Document:

EXHIBIT 10.2

 

CONFIDENTIAL TREATMENT

Apogee Technology, Inc. has requested that the marked
portions of this document be accorded confidential treatment pursuant to
Rule24b-2 under the Securities Exchange Act of 1934.

 

TRANSFER, EMPLOYMENT AND ROYALTY AGREEMENT

 

This TRANSFER, EMPLOYMENT
AND ROYALTY AGREEMENT (the “Agreement”) is made as of April 30, 2004 (the
“Effective Date”) between Apogee Technology, Inc., a corporation organized and
existing under the laws of the State of Delaware, with its principal office at
129 Morgan Drive Norwood,  MA  02062 (“Apogee”), and Glenn Fricano, an
individual residing at 95 Church Avenue, Islip, NY 11751 (hereafter “Fricano”).

 

Recitals

 

WHEREAS, Fricano is
knowledgeable concerning micro-electro-mechanical (“MEMS”) technology, and
managed the former Hauppauge fabrication facility of Standard Mems, Inc.
bankrupt (“SMI”);

 

WHEREAS, SMI is a bankrupt
under Chapter 7 of the Bankruptcy Act;

 

WHEREAS, Kavlico Corporation
is a senior secured creditor of SMI, holding a security interest in, among
other assets, certain MEMS technology, related documentation, and intellectual
property rights, as further defined below (the “MEMS Technology and
Documentation”);

 

WHEREAS, Fricano and Kavlico
are parties to a Release of Rights Agreement dated March 31, 2004, a copy of
which is annexed hereto as Exhibit A (the “Release of Rights Agreement”);

 

WHEREAS, Fricano is willing,
on the terms and conditions set out below, to assign his rights under the
Release of Rights Agreement to Apogee, and to collect further materials
concerning the MEMS Technology and Documentation, perform due diligence, and
obtain further evidence concerning interests in the MEMS Technology and
Documentation; and

 

WHEREAS, Apogee wishes to
receive such assignment from Fricano, and to have Fricano collect such further
materials and perform such due diligence, and perform services for Apogee, on
the terms set out below;

 

NOW, THEREFORE, in
furtherance of the foregoing Recitals and in consideration of the mutual
covenants and obligations set forth in this Agreement, the Parties agree as
follows:

 

Agreement

 

1.                                       Definitions. 
Capitalized terms shall have the following meanings:

 

“Confidential Information”
shall have the meaning provided in Section 10 (Confidential Information).

 

“Employment Agreement” shall
have the meaning set out in Section Error!
Reference source not found. (Employee Commitment).

 

“Further Deliverables” shall
have the meaning set out in Section Error!
Reference source not found. (Further Deliverables).

 

“Initial Deliverables” shall
have the meaning set out in Section Error!
Reference source not found. (Delivery; Continuing Obligations).

 

“IP Rights” shall mean
patent rights, copyrights, trademarks, rights in mask works, trade secrets
rights, and any other rights to exclude, existing from time to time in a
jurisdiction under patent law, copyright law, trademark

 

1

 

law, unfair competition law,
moral rights law, trade-secret law, semiconductor chip protection law, or other
similar law.

 

“Knowledge” shall mean the
actual knowledge of the indicated Party without any investigation or due
diligence on the part of such person or persons.

 

“License Revenues” shall
mean all of the royalties paid to Apogee for licensing or similar exploitation,
regardless of the form thereof, of the MEMS Technology and Documentation (as
defined below).

 

“MEMS Division” shall mean
the division Apogee is establishing to design, develop, manufacture and sell
MEMS Products.

 

“MEMS Product” shall mean
any (a) device or intellectual property that can be sold or licensed that
relies for its content, design, functionality or manufacturing process in any
material respect on the MEMS Technology and Documentation and (b) any product
derived from the MEMS Technology and Documentation.

 

“MEMS Technology and
Documentation” shall mean (a) the materials, techniques, processes, and
information described in Exhibit A, including all associated IP Rights and (b)
all technology developed by the MEMS Division or otherwise by Apogee using the
services of Fricano and others and based on or originating from the rights
being transferred pursuant to Section 3 hereof (Transfer of Rights).

 

“Party” or “Parties” shall
mean Apogee, Fricano, or both Apogee and Fricano, as the context permits.

 

“Release of Rights
Agreement” shall have the meaning set out in the Preamble.

 

“Royalty Start Date” shall
mean the first date on which Apogee sells a MEMS Product.

 

“Term” shall have the
meaning set forth in Section 13 hereof (Term).

 

2.                                       Fricano Acquisition of Rights.  Fricano acquired his right, title, and
interest in and to the MEMS Technology and Documentation and all associated IP
Rights solely through the Release of Rights Agreement.

 

3.                                       Transfer of Rights.  In consideration of Apogee’s obligations under this Agreement,
Fricano hereby assigns to Apogee all of his interest in the Release of Rights
Agreement, and represents that he has made no other assignment of such rights
nor encumbered the same.

