Document:

ras-ex1021_435.htm

Exhibit 10.21 

 

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”), is entered into and executed on November 6, 2017, effective as of August 22, 2017 (the “Effective Date”), by and between RAIT Financial Trust, a Maryland real estate investment trust (the “Company”), with a principal office in Philadelphia, Pennsylvania, and Alfred J. Dilmore (“Executive”).

WHEREAS, the Executive has been employed by the Company since June 2015; 

WHEREAS, the Company desires to enter into an employment agreement with Executive and employ Executive as Interim Chief Financial Officer, Interim Treasurer and Chief Accounting Officer of the Company, pursuant to the terms and conditions set forth in this Agreement; 

WHEREAS, Executive desires to be employed by the Company, pursuant to the terms and conditions set forth in this Agreement; and

WHEREAS, Executive agrees to be bound by the non-competition, non-solicitation, intellectual property and confidentiality provisions as set forth in this Agreement.

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

1.Employment.  The Company continues to employ Executive, and Executive hereby accepts such continued employment and agrees to perform Executive’s duties and responsibilities, in accordance with the terms, conditions and provisions hereinafter set forth.

1.1Employment Term. This Agreement shall be effective as of the Effective Date and shall continue for an initial period of three (3) years, unless Executive’s employment and this Agreement are terminated sooner in accordance with Section 2; and shall be effective for two (2) successive one (1) year periods thereafter, for a maximum term of five (5) years, in accordance with the terms of this Agreement (subject to termination as aforesaid) unless either party notifies the other party of non-renewal in writing prior to three (3) months before the expiration of each renewal. The period commencing on the Effective Date and ending on the date on which the term of Executive’s employment under this Agreement shall terminate is hereinafter referred to as the “Employment Term.”    

1.2Duties and Responsibilities.  Executive’s titles shall be Interim Chief Financial Officer and Interim Treasurer of the Company, subject to the last sentence of this Section 1.2 hereof, and Chief Accounting Officer of the Company, and in those capacities he shall perform all duties and accept all responsibilities and limitations incident to such positions as may be reasonably assigned to him by the Chief Executive Officer of the Company, including without limitation, those customarily associated with these positions at a publicly traded company and those set forth in the Bylaws of the Company.   Executive shall continue to serve as the Chief Accounting Officer of the Company during the Employment Term.  The Company and the Executive acknowledge that the Company is considering him as a candidate to serve as the Company’s Chief Financial Officer and Treasurer on an other than interim basis.  However, in the event the Company appoints someone other than the 

 

 

Executive to serve as the Company’s Chief Financial Officer and Treasurer on an other than interim basis, the Company may assign such titles and the related responsibilities to such person and may direct that the Executive, as Chief Accounting Officer, report to the person holding such titles.  

1.3Extent of Service. Executive agrees to use Executive’s best efforts to carry out Executive’s duties and responsibilities under Section 1.2 hereof and, consistent with the other provisions of this Agreement, to devote all of his business time, attention and energy to the performance of his duties hereunder. The term “devote all of his business time, attention and energy” in the preceding sentence is not intended to prevent Executive from:

(a)serving as a director or trustee of a non-profit organization, subject to the prior and ongoing approval of the Board of Trustees, which will not be unreasonably withheld; and

(b)spending time during the business day to attend to personal or family businesses or investments, so long as in the aggregate of Section 1.3(a) and this Section 1.3(b), such time does not interfere with the performance of his duties for the Company.   

1.4Base Salary. For all of the services rendered by Executive hereunder, the Company shall pay Executive a base salary (“Base Salary”), which shall be at the annual rate of Three Hundred Thousand Dollars ($300,000) beginning as of the Effective Date, payable in installments at such times as the Company customarily pays its other senior level executives. Executive’s Base Salary shall be reviewed annually for appropriate increases by the Board of Trustees of the Company (the “Board”) or the Compensation Committee of the Board (the “Committee”), pursuant to the Committee’s delegated authority, pursuant to the Board’s or the Committee’s, as applicable, normal performance review policies for senior level executives but shall not be decreased. 

1.5Bonus. Executive shall continue to be eligible to receive annual bonuses in such amounts as the Board or the Committee, as applicable, may approve in its sole discretion or under the terms of any annual incentive plan of the Company maintained for other senior level executives.

1.6Retirement and Welfare Plans and Perquisites. Executive shall continue to be entitled to participate in all employee retirement and welfare benefit plans and programs or executive perquisites made available to the Company’s senior level executives as a group or to its employees generally, as such retirement and welfare plans or perquisites may be in effect from time to time and subject to the eligibility requirements of the plans. Nothing in this Agreement shall prevent the Company from amending or terminating any retirement, welfare or other employee benefit plans or programs from time to time as the Company deems appropriate.

1.7Reimbursement of Expenses; Vacation. Executive shall continue to be provided with reimbursement of reasonable expenses related to Executive’s employment by the Company on a basis no less favorable than that which may be authorized from time to time for senior level executives as a group, and shall be entitled to vacation and sick leave in 

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accordance with the Company’s vacation, holiday and other pay for time not worked policies. In addition, the Company shall reimburse Executive for reasonable out-of-pocket travel expenses in connection with the performance of his duties and responsibilities.

1.8Incentive Compensation. Executive shall be entitled to participate in any short-term and long-term incentive programs (including without limitation any equity compensation plans) established by the Company for its senior level executives generally, at levels commensurate with the benefits provided to other senior executives and with adjustments appropriate for his position and performance.

2.Termination. Executive’s employment shall terminate upon the occurrence of any of the following events:

2.1Termination Without Cause; Resignation for Good Reason; Non-Renewal.

(a)The Company may remove Executive at any time without Cause (as defined in Section 3) from the position in which Executive is employed hereunder upon not less than sixty (60) days’ prior written notice to Executive. In addition, Executive may initiate a termination of employment by resigning under this Section 2.1 for Good Reason (as defined in Section 3).  Executive shall give the Company not less than sixty (60) days’ prior written notice of such resignation.  In either event, the Company may relieve Executive of all responsibilities and authority during any portion or all of this notice period with the understanding that Executive shall remain an employee and receive all pay and benefits to which he is entitled during such period. 

(b)Upon any termination without Cause by the Company or resignation for Good Reason by the Executive as described in Section 2.1(a), Executive shall be entitled to receive only the amount due to Executive under the Company’s then-current severance pay plan for employees, if any. No other payments or benefits shall be due under this Agreement to Executive, but Executive shall be entitled to any benefits accrued and earned in accordance with the terms and conditions of any applicable benefit plans and programs of the Company in which Executive participated prior to his termination of employment. 

(c)Notwithstanding the provisions of Section 2.1(b), in the event that Executive executes and does not revoke a written mutual release upon such termination without Cause by the Company or resignation for Good Reason by the Executive as described in Section 2.1(a), in a form acceptable to the Company (the “Release ”), whereby Executive releases any and all claims against the Company and all related parties with respect to all matters arising out of Executive’s employment by the Company, or the termination thereof (other than claims for any entitlements under the terms of this Agreement or under any plans or programs of the Company under which Executive has accrued and is due a benefit), and whereby the Company releases any claims against Executive for actions within the scope of his employment by the Company, Executive shall be entitled to receive (in exchange for the Company’s undertakings in this Section 2.1(c)), in lieu of the payment described in Section 2.1(b), the following:

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(i)Executive shall receive a lump sum cash payment equal to one and one half (1.5) times the sum of (x) Executive’s Base Salary, as in effect immediately prior to his termination of employment and (y) the average annual cash bonus Executive received for and applicable to the Company’s three (3) completed fiscal years immediately prior to the Executive’s last day of employment (or, if he was not employed for the entire period covered by the three (3) completed fiscal years of the Company immediately prior to his termination, the average annual cash bonus Executive received for and applicable to those completed fiscal years of the Company for which he was employed for the entire fiscal year). Unless the payment is required to be delayed pursuant to Section 17.2, the payment shall be made on the sixtieth (60th) day following Executive’s last day of employment with the Company, provided that Executive executes the Release during the forty-five (45) day period following Executive’s last day of employment and the revocation period for the Release has expired without revocation by Executive.

