Exhibit 10.3

 

CENTERLINE

 

2007 SHARE INCENTIVE PLAN

___________________________________

 

Annual Incentive Bonus Program “A”

 

(as adopted by the Compensation Committee on April , 2007)

___________________________________

 

1.

Purpose and Authority; Effective Date.

Pursuant and subject to the Centerline Holding Company 2007 Incentive Share Plan
(the “2007 Plan”), Centerline Holding Company and its subsidiaries, including
but not limited to Centerline Capital Group, Inc., Centerline Affordable Housing
Advisors LLC and CCG Partners, Inc., have adopted this Centerline Annual
Incentive Bonus Program “A” (the “Incentive Program ‘A’”) in order to further
the purposes of the 2007 Plan.

2.

Definitions.

Terms in this Incentive Program “A” that begin with an initial capital letter
have the defined meaning set forth in Appendix A of the 2007 Plan, unless
defined in this Section 2 or elsewhere in this Incentive Program “A”, or the
context of their use clearly indicates a different meaning. As used herein, the
following terms shall have the meanings set forth below:

“Bonus” shall mean, for each Fiscal Year during which the Incentive Program “A”
is in effect, the amount that is calculated pursuant to Section 4(b) below and
payable to Participants in accordance with Section 4(c) below. Each Bonus is
designed to qualify as a Performance Compensation Award (within the meaning of
the 2007 Plan).

“CAD” shall mean, for any Fiscal Year, the Company’s Cash Available for
Distribution as reported in the Form 10-K, but prior to taking into account (i)
any Bonuses payable in cash pursuant to this Incentive Program “A”, and (ii) any
other annual cash bonuses paid by the Company, the Manager, or any of their
Affiliates to their employees (including cash bonuses paid under any program
associated with the 2007 Plan). CAD is the Performance Measure for Bonuses, as
authorized under Section 10(d) of the 2007 Plan.

“Cash Bonus Pool” shall equal a fixed percentage of CAD, with such percentage
being equal to nine and six-tenths percent (9.6%) for Fiscal Year 2007, with the
Committee to determine such fixed percentage, in accordance with the Company’s
Fiscal Year budget, as reported to the Committee by the CEO, not later than
three months after the first day of the Fiscal Year to which the percentage will
apply, and with the current Fiscal Year’s percentage being renewed for the
ensuing Fiscal Year in the absence of a timely Committee determination to change
such percentage.

 

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“Cash Participation Award” shall mean a cash award made to a Participant for a
specified Fiscal Year pursuant to Section 4(a), expressed in terms of dollars
and consisting of a portion of the Cash Bonus Pool for such Fiscal Year.

“CEO” shall mean the Company’s Chief Executive Officer.

“Eligible “A” Person” shall mean, for each Fiscal Year, each Eligible Person who
is notified in writing, by the Company’s CEO or Vice-Chairman, of being eligible
for the specified Fiscal Year to receive a Cash Participation Award, a Share
Participation Award, or both pursuant to the terms of the Incentive Program “A”.

 

“Fiscal Year” shall mean each fiscal year of the Company ending December 31.

“Form 10-K” shall mean the Company’s annual report on Form 10-K as filed with
the Securities and Exchange Commission with respect to each Fiscal Year.

 

“Incentive Program “A” ” shall have the meaning set forth in Section 1 above.

“Participant” shall mean any recipient of a Cash or a Share Participation Award
for a Fiscal Year.

“Share Bonus Pool” shall equal a fixed percentage of CAD, with such percentage
being equal to one and thirty-seven hundredths percent (1.37%) for Fiscal Year
2007, with the Committee to determine such fixed percentage, in accordance with
the Company’s Fiscal Year budget, as reported to the Committee by the CEO, not
later than three months after the first day of the Fiscal Year to which the
percentage will apply, and with the current Fiscal Year’s percentage being
renewed for the ensuing Fiscal Year in the absence of a timely Committee
determination to change such percentage.

“Share Participation Award” shall mean a share award made to a Participant for a
specified Fiscal Year pursuant to Section 4(a), expressed in terms of a number
of shares and consisting of a portion of the Share Bonus Pool for such Fiscal
Year.

