FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
JANUARY 23, 1998
Date of report
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
(Exact Name of Registrant as Specified in its Charter)
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DELAWARE 001-11981 74-2717523
__________ ___________ ____________
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification Number)
218 NORTH CHARLES STREET, SUITE 500
BALTIMORE, MARYLAND 21201
__________________________
(Address of Principal Executive Offices)(Zip Code)
(410) 962-8044
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
______________
Municipal Mortgage and Equity, L.L.C. (the "Registrant"),
entered into employment agreements with each of Mark K. Joseph,
Michael L. Falcone and Thomas R. Hobbs, the three senior officers
of the Registrant. Reference is made to each of the agreements
annexed hereto as Exhibits 10.1, 10.2 and 10.3.
The Registrant entered into a Master Purchase Agreement with
all of the various owners of BlackCap, LLC. The purchase price
was $1,000,000. Reference is made to the agreement annexed hereto
as Exhibit 10.4.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
____________________________________
(c) EXHIBITS.
_________
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EXHIBIT NO. DESCRIPTION OF DOCUMENT
___________ _______________________
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10.1 Employment Agreement between the Registrant and Mark K.
Joseph, dated August 1, 1996.
10.2 Employment Agreement between the Registrant and Michael L.
Falcone, dated August 1, 1996.
10.3 Employment Agreement between the Registrant and Thomas R.
Hobbs, dated August 1, 1996.
10.4 Master Purchase Agreement, dated June 30, 1997, among Trio
Portfolio Investors, L.L.C., Rio Portfolio Partners, L.P.,
Blackrock Capital Finance, L.P., Brazos Fund, L.P., M.F.
Swapco, Inc. and the Registrant.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
Date: January 23, 1998 By: /s/ MICHAEL L. FALCONE
___________________________
Michael L. Falcone
President
Exhibit 10.1
EMPLOYMENT AGREEMENT
--------------------
(Mark K. Joseph)
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made this 1ST day of
August, 1996 by and between MUNICIPAL MORTGAGE AND EQUITY, L.L.C., a
Delaware limited liability company ("Employer") and MARK K. JOSEPH
("Employee").
WHEREAS, Employer is engaged in the business of acquiring and
providing asset management services for real estate and debt and equity
investments therein, with a particular emphasis on investments generating
tax-exempt income and investments in, or secured by, multi-family
properties, congregate care and assisted living facilities and similar
properties;
WHEREAS, Employee has particular skill, experience and background in
investments and asset management services of the type in which the Employer
primarily engages; and
WHEREAS, Employer and Employee desire to enter into an employment
relationship, the terms of which are to be set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Employer and Employee hereby agree as follows:
1. EMPLOYMENT AND DUTIES. Employer agrees to hire Employee, and
Employee agrees to be employed by Employer, as Chairman and Chief Executive
Officer ("CEO") of Employer on the terms and conditions provided in this
Agreement. Employee shall perform the duties and responsibilities
reasonably determined from time to time by the Board of Directors of the
Employer (the "Board") consistent with the types of duties and
responsibilities typically performed by a person serving as Chairman and
CEO of businesses similar to that of Employer. Employee agrees to devote
his best efforts, attention, skill and such time as he determines is
required to perform the duties of Chairman and CEO. Nothing herein shall
prohibit Employee (a) from being employed by, consulting with or serving as
an officer or director of SCA Realty Holdings, Inc. and its subsidiaries
and affiliates and or of Shelter Development Corporation and its
subsidiaries and affiliates, (b) from participating in any other business
activities, (c) from engaging in charitable, civil, fraternal or trade
group activities, or (d) from investing in other entities or business
ventures.
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2. COMPENSATION. As compensation for performing the services
required by this Agreement, and during the term of this Agreement, Employee
shall compensated as follows:
(a) BASE COMPENSATION. Employer shall pay to Employee an annual
salary ("Base Compensation") of One Hundred Fifty Thousand Dollars
($150,000), payable in accordance with the general policies and procedures
of the Employer for payment of salaries to executive personnel, but in any
event no less frequently than every two weeks, in substantially equal
installments, subject to withholding for applicable federal, state and
local taxes. Increases in Base Compensation, if any, shall be determined
by the Board based on periodic reviews of Employee's performance conducted
on at least an annual basis. During the term of this Agreement, Employee's
annual Base Compensation shall not be reduced below the initial Base
Compensation set forth above.
(b) INCENTIVE COMPENSATION. In addition to Base Compensation,
Employee shall be eligible to receive additional compensation ("Incentive
Compensation"), pursuant to an Incentive Compensation Plan to be adopted by
the Employer. The Incentive Compensation Plan will provide that Employee
is eligible to receive an annual cash bonus of up to 150% of Employee's
Base Compensation then in effect. The Incentive Compensation Plan will
provide that the amount of the bonus will be based on a formula tied to
Employer's achievement of specified targets of growth in earnings available
for distribution to shareholders as determined by the Compensation
Committee. Employee acknowledges that the formula set forth in the
Incentive Compensation Plan may vary for each employee who participates
therein. Incentive Compensation for any given fiscal year shall be
determined no later than 60 days after the end of Employer's fiscal year
and paid no later than 75 days after the close of the fiscal year. If
Employee shall be employed for only a portion of a fiscal year for which
Employee is eligible for Incentive Compensation, the amount of Incentive
Compensation payable shall be the amount payable for the full year reduced
by the percentage which the number of months (including any partial months)
worked bears to twelve (the "Proportionate Share").
(c) OPTION TO ACQUIRE SHARES. Employer has established and
Employee shall be entitled to participate throughout the term of this
Agreement in Employer's 1995 Share Incentive Plan and any successor plan.
Employee's participation in such plan is subject to the terms thereof.
Employer agrees that the Compensation Committee of the Board of the
Employer will provide Employee in the Employer's first year of operation
with options to purchase under such plan shares of Employer's Growth Shares
exercisable at the market value of Growth Shares as of the date the options
are awarded to Employee. The Compensation Committee shall take into
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consideration the options awarded to employees having similar
responsibilities in companies of comparable business and size.
3. EMPLOYEE BENEFITS.
(a) During the term of this Agreement, Employee and his eligible
dependents shall have the right to participate in any retirement, pension,
insurance, health or other benefit plan or program adopted by Employer (or
in which Employer participates) to the same extent as any other officer of
the Employer, subject, in the case of a plan or program, to all of the
terms and conditions thereof, and to any limitations imposed by law. To
the extent that Employee has similar benefits under a plan or program
established by any other entity, Employee shall nonetheless have the right
to the benefits provided by Employer's plan or program; provided, however,
that where by the terms of any plan or program, or under applicable law,
Employee may only participate in one such plan or program, Employee shall
have the option to limit his participation to the plan or program sponsored
by Employer, or to such other plan or program. Employee shall have the
right, to the extent permitted under any applicable law, to participate
concurrently in plans or programs sponsored by others (including self-
employment plans or programs) and in plans or programs sponsored by
Employer.
(b) TAX BENEFIT ADJUSTMENT. If, as a result of any acquisition
of Growth Shares by Employee, Employee shall either lose personal income
tax deductions, be required to report additional personal taxable income,
or be required to pay additional taxes or charges, which deductions, income
or taxes would not have been lost, reportable, or payable, as the case may
be, had Employee not owned any Growth Shares, Employer shall pay Employee a
bonus on April 1 of each calendar year equal to all additional taxes or
charges Employee is required to pay, attributable to the prior calendar
year, which would not have been payable had Employee not owned Growth
Shares.
4. [RESERVED].
5. EXPENSES. Employee shall be entitled to receive, within 14 days
after he has delivered to the Employer an itemized statement thereof, and
after presentation of such invoices or similar records as the Employer may
reasonably require, reimbursement for all necessary and reasonable expenses
incurred by him in connection with the performance of his duties.
6. TERM. The initial term of this Agreement shall be for three
years (the "Initial Term"), commencing on the effective date of the merger
of SCA Tax Exempt Fund Limited Partnership into Employer (the "Effective
Date"). This Agreement shall automatically renew for successive one-year
periods after the end of the Initial Term, unless at least thirty days
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prior to the commencement of any such extension period either party shall
give the other party written notice of its intention to terminate this
Agreement. The term of this Agreement in effect at any given time is
herein referred to as the "Term". Any termination under of this Agreement
shall be subject to Section 7 below.
7. TERMINATION AND TERMINATION BENEFITS.
(a) TERMINATION BY EMPLOYER.
(i) WITHOUT CAUSE. Employer may terminate this
Agreement and Employee's employment at any time upon ninety (90) days prior
written notice to Employee, during which period Employer shall have the
option to require Employee to continue to perform his duties under this
Agreement. Employee shall be paid his Base Compensation and all other
benefits to which he is entitled under this Agreement up through the
effective date of termination, plus his Proportionate Share of Incentive
Compensation for the year in which the termination occurs.
