c/o NorthStar Realty Finance Corp.
2.After the Departure Date, you shall be entitled to receive the payments set forth in Section 6(b) of your Employment Agreement, provided that, in order to avoid the application of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), no installment of the payments during the Severance Payment Period in lieu of paying any further compensation pursuant to Section 6(b)(ii) of your Employment Agreement shall be made until the first regular payroll date of the Company which occurs more than six months following the Departure Date and, on such date, the Company shall pay you an amount equal to the sum of all payments under that Section 6(b)(ii) that would have been paid in respect of the period preceding such date but for the delay imposed on account of Section 409A of the Code.
3.On the last day of the Availability Period (or the next business day thereafter) (the “Availability End Date”), you agree to provide the Company with a signed copy of the letter attached to this Agreement as Exhibit A (the “Confirmation Letter and Release”).
4.As an employee of the Company, you were granted (i) 53,800 LTIP units under the 2004 Omnibus Stock Incentive Plan adopted by NorthStar (the “Stock Plan”) pursuant to an LTIP Unit Vesting Agreement dated as of October 29, 2004 (the “First LTIP Agreement”), and (ii) 2,444 LTIP units under the Stock Plan pursuant to an LTIP Unit Vesting Agreement dated as of November 19, 2004 (the “Second LTIP Agreement”), in each case as a result of your membership interest in NRF Employee, LLC (your “Employee LLC Interest”). In addition, you were granted 24,455 LTIP units under the Stock Plan pursuant to an LTIP Unit Vesting Agreement dated as of January 23, 2006 (the “Third LTIP Agreement” and collectively with the First LTIP Agreement and the Second LTIP Agreement, the “LTIP Agreements”). As of the Release Date, you will be vested in 28,122 LTIP Units through your Employee LLC Interest and will be vested in 2,038 of the LTIP Units granted you under the Third LTIP Agreement. If you sign this Agreement and the Confirmation Letter and Release and comply with the terms of this Agreement, including without limitation performing the services required under paragraph 1 of this Agreement, you will (a) be fully vested, as of the Release Date, in the remaining unvested LTIP Unit grants under the First LTIP Unit Agreement and the Second LTIP Unit Agreement (i.e., 56,244 LTIP Units), (b) continue to vest in your LTIP Unit grants under the Third LTIP Unit Agreement through the Availability End Date in accordance with the terms of the Third LTIP Unit Agreement, and (c) be vested, as of the Availability End Date, in your LTIP Unit grants under the Third LTIP Unit Agreement (i.e., 24,455 LTIP Units). On the Release Date, you shall (1) redeem the vested portion of your Employee LLC Interest for an equivalent number of LTIP Units, and (2) withdraw as a member of NRF Employee, LLC. For any LTIP Units that have not vested as of the Release Date under this paragraph, but with respect to which you will be eligible to continue to vest under the terms of this paragraph, you will be entitled to receive dividends on such shares or units, as applicable.
5.As an employee of the Company who participates in the NorthStar Realty Finance Corp. 2004 Long-Term Incentive Bonus Plan (the “Bonus Plan”), you will be entitled to receive (i) 25,140 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) if the return hurdle is met in the one-year performance period beginning October 1, 2005, (ii) 25,140 shares of Common Stock if the return hurdle is met in the one-year performance period beginning October 1, 2006, and (iii) alternatively to clauses (i) and (ii), 50,280 shares of Common Stock if the return hurdle is not met in the one-year performance period beginning October 1, 2005, but is met in the two-year performance period beginning October 1, 2005, in each case subject to the terms and conditions of the Bonus Plan, including that you be employed through the end of the performance period. In consideration of the accelerated vesting of your LTIP Units provided for in paragraph 4 above and the consideration that may be provided to you on the Availability End Date, as provided below in this paragraph, you agree to forfeit any right, title and interest that you may be entitled to receive as of the Departure Date or the Release Date in the Bonus Plan. If you sign this Agreement, and if you sign the Confirmation Letter and Release and comply with the terms of this Agreement, including without limitation performing the services required under paragraph 1 of this Agreement through the Availability End Date, you will, on the Availability End Date, receive, at the Company’s option, shares of common stock or LTIP Units having a value of $340,000, based on the average daily closing price for the preceding 20 consecutive trading days up to and including the day prior to the Availability End Date, or a cash payment in that amount. Your eligibility to participate in the Bonus Plan will terminate as of the Release Date.