3.

Administration.

(a)           General. The general administration of Incentive Program “A” and
the responsibility for carrying out the provisions of Incentive Program “A”
shall be placed in CEO and Vice-Chairman, subject to their right to delegate
administrative actions to other Employees and any Affiliate (who will act with
respect to such delegated matters only at the pleasure of the CEO and
Vice-Chairman) The CEO and Vice-Chairman may make such rules and regulations and
establish such procedures for the administration of the Incentive Program “A”,
as they deem appropriate.

(b)           Modification of Award Conditions or Vesting. The CEO and
Vice-Chairman may, in their absolute discretion, without amendment to Incentive
Program “A”, accelerate the lapse of restrictions, or waive any condition
imposed hereunder, with respect to any Bonus, or otherwise adjust any of the
terms applicable to any such determination

 

 

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relating to a Bonus; provided, however, that no action under this Section shall
adversely affect any Participant without the Participant’s specific written
consent.

(c)           Finality of Decisions; Indemnification and Release of
Administrators. All decisions made by the CEO and Vice-Chairman pursuant to the
provisions of Incentive Program “A” shall be final, conclusive and binding on
all persons, including the Company, the Manager, their Affiliates, the
Participant, and any of their successors, beneficiaries, or assigns. No member
of the Board or the Committee, nor the CEO, the Vice-Chair, any officer of the
Company or Employee acting on behalf of the Board or the CEO and Vice-Chairman,
shall be personally liable for any action, determination, or interpretation
taken or made in good faith with respect to Incentive Program “A”, and all
members of the Board or the Committee and each and any officer of the Company or
Employee acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such action,
determination or interpretation.

4.

Awards and Bonuses.

(a)           Participation Awards. For each Fiscal Year, commencing with Fiscal
Year 2007, the CEO and Vice-Chairman, acting together and in writing, may make
Cash and/or Share Participation Awards to Eligible “A” Persons. In the event the
position of either the CEO or Vice-Chairman shall be vacant, the Committee shall
designate another named executive officer of the Company to participate in the
award decision-making process. The total Cash Participation Awards and the total
Share Participation Awards awarded for each Fiscal Year shall, each
respectively, equal one hundred percent (100%) of the respective pools. Cash
and/or Share Participation Awards may be made with respect to any Fiscal Year at
any time during the year or within thirty (30) days after the close thereof, and
may be made to Eligible “A” Persons whose Continuous Service is for less than
the full Fiscal Year, and/or their heirs and successors. All awards of Cash
and/or Share Participation Awards shall be made substantially in the form of
individual written award agreements (substantially in the form attached as
Exhibit A) executed by the Company.

(b)           Bonus Determinations and Conditions. Each Participant’s Bonus for
a Fiscal Year shall be paid as soon as reasonably practicable after the close of
the Fiscal Year to which the Bonus relates, and the CEO and Vice-Chairman may in
their sole discretion pay projected Bonuses prior to such time based upon an
estimate of the respective Cash Bonus Pool and Share Bonus Pool, subject to
adjustment upon final determination of the Cash Bonus Pool and the Share Bonus
Pool in any way that the CEO and Vice-Chair determines is necessary or proper to
assure that each Participant receives and retains only the aggregate Bonus due
for the Fiscal Year (based upon the final CAD). In order to collect a Bonus for
a Fiscal Year, a Participant must either (i) be employed on the Bonus payment
date established by the CEO and Vice-Chairman for the Fiscal Year, or (ii) be
employed on the last day of the Fiscal Year and after the end of the Fiscal Year
have terminated Continuous Service thereafter either (I) without Cause by the
Company, (II) due to the Participant’s death, Retirement, or Disability, or
(III) pursuant to an employment-related agreement under which the Participant is
entitled to resign (for example, for “good reason” as defined in the agreement)
with a right to collect severance benefits equivalent to those payable upon a

 

 

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termination of service without Cause by the Company. The amount of each
Participant’s Bonus, if any, for a Fiscal Year shall equal the sum of –

 

(i)

the Participant’s Cash Participation Award for such Fiscal Year, and

 

(ii)

the Participant’s Share Participation Award for such Fiscal Year.