(ii) WITH CAUSE. Employer may terminate this Agreement
with cause upon ten (10) days prior written notice to Employee. In such
event, Employee shall be paid his Base Compensation and all other benefits
to which he is entitled under this Agreement up through the effective date
of termination, plus his Proportionate Share of Incentive Compensation for
the year in which termination occurs. For purposes of this Section,
termination for cause shall mean (A) acts or omissions by the Employee with
respect to the Employer which constitute intentional misconduct or a
knowing violation of law; (B) receipt by the Employee of money, property or
services from the Employer or from another person dealing with Employer in
violation of law or this Agreement, (C) breach by Employee of the
noncompetition provisions of this Agreement, (D) breach by the Employee of
his duty of loyalty to the Employer, (E) gross negligence by the Employee
in the performance of his duties, or (F) repeated failure by the Employee
to perform services that have been reasonably requested of him by the
Board, following notice and an opportunity to cure and if such requests are
consistent with this Agreement.
(iii) DISABILITY. If due to illness, physical or mental
disability, or other incapacity, Employee shall fail to perform the duties
required by this Agreement, Employer may terminate this Agreement upon 30
days written notice to Employee. In such event, Employee shall be paid his
Base Compensation and receive all benefits owing to him under this
Agreement through the effective date of termination and shall receive his
Proportionate Share of Incentive Compensation for the year in which the
termination occurs. Employee shall be considered disabled under this
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paragraph if he is unable to work due to disability for a total of 120 or
more business days during any 12-month period. Nothing in this paragraph
shall be construed to limit Employee's rights to the benefits of any
disability insurance policy provided by Employer and this Section shall not
be construed as varying the terms of any such policy in any manner adverse
to Employee.
(b) TERMINATION BY EMPLOYEE. Employee may terminate this
Agreement for good reason upon 90 days prior written notice to Employer.
In such event, Employee shall be paid his Base Compensation and shall
receive all benefits through the date of termination and shall receive his
Proportionate Share of Incentive Compensation for the year of termination.
Employee shall have "good reason" to terminate his employment if (i) his
Base Compensation, as in effect at any given time, shall be reduced without
his consent, (ii) Employer shall fail to provide any of the payments or
benefits provided for under this Agreement, (iii) Employer shall materially
reduce or alter Employee's duties as Chairman and CEO, (iv) Employer shall
require Employee to take any act which would be a violation of federal,
state or local criminal law, and (v) Employer shall require Employee to
take any act which would not be in the best interests of the Employer and
its shareholders.
(c) TERMINATION COMPENSATION.
(i)TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. In the
event of a termination of this Agreement prior to the end of the Term,
pursuant to Section 7(a)(i), 7(a)(iii) or 7(b), or in the event of
nonrenewal by the Employer at the end of the Term for reasons other than as
set forth in Section 7(a)(ii), Employer, in addition to the Base
Compensation, benefits and Incentive Compensation payable as provided in
such sections, shall pay to Employee additional compensation ("Termination
Compensation") as follows. If the termination does not follow a Change in
Control (as defined in subparagraph (ii) below), Termination Compensation
shall be equal to 36 months Base Compensation. Termination Compensation
shall be paid in four equal quarterly payments beginning on the first day
of the first calendar month following the termination date, unless Employer
elects to make such payments sooner.
(ii) CHANGE IN CONTROL. The acquisition of voting
control of the Employer by any one or more persons or entities who are
directly, or indirectly through one or more intermediaries, under common
control, or who are related to each other within the meaning of Sections
267 and 707(b) of the Internal Revenue Code, shall be deemed a "Change in
Control." In the event Employee is terminated within two years of a
Change in Control, Termination Compensation shall be equal to six years
Base Compensation, payable in a lump sum on the effective date of
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Employee's termination. Such Termination Compensation shall be in addition
to all other compensation and benefits to which Employee is entitled for a
termination without cause under Section 7(a)(i) above, and shall be payable
even in the event of a termination effective as of the end of the Term.
(d) DEATH BENEFIT. Notwithstanding any other provision of this
Agreement, this Agreement shall terminate on the date of Employee's death.
In such event, Employee's estate shall be paid two years' Base Compensation
as follows: to the extent of any insurance carried by Employer on
Employee's life, the death benefit shall be payable in a lump sum within
five (5) business days' of Employer's receipt of the insurance proceeds;
any portion of the death benefit not covered by insurance shall be paid in
eight equal installments payable on the first day of each calendar quarter
following Employee's death. Employer shall carry as much life insurance on
Employee's life as the Board may from time to time determine.
8. COVENANT NOT TO COMPETE.
(a) NONCOMPETITION. From and after the Effective Date and
continuing for the longer of (i) 12 months following the termination of
this Agreement or (ii) the remainder of the Term of this Agreement,
Employee shall not within the State of Maryland engage in or carry on,
directly or indirectly, whether as an advisor, principal, agent, partner,
officer, director, employee, shareholder, associate or consultant of or to
any person, partnership, corporation or any other business entity, the
business of financing or asset management of multi-family apartment
properties financed by tax-exempt bonds without the prior written consent
of the Board; provided, however, if Employer terminates Employee without
cause under Section 7(a)(i) above, or the Employee resigns for good reason
under Section 7(b) above, this Section 8(a) shall not apply.
(b) REASONABLE RESTRICTIONS. Employee acknowledges that the
restrictions of subparagraph (a) above are reasonable, fair and equitable
in scope, term and duration, are necessary to protect the legitimate
business interests of the Employer, and are a material inducement to the
Employer to enter into this Agreement. Employer and Employee both agree
that in the event a court shall determine any portion of the restrictions
in subparagraph (a) are not reasonable, the court may change such
restrictions, including without limitation the geographical restrictions
and the duration restrictions, to reflect a restriction which the court
will enforce as reasonable.
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(c) SPECIFIC PERFORMANCE. Employee acknowledges that the
obligations undertaken by him pursuant to this Agreement are unique and
that if Employee shall fail to abide by any of the restrictions set forth
in subparagraph (a), Employer will have no adequate remedy at law.
Employee therefore confirms that Employer shall have the right, in the
event of a violation of subparagraph (a), to injunctive relief to enforce
the terms of this Section 8 or, in the alternative, the right to $50,000 in
liquidated damages. This right to injunctive relief or liquidated damages
shall be Employer's exclusive remedy at law or in equity.
9. INDEMNIFICATION AND LIABILITY INSURANCE. Employer hereby agrees
to indemnify and hold Employee harmless, to the maximum extent allowed by
law, from any and all liability for acts or omissions of Employee performed
in the course of Employee's employment (or reasonably believed by Employee
to be within the scope of his employment) provided that such acts or
omissions do not constitute (a) criminal conduct, (b) willful misconduct,
or (c) a fraud upon, or breach of Employee's duty of loyalty to, the
Employer. Employer shall at all times carry Directors' and Officers'
liability insurance in commercially reasonable amounts, but in any event
not less than One Million Dollars ($1,000,000).
10. MISCELLANEOUS.
(a) COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the matters set forth herein
and supersedes all prior understandings and agreements between the parties
as to such matters. No amendments or modifications shall be binding unless
set forth in writing and signed by both parties.
(b) SUCCESSORS AND ASSIGNS. Neither party may assign its rights
or interest under this Agreement without the prior written consent of the
other party, except that Employer's interest in this Agreement may be
assigned to a successor by operation of law or to a purchaser purchasing
substantially all of Employer's business. This Agreement shall be binding
upon and shall inure to the benefit of each of the parties and their
respective permitted successors and assigns.
(c) SEVERABILITY. Each provision of this Agreement is
severable, such that if any part of this Agreement shall be deemed invalid
or unenforceable, the balance of this Agreement shall be enforced so as to
give effect as to the intent of the parties.
(d) REPRESENTATIONS OF EMPLOYER. Employer represents and
warrants to Employee that it has the requisite limited liability company
power to enter into this Agreement and perform the terms hereof and that
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the execution, delivery and performance of this Agreement have been duly
authorized by all appropriate company action.
(e) CONSTRUCTION. This Agreement shall be governed in all
respects by the internal laws of the State of Maryland (excluding reference
to principles of conflicts of law). As used herein, the singular shall
include the plural, the plural shall include the singular, and the use of
any pronoun shall be construed to refer to the masculine, feminine or
neuter, all as the context may require.
(f) NOTICES. All notices required or permitted under this
Agreement shall be in writing and shall be deemed given on the date sent if
delivered by hand or by facsimile, and on the next business day if sent by
overnight courier or by United States mail, postage prepaid, to each party
at the following address (or at such other address as a party may specify
by notice under this section):
IF TO EMPLOYER:
Municipal Mortgage and Equity, L.L.C.
218 North Charles Street
Suite 500
Baltimore, Maryland 21201
Attention: President
IF TO EMPLOYEE:
Mark K. Joseph
1006 Winding Way
Baltimore, Maryland 21210
(g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one instrument.
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IN WITNESS WHEREOF, and intending to be legally bound, the parties
have executed this Agreement as of the date and year first above written.