6.The Company agrees not to contest any application you may make for unemployment compensation benefits; however, you should be aware that New York law (or the law of any other state in which you reside in the future) may have other requirements that must be met for you to receive such benefits.
7.(a) In consideration of the payments made by the Company to you, as well as its other undertakings delineated in this Agreement, you agree to release and hold harmless, NorthStar, NorthStar Realty Finance Limited Partnership, NS Advisors LLC, NorthStar Capital Investment Corp., NRF Employee, LLC and their respective shareholders, subsidiaries, affiliates, employees, former employees, officers, directors, agents, representatives, successors and assigns (collectively referred to in this Agreement as “Releasees”) from any and all claims, demands or causes of action of whatever nature, whether known or unknown, which you have or may have against Releasees arising out of any events which have occurred up to the date of this Agreement (except for any claim to enforce the terms of this Agreement and any claims for indemnification resulting from third party claims related to your employment with the Company), including, but not limited to: (1) any claim in contract or tort, including, but not limited to claims for wrongful discharge, infliction of emotional distress, invasion of privacy or defamation; (2) any and all claims for breach of an express or implied contract; (3) any and all claims for unlawful discrimination (including but not limited to claims based on race, sex, sexual orientation, marital status, religion, creed, age, handicap, disability, national origin, ethnic heritage, ancestry, veteran status, genetic predisposition or carrier status, retaliation or any other protected classification) under any federal, state or local statute or ordinance, including but not limited to, any claim under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the New York State Human Rights Law or the New York City Administrative Code; (4) any and all claims for wages or other compensation or benefits; (5) any and all claims arising out of your employment or the termination of your employment; and (6) any and all claims for compensatory or punitive damages, interest, costs or attorney’s fees. By signing this Agreement you are not releasing any claim that you may have with respect to: (i) the prospective payments and distributions of cash, common shares in the Company and LTIP Units referenced as payable or distributable to you under the terms and conditions of this Agreement, (ii) any other claims arising after the date hereof that you may have based upon the failure of any NorthStar Parties (as defined below) to observe or perform any obligations it/they may have to you under this Agreement or under the surviving provisions of the Employment Agreement, (iii) your rights to be indemnified in your capacity as an officer of the Company under the terms of that certain Indemnity Agreement, dated as of October 22, 2004 between you and the Company, and any charter, by-laws, agreements or insurance policies for the Company and its affiliates in accordance with its terms, or (viii) your rights, solely in your capacity as a shareholder of the Company to share in any economic benefits inuring to all shareholders of the Company, provided that you have complied with your obligations under paragraphs 3(b), 7 and 14 of your Employment Agreement, as amended hereby, which survive and remain in full force and effect.
(b) In consideration of the foregoing release and your other undertakings contained in this Agreement, NorthStar, NorthStar Realty Finance Limited Partnership, NS Advisors LLC, NorthStar Capital Investment Corp., NRF Employee, LLC and their respective subsidiaries, successors and assigns (the “NorthStar Parties”), voluntarily, knowingly and willingly release and forever discharge you from any and all charges, complaints, claims, promises, agreements, controversies, causes of action and demands of any nature whatsoever which against you or your executors, administrators, successors or assigns such NorthStar Parties ever had, now have or hereafter can, shall or may have by reason of any matter, cause or thing whatsoever arising prior to the time you sign this Agreement; provided, however, that this release shall not extend to any fraud committed or engaged in by you against or involving the Company or to any acts that are not known by any of the current directors or executive officers, other than you, of the Company. This release includes, but is not limited to, any rights or claims relating in any way to your employment relationship with the Company, or the termination thereof, or under any statute, regulation, or common law, or any federal, state or local law, or under any policy, agreement, understanding or promise, written or oral, formal or informal between you and any NorthStar Party. By signing this Agreement the NorthStar Parties are not releasing any claim arising after the date hereof that they may have relating to your failure to observe and perform any of your obligations under this Agreement, or under the surviving provisions of the Employment Agreement.
8.You agree, unless such agreement is otherwise prohibited by law, not to commence, maintain, prosecute or participate in any action or proceeding of any kind (judicial or administrative) against any of the Releasees arising out of any act, omission, transaction or occurrence occurring up to and including the Release Effective Date, and represent that you have not done so as of the Release Effective Date.