(ii)Executive shall receive a lump sum cash payment equal to a pro rata portion of Executive’s target annual cash bonus for and applicable to the fiscal year of his termination (or, in the absence of a target bonus opportunity for and applicable to the fiscal year of his termination, the lump sum cash payment shall be equal to a pro rata portion of the average annual cash bonus Executive received for the Company’s three (3) completed fiscal years immediately prior to Executive’s last day of employment) (the “Cash Bonus”).  In the absence of a target annual cash bonus opportunity for and applicable to the fiscal year of his termination and in the event that the Executive was not employed for the entire period covered by the three (3) completed fiscal years of the Company immediately prior to his termination, the Cash Bonus shall be calculated on the basis of the annual cash bonus received for and applicable to those completed fiscal years of the Company for which he was employed for the entire fiscal year). The pro-rated Cash Bonus shall be determined by multiplying the Cash Bonus by a fraction, the numerator of which is the number of days during which Executive was employed by the Company in the fiscal year of his termination of employment and the denominator of which is three hundred sixty-five (365).  Unless the payment is required to be delayed pursuant to Section 17.2, the payment shall be made on the sixtieth (60th) day following Executive’s last day of employment with the Company, provided that Executive executes the Release during the forty-five (45) day period following Executive’s last day of employment and the revocation period for the Release has expired without revocation by Executive. 

(iii)For a period of eighteen (18) months following the date of termination, Executive shall continue to receive the medical coverage in effect at the date of his termination (or generally comparable coverage) for himself and, where applicable, his spouse and dependents, at the same premium rate as may be charged from time to time for employees generally, as if Executive had continued in employment with the Company during such period.  The COBRA health care continuation coverage period under Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”), shall run concurrently with the foregoing eighteen (18) month benefit period.

(iv)Solely for purposes of this Section 2.1(c)(iv), upon (1) a termination without Cause by the Company, (2) the Company elects not to renew Executive’s Employment Term pursuant to Section 1.1, or (3) a resignation for Good Reason by the 

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Executive as described in Section 2.1(a), all outstanding equity-based compensation awards that are not intended to operate in a manner substantially similar to “performance-based compensation” under Section 162(m)(4)(C) of the Code (whether or not meeting timing and other requirements thereof) shall become fully vested, immediately exercisable and any restrictions thereon shall lapse, as the case may be; provided, that any delays in the settlement or payment of such awards that are set forth in the applicable award agreement and that are required under Section 409A of the Code shall remain in effect, and all outstanding equity-based compensation awards that are intended to operate in a manner substantially similar to “performance-based compensation” under Section 162(m)(4)(C) of the Code (whether or not meeting timing and other requirements thereof) under Section 162(m)(4)(C) of the Code shall remain outstanding and shall vest or be forfeited in accordance with the terms of the applicable award agreements, if the applicable performance goals are satisfied.

For clarity, the foregoing payments and benefits referenced in Sections 2.1(c)(i)-(iv), which Executive shall receive if he executes and does not revoke the Release required by this Section 2.1(c), shall be in addition to any other amounts earned, accrued and owing to Executive but not yet paid under Section 1 and under any applicable benefit plans and programs of the Company (other than severance plans or programs) in which Executive participated prior to his termination of employment, subject to the terms and conditions of any such plans and programs, without regard to whether Executive executes and does not revoke the Release. For the avoidance of doubt, neither non-renewal of this Agreement by either party nor the expiration of the term of this Agreement shall entitle Executive to the payments and benefits set forth in this Section 2.1(c).

2.2Voluntary Termination. Executive may voluntarily terminate his employment for any reason upon sixty (60) days’ prior written notice or by sending a notice of non-renewal of this Agreement to the Company, as described in Section 1.1. In any such event, after the effective date of such termination, except as provided in Section 2.1 with respect to a resignation for Good Reason, no further payments shall be due under this Agreement, except that Executive shall be entitled to any amounts earned, accrued and owing to Executive but not yet paid under Section 1 and any benefits accrued and due in accordance with the terms and conditions of any applicable benefit plans and programs of the Company in which Executive participated prior to his termination of employment.

2.3Disability. The Company may terminate Executive’s employment, to the extent permitted by applicable law, if Executive has been unable to perform the material duties of his employment and has been formally determined to be eligible for disability benefits under the Company’s long-term disability plan (“Disability”); provided, however, that the Company shall continue to pay Executive’s Base Salary until the Company acts to terminate Executive’s employment. Executive agrees, in the event of a dispute under this Section 2.3 relating to Executive’s Disability, to submit to a physical examination by a licensed physician jointly selected by the Board or the Committee, as applicable, and Executive. If the Company terminates Executive’s employment for Disability, Executive shall be entitled to receive the following:  

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(a)Executive shall receive a lump sum cash payment equal to a pro rata portion of Executive’s Cash Bonus (as Cash Bonus is defined in Section 2.1(c)(ii)).  The pro-rated Cash Bonus (the “Pro-Rata Cash Bonus”) shall be determined by multiplying the Cash Bonus by a fraction, the numerator of which is the number of days during which Executive was employed by the Company in the fiscal year of his termination of employment and the denominator of which is three hundred sixty-five (365).  Except as otherwise required to comply with the requirements of Section 17, payment shall be made on the sixtieth (60th) day following Executive’s last day of employment with the Company.

(b)The Company shall pay to Executive any amounts earned, accrued and owing but not yet paid under Section 1 and any other benefits accrued and earned in accordance with the terms and conditions of any applicable benefit plans and programs of the Company in which Executive participated prior to his termination of employment.

2.4Death. If Executive dies while employed by the Company, the Company shall pay to Executive’s executor, legal representative, administrator or designated beneficiary, as applicable, (i) any amounts earned, accrued and owing but not yet paid under Section 1 and any benefits accrued and earned under the Company’s benefit plans and programs in which Executive participated prior to his termination of employment, in accordance with the terms and conditions of such plans and programs, and (ii) a Pro-Rata Cash Bonus (determined according to Section 2.3(a)) for the Company’s fiscal year in which Executive’s death occurs and, except as otherwise required to comply with the requirements of Section 17, such amounts shall be paid on the sixtieth (60th) day following the date of Executive’s death. Otherwise, the Company shall have no further liability or obligation under this Agreement to Executive’s executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through Executive.

2.5Cause. The Company may terminate Executive’s employment at any time for Cause upon written notice to Executive, in which event all payments under this Agreement shall cease, except for Base Salary to the extent already accrued. Executive shall be entitled to any benefits accrued and earned before his termination in accordance with the terms and conditions of any applicable benefit plans and programs of the Company in which Executive participated prior to his termination of employment.

2.6Notice of Termination. Any termination of Executive’s employment shall be communicated by a written notice of termination to the other party hereto given in accordance with Section 9. The notice of termination shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) briefly summarize the facts and circumstances deemed to provide a basis for a termination of employment and the applicable provision hereof, and (iii) specify the termination date in accordance with the requirements of this Agreement.

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3.Definitions and References.