EMPLOYER:
WITNESS: MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
/S/ PATRICIA C. QUAYLE By: /S/ THOMAS R. HOBBS
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Thomas R. Hobbs
Senior Vice President
EMPLOYEE:
/S/ PATRICIA C. QUAYLE By: /S/ MARK K. JOSEPH
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Mark K. Joseph
2113SAG.caj
7/31/96
6252
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Exhibit 10.2
EMPLOYMENT AGREEMENT
--------------------
(Michael L. Falcone)
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made this 1ST day of
August, 1996 by and between MUNICIPAL MORTGAGE AND EQUITY, L.L.C., a
Delaware limited liability company ("Employer") and MICHAEL L. FALCONE
("Employee").
WHEREAS, Employer is engaged in the business of acquiring and
providing asset management services for real estate and debt and equity
investments therein, with a particular emphasis on investments generating
tax-exempt income and investments in, or secured by, multi-family
properties, congregate care and assisted living facilities and similar
properties;
WHEREAS, Employee has particular skill, experience and background in
investments and asset management services of the type in which the Employer
primarily engages; and
WHEREAS, Employer and Employee desire to enter into an employment
relationship, the terms of which are to be set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Employer and Employee hereby agree as follows:
1. EMPLOYMENT AND DUTIES. Employer agrees to hire Employee, and
Employee agrees to be employed by Employer, as Senior Vice President of
Employer on the terms and conditions provided in this Agreement. Employee
shall perform the duties and responsibilities reasonably determined from
time to time by the Chief Executive Officer ("CEO") of the Employer
consistent with the types of duties and responsibilities typically
performed by a person serving as Senior Vice President of businesses
similar to that of Employer. Employee agrees to devote his best efforts
and full time, attention and skill in performing the duties of Senior Vice
President. Provided that such activity shall not violate any provision of
this Agreement (including the noncompetition provisions of Section 8 below)
or materially interfere with his performance of his duties hereunder,
nothing herein shall prohibit Employee (a) from consulting with or serving
as an officer or director of SCA Realty Holdings, Inc. and its subsidiaries
and affiliates and or of Shelter Development Corporation and its
subsidiaries and affiliates, (b) from participating in any other business
activities approved in advance by the CEO or by the Chairman of the Board
of Directors (the "Board") in accordance with any terms and conditions of
such approval, such approval not to be unreasonably withheld or delayed,
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(c) from engaging in charitable, civil, fraternal or trade group
activities, or (d) from investing in other entities or business ventures.
2. COMPENSATION. As compensation for performing the services
required by this Agreement, and during the term of this Agreement, Employee
shall compensated as follows:
(a) BASE COMPENSATION. Employer shall pay to Employee an annual
salary ("Base Compensation") of One Hundred Twenty-Five Thousand Dollars
($125,000), payable in accordance with the general policies and procedures
of the Employer for payment of salaries to executive personnel, but in any
event no less frequently than every two weeks, in substantially equal
installments, subject to withholding for applicable federal, state and
local taxes. Increases in Base Compensation, if any, shall be determined
by the Compensation Committee of the Board based on the recommendation of
the CEO and on periodic reviews of Employee's performance conducted on at
least an annual basis. During the term of this Agreement, Employee's
annual Base Compensation shall not be reduced below the initial Base
Compensation set forth above.
(b) INCENTIVE COMPENSATION. In addition to Base Compensation,
Employee shall be eligible to receive additional compensation ("Incentive
Compensation"), pursuant to an Incentive Compensation Plan to be adopted by
the Employer. The Incentive Compensation Plan will provide that Employee
is eligible to receive an annual cash bonus of up to 100% of Employee's
Base Compensation then in effect. The Incentive Compensation Plan will
provide that the amount of the bonus will be based on a formula tied to
Employer's achievement of specified targets of growth in earnings available
for distribution to shareholders as determined by the Compensation
Committee and the recommendation of the CEO. Employee acknowledges that
the formula set forth in the Incentive Compensation Plan may vary for each
employee who participates therein. Incentive Compensation for any given
fiscal year shall be determined no later than 60 days after the end of
Employer's fiscal year and paid no later than 75 days after the close of
the fiscal year. If Employee shall be employed for only a portion of a
fiscal year for which Employee is eligible for Incentive Compensation, the
amount of Incentive Compensation payable shall be the amount payable for
the full year reduced by the percentage which the number of months
(including any partial months) worked bears to twelve (the "Proportionate
Share").
(c) OPTION TO ACQUIRE SHARES. Employer has established and
Employee shall be entitled to participate throughout the term of this
Agreement in Employer's 1995 Share Incentive Plan and any successor plan.
Employee's participation in such plan is subject to the terms thereof. The
CEO of the Employer shall recommend to the Compensation Committee of the
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Board that Employee receive, during Employer's first year of operation,
options to purchase Employer's Growth Shares. Such options shall be
exercisable at the market value of Growth Shares as of the date the options
are awarded. The CEO shall base his recommendation on comparable option
awards to employees having similar responsibilities in companies of
comparable business and size.
3. EMPLOYEE BENEFITS.
(a) During the term of this Agreement, Employee and his eligible
dependents shall have the right to participate in any retirement, pension,
insurance, health or other benefit plan or program adopted by Employer (or
in which Employer participates) to the same extent as any other officer of
the Employer, subject, in the case of a plan or program, to all of the
terms and conditions thereof, and to any limitations imposed by law. To
the extent that Employee has similar benefits under a plan or program
established by any other entity, Employee shall nonetheless have the right
to the benefits provided by Employer's plan or program; provided, however,
that where by the terms of any plan or program, or under applicable law,
Employee may only participate in one such plan or program, Employee shall
have the option to limit his participation to the plan or program sponsored
by Employer, or to such other plan or program. Employee shall have the
right, to the extent permitted under any applicable law, to participate
concurrently in plans or programs sponsored by others (including self-
employment plans or programs) and in plans or programs sponsored by
Employer.
(b) TAX BENEFIT ADJUSTMENT. If, as a result of any acquisition
of Growth Shares by Employee, Employee shall either lose personal income
tax deductions, be required to report additional personal taxable income,
or be required to pay additional taxes or charges, which deductions, income
or taxes would not have been lost, reportable, or payable, as the case may
be, had Employee not owned any Growth Shares, Employer shall pay Employee a
bonus on April 1 of each calendar year equal to all additional taxes or
charges Employee is required to pay, attributable to the prior calendar
year, which would not have been payable had Employee not owned Growth
Shares.
4. VACATION, SICKNESS AND LEAVES OF ABSENCE. Employee shall be
entitled to the normal and customary amount of paid vacation provided to
officers of Employer, but in no event less than six weeks during each
fiscal year. Employee shall provide Employer with reasonable notice of
anticipated vacation dates. Any vacation days that are not taken in a
given fiscal year shall accrue and carryover from year to year, and, upon
any termination of this Agreement for any reason whatsoever, all accrued
and unused vacation time will be paid to Employee within 10 days of such
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termination based on his annual rate of Base Compensation in effect on the
date of such termination; provided, however, that no more than 20 days of
accrued vacation may be carried over at any time. In addition, Employee
shall be entitled to such sick leave and holidays, with pay, as Employer
provides to other officers. Unused sick leave shall be carried forward or
compensated upon termination of employment. Employee may also be granted
leaves of absence with or without pay for such valid and legitimate reasons
as the Board on recommendation from the CEO, in its sole and absolute
discretion, may determine.
5. EXPENSES. Employee shall be entitled to receive, within 14 days
after he has delivered to the Employer an itemized statement thereof, and
after presentation of such invoices or similar records as the Employer may
reasonably require, reimbursement for all necessary and reasonable expenses
incurred by him in connection with the performance of his duties.
6. TERM. The initial term of this Agreement shall be for three
years (the "Initial Term"), commencing on the effective date of the merger
of SCA Tax Exempt Fund Limited Partnership into Employer (the "Effective
Date"). This Agreement shall automatically renew for successive one-year
periods after the end of the Initial Term, unless at least thirty days
prior to the commencement of any such extension period either party shall
give the other party written notice of its intention to terminate this
Agreement. The term of this Agreement in effect at any given time is
herein referred to as the "Term". Any termination under of this Agreement
shall be subject to Section 7 below.
7. TERMINATION AND TERMINATION BENEFITS.
(a) TERMINATION BY EMPLOYER.
(i) WITHOUT CAUSE. Employer may terminate this
Agreement and Employee's employment at any time upon ninety (90) days prior
written notice to Employee, during which period Employer shall have the
option to require Employee to continue to perform his duties under this
Agreement. Employee shall be paid his Base Compensation and all other
benefits to which he is entitled under this Agreement up through the
effective date of termination, plus his Proportionate Share of Incentive
Compensation for the year in which the termination occurs.
(ii) WITH CAUSE. Employer may terminate this Agreement
with cause upon ten (10) days prior written notice to Employee. In such
event, Employee shall be paid his Base Compensation and all other benefits
to which he is entitled under this Agreement up through the effective date
of termination, plus his Proportionate Share of Incentive Compensation for
the year in which termination occurs. For purposes of this Section,
- 4 -
<PAGE>
termination for cause shall mean (A) acts or omissions by the Employee with
respect to the Employer which constitute intentional misconduct or a
knowing violation of law; (B) receipt by the Employee of money, property or
services from the Employer or from another person dealing with Employer in
violation of law or this Agreement, (C) breach by Employee of the
noncompetition provisions of this Agreement, (D) breach by the Employee of
his duty of loyalty to the Employer, (E) gross negligence by the Employee
in the performance of his duties, or (F) repeated failure by the Employee
to perform services that have been reasonably requested of him by the
Board, following notice and opportunity to cure and if such requests are
consistent with this Agreement.