9.You represent that you have returned or will on or before the Availability End Date return to NorthStar all proprietary confidential company information and property, including without limitation, company credit cards, mailing lists, reports, files, memoranda, records and software, credit cards, door and file keys, computer access codes or disks and instructional manuals, and other physical or personal property which you received or prepared or helped prepare in connection with your employment with NorthStar, and you will not retain any copies, duplicates, reproductions or excerpts thereof. The Company will as soon as reasonably practicable remove you as a signatory from Company bank accounts and other instruments with respect to which you are listed as a signatory. Effective as of the Departure Date, your signature to this Agreement will constitute your resignation as an officer and/or director, as the case may be, of all entities listed on Annex A hereto.
10.You acknowledge and agree that in the course of your employment with the NorthStar you have acquired proprietary company information you have signed and remain bound by the terms of Sections 3(b) and 7 of your Employment Agreement.
11.You will refrain from making any statements, taking any actions, or conducting yourself in any way that adversely affects the reputation and/or goodwill of the Company. The NorthStar Parties also agree that they will not make, participate in the making of, or encourage any other person to make, any statements which criticize or disparage, defame the reputation or integrity of, or which are intended to adversely affect you. Nothing in this paragraph shall preclude any party to this Agreement from giving truthful testimony under oath in response to a subpoena or other lawful process or truthful answers in response to questions from a government investigator.
12.Upon reasonable notice and within reasonable time commitments, you agree to cooperate with and assist the Company and provide information to the Company and its affiliates as to matters in which you were involved prior to the Availability End Date, including information needed in connection with any claim or litigation, investigation, administrative proceeding, arbitration, enforcement action, by or against the Company or any of its affiliates relating to any matter in which you were involved or which you had knowledge, and will testify as a witness in connection with such matters if requested by the Company or any one of its affiliates. The Company agrees to reimburse you for all reasonable out-of-pocket expenses incurred in such cooperation including reasonable travel and reasonable attorneys’ fees following submission of appropriate documentation. In the event that, after the Availability End Date, the Company requests your assistance in connection with litigation or arbitration involving the Company or any of its affiliates, the Company will pay you at the hourly rate of $250.00 for time actually expended by you providing such assistance.
13.This Agreement and the LTIP Agreement constitute the entire agreement between the parties as to the subject matter hereof. This Agreement may not be modified except by a written agreement signed by the parties. This Agreement and the Confirmation Letter and Release will be governed by the laws of the State of New York.
14.This Agreement is binding upon, and shall inure to the benefit of, the parties and their respective heirs, executors, administrators, successors and assigns.
15.You acknowledge that you: (a) have carefully read this Agreement in its entirety; (b) have had an opportunity to consider for at least 21 days the terms of this Agreement; (c) are hereby, advised by the Company in writing to consult with an attorney of your choice in connection with this Agreement; (d) fully understand the significance of all of the terms and conditions of this Agreement and have discussed them with your independent legal counsel, or have had a reasonable opportunity to do so; (e) have had answered to your satisfaction by your independent legal counsel any questions you have asked with regard to the meaning and significance of any of the provisions of this Agreement; and (f) are signing this Agreement voluntarily and of your own free will and agree to abide by all the terms and conditions contained herein.
16.You understand that you will have at least 21 days from the date of receipt of this Agreement to consider the terms and conditions of this Agreement. You may accept this Agreement by signing it and returning it to Richard J. McCready. After executing this Agreement, you shall have seven days (the “Revocation Period”) to revoke this Agreement by indicating your desire to do so in writing delivered to Richard J. McCready, by hand, mail or fax, received no later than 5:00 p.m. on the seventh day after the date you sign this Agreement. The effective date of this Agreement shall be the eighth day after you sign the Agreement (the “Release Effective Date”). If the last day of the Revocation Period falls on a Saturday, Sunday or holiday, the last day of the Revocation Period will be deemed to be the next business day. In the event you do not accept this Agreement as set forth above, or in the event you revoke this Agreement during the Revocation Period, this Agreement, including but not limited to the obligation of the Company to provide the payments and other benefits referred to in paragraphs 1, 2, 4, and 5 above, shall be deemed automatically null and void.
If you agree to the terms of this Agreement you should sign below.
The Company would like to extend its appreciation to you for your past service, and its sincere hope for success in your future endeavors.
| | Very truly yours, /s/ Richard J. McCready Richard J. McCready Executive Vice President & General Counsel |
Accepted and agreed to this 6th day of April, 2006:
/s/ Mark Chertok
Mark Chertok
Richard J. McCready
NorthStar Realty Finance Corp.
Dear Mr. McCready:
