GRAMERCY CAPITAL CORP.

 

2012 INDUCEMENT EQUITY INCENTIVE PLAN

 

 

 

 

TABLE OF CONTENTS

  

  Page      1. DEFINITIONS 1     2. EFFECTIVE DATE AND TERMINATION OF PLAN 4    
3. ADMINISTRATION OF PLAN 5     4. SHARES AND UNITS SUBJECT TO THE PLAN 5     5.
PROVISIONS APPLICABLE TO STOCK OPTIONS 6     6. PROVISIONS APPLICABLE TO
RESTRICTED STOCK 9     7. PROVISIONS APPLICABLE TO PHANTOM SHARES 10     8.
PROVISIONS APPLICABLE TO DIVIDEND EQUIVALENT RIGHTS 13     9. OTHER EQUITY-BASED
AWARDS 14     10. PERFORMANCE GOALS 14     11. TAX WITHHOLDING 15     12.
REGULATIONS AND APPROVALS 16     13. INTERPRETATION AND AMENDMENTS; OTHER RULES
17     14. CHANGES IN CAPITAL STRUCTURE 17     15. MISCELLANEOUS 19

 

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GRAMERCY CAPITAL CORP.

 

2012 INDUCEMENT EQUITY INCENTIVE PLAN

 

Gramercy Capital Corp., a Maryland corporation, established the Gramercy Capital
Corp. 2012 Inducement Equity Incentive Plan, effective June 7, 2012, to attract
qualified key employees and other personnel and encourage them to increase their
efforts to make the Company’s business more successful whether directly or
through its Subsidiaries or other affiliates. Awards under the Plan may be made
to Eligible Persons in the form of Options, Restricted Stock, Phantom Shares,
Dividend Equivalent Rights or other forms of equity-based compensation. All
Awards under the Plan are intended to qualify as “employment inducement awards”
within the meaning of Section 303A.08, or any successor provision, of the New
York Stock Exchange Listed Company Manual.

 

1. DEFINITIONS.

 

Whenever used herein, the following terms shall have the meanings set forth
below:

 

“Award,” except where referring to a particular category of grant under the
Plan, shall include Non-Qualified Stock Options, Restricted Stock, Phantom
Shares, Dividend Equivalent Rights and other equity-based Awards as contemplated
herein.

 

“Award Agreement” means a written agreement in a form approved by the Committee
to be entered into between the Company and the Participant as provided in
Section 3. An Award Agreement may be, without limitation, an employment or other
similar agreement containing provisions governing grants hereunder, if approved
by the Committee for use under the Plan.

 

“Board” means the Board of Directors of the Company.

 

“Cause” means, unless otherwise provided in the Participant’s Award Agreement,
(i) engaging in (A) willful or gross misconduct or (B) willful or gross neglect;
(ii) repeatedly failing to adhere to the directions of superiors or the Board or
the written policies and practices of the Company or its Subsidiaries or its
affiliates; (iii) the commission of a felony or a crime of moral turpitude,
dishonesty, breach of trust or unethical business conduct, or any crime
involving the Company or its Subsidiaries, or any affiliate thereof; (iv) fraud,
misappropriation or embezzlement; (v) acts or omissions constituting a material
failure to perform substantially and adequately the duties assigned to the
Participant; (vi) any illegal act detrimental to the Company its Subsidiaries or
any affiliate thereof; (vii) repeated failure to devote substantially all of the
Participant’s business time and efforts to the Company or its Subsidiaries, or
any affiliate thereof if required by the Participant’s employment agreement; or
(viii) the Participant’s failure to competently perform his duties after
receiving notice from the Company or its Subsidiaries, or any affiliate thereof;
specifically identifying the manner in which the Participant has failed to
perform; provided, however, that, if at any particular time the Participant is
subject to an effective employment agreement with the Company, then, in lieu of
the foregoing definition, “Cause” shall at that time have such meaning as may be
specified in such employment agreement.

 

“Change in Control” shall mean the happening of any of the following:

 

 

 

 

(i)          any “person,” including a “group” (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act, but excluding the Company, any
entity controlling, controlled by or under common control with the Company, any
trustee, fiduciary or other person or entity holding securities under any
employee benefit plan or trust of the Company or any such entity, and with
respect to any particular Participant, the Participant and any “group” (as such
term is used in Section 13(d)(3) of the Exchange Act) of which the Participant
is a member), is or becomes the “beneficial owner” (as defined in Rule 13(d)(3)
under the Exchange Act), directly or indirectly, of securities of the Company
representing 25% or more of either (A) the combined voting power of the
Company’s then outstanding securities or (B) the then outstanding Common Stock
(other than as a result of an acquisition of securities directly from the
Company); or

 

(ii)         there shall occur any consolidation or merger of the Company that
would result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation representing (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) less than 50% of the total voting power of the voting securities of the
surviving entity outstanding immediately after such merger or consolidation or
ceasing to have the power to elect at least a majority of the board of directors
or other governing body of such surviving entity; or

 

(iii)        there shall occur (A) any sale, lease, exchange or other transfer
(in one transaction or a series of transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the assets of the
Company, other than a sale or disposition by the Company of all or substantially
all of the Company’s assets to an entity, at least 50% of the combined voting
power of the voting securities of which are owned by “persons” (as defined
above) in substantially the same proportion as their ownership of the Company
immediately prior to such sale or (B) the approval by shareholders of the
Company of any plan or proposal for the liquidation or dissolution of the
Company; or

 

(iv)        the members of the Board at the beginning of any consecutive
24-calendar-month period (the “Incumbent Directors”) cease for any reason other
than due to death to constitute at least a majority of the members of the Board;
provided that any director whose election, or nomination for election by the
Company’s shareholders was approved or ratified by a vote of at least a majority
of the Incumbent Directors shall be deemed to be an Incumbent Director.