(iii) DISABILITY. If due to illness, physical or mental
disability, or other incapacity, Employee shall fail to perform the duties
required by this Agreement, Employer may terminate this Agreement upon 30
days written notice to Employee. In such event, Employee shall be paid his
Base Compensation and receive all benefits owing to him under this
Agreement through the effective date of termination and shall receive his
Proportionate Share of Incentive Compensation for the year in which the
termination occurs. Employee shall be considered disabled under this
paragraph if he is unable to work due to disability for a total of 120 or
more business days during any 12-month period. Nothing in this paragraph
shall be construed to limit Employee's rights to the benefits of any
disability insurance policy provided by Employer and this Section shall not
be construed as varying the terms of any such policy in any manner adverse
to Employee.
(b) TERMINATION BY EMPLOYEE. Employee may terminate this
Agreement for good reason upon 90 days prior written notice to Employer.
In such event, Employee shall be paid his Base Compensation and shall
receive all benefits through the date of termination and shall receive his
Proportionate Share of Incentive Compensation for the year of termination.
Employee shall have "good reason" to terminate his employment if (i) his
Base Compensation, as in effect at any given time, shall be reduced without
his consent, (ii) Employer shall fail to provide any of the payments or
benefits provided for under this Agreement, (iii) Employer shall materially
reduce or alter Employee's duties as Senior Vice President, (iv) Employer
shall require Employee to take any act which would be a violation of
federal, state or local criminal law, and (v) Employer shall require
Employee to take any act which would not be in the best interests of the
Employer and its shareholders.
- 5 -
<PAGE>
(c) TERMINATION COMPENSATION.
(i)TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. In the
event of a termination of this Agreement prior to the end of the Term,
pursuant to Section 7(a)(i), 7(a)(iii) or 7(b), Employer, in addition to
the Base Compensation, benefits and Incentive Compensation payable as
provided in such sections, shall pay to Employee additional compensation
("Termination Compensation") as follows. If the termination does not
follow a Change in Control (as defined in subparagraph (ii) below),
Termination Compensation shall be equal to the greater of (a) 18 months
Base Compensation or (b) the Base Compensation that Employee would have
received during the remaining Term of this Agreement. Termination
Compensation shall be paid in four equal quarterly payments beginning on
the first day of the first calendar month following the termination date,
unless Employer elects to make such payments sooner.
(ii) CHANGE IN CONTROL. The acquisition of voting
control of the Employer by any one or more persons or entities who are
directly, or indirectly through one or more intermediaries, under common
control, or who are related to each other within the meaning of Sections
267 and 707(b) of the Internal Revenue Code, shall be deemed a "Change in
Control." In the event Employee is terminated within eighteen months of a
Change in Control, Termination Compensation shall be equal to two years
Base Compensation, payable in a lump sum on the effective date of
Employee's termination. Such Termination Compensation shall be in addition
to all other compensation and benefits to which Employee is entitled for a
termination without cause under Section 7(a)(i) above, and shall be payable
even in the event of a termination effective as of the end of the Term.
(d) DEATH BENEFIT. Notwithstanding any other provision of this
Agreement, this Agreement shall terminate on the date of Employee's death.
In such event, Employee's estate shall be paid two years' Base Compensation
as follows: to the extent of any insurance carried by Employer on
Employee's life, the death benefit shall be payable in a lump sum within
five (5) business days' of Employer's receipt of the insurance proceeds;
any portion of the death benefit not covered by insurance shall be paid in
eight equal installments payable on the first day of each calendar quarter
following Employee's death. Employer shall carry as much life insurance on
Employee's life as the Board on recommendation of the CEO may from time to
time determine.
8. COVENANT NOT TO COMPETE.
(a) NONCOMPETITION. From and after the Effective Date and
continuing for the longer of (i) 12 months following the termination of
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<PAGE>
this Agreement or (ii) the remainder of the Term of this Agreement,
Employee shall not within the State of Maryland engage in or carry on,
directly or indirectly, whether as an advisor, principal, agent, partner,
officer, director, employee, shareholder, associate or consultant of or to
any person, partnership, corporation or any other business entity, the
business of financing or asset management of multi-family apartment
properties financed by tax-exempt bonds without the prior written consent
of the Board; provided, however, if Employer terminates Employee without
cause under Section 7(a)(i) above, or the Employee resigns for good reason
under Section 7(b) above, this Section 8(a) shall not apply.
(b) REASONABLE RESTRICTIONS. Employee acknowledges that the
restrictions of subparagraph (a) above are reasonable, fair and equitable
in scope, term and duration, are necessary to protect the legitimate
business interests of the Employer, and are a material inducement to the
Employer to enter into this Agreement. Employer and Employee both agree
that in the event a court shall determine any portion of the restrictions
in subparagraph (a) are not reasonable, the court may change such
restrictions, including without limitation the geographical restrictions
and the duration restrictions, to reflect a restriction which the court
will enforce as reasonable.
(c) SPECIFIC PERFORMANCE. Employee acknowledges that the
obligations undertaken by him pursuant to this Agreement are unique and
that if Employee shall fail to abide by any of the restrictions set forth
in subparagraph (a), Employer will have no adequate remedy at law.
Employee therefore confirms that Employer shall have the right, in the
event of a violation of subparagraph (a), to injunctive relief to enforce
the terms of this Section 8 or, in the alternative, the right to $50,000 in
liquidated damages. This right to injunctive relief or liquidated damages
shall be Employer's exclusive remedy at law or in equity.
9. INDEMNIFICATION AND LIABILITY INSURANCE. Employer hereby agrees
to indemnify and hold Employee harmless, to the maximum extent allowed by
law, from any and all liability for acts or omissions of Employee performed
in the course of Employee's employment (or reasonably believed by Employee
to be within the scope of his employment) provided that such acts or
omissions do not constitute (a) criminal conduct, (b) willful misconduct,
or (c) a fraud upon, or breach of Employee's duty of loyalty to, the
Employer. Employer shall at all times carry Directors' and Officers'
liability insurance in commercially reasonable amounts, but in any event
not less than One Million Dollars ($1,000,000).
- 7 -
<PAGE>
10. MISCELLANEOUS.
(a) COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the matters set forth herein
and supersedes all prior understandings and agreements between the parties
as to such matters. No amendments or modifications shall be binding unless
set forth in writing and signed by both parties.
(b) SUCCESSORS AND ASSIGNS. Neither party may assign its rights
or interest under this Agreement without the prior written consent of the
other party, except that Employer's interest in this Agreement may be
assigned to a successor by operation of law or to a purchaser purchasing
substantially all of Employer's business. This Agreement shall be binding
upon and shall inure to the benefit of each of the parties and their
respective permitted successors and assigns.
(c) SEVERABILITY. Each provision of this Agreement is
severable, such that if any part of this Agreement shall be deemed invalid
or unenforceable, the balance of this Agreement shall be enforced so as to
give effect as to the intent of the parties.
(d) REPRESENTATIONS OF EMPLOYER. Employer represents and
warrants to Employee that it has the requisite limited liability company
power to enter into this Agreement and perform the terms hereof and that
the execution, delivery and performance of this Agreement have been duly
authorized by all appropriate company action.
(e) CONSTRUCTION. This Agreement shall be governed in all
respects by the internal laws of the State of Maryland (excluding reference
to principles of conflicts of law). As used herein, the singular shall
include the plural, the plural shall include the singular, and the use of
any pronoun shall be construed to refer to the masculine, feminine or
neuter, all as the context may require.
(f) NOTICES. All notices required or permitted under this
Agreement shall be in writing and shall be deemed given on the date sent if
delivered by hand or by facsimile, and on the next business day if sent by
overnight courier or by United States mail, postage prepaid, to each party
at the following address (or at such other address as a party may specify
by notice under this section):
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<PAGE>
IF TO EMPLOYER:
Municipal Mortgage and Equity, L.L.C.
218 North Charles Street
Suite 500
Baltimore, Maryland 21201
Attention: Chief Executive Officer
IF TO EMPLOYEE:
Michael L. Falcone
8 Englewood Road
Baltimore, Maryland 21210
(g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one instrument.
- 9 -
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound, the parties
have executed this Agreement as of the date and year first above written.
EMPLOYER:
--------
WITNESS: MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
/S/ PATRICIA C. QUAYLE By: /S/ MARK K. JOSEPH
- ------------------------ --------------------------------------
Mark K. Joseph
President
EMPLOYEE:
--------
/S/ PATRICIA C. QUAYLE By: /S/ MICHAEL L. FALCONE
- ------------------------ -------------------------------------
Michael L. Falcone
{2108SAG.caj
07/31/96
6252}
- 10 -
Exhibit 10.3
EMPLOYMENT AGREEMENT
--------------------
(Thomas R. Hobbs)
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made this 1st day of
August, 1996 by and between MUNICIPAL MORTGAGE AND EQUITY, L.L.C., a
Delaware limited liability company ("Employer") and THOMAS R. HOBBS
("Employee").