 

4.                                       Employment Commitment.  Apogee agrees to employ Fricano, and Fricano
agrees to accept and carry out such employment on a full-time basis for a
period of no less than one year, commencing on the Effective Date, in
accordance with the Confidentiality, Non-Disclosure and Non-Solicitation Agreements,
a copy of which is annexed hereto as Exhibit B, and incorporated herein by such
reference as if fully set forth herein, and the provisions of Section 6 hereof.
Fricano’s compensation shall be as separately agreed to by Fricano and Apogee.

 

5.                                       Delivery; Continuing Obligations.  Within two (2) business days of the
Effective Date, Fricano shall deliver to Apogee all media in his possession as
of the Effective Date embodying the MEMS Technology and Documentation (the
“Initial Deliverables”).

 

5.1                                 Further Deliverables.  After delivery of the Initial Deliverables
and in consideration of Apogee’s obligations under Section Error! Reference source not found.
(Compensation), Fricano shall during the Term of this Agreement, shall use
reasonable business efforts, at the expense of Apogee, to collect and compile
media embodying the MEMS Technology and Documentation, it being understood that
such media, due to SMI’s bankruptcy, may be stored in diverse locations.  Upon obtaining possession of any media
embodying the MEMS Technology and Documentation, Fricano shall promptly deliver
such media to Apogee (“Further Deliverables”) and such Further Deliverables
shall be deemed transferred in accordance with Section Error! Reference source not found.
(Transfer of Rights).  .

 

5.2                                 Costs. 
Actual out-of-pocket costs associated with the collection of media and
delivery of Further Deliverables under Section Error! Reference source not found. (Further Deliverables)
shall be handled in accordance with the Employment Agreement.  After expiration or termination of the
Employment

 

2

 

Agreement (if applicable),
Apogee will reimburse Fricano for his actual out-of-pocket costs, upon
submission of supporting invoices and provided Fricano obtains written
pre-approval for costs in excess of $500.00. .

 

5.3                                 Technical Assistance.  Fricano shall provide Apogee with such
services and consultation as is reasonably necessary to allow Apogee to test
and evaluate the MEMS Technology and Documentation.  If Fricano is not employed at Apogee, such consulting services
shall be at such rates and for such periods as may be agreed to by Fricano and
Apogee.

 

6.                                       Compensation.  In consideration of (i) the assignment by Fricano to Apogee under
Section Error! Reference source not found.
(Transfer of Rights), and (ii) Fricano’s obligations under Section Error! Reference source not found.
(Employee Commitment), Apogee agrees as follows:

 

6.1                                 Transfer Compensation.  Apogee shall pay to Fricano the sum of One
Hundred Thousand Dollars ($100,000.00) in the following installments:  (i) within five (5) business days of
Apogee’s receipt of the Initial Deliverables, Apogee shall pay Fricano the sum
of Seventy Five Thousand Dollars ($75,000.00); (ii) within ninety (90) days of
the receipt of the Initial Deliverables, shall pay Fricano the sum of Twenty
Five Thousand Dollars ($25,0000), provided Fricano is complying with his
obligations under Section Error! Reference
source not found. (Further Deliverables).

 

6.2                                 MEMS Product Royalties.  Within forty-five (45) days of the end of
each calendar quarter, Apogee shall make a payment (the “Royalty Payment”) of
Royalties (as defined below) on MEMS Products calculated as set forth below:

 

6.2.1.                     Definition of Net Sales Revenue.  The term “Net Sales Revenue” shall mean
[***************************************************************].

 

6.2.2.                     Royalties. 
(a) For MEMS Products sold during the [**************] after the Royalty
Start Date, the Royalty shall be [******(****)] of the Net Sales Revenues;
during the period from the [*******] anniversary of the Royalty Start Date
through the [*******] anniversary of the Royalty Start Date, the Royalty shall
be [******(****)] of the Net Sales Revenues; and after the [*******]
anniversary of the Royalty Start Date, there shall be no Royalty due or
owing.  If a MEMS Product is bundled
with other previously existing Apogee products without a separate price, then
the amount for Net Sales Revenues will be calculated based on the ratio of (i)
Apogee’s then-current list price for the Product as compared to (ii) Apogee’s
then-current list price for all of the other products included in the bundle.

 

(b) For MEMS Technology and
Documentation licensed during the [*****(***)] years after the Royalty Start
Date, the Royalty shall be [******(***)] of the License Revenues; during the
period from the [*******] anniversary of the Royalty Start Date through the
[*******] anniversary of the Royalty Start Date, the Royalty shall be
[******(***)] of the License Revenues; and after the [*******] anniversary of
the Royalty Start Date, there shall be no Royalty due or owing.

 

6.3.                              Division of Royalty Payments.  Royalty Payments shall be allocated as
follows:

 

6.3.1.[***************************************************************************************
*****************************************]

 

6.3.2.[***************************************************************************************
*****************************************]

 

6.4.                              Royalty Report.  Simultaneous with the payment of the Royalty, Apogee shall submit
to Fricano a royalty report setting forth (i) an itemized summary of the
quantity, Net Sales Revenues and identity of Products subject to royalty, and
(ii) the payments due under the terms of this Agreement, showing the manner of
calculating these payments.

 

3

 

6.5.                              Method of Payment; Overdue Payments.  Royalty Payments shall be made in U.S.
dollars by wire transfer or by other reasonable payment means.  [**********************************************************************].  Overdue payments shall bear interest at the
rate of one percent (1%) per month, beginning on the date such payment was due.

 

6.6.                              Apogee Commercialization Obligations.  Fricano is entering into this Agreement with
the understanding of both Fricano and Apogee that a typical cycle time to bring
a MEMS Product to market is not more than two (2) years.  This means development needs to begin as
soon as possible after the Effective Date and should be reasonably close to
commercialization by end of year two. 
In any event, Apogee intends to take commercially reasonable steps to
design, develop, manufacture and sell MEMS Products, and Apogee commits to do
so, provided however, that its failure to do so shall not render it liable to
Fricano if it then grants the License to Fricano described in Section 8 hereof
and releases him from any obligations to Apogee which would interfere with the
exercise by him or others of such license.

 

7.                                       Fricano Representations and Warranties.  Fricano represents and warrants that:

 

7.1.                              Right to Assign.  As of the Effective Date, Fricano, to his knowledge, has the
right to take the action described in Section 3 hereof (Transfer of Rights).

 

7.2.                              Non-Infringement.  As of the Effective Date, Fricano, to his Knowledge, knows of no
infringement or threatened infringement of third party IP Rights by the MEMS
Technology and Documentation, other than the matters set out on Exhibit C,
based solely on writings received by Fricano or statements made to Fricano
which he actually believes to be authoritative.

 

7.3.                              No Claims. 
As of the Effective Date, to Fricano’s Knowledge, no claim has been made
and is continuing or threatened that the use of any IP Right concerning the
MEMS Technology and Documentation is invalid or unenforceable or that the use
of any such IP Right does or may violate the rights of any third party, other
than the claims set out on Exhibit C, based solely on writings received by
Fricano or statements made to Fricano which he actually believes to be
authoritative.

 

7.4.                              Disclaimer of Other
Warranties.  EXCEPT AS EXPRESSLY
PROVIDED IN THIS SECTION Error! Reference
source not found. (Fricano Representations and Warranties), FRICANO
MAKES NO OTHER WARRANTIES (AND EXPRESSLY DISCLAIMS ANY AND ALL SUCH
WARRANTIES), WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING,
WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.  APART FROM THE WARRANTIES SET
FORTH IN THIS SECTION Error! Reference source
not found., THE MEMS TECHNOLOGY AND DOCUMENTATION IS PROVIDED “AS
IS.”

 

7.5.                              Remedy for Material
Breach of Warranty.  In the event of a
material breach of the representations and warranties set out in this Section,
Apogee’s sole remedy shall be recovery of not more than [*********(***)] of the
Transfer Compensation paid to Fricano under Section Error! Reference source not found. (Transfer Compensation).

 

8.                                       Conditional License to Fricano.  In the event that Apogee fails to perform
the Apogee Commercialization Obligations, Apogee shall, upon notice of such
failure which is not remedied within sixty (60) days thereafter, grant to
Fricano a non-exclusive license (with the right to grant sublicenses) to copy,
modify, and exploit the MEMS Technology and Documentation.  Such license shall bear a royalty to Apogee
on the same terms and conditions as set out in this Agreement, and shall
contain such other provisions as are customary in such a license. In connection
therewith, Apogee shall make disclosure to Fricano of any part of the then MEMS
Technology and Documentation.

 

9.                                       Audit Right. 
Apogee shall keep separate, auditable, 
books and records pertaining to the sale, distribution, and pricing of
MEMS Products. 
[***********************************************************************************************
********************************************************].

 

4

 

10.                               Confidential Information.   The following terms and conditions govern
use and protection of confidential information that one Party (the “Disclosing
Party”) provides or discloses to the other Party (the “Receiving Party”)
pursuant to this Agreement:

 

10.1.                        Definition of Confidential Information.  The term “Confidential Information” shall
mean (a) the MEMS Technology and Documentation; (b) non-public information and
materials (in any medium), including but not limited to any software,
semiconductor chip design, design documentation, business, financial or
strategic plans or information of the Disclosing Party; (c) information subject
to an obligation of confidence to a third party; and (d) any information marked
confidential, restricted or proprietary by a Party or by any other person to
whom such party has an obligation of confidence; provided, however, that the
failure of either Party to so mark any material shall not relieve the Receiving
Party of the obligation to maintain the confidentiality of any unlegended
material which the Receiving Party knows or should know contains Confidential
Information.  The financial terms of
this Agreement shall be Confidential Information of both Parties.

 

10.2.                        Limitations on Use and Disclosure.  The Receiving Party shall not use
Confidential Information of the Disclosing Party except for purposes of this
Agreement. The Receiving Party shall not disclose Confidential Information
received from the Disclosing Party; provided that the Receiving Party may
disclose such information to its employees if such personnel have a legitimate
need to know such information and are bound in writing by confidentiality
obligations not materially less restrictive than those set forth in this
Agreement.

 

10.3.                        Standard of Care.  The Receiving Party will use the same degree of care and
discretion (but in any event no less than a reasonable degree of care and
discretion) to avoid unauthorized disclosure or use of Confidential Information
received from the Disclosing Party as the Receiving Party uses to protect its
own information of a similar nature from unauthorized disclosure or use.