 

Notwithstanding the foregoing provisions of this definition of Change in
Control, if at any particular time the Participant is subject to an effective
employment agreement with the Company which expressly provides for the
definition of a change in control of the Company, then, in lieu of the foregoing
definition, “Change in Control” shall at that time have such meaning as may be
specified, in such employment agreement, with respect to the Company. In
addition, notwithstanding the foregoing provisions of this definition of Change
in Control, no event or condition shall constitute a Change in Control to the
extent that, if it were, a 20% tax would be imposed under Section 409A of the
Code; provided that, in such a case, the event or condition shall continue to
constitute a Change in Control to the maximum extent possible (e.g., if
applicable, in respect of vesting without an acceleration of distribution)
without causing the imposition of such 20% tax.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Committee” means the Compensation Committee of the Board.

 

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“Common Stock” means the Company’s Common Stock, par value $.001 per share,
either currently existing or authorized hereafter.

 

“Company” means the Gramercy Capital Corp., a Maryland corporation.

 

“Director” means a non-employee director of the Company or its Subsidiaries.

 

“Disability” means, unless otherwise provided by the Committee in the
Participant’s Award Agreement, a disability which renders the Participant
incapable of performing all of his or her material duties for a period of at
least 180 consecutive or non-consecutive days during any consecutive
twelve-month period. Notwithstanding the foregoing, no circumstances or
condition shall constitute a Disability to the extent that, if it were, a 20%
tax would be imposed under Section 409A of the Code; provided that, in such a
case, the event or condition shall continue to constitute a Disability to the
maximum extent possible (e.g., if applicable, in respect of vesting without an
acceleration of distribution) without causing the imposition of such 20% tax.

 

“Dividend Equivalent Right” means a right awarded under Section 8 of the Plan to
receive (or have credited) the equivalent value of dividends paid on Common
Stock.

 

“Eligible Person” means such full- or part-time officers and other employees to
whom the Company may issue securities without Stockholder approval in accordance
with Section 303A.08, or any successor provision of the New York Stock Exchange
Listed Company Manual, as selected from time-to-time by the Committee in its
sole discretion.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” per Share as of a particular date means (i) if Shares are
then listed on a national stock exchange, the closing sales price per Share on
the exchange for the last preceding date on which there was a sale of Shares on
such exchange, as determined by the Committee, (ii) if Shares are not then
listed on a national stock exchange but are then traded on an over-the-counter
market, the average of the closing bid and asked prices for the Shares in such
over-the-counter market for the last preceding date on which there was a sale of
such Shares in such market, as determined by the Committee, or (iii) if Shares
are not then listed on a national stock exchange or traded on an
over-the-counter market, such value as the Committee in its discretion may in
good faith determine; provided that, where the Shares are so listed or traded,
the Committee may make such discretionary determinations where the Shares have
not been traded for 10 trading days. Notwithstanding the foregoing, with respect
to any “stock right” within the meaning of Section 409A of the Code, Fair Market
Value shall not be less than the “fair market value” of the shares of Common
Stock determined in accordance with the final regulations promulgated under
Section 409A of the Code.

 

“Grantee” means an Eligible Person granted Restricted Stock, Phantom Shares,
Dividend Equivalent Rights or such other equity-based Awards as may be granted
pursuant to Section 9.

 

“Non-Qualified Stock Option” means an Option which is not intended to be an
Incentive Stock Option within the meaning of Section 422(b) of the Code.

 

“Option” means the right to purchase, at a price and for the term fixed by the
Committee in accordance with the Plan, and subject to such other limitations and
restrictions in the Plan and the applicable Award Agreement, a number of Shares
determined by the Committee.

 

“Optionee” means an Eligible Person to whom an Option is granted, or the
Successors of the Optionee, as the context so requires.

 

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“Option Price” means the price per Share, determined by the Board or the
Committee, at which an Option may be exercised.

 

“Participant” means a Grantee or Optionee.

 

“Phantom Share” means a right, pursuant to the Plan, of the Grantee to payment
of the Phantom Share Value.

 

“Phantom Share Value,” per Phantom Share, means the Fair Market Value of a Share
of Class A Common Stock, or, if so provided by the Committee, such Fair Market
Value to the extent in excess of a base value established by the Committee at
the time of grant.

 

“Plan” means the Company’s 2012 Inducement Equity Incentive Plan, as set forth
herein and as the same may from time to time be amended.

 

“Restricted Stock” means an award of Shares that are subject to restrictions
hereunder.

 

“Retirement” means, unless otherwise provided by the Committee in the
Participant’s Award Agreement, the Termination of Service (other than for Cause)
of a Participant on or after the Participant’s attainment of age 65 or on or
after the Participant’s attainment of age 55 with five consecutive years of
service with the Company and or its Subsidiaries or its affiliates.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Settlement Date” means the date determined under Section 7.4(c).

 

“Shares” means shares of Common Stock of the Company.

 

“Subsidiary” means any corporation (other than the Company) that is a
“subsidiary corporation” with respect to the Company under Section 424(f) of the
Code. In the event the Company becomes a subsidiary of another company, the
provisions hereof applicable to subsidiaries shall, unless otherwise determined
by the Committee, also be applicable to any company that is a “parent
corporation” with respect to the Company under Section 424(e) of the Code.

 

“Successor of the Optionee” means the legal representative of the estate of a
deceased Optionee or the person or persons who shall acquire the right to
exercise an Option by bequest or inheritance or by reason of the death of the
Optionee.

 

“Termination of Service” means a Participant’s termination of employment or
other service, as applicable, with the Company and its Subsidiaries.
Notwithstanding the foregoing, with respect to any Award subject to Section 409A
of the Code, Termination of Service shall be interpreted within the meaning of
Section 409A of the Code and Treasury Regulation 1.409A-1(h).

 

2. EFFECTIVE DATE AND TERMINATION OF PLAN.

 

The effective date of the Plan is June 7, 2012. The Plan shall terminate on, and
no Award shall be granted hereunder on or after, the 10-year anniversary of the
approval of the Plan by the Board; provided, however, that the Board may at any
time prior to that date terminate the Plan; and provided, further, that all
Awards made under the Plan prior to a Plan termination shall remain in effect
until such Awards have been satisfied or terminated in accordance with the terms
and provisions of the Plan and the applicable Award Agreement.

 

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3. ADMINISTRATION OF PLAN.