WHEREAS, Employer is engaged in the business of acquiring and
providing asset management services for real estate and debt and equity
investments therein, with a particular emphasis on investments generating
tax-exempt income and investments in, or secured by, multi-family
properties, congregate care and assisted living facilities and similar
properties;
WHEREAS, Employee has particular skill, experience and background in
investments and asset management services of the type in which the Employer
primarily engages; and
WHEREAS, Employer and Employee desire to enter into an employment
relationship, the terms of which are to be set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Employer and Employee hereby agree as follows:
1. EMPLOYMENT AND DUTIES. Employer agrees to hire Employee, and
Employee agrees to be employed by Employer, as Senior Vice President of
Employer on the terms and conditions provided in this Agreement. Employee
shall perform the duties and responsibilities reasonably determined from
time to time by the Chief Executive Officer ("CEO") of the Employer
consistent with the types of duties and responsibilities typically
performed by a person serving as Senior Vice President of businesses
similar to that of Employer. Employee agrees to devote his best efforts
and full time, attention and skill in performing the duties of Senior Vice
President. Provided that such activity shall not violate any provision of
this Agreement (including the noncompetition provisions of Section 8 below)
or materially interfere with his performance of his duties hereunder,
nothing herein shall prohibit Employee (a) from consulting with or serving
as an officer or director of SCA Realty Holdings, Inc. and its subsidiaries
and affiliates and or of Shelter Development Corporation and its
subsidiaries and affiliates, (b) from participating in any other business
activities approved in advance by the CEO or by the Chairman of the Board
of Directors (the "Board") in accordance with any terms and conditions of
such approval, such approval not to be unreasonably withheld or delayed,
<PAGE>
(c) from engaging in charitable, civil, fraternal or trade group
activities, or (d) from investing in other entities or business ventures.
2. COMPENSATION. As compensation for performing the services
required by this Agreement, and during the term of this Agreement, Employee
shall compensated as follows:
(a) BASE COMPENSATION. Employer shall pay to Employee an annual
salary ("Base Compensation") of One Hundred Twenty-Five Thousand Dollars
($125,000), payable in accordance with the general policies and procedures
of the Employer for payment of salaries to executive personnel, but in any
event no less frequently than every two weeks, in substantially equal
installments, subject to withholding for applicable federal, state and
local taxes. Increases in Base Compensation, if any, shall be determined
by the Compensation Committee of the Board based on the recommendation of
the CEO and on periodic reviews of Employee's performance conducted on at
least an annual basis. During the term of this Agreement, Employee's
annual Base Compensation shall not be reduced below the initial Base
Compensation set forth above.
(b) INCENTIVE COMPENSATION. In addition to Base Compensation,
Employee shall be eligible to receive additional compensation ("Incentive
Compensation"), pursuant to an Incentive Compensation Plan to be adopted by
the Employer. The Incentive Compensation Plan will provide that Employee
is eligible to receive an annual cash bonus of up to 100% of Employee's
Base Compensation then in effect. The Incentive Compensation Plan will
provide that the amount of the bonus will be based on a formula tied to
Employer's achievement of specified targets of growth in earnings available
for distribution to shareholders as determined by the Compensation
Committee and the recommendation of the CEO. Employee acknowledges that
the formula set forth in the Incentive Compensation Plan may vary for each
employee who participates therein. Incentive Compensation for any given
fiscal year shall be determined no later than 60 days after the end of
Employer's fiscal year and paid no later than 75 days after the close of
the fiscal year. If Employee shall be employed for only a portion of a
fiscal year for which Employee is eligible for Incentive Compensation, the
amount of Incentive Compensation payable shall be the amount payable for
the full year reduced by the percentage which the number of months
(including any partial months) worked bears to twelve (the "Proportionate
Share").
(c) OPTION TO ACQUIRE SHARES. Employer has established and
Employee shall be entitled to participate throughout the term of this
Agreement in Employer's 1995 Share Incentive Plan and any successor plan.
Employee's participation in such plan is subject to the terms thereof. The
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<PAGE>
CEO of the Employer shall recommend to the Compensation Committee of the
Board that Employee receive, during Employer's first year of operation,
options to purchase Employer's Growth Shares. Such options shall be
exercisable at the market value of Growth Shares as of the date the options
are awarded. The CEO shall base his recommendation on comparable option
awards to employees having similar responsibilities in companies of
comparable business and size.
3. EMPLOYEE BENEFITS.
(a) During the term of this Agreement, Employee and his eligible
dependents shall have the right to participate in any retirement, pension,
insurance, health or other benefit plan or program adopted by Employer (or
in which Employer participates) to the same extent as any other officer of
the Employer, subject, in the case of a plan or program, to all of the
terms and conditions thereof, and to any limitations imposed by law. To
the extent that Employee has similar benefits under a plan or program
established by any other entity, Employee shall nonetheless have the right
to the benefits provided by Employer's plan or program; provided, however,
that where by the terms of any plan or program, or under applicable law,
Employee may only participate in one such plan or program, Employee shall
have the option to limit his participation to the plan or program sponsored
by Employer, or to such other plan or program. Employee shall have the
right, to the extent permitted under any applicable law, to participate
concurrently in plans or programs sponsored by others (including self-
employment plans or programs) and in plans or programs sponsored by
Employer.
(b) TAX BENEFIT ADJUSTMENT. If, as a result of any acquisition
of Growth Shares by Employee, Employee shall either lose personal income
tax deductions, be required to report additional personal taxable income,
or be required to pay additional taxes or charges, which deductions, income
or taxes would not have been lost, reportable, or payable, as the case may
be, had Employee not owned any Growth Shares, Employer shall pay Employee a
bonus on April 1 of each calendar year equal to all additional taxes or
charges Employee is required to pay, attributable to the prior calendar
year, which would not have been payable had Employee not owned Growth
Shares.
4. VACATION, SICKNESS AND LEAVES OF ABSENCE. Employee shall be
entitled to the normal and customary amount of paid vacation provided to
officers of Employer, but in no event less than six weeks during each
fiscal year. Employee shall provide Employer with reasonable notice of
anticipated vacation dates. Any vacation days that are not taken in a
given fiscal year shall accrue and carryover from year to year, and, upon
any termination of this Agreement for any reason whatsoever, all accrued
and unused vacation time will be paid to Employee within 10 days of such
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<PAGE>
termination based on his annual rate of Base Compensation in effect on the
date of such termination; provided, however, that no more than 20 days of
accrued vacation may be carried over at any time. In addition, Employee
shall be entitled to such sick leave and holidays, with pay, as Employer
provides to other officers. Unused sick leave shall be carried forward or
compensated upon termination of employment. Employee may also be granted
leaves of absence with or without pay for such valid and legitimate reasons
as the Board on recommendation from the CEO, in its sole and absolute
discretion, may determine.
5. EXPENSES. Employee shall be entitled to receive, within 14 days
after he has delivered to the Employer an itemized statement thereof, and
after presentation of such invoices or similar records as the Employer may
reasonably require, reimbursement for all necessary and reasonable expenses
incurred by him in connection with the performance of his duties.
6. TERM. The initial term of this Agreement shall be for three
years (the "Initial Term"), commencing on the effective date of the merger
of SCA Tax Exempt Fund Limited Partnership into Employer (the "Effective
Date"). This Agreement shall automatically renew for successive one-year
periods after the end of the Initial Term, unless at least thirty days
prior to the commencement of any such extension period either party shall
give the other party written notice of its intention to terminate this
Agreement. The term of this Agreement in effect at any given time is
herein referred to as the "Term". Any termination under of this Agreement
shall be subject to Section 7 below.
7. TERMINATION AND TERMINATION BENEFITS.
(a) TERMINATION BY EMPLOYER.
(i) WITHOUT CAUSE. Employer may terminate this
Agreement and Employee's employment at any time upon ninety (90) days prior
written notice to Employee, during which period Employer shall have the
option to require Employee to continue to perform his duties under this
Agreement. Employee shall be paid his Base Compensation and all other
benefits to which he is entitled under this Agreement up through the
effective date of termination, plus his Proportionate Share of Incentive
- 4 -
<PAGE>
Compensation for the year in which the termination occurs.
(ii) WITH CAUSE. Employer may terminate this Agreement
with cause upon ten (10) days prior written notice to Employee. In such
event, Employee shall be paid his Base Compensation and all other benefits
to which he is entitled under this Agreement up through the effective date
of termination, plus his Proportionate Share of Incentive Compensation for
the year in which termination occurs. For purposes of this Section,
termination for cause shall mean (A) acts or omissions by the Employee with
respect to the Employer which constitute intentional misconduct or a
knowing violation of law; (B) receipt by the Employee of money, property or
services from the Employer or from another person dealing with Employer in
violation of law or this Agreement, (C) breach by Employee of the
noncompetition provisions of this Agreement, (D) breach by the Employee of
his duty of loyalty to the Employer, (E) gross negligence by the Employee
in the performance of his duties, or (F) repeated failure by the Employee
to perform services that have been reasonably requested of him by the
Board, following notice and an opportunity to cure and if such requests are
consistent with this Agreement.