 

10.4.                        Exclusions. 
Without granting any right or license, the Parties agree that no
obligation of nondisclosure or nonuse under this Agreement will apply to any
information (with the burden of proof upon the Receiving Party) (i) that the
Receiving Party already rightfully possesses at the time of the disclosure by
the Disclosing Party or rightfully receives from a third party, (ii) that the
Receiving Party develops independently and without reference to any
Confidential Information of the Disclosing Party, or (iii) that is or becomes
available to the public other than by breach of this Agreement.  The Receiving Party may disclose
Confidential Information received from the Disclosing Party to the extent that
the Receiving Party is required by any judicial or government authority to
disclose such information, provided the Receiving Party gives the Disclosing
Party prompt notice of such requirement and reasonably cooperates with the
Disclosing Party in attempting to limit such required disclosure.

 

10.5.                        Return of Confidential Information.  Upon termination or expiration of this
Agreement, the Receiving Party will promptly return all documents and materials
containing Confidential Information that were provided to it by Disclosing
Party or will certify to the destruction of such materials.

 

11.                                 Limitation of Liability.  IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES OF ANY KIND
OR NATURE WHATSOEVER, INCLUDING WITHOUT LIMITATION, LOSS OF PROFITS OR OTHER
ECONOMIC LOSS, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, EXCEPT FOR A BREACH OF SECTION 10 (Confidential Information).

 

12.                                 No Implied Licenses. Any license concerning
the MEMS Technology and Documentation to Fricano under this Agreement must be
expressly provided herein, and there shall be no licenses implied pursuant to
this Agreement, based on any course of conduct or other construction or
interpretation thereof.

 

13.                                 Term. 
The term (“Term”) of this Agreement shall commence on the Effective Date
and shall continue in force until all of the provisions hereof have been
performed as set forth herein, unless sooner terminated in accordance with
Section 14 (Termination).

 

5

 

14.                                 Termination. 
Without prejudice to other remedies, a Party may terminate this
Agreement on the occurrence of one or more of the following:

 

14.1.                        Material Breach.  In the event that either of the Parties is in material breach of
any obligation under this Agreement, the non-breaching Party may terminate this
Agreement upon (i) providing the other Party with written notice of the breach
(a “Notice of Breach”) and (ii) providing thereafter a ninety (90) day
opportunity to cure beginning on the date of receipt by the alleged breaching
Party of the Notice of Breach.

 

14.2.                        Insolvency. 
In the event a Party shall become insolvent, shall make an assignment
for the benefit of creditors, or shall have a petition in bankruptcy filed for
or against it, the other Party shall have the right to terminate this entire
Agreement immediately upon providing written notice of such termination.

 

14.3.                        Survival.  The rights and obligations of the Parties
under the following Sections shall survive the termination or expiration of
this Agreement:  Section Error! Reference source not found.
(Transfer of Rights); Section Error!
Reference source not found. (Fricano Representations and
Warranties); Section 9 (Audit Right) (for the period specified in such
section); Section 10 (Confidential Information);; Section 11 (Limitation of
Liability); and Section 15 (General).

 

15.                                 General

 

15.1.                        No Agency. 
Nothing contained herein shall be construed as creating any agency,
partnership, or other form of joint enterprise between the Parties.

 

15.2.                        Press Releases.  Upon obtaining the consent of the other Party (which consent
shall not be unreasonably withheld or delayed), either Party shall be entitled
to issue press releases concerning this Agreement.

 

15.3.                        Governing Law.  This Agreement shall be governed in all respects by the laws of
Commonwealth of Massachusetts without regard to its conflicts of law
principles.

 

15.4.                        Forum. 
In the event of a dispute hereunder, the same shall be submitted to
binding arbitration under the rules of the American Arbitration Association in
the city of Boston, State of Massachusetts or the City of New York, State of
New York.  The Party prevailing shall be
entitled to recover reasonable legal fees and expenses from the Party not
prevailing.

 

15.5.                        Notices. 
In any case where any notice or other communication is required or
permitted to be given hereunder, such notice or communication will be given in
writing by personal delivery or national overnight delivery service, addressed
to the respective Party at the addresses indicated above.  All such notices or other communications
will be deemed to have been given and received (i) upon receipt if personally
delivered or sent by registered mail; or (ii) when delivery is confirmed if
sent by overnight delivery service

 

15.6.                        Force Majeure.  Neither Party shall be liable hereunder by reason of any failure
or delay in the performance of its obligations hereunder on account of strikes,
shortages, riots, insurrection, fires, flood, storm, explosions, acts of God,
acts of terrorism, war, governmental action, labor conditions, earthquakes,
material shortages or any other cause which is beyond the reasonable control of
such Party.

 

15.7.                        Waiver. 
The failure of either Party to require performance by the other party of
any provision hereof shall not affect the full right to require such
performance at any time thereafter; nor shall the waiver by either party of a
breach of any provision hereof be taken or held to be a waiver of the provision
itself.

 

15.8.                        Severability.  In the event that any provision of this Agreement shall be
unenforceable or invalid under any applicable law or be so held by applicable
court decision, such unenforceability or invalidity shall not render this
Agreement unenforceable or invalid as a whole, and, in such event, such
provision shall be changed and interpreted so as to best accomplish the
objectives of such unenforceable or invalid provision within the limits of
applicable law or applicable court decisions.