 

(a)     The Plan shall be administered by the Committee appointed by the Board.
The Committee, upon and after such time as it is covered in Section 16 of the
Exchange Act, shall consist of at least two individuals each of whom shall be a
“nonemployee director” as defined in Rule 16b-3 as promulgated by the Securities
and Exchange Commission (“Rule 16b-3”) under the Exchange Act; provided that no
action taken by the Committee (including without limitation grants) shall be
invalidated because any or all of the members of the Committee fails to satisfy
the foregoing requirements of this sentence. The acts of a majority of the
members present at any meeting of the Committee at which a quorum is present, or
acts approved in writing by a majority of the entire Committee, shall be the
acts of the Committee for purposes of the Plan. If and to the extent applicable,
no member of the Committee may act as to matters under the Plan specifically
relating to such member. Notwithstanding the other foregoing provisions of this
Section 3(a), any Award under the Plan to a person who is a member of the
Committee shall be made and administered by the Board. If no Committee is
designated by the Board to act for these purposes, the Board shall have the
rights and responsibilities of the Committee hereunder and under the Award
Agreements.

 

(b)     Subject to the provisions of the Plan, the Committee shall in its
discretion (i) authorize the granting of Awards to Eligible Persons; and (ii)
determine the eligibility of Eligible Persons to receive an Award, as well as
determine the number of Shares to be covered under any Award Agreement,
considering the position and responsibilities of the Eligible Persons, the
nature and value to the Company of the Eligible Person’s present and potential
contribution to the success of the Company whether directly or through its
Subsidiaries and such other factors as the Committee may deem relevant.

 

(c)     The Award Agreement shall contain such other terms, provisions and
conditions not inconsistent herewith as shall be determined by the Committee. In
the event that any Award Agreement or other agreement hereunder provides
(without regard to this sentence) for the obligation of the Company or any
affiliate thereof to purchase or repurchase Shares from a Participant or any
other person, then, notwithstanding the provisions of the Award Agreement or
such other agreement, such obligation shall not apply to the extent that the
purchase or repurchase would not be permitted under governing state law. The
Participant shall take whatever additional actions and execute whatever
additional documents the Committee may in its reasonable judgment deem necessary
or advisable in order to carry out or effect one or more of the obligations or
restrictions imposed on the Participant pursuant to the express provisions of
the Plan and the Award Agreement.

 

(d)     The Committee may provide, in its discretion, that (i) all stock issued
hereunder be initially maintained in separate brokerage account for the
Participant at a brokerage firm selected by, and pursuant to an arrangement
with, the Company; and (ii) in the case of vested Shares, the Participant may
move such Shares to another brokerage account of the Participant’s choosing or
request that a stock certificate be issued and delivered to him or her.

 

4. SHARES AND UNITS SUBJECT TO THE PLAN.

 

4.1       In General.

 

(a)     Subject to Section 4.2, and subject to adjustments as provided in
Section 14, the total number of Shares subject to Awards granted under the Plan,
in the aggregate, may not exceed 4,500,000. Shares distributed under the Plan
may be treasury Shares or authorized but unissued Shares. Any Shares that have
been granted as Restricted Stock or that have been reserved for distribution in
payment for Options, Phantom Shares or other equity-based Awards but are later
forfeited or for any other reason are not payable under the Plan may again be
made the subject of Awards under the Plan.

 

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(b)     Shares subject to Dividend Equivalent Rights, other than Dividend
Equivalent Rights based directly on the dividends payable with respect to Shares
subject to Options or the dividends payable on a number of Shares corresponding
to the number of Phantom Shares awarded, shall be subject to the limitation of
Section 4.1(a). If any Phantom Shares, Dividend Equivalent Rights or other
equity-based Awards under Section 9 are paid out in cash, then, notwithstanding
the first sentence of Section 4.1(a) above (but subject to the second sentence
thereof) the underlying Shares may again be made the subject of Awards under the
Plan.

 

(c)     The certificates for Shares issued hereunder may include any legend
which the Committee deems appropriate to reflect any rights of first refusal or
other restrictions on transfer hereunder or under the Award Agreement, or as the
Committee may otherwise deem appropriate.

 

5. PROVISIONS APPLICABLE TO STOCK OPTIONS.

 

5.1       Grant of Option.

 

Subject to the other terms of the Plan, the Committee shall, in its discretion
as reflected by the terms of the applicable Award Agreement: (i) determine and
designate from time to time those Eligible Persons to whom Options are to be
granted and the number of Shares to be optioned to each Eligible Person; (ii)
determine the time or times when and the manner and condition in which each
Option shall be exercisable and the duration of the exercise period; and (iii)
determine or impose other conditions to the grant or exercise of Options under
the Plan as it may deem appropriate. Each Option granted hereunder shall be a
Non-Qualified Stock Option.

 

5.2       Option Price.

 

The Option Price shall be determined by the Committee on the date the Option is
granted and reflected in the Award Agreement, as the same may be amended from
time to time. Any particular Award Agreement may provide for different Option
Prices for specified amounts of Shares subject to the Option; provided that the
Option Price shall not be less than 100% of the Fair Market Value of a Share at
the time the Option is granted.

 

5.3       Period of Option and Vesting.

 

(a)     Unless earlier expired, forfeited or otherwise terminated, each Option
shall expire in its entirety upon the 10th anniversary of the date of grant or
shall have such other term as is set forth in the applicable Award Agreement.
The Option shall also expire, be forfeited and terminate at such times and in
such circumstances as otherwise provided hereunder or under the Award Agreement.

 

(b)     Each Option, to the extent that the Optionee has not had a Termination
of Service and the Option has not otherwise lapsed, expired, terminated or been
forfeited, shall first become exercisable according to the terms and conditions
set forth in the Award Agreement, as determined by the Committee at the time of
grant. Unless otherwise provided in the Award Agreement, no Option (or portion
thereof) shall ever be exercisable if the Optionee has a Termination of Service
before the time at which such Option (or portion thereof) would otherwise have
become exercisable, and any Option that would otherwise become exercisable after
such Termination of Service shall not become exercisable and shall be forfeited
upon such termination. Notwithstanding the foregoing provisions of this Section
5.3(b), Options exercisable pursuant to the schedule set forth by the Committee
at the time of grant may be fully or more rapidly exercisable or otherwise
vested at any time in the discretion of the Committee. Upon and after the death
of an Optionee, such Optionee’s Options, if and to the extent otherwise
exercisable hereunder or under the applicable Award Agreement after the
Optionee’s death, may be exercised by the Successors of the Optionee.