3.1 “Cause ” shall mean any of the following grounds for termination of Executive’s employment:

(a)Executive’s commission of, or indictment for, or formal admission to a felony, any crime of moral turpitude, dishonesty, or any crime involving the Company; or Executive’s breach of the Company’s Code of Ethics;

(b)Executive’s engagement in fraud, misappropriation or embezzlement;

(c)Executive’s continual failure to substantially perform his reasonably assigned material duties to the Company (other than a failure resulting from Executive’s incapacity due to physical or mental illness), and such failure has continued for a period of at least thirty (30) days after a written notice of demand for performance, signed by a duly authorized officer of the Company, has been delivered to Executive specifying the manner in which Executive has failed to substantially perform; or

(d)Executive’s  breach of Section 4 of this Agreement.

3.2 “Good Reason” shall mean, without Executive’s consent:

(a)the material reduction of Executive’s title, authority, duties and responsibilities or the assignment to Executive of duties materially inconsistent with Executive’s position or positions with the Company; provided, however, that the appointment of a person other than the Executive to serve as Chief Financial Officer and Treasurer of the Company and the Company directing that the Executive, as Chief Accounting Officer, report to such person shall not constitute Good Reason; 

(b)a reduction in Base Salary of the Executive; 

(c)a relocation of Executive’s regular office location at Two Logan Square, 100 N. 18th Street, 23rd Floor, Philadelphia, PA 19103 for the performance of his duties to a location more than thirty (30) miles from such office; or 

(d)the Company’s material and willful breach of this Agreement. 

Notwithstanding the foregoing, (i) Good Reason shall not be deemed to exist unless notice of termination on account thereof (specifying a termination date of at least forty-five (45) days but no more than sixty (60) days from the date of such notice) is given no later than thirty (30) days after the time at which the event or condition purportedly giving rise to Good Reason first occurs or arises and (ii) if there exists an event or condition that constitutes Good Reason, the Company shall have thirty (30) days from the date notice of such a termination is given to cure such event or condition and, if the Company does so, such event or condition shall not constitute Good Reason hereunder.

3.3“Code of Ethics” shall mean the RAIT Code of Business Conduct and Ethics, the Company’s Equal Employment Opportunity Policy (including without limitation its 

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provisions relating to Prohibition of Sexual Harassment and Prohibition of Harassment of Legally Protected Groups), the RAIT Insider Trading Policy, the Company’s Section 16 Compliance Policy, the RAIT Stock Ownership Guidelines, the Company’s Restricted List of Securities and Limitation of Personal Trading, the Company’s Travel and Business Expense Policy & Procedure, and the RAIT Procedure to Communicate with Audit Committee.  

3.4References to “termination” and “terminate” (whether or not these words are capitalized) shall include separations from the Company for any reason and under any circumstances, whether initiated by the Company, by Executive or by mutual agreement, unless it is clear from the context in which such word is used that the reference is intended to relate to a specific separation or type of separation.

4.Non-Competition, Non-Solicitation, Intellectual Property and Confidentiality. Executive hereby acknowledges that, during and solely as a result of his employment by the Company, Executive will receive special information with respect to the operation of the businesses of the Company, and/or its affiliates, and other related matters not generally available to other executives of the Company, and access to confidential information and business and professional contacts. Executive hereby agrees to abide by the terms of the non-competition, non-solicitation, intellectual property and confidentiality provisions below, in consideration of Executive’s employment as an executive officer of the Company and the public stature which accompanies such position, as well as access to confidential information and business and professional contacts, and unique opportunities afforded by the Company to Executive as a result of Executive’s employment in such position; Executive’s eligibility for the benefits set forth in this Agreement (including without limitation the opportunity for the payment of additional salary and bonuses as well as Company paid or subsidized medical insurance referenced in Section 2.1(c) and the opportunity to participate in any long term incentive programs); and the Company’s entering into this Agreement. Executive agrees and acknowledges that the foregoing, whether treated separately or together, constitute full, adequate and sufficient consideration for the restrictions and obligations set forth in those provisions. 

4.1Non-Competition and Non-Solicitation. Executive agrees that during his employment with the Company  and, with respect to Section 4.1(a), for a period of nine (9) months after the termination of Executive’s employment under any circumstances (other than at the expiration of the maximum Employment Term of five (5) years, as set forth in Section 1.1, or in the event that the Company elects not to renew Executive’s Employment Term pursuant to Section 1.1, in which case this Section 4.1(a) will not be applicable to Executive) and, with respect to Sections 4.1(b) and (c), for a period of nine (9) months after the termination of Executive’s employment under any circumstances, Executive (without regard to the state in which Executive lives or works) shall not, unless acting pursuant hereto or with the prior written consent of the Board:

(a)directly or indirectly, own, manage, operate, finance, join, control or participate in the ownership, management, operation, financing or control of, or be connected as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise with, or use or permit Executive’s name to be used, or perform work in connection with or on behalf of any Competing Business (defined below) with respect to the activities of a Competing Business within any state in which the Company, and/or its affiliates, then 

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currently engages in any Substantial Business Activity (defined below) or with respect to any state in which the Company, and/or its affiliates, engaged in any Substantial Business Activity during the twelve (12) month period preceding  Executive’s last day of employment with the Company; provided, however, that notwithstanding the foregoing, this provision shall not be construed to prohibit the passive ownership by Executive of not more than five percent (5%) of the capital stock of any entity which is engaged in any Competing Business having a class of securities registered pursuant to the Securities Exchange Act of 1934, as amended; or

(b)solicit or divert, or attempt to solicit or divert, to any Competing Business any individual or entity which is an active or prospective customer, agent, mortgage broker, loan originator or borrower of, with or from the Company, and/or its affiliates, or was such an active or prospective customer, agent, mortgage broker, loan originator or borrower at any time during the twelve (12) month period immediately preceding Executive’s termination of employment; or

(c)employ, attempt to employ, solicit or assist any Competing Business in employing (or engaging as a consultant) any individual who is a current employee of or consultant to the Company, and/or its affiliates, or who was an employee or consultant to the Company and/or its affiliates during the twelve (12) month period immediately preceding Executive’s termination of employment; provided, however, that, notwithstanding the foregoing, nothing in this Section 4 shall prohibit Executive from making general employment solicitations, such as through advertisements in publicly available media, so long as such advertisements are not specifically targeted at employees of the Company or any of its affiliates.

The phrase “Competing Business” shall mean any entity or enterprise actively engaged or planning to engage in any business or businesses the Company and/or its affiliates are actively engaged in (or are expected to be actively engaged in within twelve (12) months) at the time of Executive’s termination of employment (the “Company Business”).  Without limiting the scope of the preceding sentence, the phrase “Competing Business” includes the solicitation, origination, aggregation, pricing, negotiation and/or sale of (i) loans secured by mortgages on commercial real estate, and/or (ii) loans to entities engaged in the commercial real estate business, whether to hold these assets for investment or for sale individually or by combining them in one or more entities for sale as an investment (the process referred to as “securitization”).  The securitizations, depending upon the make-up of the assets, are often referred to by their acronyms such as “CMBS” (Commercial Mortgage Backed Securities), “CDO” (Collateralized Debt Obligations), “CLO” (Collateralized Loan Obligations) or other current or future similar acronyms. Notwithstanding the foregoing, an entity or enterprise shall be deemed not to be a Competing Business if the Executive recuses himself from participating in the management by such entity or enterprise of any business substantially similar to the Company Business and provides reasonable assurances to the Company of the same, upon request by the Company.  