 

6

 

15.9.                        Assignment. 
Neither this Agreement nor any rights or obligations of either Party
shall be assigned without the prior written approval of the other Party except
as follows: (a) Apogee shall assign its rights and obligations hereunder to any
entity that acquires its business and assets, or such portion thereof as is
relevant to the subject matter of this Agreement; and (b) Fricano may assign
any right to any payment to him hereunder.

 

15.10.                  Counterparts.  This Agreement may be executed simultaneously in two or more
counterparts, each of which will be considered an original, but all of which
together will constitute one and the same instrument.

 

15.11.                  Entire Agreement.  This Agreement together with the exhibits hereto completely and
exclusively states the agreement of the Parties regarding its subject matter,
and supersedes, and its terms govern, all prior proposals, agreements, or other
communications between the parties, oral or written, regarding such subject
matter.  This Agreement shall not be
modified except by a subsequently dated written amendment signed on behalf of
each of the parties.

 

IN WITNESS WHEREOF, the
parties hereto have caused this Transfer and Royalty Agreement to be executed
by their duly authorized representatives.

 

	
   

  	
  Fricano:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Apogee Technology,

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
					

 

7

 

EXHIBIT “A”

Release of Rights Agreement

 

8

 

EXHIBIT “B”

Confidentiality
Agreement

 

9

 

EXHIBIT
“C”

Infringement and Adverse Claims

 

10Exhibit 10.19

 

EMPLOYMENT
AGREEMENT

 

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

 

The Executive is
presently employed as Senior Vice President and National Marketing Director of
the Trust.  The Board of Trustees of the
Trust (the “Board”) recognizes that the Executive’s contribution to the growth
and success of the Trust has been substantial. 
The Board desires to provide for the continued employment of the
Executive and to make certain changes in the Executive’s employment
arrangements with the Trust which the Board has determined will reinforce and
encourage the continued attention and dedication to the Trust of the Executive
as a member of the Trust’s management, in the best interest of the Trust and
its shareholders.  The Executive is
willing to commit himself to continue to serve the Trust, on the terms and
conditions herein provided.

 

In order to effect the
foregoing, the Trust and the Executive wish to enter into an employment
agreement on the terms and conditions set forth below.  Accordingly, in consideration of the
premises and the respective covenants and agreements of the parties herein
contained, and intending to be legally bound hereby, the parties hereto agree
as follows:

 

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

 

2.                                       Term.  The employment of the Executive by the Trust
as provided in Section 1 will commence on the date hereof and end on
December 31, 2005 (the “Term”), unless further extended or sooner
terminated 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 one
additional year, unless, not later than the October 31 immediately
preceding such January 1, the Trust or the Executive shall have given
written notice to the other that it does not wish to extend this Agreement.

 

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

 

 

appointed by the
Board 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 a
manner that will faithfully and diligently further the business and interests
of the Trust; provided, that, nothing in this Agreement shall preclude
Executive from serving as a director or trustee in any other firm that is not a
competitor of the Trust and its subsidiaries or from pursuing personal
investments, as long as such activities do not, in the reasonable judgment of
the independent members of the Board of Trustees with regard to activities
other than passive investments of less than five percent ownership, interfere
with Executive’s performance of his duties hereunder.

 

4.                                       Place
of Performance.  In connection with
the Executive’s employment by the Trust, the Executive shall be based in
Bethesda, Maryland, provided, however, the Executive shall visit the principal
executive offices of the Trust in Stamford, Connecticut, on a regular basis and
the Executive shall be expected to travel to the extent necessary for the
Executive to carry out his duties hereunder.

 

5.                                       Compensation
and Related Matters.

 

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

 

(b)                                 Expenses.  During the Term, the Executive shall be
entitled to receive prompt reimbursement for all reasonable and customary out
of pocket expenses incurred by the Executive in performing his duties hereunder,
including all reasonable expenses of travel and reasonable living expenses
while away from home on business or at the request of and in the service of the
Trust, provided that such expenses are incurred and accounted for in accordance
with 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 as
may

 

2

 

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

 

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

 

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

 

(b)                                 Disability.  If, in the written opinion of a qualified
physician reasonably agreed to by the Trust and the Executive, the Executive
shall become unable to perform his duties hereunder due to Disability, the
Trust 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 to
perform his duties hereunder on a full-time basis for any period of 180
consecutive days and the return of the Executive to his duties hereunder for
periods of 15 days or less shall not interrupt such 180 day period.