 

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5.4       Exercisability Upon and After Termination of Optionee.

 

(a)     Subject to provisions of the Award Agreement, in the event the Optionee
has a Termination of Service other than by the Company or its Subsidiaries for
Cause, or other than by reason of death, Retirement or Disability, no exercise
of an Option may occur after the expiration of the three-month period to follow
the termination, or if earlier, the expiration of the term of the Option as
provided under Section 5.3(a); provided that, if the Optionee should die after
the Termination of Service, such termination being for a reason other than
Disability or Retirement, but while the Option is still in effect, the Option
(if and to the extent otherwise exercisable by the Optionee at the time of
death) may be exercised until the earlier of (i) one year from the date of the
Termination of Service of the Optionee, or (ii) the date on which the term of
the Option expires in accordance with Section 5.3(a).

 

(b)     Subject to provisions of the Award Agreement, in the event the Optionee
has a Termination of Service on account of death or Disability or Retirement,
the Option (if and to the extent otherwise exercisable by the Optionee on the
date of the Termination of Service) may be exercised until the earlier of (i)
one year from the date of the Termination of Service of the Optionee, or (ii)
the date on which the term of the Option expires in accordance with Section 5.3.

 

(c)     Notwithstanding any other provision hereof, unless otherwise provided in
the Award Agreement, if the Optionee has a Termination of Service by the Company
for Cause, the Optionee’s Options, to the extent then unexercised, shall
thereupon cease to be exercisable and shall be forfeited forthwith.

 

5.5       Exercise of Options.

 

(a)     Subject to vesting, restrictions on exercisability and other
restrictions provided for hereunder or otherwise imposed in accordance herewith,
an Option may be exercised, and payment in full of the aggregate Option Price
made, by an Optionee only by written notice (in the form prescribed by the
Committee) to the Company specifying the number of Shares to be purchased.

 

(b)     Without limiting the scope of the Committee’s discretion hereunder, the
Committee may impose such other restrictions on the exercise of an Option
(whether or not in the nature of the foregoing restrictions) as it may deem
necessary or appropriate.

 

5.6       Payment.

 

(a)     The aggregate Option Price shall be paid in full upon the exercise of
the Option. Payment must be made by one of the following methods:

 

(i)          a certified or bank cashier’s check;

 

(ii)         subject to Section 12(e), the proceeds of a Company loan program or
third-party sale program or a notice acceptable to the Committee given as
consideration under such a program, in each case if permitted by the Committee
in its discretion, if such a program has been established and the Optionee is
eligible to participate therein;

 

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(iii)        if approved by the Committee in its discretion, Shares of
previously owned Common Stock, which have been previously owned for more than
six months, having an aggregate Fair Market Value on the date of exercise equal
to the aggregate Option Price; or

 

(iv)        by any combination of such methods of payment or any other method
acceptable to the Committee in its discretion.

 

(b)     Except in the case of Options exercised by certified or bank cashier’s
check, the Committee may impose limitations and prohibitions on the exercise of
Options as it deems appropriate, including, without limitation, any limitation
or prohibition designed to avoid accounting consequences which may result from
the use of Common Stock as payment upon exercise of an Option.

 

(c)     The Committee may provide that no Option may be exercised with respect
to any fractional Share. Any fractional Shares resulting from an Optionee’s
exercise that is accepted by the Company shall in the discretion of the
Committee be paid in cash.

 

5.7       Stock Appreciation Rights.

 

The Committee, in its discretion, may (taking into account, without limitation,
the application of Section 409A of the Code, as the Committee may deem
appropriate) also permit the Optionee to elect to exercise an Option by
receiving a combination of Shares and cash, or, in the discretion of the
Committee, either Shares or solely in cash, with an aggregate Fair Market Value
(or, to the extent of payment in cash, in an amount) equal to the excess of the
Fair Market Value of the Shares with respect to which the Option is being
exercised over the aggregate Option Price, as determined as of the day the
Option is exercised.

 

5.8       Exercise by Successors.

 

An Option may be exercised, and payment in full of the aggregate Option Price
made, by the Successors of the Optionee only by written notice (in the form
prescribed by the Committee) to the Company specifying the number of Shares to
be purchased. Such notice shall state that the aggregate Option Price will be
paid in full, or that the Option will be exercised as otherwise provided
hereunder, in the discretion of the Company or the Committee, if and as
applicable.

 

5.9       Nontransferability of Option.

 

Each Option granted under the Plan shall be nontransferable by the Optionee
except by will or the laws of descent and distribution of the state wherein the
Optionee is domiciled at the time of his death; provided, however, that the
Committee may (but need not) permit other transfers, where the Committee
concludes that such transferability (i) does not result in accelerated U.S.
federal income taxation, and (ii) is otherwise appropriate and desirable.

 

5.10     Deferral.

 

Except as provided in the Award Agreement, the Committee may establish a program
(taking into account, without limitation, the application of Section 409A of the
Code, as the Committee may deem appropriate) under which Participants will have
Phantom Shares subject to Section 7 credited upon their exercise of Options,
rather than receiving Shares at that time.

 

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6. PROVISIONS APPLICABLE TO RESTRICTED STOCK.

 

6.1       Grant of Restricted Stock.

 

(a)     In connection with the grant of Restricted Stock, whether or not
performance goals (as provided for under Section 10) apply thereto, the
Committee shall establish one or more vesting periods with respect to the shares
of Restricted Stock granted, the length of which shall be determined in the
discretion of the Committee. Subject to the provisions of this Section 6, the
applicable Award Agreement and the other provisions of the Plan, restrictions on
Restricted Stock shall lapse if the Grantee satisfies all applicable employment
or other service requirements through the end of the applicable vesting period.

 

(b)     Subject to the other terms of the Plan, the Committee may, in its
discretion as reflected by the terms of the applicable Award Agreement: (i)
authorize the granting of Restricted Stock to Eligible Persons; (ii) provide a
specified purchase price for the Restricted Stock (whether or not the payment of
a purchase price is required by any state law applicable to the Company); (iii)
determine the restrictions applicable to Restricted Stock and (iv) determine or
impose other conditions, including any applicable performance goals, to the
grant of Restricted Stock under the Plan as it may deem appropriate.