The phrase “Substantial Business Activity” shall mean that the Company, and/or its affiliates:  (i) has, has had, or is taking action to establish a business office;  (ii) solicits, has solicited, makes or has made, loans secured by real estate, or is or has reviewed applications 

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by borrowers or brokers to engage in these activities; (iii) solicits, has solicited, makes or has made, loans to real estate developers and/or owners, or is or has reviewed applications by borrowers or brokers to engage in these activities; (iv) owns, services or manages real estate, or has owned, serviced or managed real estate; and/or (v) has or has had a recorded and unsatisfied mortgage or other lien upon real estate or personal property.

 

In the event that the provisions of this Section 4.1 should ever be adjudicated to exceed the time, geographic, business activities or other limitations permitted by applicable law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, business activities or other limitations permitted by applicable law.

4.2Developments. Executive shall disclose fully, promptly and in writing to the Company any and all inventions, discoveries, improvements, modifications and other intellectual property rights, whether patentable or not, which Executive has conceived, made or developed, solely or jointly with others, while employed by the Company and which (i) relate to the businesses, work or activities of the Company, and/or its affiliates or (ii) result from or are suggested by the carrying out of Executive’s duties hereunder or from or by any information that Executive may receive as an employee of the Company. Executive hereby assigns, transfers and conveys to the Company all of Executive’s right, title and interest in and to any and all such inventions, discoveries, improvements, modifications and other intellectual property rights and agrees to take all such actions as may be requested by the Company at any time and with respect to any such invention, discovery, improvement, modification or other intellectual property rights to confirm or evidence such assignment, transfer and conveyance. Furthermore, at any time and from time to time, upon the request of the Company, Executive shall execute and deliver to the Company, any and all instruments, documents and papers, give evidence and do any and all other acts that, in the opinion of counsel for the Company, are or may be necessary or desirable to document such assignment, transfer and conveyance or to enable the Company to file and prosecute applications for and to acquire, maintain and enforce any and all patents, trademark registrations or copyrights under United States or foreign law with respect to any such inventions, discoveries, improvements, modifications or other intellectual property rights or to obtain any extension, validation, reissue, continuance or renewal of any such patent, trademark or copyright. The Company shall be responsible for the preparation of any such instruments, documents and papers and for the prosecution of any such proceedings and shall pay for all reasonable expenses incurred by Executive in compliance with the provisions of this Section 4.2, promptly upon Executive’s submission of proper invoices therefor.

4.3Confidentiality.

(a)Executive acknowledges that, by reason of Executive’s employment by the Company, Executive will have access to confidential information of the Company, and/or its affiliates, including, without limitation, information and knowledge pertaining to products, inventions, discoveries, improvements, innovations, designs, ideas, trade secrets, proprietary information, manufacturing, packaging, advertising, distribution and sales methods, sales and profit figures, customer and client lists and relationships between the Company, and/or its affiliates, and dealers, distributors, sales representatives, wholesalers, customers, clients, real 

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estate developers and/or owners, mortgage brokers, suppliers and others who have business dealings with them (“Confidential Information”).  Executive acknowledges that such Confidential Information is a valuable and unique asset of the Company, and/or its affiliates, and covenants that, both during his employment with the Company and following his termination of employment under any circumstances, Executive will not disclose any Confidential Information to any person (except as Executive’s duties as an officer of the Company may require or as required by law or in a judicial or administrative proceeding) without the prior written authorization of the Board. The obligation of confidentiality imposed by this Section 4.3 shall not apply to information that becomes generally known to the public through no act of Executive in breach of this Agreement.

(b)Executive acknowledges that all documents, files and other materials received from the Company, and/or its affiliates, during his employment (with the exception of documents relating to Executive’s compensation or benefits to which Executive is entitled following the termination of his employment) are for use of Executive solely in discharging Executive’s duties and responsibilities hereunder and that Executive has no claim or right to the continued use or possession of such documents, files or other materials following termination of Executive’s employment by the Company. Executive agrees that, upon termination of employment, Executive will not retain any such documents, files or other materials and will promptly return to the Company any documents, files or other materials in Executive’s possession or custody. Notwithstanding the foregoing or anything in this Agreement to the contrary, Executive shall be entitled to a copy of his full list of contacts for use in activities which do not violate this Agreement.

4.4Equitable Relief. Executive acknowledges that the restrictions contained in Sections 4.1, 4.2 and 4.3 hereof are, in view of the nature of the businesses of the Company, and/or its affiliates, reasonable and necessary to protect the legitimate interests of the Company, and/or its affiliates, and that any violation of any provision of those Sections will result in irreparable injury to the Company and/or its affiliates.  Executive also acknowledges that in the event of any such violation, the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, and to an equitable accounting of all earnings, profits and other benefits arising from any such violation, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled. Executive agrees that in the event of any such violation, an action may be commenced for any such preliminary and permanent injunctive relief and other equitable relief in the Federal District Court for the Eastern District of Pennsylvania or the Common Pleas Court of Philadelphia.  Executive hereby waives, to the fullest extent permitted by law, any objection that Executive may now or hereafter have to such jurisdiction or to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that such suit, action or proceeding has been brought in an inconvenient forum. Executive agrees that effective service of process may be made upon Executive by mail under the notice provisions contained in Section 9 hereof.

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5.Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company and for which Executive may qualify; provided, however, that if Executive becomes entitled to and receives the payments provided for in Section 2.1(c) of this Agreement, Executive hereby waives Executive’s right to receive payments under any severance plan or similar program applicable to all employees of the Company.

6.Survivorship. The respective rights and obligations of the parties under this Agreement shall survive any termination of Executive’s employment to the extent necessary to the intended preservation of such rights and obligations, including, without limitation, Section 4 (Non-Competition, Non-Solicitation, Intellectual Property and Confidentiality), Section 8 (Arbitration; Expenses) and Section 18 (Claw-Back).

7.Mitigation. Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise and there shall be no offset against amounts due Executive under this Agreement on account of any remuneration attributable to any subsequent employment, insurance or other proceeds that Executive may obtain.

8.Arbitration; Expenses. In the event of any dispute under the provisions of this Agreement, other than a dispute in which the primary relief sought is an equitable remedy such as an injunction, the parties shall be required to have the dispute, controversy or claim settled by arbitration in Philadelphia, Pennsylvania in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and Executive, respectively, and the third of whom shall be selected by the other two arbitrators. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The arbitrators shall have no authority to modify any provision of this Agreement or to award a remedy for a dispute involving this Agreement other than a benefit specifically provided under or by virtue of the Agreement. Each party shall be responsible for its own expenses relating to the conduct of the arbitration (including reasonable attorneys’ fees and expenses) and shall share the fees and expenses of the arbitrators and the American Arbitration Association.

9.Notices. All notices and other communications required or permitted under this Agreement or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been given when hand delivered or mailed by registered or certified mail or overnight national courier, as follows (provided that notice of change of address shall be deemed given only when received):

If to the Company, to:

RAIT Financial Trust
Two Logan Square

100 N. 18th Street, 23rd Floor 

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Philadelphia, PA 19103
Attention:  Chief Executive Officer

If to Executive, to:

Alfred J. Dilmore at his most recent home address set forth in the records of the Company.

or to such other names or addresses as the Company or Executive, as the case may be, shall designate by notice to each other person entitled to receive notices in the manner specified in this Section.

10.Contents of Agreement; Amendment and Assignment.

10.1This Agreement sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment approved by the Board or the Committee, as applicable, and executed on its behalf by a duly authorized officer of the Company and by Executive. This Agreement supersedes the provisions of any employment or other agreement between Executive and the Company that relate to any matter that is also the subject of this Agreement and such provisions in such other agreements are null and void; provided, however, that the foregoing shall not apply to any equity compensation/incentive agreements and/or indemnification agreements entered into between Executive and the Company, which such agreements shall continue in accordance with their terms.