 

(c)                                  Cause.  The Trust shall have the right to terminate
Executive’s employment at any time upon delivery of written notice of
termination for Cause (as defined below) to Executive (which notice shall
specify in reasonable detail the basis upon which such termination is made),
such employment to terminate immediately upon delivery of such notice unless
otherwise specified by the Board of Trustees of the Trust if a majority of the
Board of Trustees (other than Executive) determines that Executive:
(i) has misappropriated, stolen or embezzled funds or property from the
Trust or an affiliate of the Trust or secured or attempted to secure personally
any profit in connection with any transaction entered into on behalf of the
Trust or any affiliate of the Trust, (ii) has been convicted of a felony
or entered a plea of “nolo contendre” which in the reasonable
opinion of the Board brings Executive into disrepute or is likely to cause
material harm to the Trust’s (or any affiliate of the Trust) business, customer
or supplier relations, financial condition or prospects, (iii) has,
notwithstanding not less than 30 days’ prior written notice from the Board of
Trustees, willfully and persistently failed to perform (other than by reason of
illness or temporary disability, regardless of whether such temporary
disability is or becomes total Disability, or by reason of vacation or approved
leave of absence) his material duties hereunder, or (iv) has willfully violated
or breached any provision of this Agreement, any material law or regulation or
any written policy or code of business conduct or ethics of the Trust to the
material detriment of the Trust or any affiliate of the Trust or its
business.  For purposes of this
provision, no act or failure to act, on the part of the Executive, shall be
considered “willful” unless it is done, or omitted to be done, by the Executive
in

 

3

 

bad faith or
without reasonable belief that his action or omission was in the best interests
of the Trust.  Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or based upon the advice of counsel for the Trust shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and
in the best interests of the Trust.  The
cessation of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the membership of the Board (the Executive shall not be counted for the purpose
of determining a majority of the membership of the Board if he is a Trustee at
the time of such vote) at a meeting of the Board called and held for such
purpose (after reasonable notice is provided to the Executive and the Executive
is 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 guilty
of the conduct set forth in clause (i), (ii), (iii) or (iv) hereof, and
specifying the particulars thereof in detail.

 

(d)                                 Without
Cause.  The Trust may at any time
terminate the Executive’s employment hereunder without Cause.

 

(e)                                  Termination
by the Executive.

 

(i)                                     The
Executive 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)                                  For
purposes of this Agreement, “Good Reason” shall mean (A) a failure by the Trust
to comply with any material provision of this Agreement which has not been
cured within thirty (30) days after notice of such noncompliance has been given
by the Executive to the Trust, (B) the assignment to the Executive of any
duties materially inconsistent with the Executive’s position with the Trust or
a substantial adverse alteration in the nature of the Executive’s
responsibilities without the consent of the Executive, (C) without the consent
of the Executive, a material reduction in employee benefits other than a
reduction generally applicable to all eligible employees of the Trust, or (D)
any purported termination of the Executive’s employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of paragraph
(e) hereof (and for purposes of this Agreement no such purported termination
shall be effective).

 

(f)                                    Any
termination of the Executive’s employment by the Trust or by the Executive
(other than termination pursuant to subsection (a) or (b) hereof) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 12.  For
purposes of this Agreement, a “Notice of Termination” shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the

 

4

 

facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated.

 

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

 

7.                                       Compensation
Upon Termination, Death or During Disability.

 

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

 

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

 

5

 

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

 

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

 

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

 

(ii)                                  in
addition to the Incentive Compensation payments set forth in (d)(i) above, the
Trust shall pay the Executive, Incentive Compensation on all loans closed by
the 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 Date
of Termination;

 

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

 

(e)                                  In
the case of a termination of the Executive’s employment by the Trust without
Cause or for Disability, or by the Executive for

 

6

 

Good Reason, the
Trust shall pay the full cost for the Executive to participate in the health
insurance plan in which the Executive was enrolled immediately prior to the
Date of Termination for a period of twelve (12) months, provided that the
Executive’s continued participation is possible under the general terms and
provisions of such plans and programs. 
In the event that the Executive’s participation in any such plan or
program is barred, the Trust shall arrange to provide the Executive with
benefits substantially similar to those which the Executive would otherwise
have been entitled to receive under such plan from which his continued
participation is barred.

 

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

 

8.                                       Nondisclosure.  The Executive shall hold in a fiduciary
capacity for the benefit of the Trust all Confidential Information relating to
the Trust or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Executive during the Executive’s
employment 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 the
business conducted by the Trust or its affiliates, that is material to the
Trust’s business operations and is not generally known by the public, including
business and trade secrets.  To the
extent consistent with the foregoing definition, Confidential Information
includes without limitation: (a) reports, pricing, underwriting and pricing
procedures, and financing methods of the Company, together with any specific
and proprietary techniques utilized by the Company in designing, developing,
and marketing its loan products or in performing services for customers and
accounts of the Company; (b) the business plans and financial statements,
reports, data and projections of the Company; (c) identities and addresses of
consultants, borrowers or customers or any other confidential information
relating to or dealing with the business operations or activities of the Trust
and its affiliates; and (e) information concerning trade secrets of the Trust
and its affiliates.  After termination
of the Executive’s employment with the Trust, the Executive shall not, without
the prior written consent of the Trust or as may otherwise be required by law
or legal process, communicate or divulge any such Confidential Information to
anyone other than the Trust and those designated by it.  The agreement made in this Section 8
shall be in addition to, and not in limitation or derogation of, any
obligations otherwise imposed by law or by separate agreement upon the
Executive in respect of Confidential Information of the Trust.