 

6.2       Certificates.

 

(a)     Unless otherwise provided by the Company, all Restricted Stock shall be
uncertificated. Restricted Stock shall be registered in the name of the Grantee.
Without limiting the generality of Section 4.1(c), the certificates for Shares
of Restricted Stock issued hereunder, if any, and other documentation for
Restricted Stock issued hereunder may include any legend which the Company deems
appropriate to reflect any restrictions on transfer hereunder or under the Award
Agreement, or as the Company may otherwise deem appropriate, including, without
limitation, a legend in the following form:

 

The transferability of these shares of stock are subject to the terms and
conditions (including forfeiture) of the Gramercy Capital Corp. 2012 Inducement
Equity Incentive Plan and an Award Agreement entered into between the registered
owner and Gramercy Capital Corp. Copies of such Plan and Award Agreement are on
file in the offices of Gramercy Capital Corp., at 420 Lexington Avenue, New
York, New York 10170.

 

(b)     The Committee shall require that any stock certificates evidencing such
Shares be held in custody by the Company until the restrictions hereunder shall
have lapsed. If and when such restrictions so lapse, any such stock certificates
shall be delivered by the Company to the Grantee or his or her designee as
provided in Section 6.3.

 

6.3       Restrictions and Conditions.

 

Unless otherwise provided by the Committee, the Shares of Restricted Stock
awarded pursuant to the Plan shall be subject to the following restrictions and
conditions:

 

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(i)          Subject to the provisions of the Plan and the Award Agreements,
during a period commencing with the date of such Award and ending on the date
the period of forfeiture with respect to such Shares lapses, the Grantee shall
not be permitted voluntarily or involuntarily to sell, transfer, pledge,
anticipate, alienate, encumber or assign Shares of Restricted Stock awarded
under the Plan (or have such Shares attached or garnished). Subject to the
provisions of the Award Agreements and clause (iii) below, the period of
forfeiture with respect to Shares granted hereunder shall lapse as provided in
the applicable Award Agreement. Notwithstanding the foregoing, unless otherwise
expressly provided by the Committee, the period of forfeiture with respect to
such Shares shall only lapse as to whole Shares.

 

(ii)         Except as provided in the foregoing clause (i), below in this
clause (ii) or in Section 14, or as otherwise provided in the applicable Award
Agreement, the Grantee shall have, in respect of the Shares of Restricted Stock,
all of the rights of a shareholder of the Company (including the right to vote
the Shares). Unless otherwise provided in the Award Agreement, all cash
dividends on Shares paid during the Restriction Period shall be paid directly
to, and retained by, the Company in its own capacity, and shall not at any time
be paid over to or retained by the Grantee, whether or not the Restriction
Period ends; in the event that such dividends are, notwithstanding the
foregoing, erroneously paid to the Grantee, they shall be paid by the Grantee to
the Company promptly, and in no event more than three business days after, they
are received by the Grantee. Certificates, if any, for Shares (not subject to
restrictions hereunder) shall be delivered to the Grantee or his or her designee
promptly after, and only after, the period of forfeiture shall lapse without
forfeiture in respect of such Shares of Restricted Stock.

 

(iii)        Except as otherwise provided in the applicable Award Agreement, if
the Grantee has a Termination of Service by the Company and its Subsidiaries for
Cause, or by the Grantee for any reason, during the applicable period of
forfeiture, then (A) all Shares still subject to restriction shall thereupon,
and with no further action, be forfeited by the Grantee, and (B) the Company
shall pay to the Grantee as soon as practicable (and in no event more than 30
days) after such termination an amount equal to the lesser of (x) the amount
paid by the Grantee for such forfeited Restricted Stock as contemplated by
Section 6.1, and (y) the Fair Market Value on the date of termination of the
forfeited Restricted Stock.

 

7. PROVISIONS APPLICABLE TO PHANTOM SHARES.

 

7.1       Grant of Phantom Shares.

 

Subject to the other terms of the Plan, the Committee shall, in its discretion
as reflected by the terms of the applicable Award Agreement: (i) authorize the
granting of Phantom Shares to Eligible Persons and (ii) determine or impose
other conditions to the grant of Phantom Shares under the Plan as it may deem
appropriate.

 

7.2       Term.

 

The Committee may provide in an Award Agreement that any particular Phantom
Share shall expire at the end of a specified term.

 

10

 

 

7.3       Vesting.

 

Phantom Shares shall vest as provided in the applicable Award Agreement.

 

7.4       Settlement of Phantom Shares.

 

(a)     Each vested and outstanding Phantom Share shall be settled by the
transfer to the Grantee of one Share; provided that, the Committee at the time
of grant may provide that a Phantom Share may be settled (i) in cash at the
applicable Phantom Share Value, (ii) in cash or by transfer of Shares as elected
by the Grantee in accordance with procedures established by the Committee or
(iii) in cash or by transfer of Shares as elected by the Company.

 

(b)     Phantom Shares shall be settled with a single-sum payment by the
Company; provided that, with respect to Phantom Shares of a Grantee which have a
common Settlement Date, the Committee may permit the Grantee to elect in
accordance with procedures established by the Committee (taking into account,
without limitation, Section 409A of the Code, as the Committee may deem
appropriate) to receive installment payments over a period not to exceed 10
years.

 

(c)      (i) Unless otherwise provided in the applicable Award Agreement, the
“Settlement Date” with respect to a Phantom Share is the first day of the month
to follow the date on which the Phantom Share vests; provided that a Grantee may
elect, in accordance with procedures to be established by the Committee, that
such Settlement Date will be deferred as elected by the Grantee to the first day
of the month to follow the Grantee’s Termination of Service, or such other time
as may be permitted by the Committee. Unless otherwise determined by the
Committee, any revised elections under this Section 7.4(c)(i) must, except as
may otherwise be permitted under the rules applicable under Section 409A of the
Code, (A) not be effective for at least one year after they are made, or, in the
case of payments to commence at a specific time, be made at least one year
before the first scheduled payment and (B) defer the commencement of
distributions (and each affected distribution) for at least five years.