(iii) DISABILITY. If due to illness, physical or mental
disability, or other incapacity, Employee shall fail to perform the duties
required by this Agreement, Employer may terminate this Agreement upon 30
days written notice to Employee. In such event, Employee shall be paid his
Base Compensation and receive all benefits owing to him under this
Agreement through the effective date of termination and shall receive his
Proportionate Share of Incentive Compensation for the year in which the
termination occurs. Employee shall be considered disabled under this
paragraph if he is unable to work due to disability for a total of 120 or
more business days during any 12-month period. Nothing in this paragraph
shall be construed to limit Employee's rights to the benefits of any
disability insurance policy provided by Employer and this Section shall not
be construed as varying the terms of any such policy in any manner adverse
to Employee. Employer shall provide Employee with disability coverage at
least as favorable to Employee as that provided to Employee by its prior
employer.
(b) TERMINATION BY EMPLOYEE. Employee may terminate this
Agreement for good reason upon 90 days prior written notice to Employer.
In such event, Employee shall be paid his Base Compensation and shall
receive all benefits through the date of termination and shall receive his
Proportionate Share of Incentive Compensation for the year of termination.
Employee shall have "good reason" to terminate his employment if (i) his
Base Compensation, as in effect at any given time, shall be reduced without
his consent, (ii) Employer shall fail to provide any of the payments or
benefits provided for under this Agreement, (iii) Employer shall materially
reduce or alter Employee's duties as Senior Vice President, (iv) Employer
shall require Employee to take any act which would be a violation of
federal, state or local criminal law, and (v) Employer shall require
Employee to take any act which would not be in the best interests of the
Employer and its shareholders.
- 5 -
<PAGE>
(c) TERMINATION COMPENSATION.
(i)TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. In the
event of a termination of this Agreement prior to the end of the Term,
pursuant to Section 7(a)(i), 7(a)(iii) or 7(b), Employer, in addition to
the Base Compensation, benefits and Incentive Compensation payable as
provided in such sections, shall pay to Employee additional compensation
("Termination Compensation") as follows. If the termination does not
follow a Change in Control (as defined in subparagraph (ii) below),
Termination Compensation shall be equal to the greater of (a) 18 months
Base Compensation or (b) the Base Compensation that Employee would have
received during the remaining Term of this Agreement. Termination
Compensation shall be paid in four equal quarterly payments beginning on
the first day of the first calendar month following the termination date,
unless Employer elects to make such payments sooner.
(ii) CHANGE IN CONTROL. The acquisition of voting
control of the Employer by any one or more persons or entities who are
directly, or indirectly through one or more intermediaries, under common
control, or who are related to each other within the meaning of Sections
267 and 707(b) of the Internal Revenue Code, shall be deemed a "Change in
Control." In the event Employee is terminated within eighteen months of a
Change in Control, Termination Compensation shall be equal to two years
Base Compensation, payable in a lump sum on the effective date of
Employee's termination. Such Termination Compensation shall be in addition
to all other compensation and benefits to which Employee is entitled for a
termination without cause under Section 7(a)(i) above, and shall be payable
even in the event of a termination effective as of the end of the Term.
(d) DEATH BENEFIT. Notwithstanding any other provision of this
Agreement, this Agreement shall terminate on the date of Employee's death.
In such event, Employee's estate shall be paid two years' Base Compensation
as follows: to the extent of any insurance carried by Employer on
Employee's life, the death benefit shall be payable in a lump sum within
five (5) business days' of Employer's receipt of the insurance proceeds;
any portion of the death benefit not covered by insurance shall be paid in
eight equal installments payable on the first day of each calendar quarter
following Employee's death. Employer shall carry as much life insurance on
Employee's life as the Board on the recommendation of the CEO may from time
to time determine.
8. COVENANT NOT TO COMPETE.
(a) NONCOMPETITION. From and after the Effective Date and
continuing for the longer of (i) 12 months following the termination of
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<PAGE>
this Agreement or (ii) the remainder of the Term of this Agreement,
Employee shall not within the State of Maryland engage in or carry on,
directly or indirectly, whether as an advisor, principal, agent, partner,
officer, director, employee, shareholder, associate or consultant of or to
any person, partnership, corporation or any other business entity, the
business of financing or asset management of multi-family apartment
properties financed by tax-exempt bonds without the prior written consent
of the Board; provided, however, if Employer terminates Employee without
cause under Section 7(a)(i) above, or the Employee resigns for good reason
under Section 7(b) above, this Section 8(a) shall not apply.
(b) REASONABLE RESTRICTIONS. Employee acknowledges that the
restrictions of subparagraph (a) above are reasonable, fair and equitable
in scope, term and duration, are necessary to protect the legitimate
business interests of the Employer, and are a material inducement to the
Employer to enter into this Agreement. Employer and Employee both agree
that in the event a court shall determine any portion of the restrictions
in subparagraph (a) are not reasonable, the court may change such
restrictions, including without limitation the geographical restrictions
and the duration restrictions, to reflect a restriction which the court
will enforce as reasonable.
(c) SPECIFIC PERFORMANCE. Employee acknowledges that the
obligations undertaken by him pursuant to this Agreement are unique and
that if Employee shall fail to abide by any of the restrictions set forth
in subparagraph (a), Employer will have no adequate remedy at law.
Employee therefore confirms that Employer shall have the right, in the
event of a violation of subparagraph (a), to injunctive relief to enforce
the terms of this Section 8 or, in the alternative, the right to $50,000 in
liquidated damages. This right to injunctive relief or liquidated damages
shall be Employer's exclusive remedy at law or in equity.
9. INDEMNIFICATION AND LIABILITY INSURANCE. Employer hereby agrees
to indemnify and hold Employee harmless, to the maximum extent allowed by
law, from any and all liability for acts or omissions of Employee performed
in the course of Employee's employment (or reasonably believed by Employee
to be within the scope of his employment) provided that such acts or
omissions do not constitute (a) criminal conduct, (b) willful misconduct,
or (c) a fraud upon, or breach of Employee's duty of loyalty to, the
Employer. Employer shall at all times carry Directors' and Officers'
liability insurance in commercially reasonable amounts, but in any event
not less than One Million Dollars ($1,000,000).
- 7 -
<PAGE>
10. MISCELLANEOUS.
(a) COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the matters set forth herein
and supersedes all prior understandings and agreements between the parties
as to such matters. No amendments or modifications shall be binding unless
set forth in writing and signed by both parties.
(b) SUCCESSORS AND ASSIGNS. Neither party may assign its rights
or interest under this Agreement without the prior written consent of the
other party, except that Employer's interest in this Agreement may be
assigned to a successor by operation of law or to a purchaser purchasing
substantially all of Employer's business. This Agreement shall be binding
upon and shall inure to the benefit of each of the parties and their
respective permitted successors and assigns.
(c) SEVERABILITY. Each provision of this Agreement is
severable, such that if any part of this Agreement shall be deemed invalid
or unenforceable, the balance of this Agreement shall be enforced so as to
give effect as to the intent of the parties.
(d) REPRESENTATIONS OF EMPLOYER. Employer represents and
warrants to Employee that it has the requisite limited liability company
power to enter into this Agreement and perform the terms hereof and that
the execution, delivery and performance of this Agreement have been duly
authorized by all appropriate company action.
(e) CONSTRUCTION. This Agreement shall be governed in all
respects by the internal laws of the State of Maryland (excluding reference
to principles of conflicts of law). As used herein, the singular shall
include the plural, the plural shall include the singular, and the use of
any pronoun shall be construed to refer to the masculine, feminine or
neuter, all as the context may require.
(f) NOTICES. All notices required or permitted under this
Agreement shall be in writing and shall be deemed given on the date sent if
delivered by hand or by facsimile, and on the next business day if sent by
overnight courier or by United States mail, postage prepaid, to each party
at the following address (or at such other address as a party may specify
by notice under this section):
- 8 -
<PAGE>
IF TO EMPLOYER:
Municipal Mortgage and Equity, L.L.C.
218 North Charles Street
Suite 500
Baltimore, Maryland 21201
Attention: Chief Executive Officer
IF TO EMPLOYEE:
Thomas R. Hobbs
One St. Martin's Road
Baltimore, Maryland 21218
(g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one instrument.
- 9 -
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound, the parties
have executed this Agreement as of the date and year first above written.
