as such
terms are used in the Securities Exchange Act of 1934, as amended) that does
not include any of the Investors or any of their respective affiliates; or
(iii) a sale by the Company or GMACCH Investor LLC, in an unrelated series of
transactions, as a result of which the Investors and any of their respective
affiliates are not the single largest holder of voting stock of the Company; or
(iv) a merger or consolidation of the Company or GMACCH Investor LLC into
another person which is not an Investor or an affiliate of any of the Investors;
if and only if any such event (or
as a result of any such event) listed in (i) – (iv) above results in the
inability of the Investors and any of their respective affiliates to elect a
majority of the Board or board of directors of the resulting entity; provided,
however, to the extent any such event listed in (i) – (iv) above occurs but the
neither the Investors nor any of their affiliates retain the ability to elect a
majority of the Board or the board of directors of the resulting entity, a
Change of Control shall be deemed to have occurred upon the date the Investors
and their affiliates lose such ability.

 

 

Notwithstanding
the foregoing, if any of the transactions described in (i), (ii) or (iv) of the
preceding sentence shall occur and the other person or group involved in such
transaction (or its parent entity) is an affiliate of any of the Investors
because it is under common control by an ultimate parent entity, but the day-to-day operations of, and key
business decisions regarding, such affiliate are controlled by an entity that
is, or individuals who are, principally engaged in a business other than the
management or operations of private equity funds (any such affiliate, a “Strategic
Business Affiliate”), then the determination of whether a Change of Control has
occurred shall be made by applying the relevant test in clause (i), (ii) or
(iv) above (along with the test of whether the Investors or any of the
affiliates of any of the Investors lose the ability to elect a majority of the
Board) as if the Strategic Business Affiliate was not an affiliate of any of
the Investors and by treating the voting power of the Strategic Business
Affiliate in the Company (or the resulting entity) as if it were held by a
person or group unaffiliated with any of the Investors.

 

“Disability” shall mean, absent an
employment agreement between the Company and the Executive otherwise defining
Disability, an Executive’s physical or mental disability or infirmity that
prevents the performance of his duties for a period of (i) one hundred twenty
(120) consecutive days or (ii) one hundred eighty (180) non-consecutive days
during any twelve (12) month period, in either case, as evidenced by a written
statement of a physician licensed to practice medicine in any state in the United
States mutually agreed upon by the Company and Executive.

 

“Fair Market Value” shall mean, on a
per share basis, (i) if there is a public market for the shares on such date,
the average of the high and low closing bid prices of the shares of Common Stock
on such stock exchange on which the shares are principally trading on the date
in question, or, if there were no sales on such date, on the closest preceding
date on which there were sales of shares, or (ii) if there is no public market
for the of Common Stock on such date, the fair market value of the shares of
Common Stock on an entity basis (i.e.,
without minority discount) as determined by an independent
investment banker, chosen by the Board in consultation with Executive.

 

“Good Reason” shall mean, without
Executive’s consent (i) the material reduction of Executive’s annual rate of
base salary (excluding any general salary reduction affecting substantially all
of the full-time, salaried employee population of the Company) or annual bonus
opportunity (excluding reductions in the value of any performance bonus pool as
a result of Company or business unit’s performance or changes in the goal
amount or type of performance targets of the applicable bonus arrangement),
(ii) a material diminution in the Executive’s employment duties or
responsibilities, in each case, following a reasonable period by the Company to
cure such event following receipt of written notice by the Executive indicating
the event giving rise to Good Reason; (iii) material interference with
Executive’s management of the Company or (iv) relocation of Executive’s primary
workplace to a location more than 50 miles away from Horsham, Pennsylvania (or
once Executive is relocated to San Francisco, California, San Francisco,
California) without the Executive’s consent. The Executive may terminate his
employment with Good Reason by providing the Company ten (10) days’ written
notice setting forth in reasonable specificity the event that constitutes Good
Reason, within one hundred eighty (180) days after the occurrence of such
event.

 

 

“Qualified Public Offering”  shall mean any public offering of the
Company (whether an initial or subsequent offering) after which at least 35% of
the Company’s or any affiliated holding company’s, outstanding common stock are
listed on the New York Stock Exchange or the Nasdaq National Market or other
nationally recognized stock exchange or listing system.