 

              (ii)         Notwithstanding Section 7.4(c)(i), the Committee may
provide that distributions of Phantom Shares can be elected at any time in those
cases in which the Phantom Share Value is determined by reference to Fair Market
Value to the extent in excess of a base value, rather than by reference to
unreduced Fair Market Value.

 

              (iii)        Notwithstanding the foregoing, the Settlement Date,
if not earlier pursuant to this Section 7.4(c), is the date of the Grantee’s
death.

 

(d)     Notwithstanding the other provisions of this Section 7 (taking into
account, without limitation, the application of Section 409A of the Code, as the
Committee may deem appropriate), in the event of a Change in Control, the
Settlement Date shall be the date of such Change in Control and all amounts due
with respect to Phantom Shares to a Grantee hereunder shall be paid as soon as
practicable (but in no event more than 30 days) after such Change in Control,
unless such Grantee elects otherwise in accordance with procedures established
by the Committee or unless otherwise provided in the applicable Award Agreement.

 

(e)     Notwithstanding any other provision of the Plan, a Grantee may receive
any amounts to be paid in installments as provided in Section 7.4(b) or deferred
by the Grantee as provided in Section 7.4(c) in the event of an “Unforeseeable
Emergency.” For these purposes, an “Unforeseeable Emergency,” as determined by
the Committee in its sole discretion, is a severe financial hardship to the
Grantee resulting from a sudden and unexpected illness or accident of the
Grantee or “dependent,” as defined in Section 152(a) of the Code, of the
Grantee, loss of the Grantee’s property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Grantee. The circumstances that will constitute an
Unforeseeable Emergency will depend upon the facts of each case, but, in any
case, payment may not be made to the extent that such hardship is or may be
relieved:

 

11

 

 

(i)          through reimbursement or compensation by insurance or otherwise,

 

(ii)         by liquidation of the Grantee’s assets, to the extent the
liquidation of such assets would not itself cause severe financial hardship, or

 

(iii)        by future cessation of the making of additional deferrals under
Section 7.4 (b) and (c).

 

Without limitation, the need to send a Grantee’s child to college or the desire
to purchase a home shall not constitute an Unforeseeable Emergency.
Distributions of amounts because of an Unforeseeable Emergency shall be
permitted to the extent reasonably needed to satisfy the emergency need.

 

7.5      Other Phantom Share Provisions.

 

(a)     Rights to payments with respect to Phantom Shares granted under the Plan
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, garnishment, levy, execution, or
other legal or equitable process, either voluntary or involuntary; and any
attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber,
attach or garnish, or levy or execute on any right to payments or other benefits
payable hereunder, shall be void.

 

(b)     A Grantee may designate in writing, on forms to be prescribed by the
Committee, a beneficiary or beneficiaries to receive any payments payable after
his or her death and may amend or revoke such designation at any time. If no
beneficiary designation is in effect at the time of a Grantee’s death, payments
hereunder shall be made to the Grantee’s estate. If a Grantee with a vested
Phantom Share dies, such Phantom Share shall be settled and the Phantom Share
Value in respect of such Phantom Shares paid, and any payments deferred pursuant
to an election under Section 7.4(c) shall be accelerated and paid, as soon as
practicable (but no later than 60 days) after the date of death to such
Grantee’s beneficiary or estate, as applicable.

 

(c)     The Committee may (taking into account, without limitation, the
application of Section 409A of the Code, as the Committee may deem appropriate)
establish a program under which distributions with respect to Phantom Shares may
be deferred for periods in addition to those otherwise contemplated by foregoing
provisions of this Section 7. Such program may include, without limitation,
provisions for the crediting of earnings and losses on unpaid amounts, and, if
permitted by the Committee, provisions under which Participants may select from
among hypothetical investment alternatives for such deferred amounts in
accordance with procedures established by the Committee.

 

(d)     Notwithstanding any other provision of this Section 7, any fractional
Phantom Share will be paid out in cash at the Phantom Share Value as of the
Settlement Date.

 

(e)     No Phantom Share shall be construed to give any Grantee any rights with
respect to Shares or any ownership interest in the Company. Except as may be
provided in accordance with Section 8, no provision of the Plan shall be
interpreted to confer upon any Grantee any voting, dividend or derivative or
other similar rights with respect to any Phantom Share.

 

12

 

 

7.6       Claims Procedures.

 

(a)     To the extent that the Plan is determined by the Committee to be subject
to the Employee Retirement Income Security Act of 1974, as amended, the Grantee,
or his beneficiary hereunder or authorized representative, may file a claim for
payments with respect to Phantom Shares under the Plan by written communication
to the Committee or its designee. A claim is not considered filed until such
communication is actually received. Within 90 days (or, if special circumstances
require an extension of time for processing, 180 days, in which case notice of
such special circumstances should be provided within the initial 90-day period)
after the filing of the claim, the Committee will either:

 

(i)          approve the claim and take appropriate steps for satisfaction of
the claim; or

 

(ii)         if the claim is wholly or partially denied, advise the claimant of
such denial by furnishing to him a written notice of such denial setting forth
(A) the specific reason or reasons for the denial; (B) specific reference to
pertinent provisions of the Plan on which the denial is based and, if the denial
is based in whole or in part on any rule of construction or interpretation
adopted by the Committee, a reference to such rule, a copy of which shall be
provided to the claimant; (C) a description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
of the reasons why such material or information is necessary; and (D) a
reference to this Section 7.6 as the provision setting forth the claims
procedure under the Plan.

 

(b)          The claimant may request a review of any denial of his claim by
written application to the Committee within 60 days after receipt of the notice
of denial of such claim. Within 60 days (or, if special circumstances require an
extension of time for processing, 120 days, in which case notice of such special
circumstances should be provided within the initial 60-day period) after receipt
of written application for review, the Committee will provide the claimant with
its decision in writing, including, if the claimant’s claim is not approved,
specific reasons for the decision and specific references to the Plan provisions
on which the decision is based.