EMPLOYER:
WITNESS: MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
/S/ PATRICIA C. QUAYLE By: /S/ MARK K. JOSEPH
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Mark K. Joseph
President
EMPLOYEE:
/S/ PATRICIA C. QUAYLE By: /S/ THOMAS R. HOBBS
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Thomas R. Hobbs
2114SAG.caj
7/31/96
6252
- 10 -
Exhibit 10.4
MASTER PURCHASE AGREEMENT
THIS MASTER PURCHASE AGREEMENT is made as of this 30 day of June,
1997, by and among FRIO PORTFOLIO INVESTORS, L.L.C., a Delaware limited
liability company ("Frio"), RIO PORTFOLIO PARTNERS, L.P., a Delaware
limited partnership ("RIO"), BLACKROCK CAPITAL FINANCE, L.P., a Delaware
limited partnership ("BlackRock"), BRAZOS FUND, L.P., a Delaware limited
partnership ("Brazos") and MF SWAPCO, INC., a Delaware corporation ("MF")
(collectively, "Sellers"), MUNICIPAL MORTGAGE AND EQUITY, L.L.C., a
Delaware limited liability company ("MuniMae" or "Purchaser"), and MME I
CORPORATION, a Maryland corporation ("MME I").
WHEREAS, Frio, RIO, BlackRock and MF own all of the membership
interests (the "Membership Interests") in BlackCap, LLC, a Delaware limited
liability company ("BlackCap");
WHEREAS, BlackRock owns all of the bonds known as $10,300,000 Newport
News Redevelopment and Housing Authority 1995 Housing Revenue Refunding
Bonds (Indian Lakes Apartments Project) (the "Indian Lakes Bonds");
WHEREAS, pursuant to a certain Servicing Agreement and certain Special
Servicing Agreements (collectively, the "Servicing Agreements"), Brazos
acts as the Servicer and Special Servicer for the Indian Lakes Bonds and as
Special Servicer for certain bonds (the "Additional Bonds") issued with
respect to multifamily housing projects located in Independence, Missouri
and Locarno, Missouri and Columbia, Maryland (the Indian Lakes Bonds and
the Additional Bonds being collectively referred to herein as the "Bonds");
and
WHEREAS, Sellers desire to sell and MuniMae and MME I desire to
purchase all of the Sellers' right, title and interest in and to the
foregoing Membership Interests, Indian Lakes Bonds and the parties desire
to provide a mechanism for the transfer of the Servicing Agreements without
additional cost.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. SALE OF BLACKCAP.
(a) PURCHASE AND SALE. Frio, RIO, MF and BlackRock,
constituting all of the members of BlackCap, hereby agree to assign, sell
and convey to MuniMae and MME I all of their right, title and interest in
and to all of the Membership Interests in BlackCap. MuniMae and MME I
hereby agree to pay the sum of One Million Dollars ($1,000,000) for these
interests. The parties agree that MuniMae may deliver the purchase price
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to BlackRock and shall have no responsibility for the further distribution
thereof, it being BlackRock's responsibility to allocate and distribute the
money among the Sellers.
(b) ASSUMPTION OF BLACKROCK'S RESPONSIBILITIES. MuniMae hereby
agrees to assume, effective as of the closing date, all of BlackRock's
obligations under the FNMA Documents (as hereinafter defined). MuniMae and
BlackRock acknowledge that the approval of Federal National Mortgage
Association ("FNMA") is required for such assumption and they agree to
cooperate in obtaining such approval and to execute an Assignment,
Assumption and Consent substantially in the form of Exhibit A.
2. BLACKCAP SELLERS' REPRESENTATIONS AND WARRANTIES. Frio, RIO, MF
and BlackRock hereby jointly and severally represent and warrant the
following to MuniMae and MME I, each such representation and warranty to be
effective as of the date hereof and as of the date of closing:
(a) TITLE. Frio, RIO, MF and BlackRock own 100% of the
Membership Interests in BlackCap, LLC free and clear of all liens, claims
and encumbrances. Upon the conveyance of the Membership Interests to
MuniMae or its designee, MuniMae or its designee will own 100% of the
Membership Interests in BlackCap.
(b) LIABILITIES. BlackCap has no liabilities whatsoever except
for its contractual obligations to FNMA under the documents listed on
Exhibit B hereto (the "FNMA Documents"). There are no other agreements by
which BlackCap or any of its properties or assets is bound except for the
FNMA Documents listed on Exhibit A. True and correct copies of each of the
FNMA Documents have been delivered to MuniMae. No Event of Default and no
Potential Event of Default (each as defined in the FNMA Documents) exists
with respect to the FNMA Documents.
(c) ASSETS. BlackCap owns and will as of closing own each of
the assets listed on Schedule A free and clear of all liens, claims and
encumbrances except for such restrictions as may be imposed thereon by the
FNMA Documents.
3. SALE OF INDIAN LAKES BONDS. BlackRock and Brazos collectively
own, or have the right to, and hereby agree to, cause the sale of the
Indian Lakes Bonds to MuniMae, and MuniMae hereby agrees to buy the
$10,145,000 of outstanding Indian Lakes Bonds, for the sum of $10,297,783,
plus accrued interest to the date of purchase. If the Bonds are
certificated, BlackRock and Brazos agree to deliver the Bonds, with
appropriate fully executed instruments of transfer attached, to MuniMae or
its designee on the date of purchase. If the Bonds are uncertificated,
BlackRock and Brazos hereby agree to provide the Indian Lakes Bonds
registrar, any brokerage firm on whose records the Bonds are registered for
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the benefit of BlackRock or Brazos, and Depository Trust Corporation or its
nominee with irrevocable instructions to register the Bonds in the name of
MuniMae or its designee. The purchase price shall be paid in immediately
available funds on the date of closing.
4. REPRESENTATIONS AND WARRANTIES REGARDING INDIAN LAKES BONDS.
BlackRock hereby represents and warrants the following to MuniMae, each
such representation and warranty to be effective as of the date hereof and
as of the date of closing:
(a) TITLE. Merrill Lynch Portfolio Management, Inc. owns 100%
of the Indian Lakes Bonds, free and clear of all liens, claims and
encumbrances.
(b) TAX EXEMPTION. BlackRock is not aware of any claim by the
Internal Revenue Service, or of any facts which would support a claim by
the Internal Revenue Service, that interest on the Indian Lakes Bonds is
not excludable from gross income for purposes of federal income taxation.
5. TRANSFER OF SERVICING AGREEMENTS. Brazos agrees to amend the
Servicing and Special Servicing Agreements to permit Brazos to be
terminated at any time without cause as Servicer and Special Servicer under
the Indian Lakes Bonds and as Special Servicer under the Additional Bonds,
subject, however, to FNMA's approval in the case of the Additional Bonds.
Brazos agrees to use its best efforts to obtain FNMA's approval to a change
of Special Servicer for the Additional Bonds to MuniMae or its designee.
The appointment of MuniMae or its designee as Servicer and Special Servicer
under each Servicing Agreement shall be independent, such that if FNMA's
approval is obtained for some agreements but not others, those agreements
for which it is obtained (or is not needed) shall be transferred without
regard to the others.
6. CLOSING. Closing of the various purchases and transfers
described in this Agreement shall take place at a mutually agreeable time
and place, but not later than (a) June 16, 1997 as to the purchase
described in Section 1,(b) June 30, 1997, as to the purchase described in
Section 3, and (c) as set forth in Section 5 with respect to the transfers
described.
7. FURTHER ASSURANCES. Each party agrees to execute such other
documents and instruments as may be necessary to consummate each of the
transactions described in this Agreement. Each party agrees to cooperate
with each other party in obtaining any necessary approvals and each party
agrees to procure any necessary approvals diligently and in good faith.
8. EVALUATION OF MATERIALS. Sellers agree to provide Purchaser with
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any and all materials in Sellers' possession, or reasonably accessible to
Sellers, which Purchaser may desire in order to evaluate the various
purchases and transfers set forth in this Agreement. Without limiting the
generality of the foregoing, Sellers shall give Purchaser complete access
to Sellers' books and records regarding BlackCap, the Indian Lakes Bonds,
and each of the Additional Bonds. Sellers shall also give Purchaser access
to any of Sellers' books and records regarding Sellers' relationship with
FNMA as it relates to the purchases and transfers which are the subject of
this Agreement. By written notice to Sellers delivered no later than June
13, 1997, Purchaser may, as a result of its evaluation of Seller's
materials, terminate this Agreement as to any purchase or transfer not yet
closed.
9. COMPLETE AGREEMENT. This Agreement constitutes the complete
agreement of the parties hereto and may not be modified except in a writing
signed by the party against which such modification is sought to be
enforced. Each provision of this Agreement shall be deemed severable, so
that if any provision of this Agreement is held unenforceable, the
remainder shall be enforced so as to give effect to the intent of the
parties.
10. GOVERNING LAW. This Agreement shall be governed by the internal
laws of the State of Maryland (excluding reference to principles of
conflicts of law).
11. NOTICES. Any notice required or permitted to be given under this
Agreement shall be deemed received when delivered if sent by telecopy, by
recognized overnight courier, or by hand-delivery, or two days after
mailing, if sent by first-class mail, postage prepaid, return receipt
requested, to the following addresses, or to such other addresses as the
parties by notice delivered hereunder may designate:
If to Sellers: BlackRock Capital Finance L.P.