 

“Retirement”  shall mean Executive’s termination of employment other than
for Cause, at or after (i) attaining age 62 or such other age as the Board in
consultation with the CEO determines and (ii)
completing at least three years of continuous service with the
Company and/or any of its subsidiaries following the Closing or earlier with
the consent of the Committee.Exhibit 10.28

 

	
  200
  Witmer Road

  	
   

  	
  Linda
  Pickles, SPHR

  
	
  Horsham,
  PA 19044

  	
   

  	
  Executive Vice President

  
	
   

  	
   

  	
  Human Resources

  

 

 

REVISED

 

September 5, 2006

 

James Baio

[Address redacted]

 

Dear Mr. Baio:

 

Welcome to Capmark
Finance Inc. (“Capmark Finance” or “Company”). This letter will confirm our
offer of employment to you for the full-time position of Executive Vice
President, Chief Financial Officer, in our San Francisco office, with an annual
starting salary of $600,000 and an effective date on or before October 23,
2006. Your position will be responsible for accounting, tax, budget, business
planning, internal audit, treasury and risk management. Other duties may be
assigned by the CEO. Also, you will be a member of the Executive Committee and
Investment Committee, and serve on other Committees and participate in Board
meetings as requested by the CEO. You and I will work together on the timing
and content of the announcement of your position with Capmark Finance.

 

Upon commencement of
employment, you will receive a signing bonus of $1,350,000, less applicable
taxes, which will be paid to you in your first paycheck. You will be eligible
for an annual discretionary bonus beginning for plan year 2007, and we are
targeting two times your base salary. Please note that you must be an employee
in good standing at the time of pay out of any bonus to receive such bonus.

 

Effective with your
employment, you will be offered the opportunity to purchase equity in the
Company up to a maximum of $2,000,000, matched 3:1 in options. It is expected,
and has been discussed, that you will purchase a minimum of $1,500,000.
Official documentation is enclosed with this letter, and any purchase of equity
and corresponding option grants will be subject to the terms and conditions of
such documents. You will see that the revised Stock Option Agreement notes that
Closing, or March 23, 2006 as defined in the Stock Option Agreement, is used as
the anniversary date for the vesting of your options, rather than the grant
date.

 

 

Per Company policy, your
performance will be reviewed after your initial three months of employment.

 

Should your employment be
terminated within the first 12 months of employment other than for Cause by
Capmark Finance or for Good Reason by you (“Cause” and “Good Reason” as defined
in the “2006 Equity Plan For Key Employees of Capmark Financial Group Inc. and
its Affiliates” and referenced at the end of this letter), you will be entitled
to a severance payment of $600,000 less applicable taxes and in exchange for a
release of all employment claims. Should your employment be terminated other
than for Cause by Capmark Finance or for Good Reason by you during your 13th
month through the end of your 24th month of employment, you will be
entitled to a severance payment of $300,000 less applicable taxes and in
exchange for a release of all employment claims. Should your employment be
terminated other than for Cause by Capmark Finance or for Good Reason by you
after your first 24 months, you will only be entitled to the normal Capmark
Finance severance policy and subject to its provisions. Should your employment
be terminated anytime with Cause by Capmark Finance, or should you leave
voluntarily, you will only be paid base salary through the date of separation,
and you will not be entitled to any other payments. Any severance payments
noted in this paragraph are subject to IRS code Section 409(A), discussed at
the end of this letter.

 

Company policy for time
off is reflected in PTO (paid time off) days. You will accrue 23 days annually
on a pro-rated monthly basis beginning on November 1, 2006. These days are to
be used for vacation, sick or any personal time you may need. As of your third
anniversary with the Company, you will begin to accrue PTO days per the Company
policy, which is based on tenure.

 

You will receive benefits
offered to full-time employees. If elected, medical, dental and term life
coverage becomes effective on December 1, 2006, and you must enroll within 30 days of your hire date.  In addition, you may purchase additional
term life insurance for you and your family contingent upon our insurance
carrier’s approval. You may participate in the Company’s 401(k) Plan beginning
on December 1, 2006, and will be eligible for matching dollars after twelve
consecutive months of employment.

 

Please be advised that we
routinely conduct a background investigation on all employees and continued
employment is contingent upon a satisfactory report.

 

The Immigration Reform
and Control Act of 1986 requires employers to verify the identity and the
authorization of all employees to work in the United States. A list of all
documents accepted by the Immigration and Naturalization Service is enclosed.
You must bring one original document from List A or one original from both List
B and List C on your first day of employment. These documents will be copied
for your file and the original(s) returned to you.

 

 

We are looking forward to
having you join Capmark Finance. Please feel free to contact me if you have any
questions concerning this offer of employment. I can be reached at (215)
328-1895.