Any Bonuses that would have been paid to Participants for a Fiscal Year but that
are forfeited due to termination of their Continuous Service shall be divided
pro rata between those Participants who actually receive a Bonus for such Fiscal
Year. The formulae for determining the Cash Bonus Pool and the Share Bonus Pool
are the Performance Formulae and the Fiscal Year shall be the Performance
Period, in each case for purposes of Section 10(d) of the 2007 Plan.

(c)         Bonus Payments. The Company shall pay any Bonus due under this
Incentive Program “A” in a combination of cash (for the portion of the Bonus
attributable to the Cash Bonus Pool) and Restricted (or Unrestricted) Shares
(for the portion of the Bonus attributable to the Share Bonus Pool). All
Restricted and Unrestricted Shares shall be awarded pursuant to the 2007 Plan,
with the choice between Restricted Shares and Unrestricted Shares for each
Participant being determined with respect to such Participant in the sole and
absolute discretion of CEO and Vice-Chair. To the extent a Bonus is payable in
Restricted Shares, such Restricted Shares shall vest as follows (with vesting to
occur only if the Participant is employed on the vesting date or terminates
Continuous Service beforehand due to the Participant’s death, Retirement, or
Disability):

Value of Shares

Vesting Period

Below $5,000

Immediate vesting

$5,000 to $25,0000

100% on the first annual anniversary of the
Grant Date

$25,000 to $50,000

50% on the first annual anniversary of the Grant Date, and the other 50% on the
second annual anniversary of the Grant Date

Over $50,000

33-1/3% on the first, second, and third annual anniversaries of the Grant Date

 

(d) In the event of a Change in Control on or before the end of any Fiscal Year
during which Incentive Program “A” is in effect, then the closing date of the
Change in Control shall be treated as the end of the Fiscal Year with the
following results:

 

(i)

allocations of Cash and Share Participation Awards shall occur before or within
thirty (30) days after the closing date of the Change in

 

 

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Control, as determined only by those individuals authorized to make allocation
decisions on the date six months before the Change in Control occurs (with any
replacement of any such individual whose service ends due to resignation or
death, being made by majority vote of the other individuals described herein);

 

 

(ii)

as soon as practicable after the Change in Control, the Bonus Pool will be
computed by determining CAD as of the Closing Date; and

 

 

(iii)

as soon as practicable after the Change in Control, Bonus awards will occur in
accordance with Section 4(c) above, subject to being made by those determined
pursuant to clause (i) hereof.

5.

Continuance of Employment.

Neither the Incentive Program “A” nor the grant of any Cash and/or Share
Participation Award hereunder shall interfere with or limit in any way the right
of the Company or the Manager to terminate any Participant’s employment at any
time and for any reason (subject to the terms of any employment agreement), nor
shall the Incentive Program “A” or the grant of any Cash and/or Share
Participation Award hereunder impose any obligation on the Company or the
Manager to continue the employment of any Participant.

6.

Requirements of Law.

The grant of Cash and/or Share Participation Awards and the payment of Bonuses
in accordance with the Incentive Program “A” and the 2007 Plan shall be subject
to all applicable laws, rules and regulations, and to such approvals by any
governmental agencies as may be required.

7.

Miscellaneous.

(a)    Amendments: The Incentive Program “A” and any Cash or Share Participation
Award may be amended or modified only in writing by the Committee or the Board;
provided that any amendment or modification of any kind which adversely affects
any Participant must be consented to by such Participant to be effective as
against him or her.

(b)    Incorporation of the 2007 Plan; Interpretation by CEO and Vice-Chairman.
This Incentive Program “A” is subject in all respects to the terms, conditions,
limitations and definitions contained in the 2007 Plan. In the event of any
discrepancy or inconsistency between Incentive Program “A” and the 2007 Plan,
the terms and conditions of the 2007 Plan shall control. Without limiting the
generality of the foregoing, the CEO and Vice-Chairman may interpret the 2007
Plan and Incentive Program “A”, and take any other actions and make any other
determinations or decisions that it deems necessary or appropriate in connection
with the 2007 Plan, this Incentive Program “A” or the administration or
interpretation thereof, with such interpretations, actions, determinations, and
decisions to be conclusive and binding on all persons and otherwise accorded the