 

8. PROVISIONS APPLICABLE TO DIVIDEND EQUIVALENT RIGHTS.

 

8.1       Grant of Dividend Equivalent Rights.

 

Subject to the other terms of the Plan, the Committee shall, in its discretion
as reflected by the terms of the Award Agreements, authorize the granting of
Dividend Equivalent Rights to Eligible Persons based on the regular cash
dividends declared on Common Stock, to be credited as of the dividend payment
dates, during the period between the date an Award is granted, and the date such
Award is exercised, vests or expires, as determined by the Committee. Such
Dividend Equivalent Rights shall be converted to cash or additional Shares by
such formula and at such time and subject to such limitation as may be
determined by the Committee. If a Dividend Equivalent Right is granted in
respect of an Award hereunder, then, unless otherwise stated in the Award
Agreement, in no event shall the Dividend Equivalent Right be in effect for a
period beyond the time during which the applicable portion of the underlying
Award is in effect.

 

8.2       Certain Terms.

 

(a)     The term of a Dividend Equivalent Right shall be set by the Committee in
its discretion.

 

13

 

 

(b)     Unless otherwise determined by the Committee, except as contemplated by
Section 8.4, a Dividend Equivalent Right is exercisable or payable only prior to
the Participant’s Termination of Service.

 

(c)     Payment of the amount determined in accordance with Section 8.1 shall be
in cash, in Common Stock or a combination of the both, as determined by the
Committee.

 

(d)     The Committee may impose such employment-related conditions on the grant
of a Dividend Equivalent Right as it deems appropriate in its discretion.

 

8.3       Other Types of Dividend Equivalent Rights.

 

The Committee may establish a program under which Dividend Equivalent Rights of
a type whether or not described in the foregoing provisions of this Section 8
may be granted to Participants. For example, and without limitation, the
Committee may grant a dividend equivalent right in respect of each Share subject
to an Option or with respect to a Phantom Share, which right would consist of
the right (subject to Section 8.4) to receive a cash payment in an amount equal
to the dividend distributions paid on a Share from time to time.

 

8.4       Deferral.

 

The Committee may establish a program (taking into account, without limitation,
the possible application of Section 409A of the Code, as the Committee may deem
appropriate) under which Participants (i) will have Phantom Shares credited,
subject to the terms of Sections 7.4 and 7.5 as though directly applicable with
respect thereto, upon the granting of Dividend Equivalent Rights, or (ii) will
have payments with respect to Dividend Equivalent Rights deferred. In the case
of the foregoing clause (ii), such program may include, without limitation,
provisions for the crediting of earnings and losses on unpaid amounts, and, if
permitted by the Committee, provisions under which Participants may select from
among hypothetical investment alternatives for such deferred amounts in
accordance with procedures established by the Committee.

 

9. OTHER EQUITY-BASED AWARDS.

 

The Committee shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Committee may determine,
including, without limitation, the grant of shares based upon certain
conditions, the grant of securities convertible into Common Stock and the grant
of limited-partnership or any other membership or ownership interests (which may
be expressed as units or otherwise) in a Subsidiary or operating or other
partnership (or other affiliate of the Company), including, without limitation,
LTIP Units in GKK Capital LP, with any Shares being issued in connection with
the conversion, exchange or redemption of (or other distribution on account of)
an interest granted under the authority of this clause (ii) to be subject, for
the avoidance of doubt, to Section 4 and the other provisions of the Plan.

 

10. PERFORMANCE GOALS.

 

The Committee, in its discretion, (i) may establish one or more performance
goals as a precondition to the issuance or vesting of Awards, and (ii) provide,
in connection with the establishment of the performance goals, for predetermined
Awards to those Participants (who continue to meet all applicable eligibility
requirements) with respect to whom the applicable performance goals are
satisfied.

 

14

 

 

11. TAX WITHHOLDING.

 

 

11.1    In General.

 

The Company shall be entitled to withhold from any payments or deemed payments
any amount of tax withholding determined by the Committee to be required by law.
Without limiting the generality of the foregoing, the Committee may, in its
discretion, require the Participant to pay to the Company at such time as the
Committee determines the amount that the Committee deems necessary to satisfy
the Company’s obligation to withhold federal, state or local income or other
taxes incurred by reason of (i) the exercise of any Option, (ii) the lapsing of
any restrictions applicable to any Restricted Stock, (iii) the receipt of a
distribution in respect of Phantom Shares or Dividend Equivalent Rights or (iv)
any other applicable income-recognition event (for example, an election under
Section 83(b) of the Code).

 

11.2    Share Withholding.

 

(a)    Upon exercise of an Option, the Optionee may, if approved by the
Committee in its discretion, make a written election to have Shares then issued
withheld by the Company from the Shares otherwise to be received, or to deliver
previously owned Shares, in order to satisfy the liability for the minimum
withholding taxes due. Alternatively, if so provided in an Award Agreement, the
Committee may require the Optionee to satisfy such liability by having Shares
then issued withheld by the Company from the Shares otherwise to be received, or
require the Optionee to do so, subject to the Optionee’s ability to elect to
satisfy such liability in cash. In the event that the Optionee makes, and the
Committee permits, such an election, the number of Shares so withheld or
delivered shall have an aggregate Fair Market Value on the date of exercise
sufficient to satisfy the applicable minimum withholding taxes. Where the
exercise of an Option does not give rise to an obligation by the Company to
withhold federal, state or local income or other taxes on the date of exercise,
but may give rise to such an obligation in the future, the Committee may, in its
discretion, make such arrangements and impose such requirements as it deems
necessary or appropriate.

 

(b)    Upon lapsing of restrictions on Restricted Stock (or other
income-recognition event), the Grantee may, if approved by the Committee in its
discretion, make a written election to have Shares withheld by the Company from
the Shares otherwise to be released from restriction, or to deliver previously
owned Shares (not subject to restrictions hereunder), in order to satisfy the
liability for the minimum withholding taxes due. Alternatively, if so provided
in an Award Agreement, the Committee may require the Grantee to satisfy such
liability by having Shares withheld by the Company from the Shares otherwise to
be released from restriction, or require the Grantee to do so, subject to the
Grantee’s ability to elect to satisfy such liability in cash. In the event that
the Grantee is to satisfy such liability in Shares, the number of Shares so
withheld or delivered shall have an aggregate Fair Market Value on the date of
the lapsing of restrictions (or other income-recognition event) sufficient to
satisfy the applicable minimum withholding taxes.