10.2All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of Executive under this Agreement are of a personal nature and shall not be assignable or delegable in whole or in part by Executive. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, within fifteen (15) days of such succession, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place.

11.Severability. If any provision of this Agreement or application thereof to anyone or under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction. If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.

13

 

12.Remedies Cumulative; No Waiver. No remedy conferred upon a party by this Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given under this Agreement or now or hereafter existing at law or in equity. No delay or omission by a party in exercising any right, remedy or power under this Agreement or existing at law or in equity shall be construed as a waiver thereof, and any such right, remedy or power may be exercised by such party from time to time and as often as may be deemed expedient or necessary by such party in its sole discretion.

13.Beneficiaries/References. Executive shall be entitled, to the extent permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit payable under this Agreement following Executive’s death by giving the Company written notice thereof. In the event of Executive’s death or a judicial determination of Executive’s incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to Executive’s beneficiary, estate or other legal representative.

14.Miscellaneous. All section headings used in this Agreement are for convenience only. This Agreement may be executed in counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts.

15.Withholding. All payments under this Agreement shall be made subject to applicable tax withholding, and the Company shall withhold from any payments under this Agreement all federal, state and local taxes as the Company is required to withhold pursuant to any law or governmental rule or regulation. Except as specifically provided otherwise in this Agreement, Executive shall bear all expense of, and be solely responsible for, all federal, state and local taxes due from Executive with respect to any payment received under this Agreement.

16.Governing Law. This Agreement shall be governed by and interpreted under the laws of the Commonwealth of Pennsylvania without giving effect to any conflict of laws provisions.

17.Section 409A.

17.1Interpretation.  Notwithstanding the other provisions hereof, this Agreement is intended to comply with the requirements of section 409A of the Code, to the extent applicable, and this Agreement shall be interpreted to avoid any penalty sanctions under section 409A of the Code.  Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to comply with section 409A and, if necessary, any such provision shall be deemed amended to comply with section 409A of the Code and regulations thereunder.  If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under section 409A of the Code, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed.  For purposes of section 409A of the Code, each payment made under this Agreement shall be treated as a separate payment.  In no event may the Executive, directly or indirectly, designate the calendar year of payment.  

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17.2Payment Delay.  Notwithstanding any provision to the contrary in this Agreement, if on the date of the Executive’s termination of employment, the Executive is a “specified employee” (as such term is defined in section 409A(a)(2)(B)(i) of the Code and its corresponding regulations) as determined by the Board (or its delegate) in its sole discretion in accordance with its “specified employee” determination policy, then all cash severance payments payable to the Executive under this Agreement that are deemed as deferred compensation subject to the requirements of section 409A of the Code shall be postponed for a period of six (6) months following the Executive’s “separation from service” with the Company (or any successor thereto).  The postponed amounts shall be paid to the Executive in a lump sum on the date that is six (6) months and one (1) day following the Executive’s “separation from service” with the Company (or any successor thereto).  If the Executive dies during such six-month period and prior to payment of the postponed cash amounts hereunder, the amounts delayed on account of section 409A of the Code shall be paid to the personal representative of the Executive’s estate on the sixtieth (60th) day after Executive’s death.  If any of the cash payments payable pursuant to this Agreement are delayed due to the requirements of section 409A of the Code, there shall be added to such payments interest during the deferral period at an annualized rate of interest equal to the prime rate as reported in the Wall Street Journal (or, if unavailable, a comparable source) at the relevant time.

18.Reimbursements.  All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the taxable year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit.  

19.       Claw-Back.   Executive acknowledges that all compensation paid or payable to Executive shall be subject to the provisions of any claw-back policy that is adopted by the Company in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act and any other relevant laws and their rules and regulations (including stock exchange rules), and is applicable to a group of the Company’s senior level executives determined by the Company that includes, at a minimum, the Chief Executive Officer, the President and the Chief Financial Officer.

 

15

Exhibit 10.21 

 

           IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written.

			
	
RAIT FINANCIAL TRUST:

	
By:
	
/s/ Scott L.N. Davidson

	
Name:
	
Scott L.N. Davidson

	
Title:
	
CEO & President

 

			
	
EXECUTIVE:

	
By:
	
/s/ Alfred J. Dilmore

	
Name:
	
Alfred J. Dilmore

 

 

[Signature Page to Executive Employment Agreement]Exhibit

EXHIBIT 10.1

TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT, dated as of August 9, 2017 (this “Agreement”), is by and among MACOM Technology Solutions Holdings, Inc., a Delaware corporation (“Buyer”), Advanced Photonix, Inc., a Delaware corporation (“API”), and Picometrix, LLC (“Picometrix” and, together with API, the “Sellers”).  Buyer and Seller are each a “Party” and are collectively the “Parties” to this Agreement. Capitalized terms used but not defined herein shall have the meaning given to them in the Purchase Agreement (as defined below). 
W I T N E S S E T H:
WHEREAS, Buyer and Sellers have entered into that certain Asset Purchase Agreement, dated as of August 9, 2017 (the “Purchase Agreement”).
WHEREAS, concurrently with the execution and delivery of this Agreement, the parties to the Purchase Agreement are consummating the transactions contemplated thereby.
WHEREAS, in connection with the transactions contemplated by the Purchase Agreement, Buyer and Sellers desire to provide one another with certain transition services after Closing with respect to the Business and the Products.
WHEREAS, each of Buyer and Sellers have agreed to provide to the other party the Transition Services (as herein defined) upon the terms and conditions set forth herein. 
NOW, THEREFORE, in consideration of the mutual terms, conditions and agreements set forth herein, the Parties hereby agree as follows:
ARTICLE  I      
DEFINITIONS
1.1    Reference to Purchase Agreement.  All capitalized terms used but not specifically defined in this Agreement have the meanings assigned to them in the Purchase Agreement.  
ARTICLE  II      
SERVICES
2.1    Services to be Provided by Sellers.  On the terms and subject to the conditions set forth herein, and in supporting the transfer of the Acquired Assets pursuant to the terms and conditions set forth in the Purchase Agreement, Sellers shall provide, independently or through other parties providing services to Sellers, to Buyer the transition services described in the Sellers Services Schedule (the “Sellers Services Schedule”) in Schedule A attached hereto (“Sellers Transition Services”).  Such Sellers Transition Services shall also include additional services reasonably requested by Buyer that Seller and/or its Affiliates had historically provided to the Business prior to the Closing that are reasonably needed to successfully transition the Business to Buyer.
2.2    Services to be Provided by Buyer.  On the terms and subject to the conditions set forth herein, and in supporting the transfer of the Acquired Assets pursuant to the terms and conditions set forth in the 