 

 

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maximum deference permitted by law, provided that the CEO and Vice-Chairman’s
interpretations, actions, determinations, and decisions shall not be entitled to
deference on and after a Change in Control except to the extent that such
interpretations are made exclusively by the CEO and Vice-Chairman who are
individuals who served in such capacities on the date six months before the
Change in Control. In the event of any dispute or disagreement as to
interpretation of the 2007 Plan or this Incentive Program “A” or of any rule,
regulation or procedure, or as to any question, right or obligation arising from
or related to the 2007 Plan or this Incentive Program “A”, the decision of the
CEO and Vice-Chairman shall, except as provided above, be final and binding upon
all persons.

(c)           Restricted Share Issuances. Any issuance of Restricted Shares
pursuant to Bonus awards shall occur pursuant to the 2007 Plan, and shall be
subject to all terms and conditions thereof.

(d)           Withholding of Tax. Anything to the contrary notwithstanding, all
Bonus payments required to be made by the Company hereunder shall be subject to
the withholding of such amounts as the Company reasonably may determine that it
is required to withhold pursuant to applicable federal, state or local law or
regulation. The Company’s obligation to deliver share certificates (or evidence
of book entry) to any Participant is subject to and conditioned on tax
withholding obligations being satisfied by such Participant, subject to the
terms of the Incentive Program “A” and of the 2007 Plan applicable thereto.

(e)           Anti-Alienation; Non-Assignability; Etc. Except as otherwise
provided by law, by a Participant’s will, by the laws of descent or distribution
in the event of the Participant’s death, by a Restricted Share Award, or by the
2007 Plan, neither a Participant nor any other person shall have any right to
sell, assign, transfer, pledge, mortgage, or otherwise encumber, transfer,
hypothecate, alienate or convey in advance of actual receipt, the Cash or Share
Participation Award, Bonus, or other amounts, if any, payable or deliverable
hereunder, or any part thereof. The designation of a death beneficiary by a
Participant shall be permissible and shall not constitute a transfer. Except to
the extent required by law or as authorized under the 2007 Plan or an agreement
or Award pursuant to Incentive Program “A”, no part of the amounts payable
shall, prior to actual payment, (i) be subject to seizure, attachment,
garnishment or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any other person, (ii) be
transferable by operation of law in the event of a Participant’s or any other
person’s bankruptcy or insolvency, or (iii) be transferable to a spouse as a
result of a property settlement or otherwise, and any attempt to cause any
benefit to be so subject under clauses (i), (ii), or (iii) hereof shall be void.

(f)            No Contract for Continuing Services. The Incentive Program “A”
shall not be construed as creating any contract for continued services between
the Company or its Affiliates and any Participant, and nothing herein contained
shall give any Participant the right to be retained as an Employee.

(g)           Governing Law; Jurisdiction. The Incentive Program “A” shall be
construed, administered, and enforced in accordance with the laws of the State
of Delaware, without giving effect to the conflict of laws principles thereof.
The Company and each Participant

 

 

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agree that the state and federal courts of New York shall have jurisdiction over
any suit, action or proceeding arising out of, or in any way related to, the
2007 Plan, any Cash or Share Participation Award, or any Bonus. The parties
waive, to the fullest extent permitted by law, any objection which any of them
may have to the venue of any such suit, action or proceeding brought in such
courts, and any claim that such suit, action or proceeding brought in such
courts has been brought in an inconvenient forum. In the event that any party
shall not have appointed an agent for service of process in New York, the party
agrees that it may be served with process by registered or certified mail,
return receipt requested, to the party at its respective address as reflected on
the records of the Company. All notices shall be deemed to have been given as of
the date so delivered or mailed.

(h)           Non-Exclusivity. The Incentive Program “A” does not limit the
authority of the Company, the Committee, the CEO and Vice-Chairman, or any
Affiliate, to grant cash bonuses, to make Awards under the 2007 Plan, or to
authorize any other compensation under the 2007 Plan or any other plan or
authority, including, without limitation, Bonuses or other compensation based on
the same performance objectives used under the Incentive Program “A”.