345 Park Avenue
30{th} Floor
New York, New York 10154
Attention: Mark Begeny
With a copy to: Hudson Advisors LLC
600 N. Pearl Street
Suite 1500
Dallas, Texas 75201
Attention: Jeffrey Yarckin
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If to Purchaser Municipal Mortgage and Equity,
or to MME I: L.L.C.
218 North Charles Street
Suite 500
Baltimore, Maryland 21201
Attention: Michael L. Falcone
With a copy to: Gallagher, Evelius & Jones
218 N. Charles Street
Suite 400
Baltimore, Maryland 21201
Attention: Stephen A. Goldberg,
Esq.
12. DECISION TO PURCHASE. Purchaser represents and warrants to
Seller (a) that Purchaser is a sophisticated investor with knowledge of and
experience in the areas of multi-family housing projects and the financing
of the same by means of both conventional and tax-exempt financing, (b)
that Purchaser has read and understands the FNMA Documents and, in
particular, that the Collateral Account (as defined in the FNMA Documents)
is available for all loss experienced with respect to the Mortgage Loans
delivered pursuant to the FNMA Documents, (c) that Purchaser has had or, at
the time it consummates the transactions contemplated hereby, will have
had, an opportunity to conduct such due diligence review and analysis of
BlackCap, the Membership Interests, the FNMA Documents, the Mortgage Loans
and the related information as the Purchaser deems appropriate, necessary
or desirable in order to make a complete, informed decision with respect to
the transactions contemplated hereby, (d) that the transactions
contemplated hereby involve a significant degree of risk and (e) that in
entering into this Agreement and consummating the transactions contemplated
hereby, the Purchaser has not relied upon any oral or written information
or any representations or warranties whatsoever from any Seller, or any of
their respective employees, affiliates, agents or representatives, other
than the representations and warranties of the Sellers expressly contained
herein.
13. NO USE OF BLACKROCK OR SIMILAR NAME. The Purchaser (a)
acknowledges that BlackRock will cause the name of BlackCap to be changed
to MMACAP, and (b) shall not use the name BlackRock, BlackCap or any
similar name as or in the name of any entity in which it has an interest
and which is a party to any of the FNMA Documents.
14. CONTINUING ACCURACY OF BLACKROCK REPRESENTATIONS. All of
BlackRock's representations and warranties to FNMA made in, or in
connection with, the FNMA Documents, were true and correct when made and
are now true and correct, except that as to all representations and
warranties made by BlackRock to FNMA under Section 4.2(h) of the Master
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Recourse Agreement described on Exhibit A (I.E., in connection with the
delivery of any Mortgage Loan (as defined in the FNMA Documents) to FNMA),
BlackRock represents only that such representations and warranties were
true when made. BlackRock shall defend, indemnify and hold MuniMae
harmless from any and all cost, loss, or expense (including reasonable
attorney's fees) claimed against or incurred by MuniMae arising in any way
out of the breach of BlackRock's representations and warranties in this
Agreement or in the FNMA Documents, including costs incurred in any seeking
the advice of counsel with respect to, or in enforcing, the provisions of
this paragraph. BlackRock shall have no liability, however, for any of its
representations or warranties which become inaccurate after the closing
date.
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IN WITNESS WHEREOF, and intending to be legally bound, the parties
have executed this Agreement as of the date and year first above written.
WITNESS: SELLERS:
FRIO PORTFOLIO INVESTORS, L.L.C.
By: Brazos Fund, L.P.,
Managing Member
By: Brazos Principal GenPar, L.P.,
its General Partner
By: Brazos GenPar, Inc.,
its General Partner
By: /S/ LOUIS PALETTA
Name: Louis Paletta
Title: Vice President
RIO PORTFOLIO PARTNERS, L.P.
By: Rio Plata, GenPar, Inc., its
General Partner
By: /S/ STEVEN LEE
Name: Steven Lee
Title: Vice President
BLACKROCK CAPITAL FINANCE, L.P.
By: BlackRock Asset
Investors, Its General Partner
By: /S/ RANDAL A. NARDONE
Name: Randal A. Nardone
Title: Managing Director
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BRAZOS FUND, L.P.
By: Brazos Principal GenPar, L.P.,
its General Partner
By: Brazos GenPar, Inc., its
General Partner
By: /S/ LOUIS PALETTA
Name: Louis Paletta
Title: Vice President
MF SWAPCO, INC.
By: /S/ RANDAL A. NARDONE
Name: Randal A. Nardone
Title: Secretary
PURCHASER:
MUNICIPAL MORTGAGE AND EQUITY,
L.L.C.
By: /S/ MICHAEL L. FALCONE
Name: Michael L. Falcone
Title: Executive Vice
President
MME I CORPORATION
By:
Name:
Title:
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SCHEDULE A
LIST OF BLACKCAP ASSETS
AGREEMENT AMOUNT
Custodian Agreement dated November 1, 1996
between Fannie Mae, BlackCap LLC, US Trust $1,329,551.24
MBS Lag Agreement between Fannie Mae and
Boatmens Trust (Locarno and Independence) $ 29,000.00
[The purchase amount for these accounts is
equal to $1,000,000.00] $1,358,551.24
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ASSIGNMENT, ASSUMPTION AND CONSENT AGREEMENT
This Assignment, Assumption and Consent Agreement ("Agreement") is made as
of this _____ day of June, 1997, between FEDERAL NATIONAL MORTGAGE ASSOCIATION
("Fannie Mae"), BLACKROCK CAPITAL FINANCE, L.P. ("Assignor") and MUNICIPAL
MORTGAGE AND EQUITY, L.L.C. ("Assignee").
RECITALS
A. Fannie Mae and Assignor, together with BlackCap LLC, are parties to
that certain Master Recourse Agreement (the "Master Recourse Agreement"), dated
as of November 1, 1996.
B. Assignor desires to assign all of its rights, interests and
obligations under the Master Recourse Agreement to Assignee, and Assignee
desires to assume all of Assignor's obligations under the Master Recourse
Agreement.
C. The Master Recourse Agreement affords Fannie Mae the right to consent
to the assignment of Assignor's rights, interest and obligations under the
Master Agreement, and Fannie Mae has agreed to consent to that assignment.
NOW, THEREFORE, Fannie Mae, Assignor and Assignee agree as follows:
Section 1. Representations and Warranties.
(a) Fannie Mae and Assignor each warrant and represent that (i)
attached hereto as Exhibit A is a true, accurate and complete copy of the
Master Recourse Agreement and (ii) the Master Recourse Agreement is in full
force and effect as of the date hereof and has not been amended or modified in
any respect nor has any notice of termination been given thereunder.
(b) Assignor represents and warrants that there is no Event of
Default or Potential Event of Default (as such terms are defined in the Master
Recourse Agreement) in existence on the date hereof.
(c) Fannie Mae represents and warrants that it has no knowledge of
any Event of Default (as defined above).
Section 2. ASSIGNMENT AND ASSUMPTION. Assignor hereby assigns to
Assignee all of its rights, interests and obligations under the Master Recourse
Agreement, and Assignee hereby assumes all of Assignor's rights, interests and
obligations (whether based on past or future events) under the Master Recourse
Agreement, including without limitation, Assignor's obligations with respect to
the representations and warranties in Section 4.2(i) of the Master Recourse
Agreement and the indemnification obligations related thereto in Section
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7.1(b)(ii) and (iv) of the Master Recourse Agreement; provided, however,
nothing herein shall be construed to limit Assignee's rights against Assignor
in the event of the breach of any representation or warranty by Assignor.
Concurrently with this Agreement, Assignee is acquiring all of the member
interests in BlackCap, LLC, the name of which is being changed to MMACap, LLC
and Assignee and Assignor agree to take all actions necessary to continue the
perfection of the security interest in any Collateral (as defined in the Master
Recourse Agreement) .
Section 3. CONSENT AND ACKNOWLEDGMENT. Fannie Mae consents to the
assignment and assumption set forth in Section 2 and acknowledges that Assignor
is relieved of all of its obligations under the Master Recourse Agreement.
Section 4. COUNTERPARTS. This Agreement may be executed in
counterparts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
WITNESS:
FEDERAL NATIONAL MORTGAGE ASSOCIATION
By: _____________________________
Name: _______________________
Title: ______________________
BLACKROCK CAPITAL FINANCE, L.P.
By: ____________________________
Name: ______________________
Title: _____________________
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
By: ______________________________
Name: ________________________
Title: _______________________
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EXHIBIT B
FNMA DOCUMENTS
1. Master Recourse Agreement by and among FNMA, BlackCap and BlackRock
dated as of November 1, 1996.
2. Custodial Agreement by and among FNMA, BlackCap and BlackRock dated
as of November 1, 1996.
3. Certificate of Authorized Representatives executed by BlackCap, and
dated November 20, 1996.
4. Letter of Acceptable Collateral executed by BlackCap dated November
20, 1996.
5. Assignment executed by BlackCap in favor of FNMA dated November 20,
1996.
6. Mortgage Loan Certificate by and among FNMA, BlackCap and BlackRock
dated November 27, 1996.
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