 

7

 

9.                                       Non-Competition
and Non-Solicitation.  During the
Executive’s employment with the Trust and for a period of eighteen (18) months
following the Executive’s Date of Termination, the Executive shall not, without
the prior written consent of the Trust, for himself or on behalf of or in
conjunction with any other person, persons, company, firm, partnership,
corporation, business, group or other entity (each, a “Person”), work within a
100 mile radius of any location where the Trust is doing business or has plans
for commencing business as of the Date of Termination, in the principal line of
business engaged in, or planned to be engaged in, by the Trust at the Date of
Termination.  The Executive’s passive
ownership of less than five percent (5%) of the securities of a company shall
not be treated as an action in competition with the Trust.

 

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

 

(i)                                     solicit
and/or hire any Person who is on the Date of Termination, or has been within
twelve (12) months prior to the Date of Termination, an officer or manager
level employee of the Trust or its affiliates, for the purpose or with the
intent of enticing such Person away from or out of the employ of the Trust or its
affiliates;

 

(ii)                                  in
order to protect the Confidential Information and proprietary rights of Trust,
solicit, induce or attempt to induce any Person who is, at the Date of
Termination, or has been within twelve (12) months prior to the Date of
Termination, an actual customer, borrower, client, business partner, or a
prospective customer, borrower, client, business partner (i.e., a customer,
borrower, client or business partner who is party to a written proposal or
letter of intent with Trust, in each case written less than six (6) months
prior to the Date of Termination) of the Trust, for the purpose or with the
intent of (A) inducing or attempting to induce such Person to cease doing
business with Trust or its affiliates, (B) enticing or attempting to entice
such 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 or
its affiliates; or

 

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

 

8

 

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

 

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

 

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

 

(e)                                  The
covenants in this Section 9 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of
any other covenant.  Moreover, in the
event any court of competent jurisdiction shall determine that the scope, time
or territorial restrictions set forth herein are unreasonable, then it is the
intention of the parties that such restrictions be enforced to the fullest
extent that such court deems reasonable, and the Agreement shall thereby be
reformed to reflect the same.

 

(f)                                    All
of the covenants in this Section 9 shall be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of Executive against Trust whether predicated on this
Agreement or otherwise shall not constitute a defense to the enforcement by
Trust of such covenants.  It is
specifically agreed that the duration of the period during which the agreements
and covenants of Executive made in this Section 9

 

9

 

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

 

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

 

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

 

11.                                 Additional
Payments by the Trust.

 

(a)                                  If
it is determined (as hereafter provided) that any payment or distribution by
the Trust to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan,
program or arrangement, including without limitation any option, share
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
“Payment”), would be subject to the excise tax imposed by Section 4999 of
the Code (or any successor provision thereto) or to any similar tax imposed by
state or local law, or any interest or penalties with respect to such excise
tax (such tax or taxes, together with any such interest and penalties, are
hereafter collectively referred to as the “Excise Tax”), then Executive will be
entitled to receive an additional payment or payments (a “Gross-Up Payment”) in
an amount such that, after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax, imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

 

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

 

10

 

Firm to submit its
determination and detailed supporting calculations to both the Trust and
Executive within 30 calendar days after the date of the change in control or
the date of Executive’s termination of employment, if applicable, and any other
such time or times as may be requested by the Trust or Executive. If the
Accounting Firm determines that any Excise Tax is payable by Executive, the
Trust will pay the required Gross-Up Payment to Executive no later than five
calendar days prior to the due date for Executive’s income tax return on which
the Excise Tax is included. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it will, at the same time as it makes such
determination, furnish Executive with an opinion that he has substantial
authority not to report any Excise Tax on his federal, state, local income or
other tax return. Any determination by the Accounting Firm as to the amount of
the Gross-Up Payment will be binding upon the Trust and Executive. As a result
of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which will
not have been made by the Trust should have been made (an “Underpayment”),
consistent with the calculations required to be made hereunder. In the event
that the Trust exhausts or fails to pursue its remedies pursuant to
Section 11(f) hereof and Executive thereafter is required to make a
payment of any Excise Tax, Executive shall so notify the Trust, which will
direct the Accounting Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting calculations
to both the Trust and Executive as promptly as possible. Any such Underpayment
will be promptly paid by the Trust to, or for the benefit of, Executive within
five business days after receipt of such determination and calculations.

 

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

 

(d)                                 The
federal, state and local income or other tax returns filed by Executive will be
prepared and filed on a consistent basis with the determination of the Accounting
Firm with respect to the Excise Tax payable by Executive. To the extent the
Excise 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 the
request of the Trust, provide to the Trust true and correct copies (with any
amendments) of his federal income tax return as filed with the Internal Revenue
Service and corresponding state and local tax returns, if relevant, as filed
with the applicable taxing authority, and such other documents reasonably
requested by the Trust, evidencing such payment. If prior to the filing of

 

11

 

Executive’s
federal income tax return, or corresponding state or local tax return, if
relevant, the Accounting Firm determines that the amount of the Gross-Up
Payment should be reduced, Executive will within five business days pay to the
Trust the amount of such reduction.