(i)            Securities Laws Compliance. Restricted Shares shall not be issued
pursuant to the settlement of any Bonus award granted hereunder unless the
settlement of such Bonus award and the issuance and delivery of such Restricted
Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act, the Exchange Act and the
requirements of any stock exchange upon which the Common Shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.

(j)            Section 409A. If and only to the extent that any compensation
provided by this Program may result in the application of Section 409A of the
Code, the Company shall, in consultation with the Participant, modify Incentive
Program ‘B” with respect to such Participant solely in the least restrictive
manner necessary in order, where applicable –

 

(I)

to exclude such compensation from the definition of “deferred compensation”
within the meaning of such Section 409A, or

 

(II)

to comply with the provisions of Section 409A, other applicable provision(s) of
the Code and/or any rules, regulations or other regulatory guidance issued under
such statutory provisions and to make such modifications, in each case, without
any diminution in the value of the benefits granted under the Program to such
Participant.

(k)           Indemnification. The Company hereby agrees to indemnify and to
hold harmless the CEO, Vice-Chairman, and each member of the Board and the
Committee and other Employees and any Affiliate to whom the CEO and
Vice-Chairman delegates authority pursuant to Section 3(a) against any and all
claims, losses, damages, expenses or liabilities arising from any action or
failure to act with respect to the Incentive Program “A” or the 2007 Plan,
except in the case of willful misconduct.

 

 

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(l)           Unfunded Nature of Program. This Incentive Program “A” is intended
to be an unfunded, nonqualified compensation arrangement for purposes of the
Code. Except to the extent that a Participant may otherwise be entitled to
preferred status under applicable bankruptcy law, Participants shall have the
status of general unsecured creditors of the Company, and the Incentive Program
“A” constitutes a mere promise by the Company to make benefit payments in the
future to the extent and consistent with the terms of a Cash and/or Share
Participation Award. Whenever there are any references in the Incentive Program
“A” to the crediting of amounts, all such references shall be deemed to refer to
notional, book entry transactions.

(m)          Exclusivity of Documents. The liability of the Company for the
payment of benefits shall be defined only by this Incentive Program “A”, the
2007 Plan, and the terms of a Cash Participation Award or Share Participation
Award, and the Company shall have no obligation to a Participant under the
Incentive Program “A”, except as expressly provided herein or therein.

(n)           Binding Effect. The provisions of this Incentive Program “A” shall
bind and inure to the benefit of the Company and its successors and assigns and
each Participant and each Participant’s successors and assigns.

(o)           Gender. Where appearing in the Incentive Program “A”, the
masculine gender shall be deemed to include the feminine gender and the singular
number shall include the plural, unless the context clearly indicates to the
contrary.

(p)           Term and Expiration. This Incentive Program “A” shall be effective
indefinitely and until all Participants have received full payment of any
Bonuses due hereunder.

 

Adopted as of January 1, 2007 at a meeting of the Compensation Committee held
April___, 2007.

 

 

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CENTERLINE

2007 SHARE INCENTIVE PLAN

___________________________________

 

Annual Incentive Compensation Program “A”

 

Exhibit A

___________________________________

[DATE]

CONFIDENTIAL

[Name]

[Address]

 

 

Re:

Your Cash and/or Share Participation Award

Dear [Name]:

You have been selected by the Company to be a participant in the Incentive
Program “A” for the Company’s Fiscal Year ending December 31, ___. Subject to
your acceptance of the terms and conditions of Program “A” (which is attached
for your review and reference) –

 

1.

your Cash Participation Award will be $___ for the Fiscal Year designated above,
and

 

2.

your Share Participation Award will be ___Restricted and _______ Unrestricted
Shares.

Please acknowledge your receipt of this letter and acceptance of the foregoing
terms and conditions for your participation in Program “A” by signing in the
space provided below and return the signed letter to the attention of
[            ].

 

Yours truly,

 

 

 

ACKNOWLEDGED BY:

 

 

 

[            ]

 

 

 

   

A Duly Authorized Trustee or

Executive Officer

 

 

 

[Name of Incentive Program “A” Participant

 

 

 

 

 

 

 

   

 

 

 

 

[Date]

 

 

 

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