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
 

Purchase Agreement, Buyer shall provide, independently or through other parties providing services to Buyer, to Sellers the transition services described in the Buyer Services Schedule (the “Buyer Services Schedule”) in Schedule B attached hereto (“Buyer Transition Services” and together with the Sellers Transition Services, the “Transition Services”). Such Buyer Transition Services shall also include additional services reasonably requested by Seller that are reasonably needed to successfully transition the Business to Buyer.
2.3    Cooperation and Transitional Nature of Services.  From the Closing Date until the expiration or termination of each of the Transition Services, each of the Parties agrees to use its reasonable good faith efforts to work together so that the provision of Transition Services may be transitioned to Buyer or Sellers as soon as is reasonably practicable.  Buyer and Sellers shall cooperate with each other in all reasonable respects in the performance by Buyer or Sellers, as applicable, of the Transition Services.  
2.4    Third Party Consents.  Each Party acknowledges and agrees that the services provided by a Party through third parties or using third party intellectual property are subject to the terms and conditions of any applicable agreements between the provider of such service and such third parties.  If a Party is not able to provide the services subject to the terms and conditions of any applicable agreements between the provider of such service and such third parties, the Parties shall use commercially reasonable efforts to identify a reasonable alternative arrangement to provide the relevant services sufficient for the purposes of the Party receiving the services.  For the first six (6) months, all costs associated with the foregoing shall be borne by the Party providing the applicable Transition Service and following six (6) months, shall be borne subject to Row ERP on Schedule A hereto. 
2.5    Monthly Payment.  In consideration of the expenses incurred to date and to be incurred by Buyer in making provision for the Buyer Transition Services, Sellers will pay Buyer one million five hundred thousand dollars ($1,500,000.00).  Such payment will be made in five monthly equal installments of three hundred thousand dollars ($300,000.00) each with an installment due no later than the end of the calendar month in August, September, October, November and December 2017.
2.6    Expenses.  Except as set forth in Section 2.4 and 2.5 or as otherwise expressly specified on the Schedules hereto, each Party will be responsible for any costs and expenses incurred by such Party in connection with the provision of the respective Transition Services hereunder.  

ARTICLE  III      
COVENANTS
3.1    Compliance with Laws.  Each Party shall comply, at its own expense, with the provisions of all applicable municipal requirements and those state and federal laws that may be applicable to the performance of this Agreement, including the performance of the Transition Services hereunder. Notwithstanding anything to the contrary in this Agreement or in the Sellers Services Schedule or the Buyer Services Schedule attached hereto, nothing in this Agreement or the Schedules hereto shall require any Party to take any action not in compliance with all applicable laws.
3.2    Performance.  The Transition Services shall be provided with the same degree of care, skill, and prudence that each Party uses in the operation of its own business and in a manner consistent with the same services provided in connection with the operation of the Business or its respective business, as 

2

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

applicable, in the ordinary course during the year prior to the Closing, including with respect to the timing of such services.  
3.3    Personnel.  Each of the Parties agrees that the Transition Services to be performed by it or on its behalf will be performed by individuals in a manner providing quality at standards consistent with the provisions of Section 3.2.
3.4    Books and Records.  All financial records regarding the Transition Services shall be maintained in accordance with generally accepted accounting principles consistently applied.
3.5    Disclaimer.  EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, (A) NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, STATUTORY, EXPRESS OR IMPLIED, REGARDING THE TRANSITION SERVICES, (B) EACH PARTY EXPRESSLY DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT, FITNESS FOR A PARTICULAR PURPOSE AND TITLE WITH RESPECT TO THE TRANSITION SERVICES, AND (C) NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY THAT ACCESS TO ANY COMPUTER NETWORK OR SYSTEM OR THE TRANSITION SERVICES WILL BE UNINTERRUPTED, SECURE, COMPLETE, ACCURATE OR ERROR-FREE.
ARTICLE  IV      
TERM AND TERMINATION
4.1    Term of Provision of Transition Services and Access.  The Parties shall provide the Transition Services through and until applicable date set forth on the Sellers Services Schedule or the Buyer Services Schedule.  Each of the Parties, upon at least ten (10) business days prior written notice to the other, may eliminate one or more categories of Transition Services provided by the other. Upon the termination of all Transition Services by both Parties pursuant to this Section 4.1, this Agreement shall automatically terminate. 
4.2    Termination by Mutual Consent.  This Agreement may be terminated by the mutual written consent of Sellers and Buyer.
4.3    Other Termination.
(a)    Either Sellers, on the one hand, or Buyer, on the other hand (the “Initiating Party”) may terminate this Agreement with immediate effect by notice in writing to Buyer or Sellers, as the case may be, on or at any time after the other Party is in material breach of any of its obligations under this Agreement and (if the breach is capable of remedy) has failed to remedy the breach within fifteen (15) days of receipt of notice in writing from the Initiating Party giving particulars of the breach and requiring the other Party to remedy the breach.  A failure to pay any amount hereunder when due shall be considered a material breach.
(b)    All rights and obligations of Sellers and Buyer under this Agreement shall cease to have effect immediately upon termination of this Agreement except that termination shall not affect the accrued rights and obligations of Sellers and Buyer at the date of termination and Articles V, VI, VII and VIII shall survive expiration or termination of this Agreement.

3

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

ARTICLE  V      
INDEMNIFICATION
5.1    Indemnity for Third Party Claims.  To the extent not prohibited by law, and except as otherwise provided in this Agreement, each Party shall indemnify and hold harmless the other Party and its Affiliates and its and their officers, directors, employees and agents (“Indemnified Parties”) from and against any and all third party claims, demands, money judgments, settlements, liabilities, costs and expenses (including reasonable attorneys’ fees) (collectively, “Losses”), in any way caused by or arising from an act or omission constituting fraud, gross negligence or willful misconduct of the indemnifying party or its Affiliates or their employees, agents or contractors.
5.2    Exclusive Remedies.  The sole and exclusive remedies for any claim (whether such claim is framed in tort, contract or otherwise) arising out of a breach of any representation, warranty, covenant, agreement or undertaking in or pursuant to this Agreement shall be (i) a claim for actual damages and (ii) available equitable rights or remedies.  
5.3    Limitation of Liability.  IN NO EVENT SHALL ANY INDEMNIFYING PARTY IN ANY CASE BE LIABLE FOR INDIRECT, CONSEQUENTIAL, PUNITIVE, SPECIAL OR OTHER SIMILAR DAMAGES ARISING FROM ANY CLAIM RELATING TO BREACH OF THIS AGREEMENT OR OTHERWISE RELATING TO ANY OF THE TRANSITION SERVICES PROVIDED HEREUNDER AND IN NO EVENT SHALL A PARTY BE LIABLE HEREUNDER FOR ANY CLAIMS, DAMAGES OR LOSSES CAUSED BY COMPUTER VIRUS, TELECOMMUNICATION ERRORS, OTHER INTERRUPTIONS IN SERVICE, UNAUTHORIZED ACCESS TO OR USE OF ANY COMPUTER SYSTEM OR ANY DAMAGES, LOSSES OR CLAIMS ARISING FROM OR RELATING TO THE ACTS OR OMISSIONS OF THIRD PARTIES.
5.4    Limitation on Liability.  Except for Losses involving fraud, intentional misrepresentation or willful misconduct or arising from a party’s indemnification obligations in Section 6.1, in no event shall the aggregate liability of a Party under this Agreement exceed one million five hundred thousand dollars ($1,500,000.00). 
ARTICLE  VI      
CONFIDENTIALITY
6.1    Confidentiality.  Buyer and Sellers shall hold all confidential or proprietary information obtained in connection with the provision by a Party of the Transition Services or receipt by a Party of the Transition Services and relating to Sellers’ or Buyer’s business (“Confidential Information”) confidential.  The receiving party shall not disclose any Confidential Information of the disclosing party to any third party unless the receiving party is legally compelled to disclose such information, in which event the disclosing party shall provide the receiving party with written notice of such legal compulsion to disclose.
ARTICLE  VII      
MISCELLANEOUS
7.1    Independent Entities.  In providing the Transition Services hereunder, each of the Parties will act solely as an independent contractor and nothing in this Agreement will constitute or be construed to 