 

 

	
  Regards,

  
	
   

  
	
   

  
	
   /s/ Linda Pickles

  	
   

  
	
  Linda Pickles

  

 

 

This appointment is for
no set term and may be terminated at any time for any reason with or without
cause by either you or the Company.

 

If you agree
to the above terms, please sign below and return all pages of the offer letter
along with the Investigative Consumer Report Disclosure Notice and
Authorization form found within the enclosed folder. Both documents can be
faxed to my attention to (215) 328-3714, prior to the expiration date
designated in this letter.

 

All
other forms should be returned to your regional HR Manager, Thomas Cataldi,
located in our Horsham office at x1891 on your first day.

 

This
offer will expire at the end of business on Friday, September 8,  2006.

 

 

	
  /s/ James Baio

  	
   

  	
  9/6/06

  	
   

  
	
  Accepted: James Baio

  	
   

  	
  Date:

  
	
   

  	
   

  
	
   

  	
   

  
					

cc: William Aldinger

 

 

Definitions:

 

Section 409A. The severance
payments outlined in this letter are intended to comply with the requirements
of section 409A of the Code, to the extent applicable, and shall be
administered in accordance with section 409A, to the extent applicable.
Notwithstanding any provision in this letter to the contrary, any payment
otherwise required to be made hereunder to you at any date as a result of the
termination of employment shall be delayed for such period of time as may be
necessary to meet the requirements of section 409A(a)(2)(B)(i) of the Internal
Revenue Code of 1986, as amended (the “Code”). On the earliest date on which
such payments can be made without violating the requirements

 

 

of section
409A(a)(2)(B)(i) of the Code, there shall be paid to you (or if you die, to
your estate), in a single cash lump sum, an amount equal to the aggregate
amount of all payments delayed pursuant to the preceding sentence.

 

“Cause”  shall exist if the Board reasonably
determines that any one or more of the following events has occurred while
employed by the Company: (i) the executive’s willful and continued failure
(except where due to a physical or mental incapacity) to substantially perform
his material duties with respect to the Company which continues beyond ten (10)
days after a written demand for substantial performance is delivered to the
executive by the Company (such ten-day period, the “Cure Period”); (ii) any
gross misconduct of the executive that causes material and demonstrable injury,
monetarily or otherwise, to the Company; (iii) conviction of, or plea of guilty
or nolo contendere to, the commission of (x) a felony by the executive
or (y) any misdemeanor involving theft, fraud, misappropriation or moral
turpitude (other than in connection with any traffic violations); (iv)
executive’s disqualification or bar by any governmental or self-regulatory
authority from serving in his position with the Company or executive’s loss of
any governmental or self-regulatory license that is reasonably necessary for
executive to perform his material duties with respect to the Company, in any
such case, as a result of misconduct by the executive; (v) executive’s willful
obstruction of, or willful failure to cooperate with (except where due to a
physical or mental incapacity), any investigation authorized by the Board;
provided that exercise by the executive of his constitutional rights under the
Fifth Amendment of the United States Constitution in the event of any criminal
investigation of executive shall not be treated as obstruction of or failure to
cooperate with any such investigation; (vi) executive’s material breach of the
Company’s written code of conduct and business ethics, which breach is
customarily punishable by termination of employment by the Company, or (vii) a
material breach by the executive of the restrictive covenants applicable to the
executive pursuant to the executive’s Management Stockholders’ Agreement or
other agreements, if any, which continues beyond the Cure Period (to the extent
that, in the Board’s reasonable judgment, such breach can be cured).

 

“Good Reason”  shall mean, without an executive’s
consent (i) the material reduction of an executive’s annual rate of base salary
(excluding any general salary reduction affecting substantially all of the
full-time, salaried employee population of the Company) or annual bonus
opportunity (excluding reductions in the value of any performance bonus pool as
a result of Company or business unit’s performance or changes in the goal
amount or type of performance targets of the applicable bonus arrangement),
(ii) a material diminution in the executive’s employment duties or
responsibilities, in each case, following a reasonable period by the Company to
cure such event following receipt of written, notice by the executive
indicating the event giving rise to Good Reason; or (iii) relocation of an
executive’s primary workplace to a location more than 50 miles away from his
prior office location. The executive may terminate his employment with Good
Reason by providing the Company ten (10) days’ written notice setting forth in
reasonable specificity the event that constitutes Good Reason, within one hundred
eighty (180) days after the occurrence of such event.

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