 

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

 

(f)                                    Executive
will notify the Trust in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Trust of a Gross-Up
Payment. Such notification will be given as promptly as practicable but no
later than ten (10) business days after Executive actually receives notice of
such claim and Executive will further apprise the Trust of the nature of such
claim 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 to
the earlier of (x) the expiration of the 30-calendar-day period following the
date on which he gives such notice to the Trust and (y) the date that any
payment of amount with respect to such claim is due. If the Trust notifies
Executive in writing prior to the expiration of such period that it desires to
contest such claim, Executive will:

 

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

 

(ii)                                  take
such action in connection with contesting such claim as the Trust will
reasonably request in writing from time to time, including without limitation
accepting legal representation with respect to such claim by an attorney
competent in respect of the subject matter and reasonably selected by the
Trust;

 

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

 

(iv)                              permit
the 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 and
will indemnify and hold harmless Executive, on an after-tax basis, for and
against any Excise Tax or income tax, including interest and penalties with
respect thereto, imposed as a result of such representation and payment of
costs and expenses. Without limiting the foregoing provisions of this
Section 11(f), the

 

12

 

Trust will control
all proceedings taken in connection with the contest of any claim contemplated
by this Section 11(f) and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim (provided that Executive may
participate therein at his own cost and expense) and may, at its option, either
direct Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Trust will determine;
provided, however, that if the Trust directs Executive to pay the tax claimed
and sue for a refund, the Trust will advance the amount of such payment to
Executive on an interest-free basis and will indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax, including
interest or penalties with respect thereto, imposed with respect to such
advance; and provided further, however, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Executive with
respect to which the contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Trust’s control of any such contested
claim will be limited to issues with respect to which a Gross-Up Payment would
be payable hereunder and Executive will be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

 

(g)                                 If,
after the receipt by Executive of an amount advanced by the Trust pursuant to
Section 11(f) hereof, Executive receives any refund with respect to such
claim, Executive will (subject to the Trust’s complying with the requirements
of Section 11(f)) hereof) promptly pay to the Trust the amount of such
refund (together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by Executive of an amount advanced
by the Trust pursuant to Section 11(f) hereof, a determination is made
that Executive will not be entitled to any refund with respect to such claim
and the Trust does not notify Executive in writing of its intent to contest
such denial or refund prior to the expiration of 30 calendar days after such
determination, then such advance will be forgiven and will not be required to
be 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 this
Section 11. If, after the receipt by Executive of a Gross-Up Payment but
before the payment by Executive of the Excise Tax, it is determined by the
Accounting Firm that the Excise Tax payable by Executive is less than the
amount originally computed by the Accounting Firm and consequently that the
amount of the Gross-Up Payment is larger than that required by this
Section 11, Executive shall promptly refund to the Trust the amount by
which the Gross-Up Payment initially made to Executive exceeds the Gross-Up
Payment required under this Section 11.

 

13

 

12.                                 Continued
Performance.  Provisions of this
Agreement shall survive any termination of this Agreement if so provided herein
or if necessary or desirable fully to accomplish the purposes of such
provisions, including, without limitation, the obligations of the Executive
under the terms and conditions of Section 8 and Section 9.  Any obligation of the Trust to make payments
to or on behalf of the Executive under Section 7 is expressly conditioned
upon the Executive’s continued performance of the Executive’s obligations under
Section 8 and Section 9.  The
Executive recognizes that, except to the extent, if any, provided in Section 7,
the Executive will earn no compensation from the Trust after the Date of
Termination.

 

13.                                 Notice.  For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or (unless
otherwise 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 Financial
Investment Trust

15 Commerce Road

Stamford, CT 06902

Tel: (203) 967-0000

Fax: (203) 967-1717

 

Attn: Compensation
Committee

 

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

 

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

 

14

 

or subsequent
time.  No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth expressly in this
Agreement.  The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Connecticut without regard to its
conflicts of law principles.

 

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

 

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

 

17.                                 Disputes.  Any dispute or controversy arising under or
in connection with this Agreement shall, at the Executive’s sole discretion, be
settled exclusively by such judicial remedies as the Executive may seek to
pursue or by arbitration conducted before a panel of three arbitrators in
Stamford, Connecticut  in accordance
with the rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitrator’s
award in any court having jurisdiction; provided, however, that the Trust shall
be entitled to seek a restraining order or injunction in any court of competent
jurisdiction to prevent any continuation of any violation of the provisions of
Section 8 and Section 9 of this Agreement and the Executive hereby
consents that such restraining order or injunction may be granted without the
necessity of the Trust’s posting any bond, and provided further that the
Executive shall be entitled to seek specific performance of his right to be
paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.  The expense of such arbitration shall be
borne by the Trust.

 

18.                                 Indemnification.  The Trust shall indemnify and hold Executive
harmless 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 defense
of, or as a result of any action or proceeding (or any appeal from any action
or proceeding) in which Executive is made or is threatened to be made a party
by 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 the
right of the Trust to procure a judgment in its favor (or other than by or in
the right of the Trust). 
Notwithstanding the foregoing, the Executive shall not be entitled to be
indemnified to the extent he has acted in bad faith or in manner that constitutes
gross negligence or willful or intentional misconduct.

 

15

 

19.                                 Entire
Agreement.  This Agreement sets
forth the entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all prior agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any party
hereto; and any prior agreement of the parties hereto in respect of the subject
matter contained herein.

 

16

 

IN WITNESS WHEREOF, the
parties 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

  
								

 

17

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