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Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

be or create a partnership, joint venture, or principal/agent between Sellers, on the one hand, and the Buyer, on the other, and neither Party shall enter into any agreement or commitment which is binding on the other.
7.2    Headings. Article and Section headings in this Agreement are included herein for convenience of reference only and shall in no way restrict or affect the interpretation of any provision hereof.
7.3    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall, taken together, be considered one and the same agreement.
7.4    Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the choice-of-laws provisions thereof.
7.5    No Third Party Beneficiaries.  This Agreement is not intended to confer upon any Person other than the parties hereto any rights or remedies hereunder.
7.6    Assignment.  No Party may assign this Agreement without the express prior written consent of the other Party; provided, however, that either Party may assign this Agreement in connection with a merger, acquisition, or sale of all or substantially all of such Party’s assets.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.
7.7    Entire Agreement/Amendment.  This Agreement and the Purchase Agreement constitute the entire agreement between the Parties with respect to the subject matter of this Agreement and supersedes all prior written and oral agreements between the Parties regarding the subject matter of this Agreement.  No amendment or waiver of compliance with any provision hereof or consent pursuant to this Agreement shall be effective unless evidenced by an instrument in writing signed by the Party against whom enforcement of such amendment, waiver, or consent is sought. 
7.8    Severability.  If any provision of this Agreement is found to be illegal or unenforceable, the other provisions shall remain effective and enforceable to the greatest extent permitted by law. 
7.9    Other Agreements.  Nothing contained in this Agreement is intended to amend or modify in any respect the rights and obligations of the Parties to the Purchase Agreement and in the event of any conflict between this Agreement (including the Sellers Services Schedule and the Buyer Services Schedule), on the one hand, and the Purchase Agreement, on the other hand, the Purchase Agreement shall control; provided that nothing in the Purchase Agreement shall affect the rights or obligations of the Parties under Article V of this Agreement.
7.10    Force Majeure.  A Party will not be liable to the other for any delay or failure of such Party to perform its obligations hereunder if such delay or failure arises from any cause or causes beyond its reasonable control.  Such causes will include, but are not limited to, acts of God, floods, fires, loss of electricity or other utilities, technical disruptions or computer viruses, or delays by the other party in providing required resources or support.
7.11    Specific Performance.  Each of the Parties acknowledges and agrees that the other Party would be damaged irreparably and suffer unreasonable hardship in the event that any term or provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached or violated.  Accordingly, each of the Parties agrees that, without posting bond or other undertaking, the other Party will be entitled to an injunction or injunctions to prevent breaches or violations of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof and thereof in any claim 

5

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

instituted in any court with jurisdiction over the Parties or their assets in addition to any and all other rights and other remedies at law or in equity and all such rights and remedies will be cumulative.  Each of the Parties further agrees that, in the event of any action for specific performance in respect of such breach or violation, it will not assert the defense that a remedy at law would be adequate or that the balance of hardships between the Parties makes an equitable remedy unwarranted.
.
[remainder of page intentionally left blank]

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Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.
    
MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

By:     /s/ John Croteau                
Name:     John Croteau                    
Title:     President and Chief Executive Officer     
    
ADVANCED PHOTONIX, INC.

By:     /s/ Dale Messick            
Name:     Dale Messick                    
Title:     Chief Executive Officer            

PICOMETRIX, LLC

By:     /s/ Dale Messick            
Name:     Dale Messick                    
Title:     Authorized Person            

[Signature Page to Transition Services Agreement]

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

SCHEDULE A
SELLERS TRANSITION SERVICES

	
			
	Service Description
	Point of Contact
	Estimated Duration

	Financial Reporting

	Sellers will provide access to and copies of historical financial reporting data requested by the Buyer and, to the extent practicable, in an electronic format requested by Buyer.
	Dale Messick
	6 months

	On a monthly basis, by the 4th day of the Buyer’s subsequent month by 3:00 pm EST, (in accordance with Exhibit A hereto), Sellers will perform a closing of each calendar month end in a manner that is consistent with Sellers’ current processes so as to be able to deliver a Trial Balance, Income Statement and Balance Sheet (Collectively the “Monthly Financial Statements”)
	Dale Messick
	6 months

	Sellers will support Buyer’s Quarterly SEC reporting requirements
	Dale Messick
	6 months

	Sellers will provide supporting detailed schedules on a monthly basis by the 9th day of the Buyer’s subsequent month by 3:00 pm EST (in accordance with Exhibit A hereto) as part of each month end, with respect to Inventory, Fixed Assets, Other Assets, Accounts Receivable, Accounts Payable, Accrued Liabilities and any other assets and liabilities acquired by Buyer pursuant to the Purchase Agreement and subject to transition
(collectively the “Account Reconciliations”).

System generated reports for Account Reconciliations must be converted to an Excel format before being delivered and Account Reconciliations must be in a format comparable to what is currently done for each account listed in Annex II of the Purchase Agreement
	Dale Messick
	6 months

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

        

	
			
	Sellers will provide month end reporting of sales revenue and the direct materials portion of the associated cost of goods sold. Such reporting shall include (but is not limited to) the following: 
i.    “Gross Sales by Customer” (with each customer identified) 
ii.    “Gross Sales and Cost by Product Family” (with each product family identified) 

Such month end reports will be required on 3rd day of the Buyer subsequent month by 3:00 pm EST (in accordance with Exhibit A hereto) (collectively the “Monthly Sales and Cost Reports”).
	Dale Messick
	6 months

	Sellers will support Buyer’s purchase accounting and opening balance sheet initiatives and will provide reasonable support to Buyer with respect to any audit requests.
	Dale Messick
	6 months

	Sellers will maintain appropriate internal accounting controls and will not change any accounting policies and procedures, except to the extent approved in writing by Buyer.
	Dale Messick
	6 months

	Sellers will conduct periodic physical inventories of the raw materials, finished goods, and other inventories.
	Dale Messick
	6 months

	Sellers will provide weekly Orders, Sales, Backlog by Product by Customer Detail on a weekly basis.
	Dale Messick
	6 months

	Billing, Receivables and Collection
	 
	 

	Sellers will ensure any changes (additions, credit limit updates, delivery terms, etc.) to customer master files are approved by the Buyer.
	Dale Messick
	6 months

	Sellers will maintain all billing personnel and processes, any inbound call or other customer support group, and other billing, receivable and collection functions to assist with customer billing, questions and the resolution of all other billing, receivable and collection matters until such time that Buyers and Service Providers have transitioned customer master files, selling programs and related billing/collection practices.
	Dale Messick
	6 months

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
 

        

	
			
	Sellers will provide the following additional services with respect to billing, receivables and collection: 

i.    Daily reporting of order entry and invoiced sales. Such reports are to be available by 3:00 pm EST for the previous day).

ii.    Post collections of cash against outstanding accounts receivable using data provided by such Service Provider’s bank and/or Buyer as applicable. Such posting will be completed immediately upon receiving required information/payments.

iii.    Weekly, provide Buyer with an invoice level accounts receivable aging, noting the status of any past due items. Such reports are to be available by Monday at 3:00 pm EST for the previous week.

iv.    Provide access to customer files as requested by Buyer.

v.    Calculate monthly and quarterly sales commissions, rebates, discounts, promotional activity, royalty programs, etc. Provide detail of these calculations on a monthly basis.

vi.    Calculate and provide detailed monthly reports on sales tax billings and associated sales tax accruals.

vii.    Sellers will ensure established customer credit limits and shipment hold notifications are appropriately adhered to.
	Dale Messick
	6 months

	Any changes in billing, receivables and collection policies and procedures existing as of the Closing Date must be mutually agreed upon by the Buyer.
	Dale Messick
	6 months

	Accounts Payable

	Sellers will ensure any changes (additions, remit to addresses, names, banking info, etc.) to vendor master files are approved by Buyer.
	Dale Messick
	6 months

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
 

        

	
			
	Sellers will maintain all accounts payable and, subject to the other provisions of this Agreement, other relevant accrued liability personnel and processes to assist with settlement of liabilities assumed by Buyer as of the Closing Date until such time that Buyer and Sellers have transitioned vendor master files and related accounts payable/disbursement practices.
	Dale Messick
	6 months

	With respect to payments made after the Closing Date, upon receipt of supplier invoices related to purchasing activity, Seller shall forward such invoices or invoice summaries to Buyer who will provide approval for payment.
	Dale Messick
	6 months

	With respect to trade payables and other liabilities outstanding as of the Closing Date and acquired by the Buyer at that time, Sellers will arrange and execute payment using funds on hand or collected by Sellers on behalf of Buyer or provided directly from Buyer pursuant to the instructions listed in the above Treasury section of this Agreement. Payment should be made in accordance with supplier payment terms existing at time of Closing Date, and should not precede payment due date by more than five days.
	Dale Messick
	6 months

	Sellers will provide the following additional services with respect to accounts payable and procurement:

i.    Weekly, provide Buyer with an invoice level accounts payable aging as well as any documents requested in the Treasury section below. Such reports are to be available by Monday at 3:00 pm EST for the previous week.

ii.    Provide access to supplier files as requested.

	Dale Messick
	6 months

	Any changes in existing policies and procedures existing as of the Closing Date must be mutually agreed upon by the Service Providers and the Buyer.
	Dale Messick
	6 months

	Treasury

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
 

        

	
			
	Sellers will maintain a daily spreadsheet detailing all inbound payments received on behalf of the Buyer and posted to accounts receivable in accordance with instructions provided in the above “Billing, Receivables and Collection” section. Resulting cash balances will be used to settle trade accounts payable and other liabilities assumed by Buyer as of the Closing Date. Recording of such disbursements should also be made within a spreadsheet that is furnished to Buyer using an Excel-based format mutually agreed upon by both parties (“Receipt and Disbursement Schedules”). 
	Dale Messick
	6 months

	Receipt and Disbursement Schedules will be provided to Buyer on a weekly basis each Wednesday at 3PM ET, and will include any other daily cash activity for any cash activity subsequent to the closing date not addressed by inbound payments and disbursements addressed above.

Receivable postings and payable settlements will be supported by the invoice level accounts receivable aging reports and check/disbursement registers discussed in the Billing, Receivables and Collection and Accounts Payable sections above.
	Dale Messick
	6 months

	The Receipt and Disbursement Schedules provided by the Sellers hereunder will reflect the net cash position relative to cash collected during the week versus cash demands created by liabilities assumed by the Buyer. Upon receipt of the Receipt and Disbursement Schedules, Buyer and Sellers will mutually determine amounts to be funded by Buyer to Sellers, with such payment to be initiated within one business day of such determination. Disputes with respect to such amounts will be determined in accordance with Section 2.5.4 of the Purchase Agreement.
	Dale Messick
	6 months

	Tax Reporting

	Seller shall continue to report and pay any sales tax, use tax, value added tax, goods and services tax or similar tax required to be reported and paid by Seller in connection with the services provided hereunder.
	Dale Messick
	6 months

	Information Technology
	 
	 

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
 

        

	
			
	Sellers will provide reasonable support in transferring information technology assets, including but not limited to physical assets, network and communications access, all system passwords, and vendor system contracts and access to Buyer’s location.
	Dale Messick
	2 months

	Human Resources

	Seller will make its human resource information systems, data and other records related to the employees of the Business available to Buyer HR personnel, provide requested reports regarding such information systems, data and other records, and facilitate data transfer related to employees of the Business where reasonably requested by Buyer.
	Dale Messick
	6 months

	Purchasing

	Sellers will maintain purchasing activities subject to the other provisions of this Agreement, other relevant accrued liability personnel and processes to assist with procurement of certain items on behalf of the Buyer as of the Closing Date until such time that Buyer and Sellers have transitioned vendor master files and related accounts payable/disbursement practices.
	Dale Messick
	6 months

	With respect to purchases made after the Closing Date, prior to making any commitment to purchase goods and services from vendors Seller shall ensure Buyer approves purchases.
	Dale Messick
	6 months

	Customer Service

	Sellers shall provide reasonable customer service and sales support to Buyer upon request.
	Dale Messick
	6 months

	Training

	Sellers will provide reasonable access to their existing personnel for on-the-job training with respect to the Business and any services contemplated hereby.
	Dale Messick
	6 months

	ERP

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
 

        

	
			
	Sellers agree to continue to make the [***] software and related information available to the employees serving under the ETSA to the same degree it has been available to them prior to Closing for up to 6 months.  Sellers will continue to provide the same service to any such employee who rolls off the ETSA and onto Buyer payroll during the 6 months. Sellers will also provide such services to any Buyer employee who is substituted, at Buyer’s sole discretion, for an employee serving under the ETSA who declines to join Buyer or quits during such 6 month period.
	Dale Messick
	6 months with Buyer right to extend

Buyer may provide 30 days’ notice prior to end of initial 6 month period of need for this service to extend beyond 6 months and the Parties will (a) reasonably cooperate with each other to approach the software licensor for obtaining any needed right and (b) split associated costs 50/50 for any license period beyond the first 6 months.

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
 

        

SCHEDULE B
BUYER TRANSITION SERVICES

	
			
	Service Description
	Point of Contact
	Estimated Duration

	Financial Services

	Inventory Reconciliations; Slow/Obsolete; WIP costing; etc.
Month end close standard entries, system reports, Bal Sheet recs, etc.
Sales/Use Taxes
Property tax returns
	Jack Kober
	Up to 6 months from Closing.

	Information Technology

	Buyer will provide Sellers with reasonable access to data housed on servers acquired by Buyer as part of the Acquired Assets and will provide copies of such data to Sellers prior to the end of the term hereof, provided, however, that the Sellers will only be entitled to the services described above with respect to data that is outside of the Acquired Assets and that is owned by the Sellers following the Closing in respect of their retained businesses.
	Bhaskar Banerjee
	6 months

	Buyer will provide the following additional support system access items related to the Acquired Assets:

•    Reasonable access to individuals at Buyer to help Seller support and transition the Acquired Assets, not to exceed 8 hours per week for any particular individual.

•    Reasonable support in transferring physical assets, including any servers, to Buyer’s location.
	Bhaskar Banerjee
	6 months

	Human Resources
	 
	 

	Buyer will provide Sellers with reasonable access to the human resources manager of the Business, not to exceed 13 hours per week and solely for the purpose of supporting the Sellers’ retained businesses in a manner and to the extent consistent with the support provided by such human resources manager to the Sellers during the 12 months prior to Closing.
	Bill Van Anglen
	Up to 3 months from Closing at no cost. Up to an additional 3 months thereafter upon request, but at a monthly price to Seller equivalent to one third (1/3) of Buyer’s fully-loaded cost incurred in employing the human resources manager.

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
 

        

	
			
	Miscellaneous

	Buyer agrees to provide and/or otherwise make available office services to Seller to facilitate the orderly transition of the Acquired Assets, provided that the location(s) and scope of such services will be mutually agreed upon by the parties.
	Bhaskar Banerjee
	6 months

	Epiwafer Supply

	Buyer to manufacture and deliver on a non-cancelable, non-returnable, as-is basis two (2) wafers of epitaxial material to Sellers for use in Sellers’ Terahertz business within 12 weeks following the Closing Date.
	Kimberly Conway
	12 weeks

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
 

        

EXHIBIT A

Confidential and Proprietary

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

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