 

(c)    Upon the making of a distribution in respect of Phantom Shares or
Dividend Equivalent Rights, the Grantee may, if approved by the Committee in its
discretion, make a written election to have amounts (which may include Shares)
withheld by the Company from the distribution otherwise to be made, or to
deliver previously owned Shares (not subject to restrictions hereunder), in
order to satisfy the liability for the minimum withholding taxes due.
Alternatively, if so provided in an Award Agreement, the Committee may require
the Grantee to satisfy such liability by having Shares withheld by the Company
from the distribution otherwise to be made, or require the Grantee to do so,
subject to the Grantee’s ability to elect to satisfy such liability in cash. In
the event that the Grantee is to satisfy such liability in Shares, any Shares so
withheld or delivered shall have an aggregate Fair Market Value on the date of
distribution sufficient to satisfy the applicable minimum withholding taxes.

 

15

 

 

(d)    Upon the occurrence of any other income-recognition event with respect to
an Award granted under the Plan that occurs upon or concurrently with the
issuance or vesting of, or lapsing of restrictions on, Common Stock, the Grantee
may, if approved by the Committee in its discretion, make a written election to
have Shares withheld by the Company from the Shares otherwise to be issued,
vested or released from restriction, or to deliver previously owned Shares (not
subject to restrictions hereunder), in order to satisfy the liability for the
minimum withholding taxes due. Alternatively, if so provided in an Award
Agreement, the Committee may require the Grantee to satisfy such liability by
having Shares withheld by the Company from the Shares otherwise to be issued,
vested or released from restriction, or require the Grantee to do so, subject to
the Grantee’s ability to elect to satisfy such liability in cash. In the event
that the Grantee is to satisfy such liability in Shares, the number of Shares so
withheld or delivered shall have an aggregate Fair Market Value on the date of
such income-recognition event sufficient to satisfy the applicable minimum
withholding taxes.

 

(e)    For purposes of determining the number of Shares to be withheld or
delivered to satisfy the applicable minimum withholding taxes pursuant to
Section 11.2 of the Plan, the Fair Market Value of the Shares shall be
calculated in the same manner as the Shares are valued for purposes of
determining the amount of withholding taxes due.

 

11.3     Withholding Required.

 

Notwithstanding anything contained in the Plan or the Award Agreement to the
contrary, the Participant’s satisfaction of any tax-withholding requirements
imposed by the Committee shall be a condition precedent to the Company’s
obligation as may otherwise be provided hereunder to provide Shares to the
Participant and to the release of any restrictions as may otherwise be provided
hereunder, as applicable; and the applicable Option, Restricted Stock, Phantom
Shares, Dividend Equivalent Rights or Other Award shall be forfeited upon the
failure of the Participant to satisfy such requirements with respect to, as
applicable, (i) the exercise of the Option, (ii) the lapsing of restrictions on
the Restricted Stock (or other income-recognition event), (iii) distributions in
respect of any Phantom Share or Dividend Equivalent Right or (iv) any other
income-recognition event with respect an Award granted under the Plan.

 

12. REGULATIONS AND APPROVALS.

 

(a)    The obligation of the Company to sell Shares with respect to an Award
granted under the Plan shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state securities laws, and the
obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.

 

(b)     The Committee may make such changes to the Plan as may be necessary or
appropriate to comply with the rules and regulations of any government authority
or to obtain tax benefits applicable to an Award.

 

(c)     Each grant of Options, Restricted Stock, Phantom Shares (or issuance of
Shares in respect thereof) or Dividend Equivalent Rights (or issuance of Shares
in respect thereof), or other Award under Section 9 (or issuance of Shares in
respect thereof), is subject to the requirement that, if at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the issuance of Options, Shares of
Restricted Stock, Phantom Shares, Dividend Equivalent Rights, other Awards or
other Shares, no payment shall be made, or Phantom Shares or Shares issued or
grant of Restricted Stock or other Award made, in whole or in part, unless
listing, registration, qualification, consent or approval has been effected or
obtained free of any conditions in a manner acceptable to the Committee.

 

16

 

 

(d)    In the event that the disposition of stock acquired pursuant to the Plan
is not covered by a then current registration statement under the Securities
Act, and is not otherwise exempt from such registration, such Shares shall be
restricted against transfer to the extent required under the Securities Act, and
the Committee may require any individual receiving Shares pursuant to the Plan,
as a condition precedent to receipt of such Shares, to represent to the Company
in writing that such Shares are acquired for investment only and not with a view
to distribution and that such Shares will be disposed of only if registered for
sale under the Securities Act or if there is an available exemption for such
disposition.

 

(e)     Notwithstanding any other provision of the Plan, the Company shall not
be required to take or permit any action under the Plan or any Award Agreement
which, in the good-faith determination of the Company, would result in a
material risk of a violation by the Company of Section 13(k) of the Exchange
Act.

 

13. INTERPRETATION AND AMENDMENTS; OTHER RULES.

 

The Committee may make such rules and regulations and establish such procedures
for the administration of the Plan as it deems appropriate. Without limiting the
generality of the foregoing, the Committee may (i) determine the extent, if any,
to which Options, Phantom Shares or Shares (whether or not Shares of Restricted
Stock) or Dividend Equivalent Rights shall be forfeited (whether or not such
forfeiture is expressly contemplated hereunder); (ii) interpret the Plan and the
Award Agreements hereunder, with such interpretations to be conclusive and
binding on all persons and otherwise accorded the maximum deference permitted by
law, provided that the Committee’s interpretation shall not be entitled to
deference on and after a Change in Control except to the extent that such
interpretations are made exclusively by members of the Committee who are
individuals who served as Committee members before the Change in Control; and
(iii) take any other actions and make any other determinations or decisions that
it deems necessary or appropriate in connection with the Plan or the
administration or interpretation thereof including any actions, determinations
or decisions necessary to comply with Section 303A.08 or any successor provision
of the New York Stock Exchange Listed Company Manual. In the event of any
dispute or disagreement as to the interpretation of the Plan or of any rule,
regulation or procedure, or as to any question, right or obligation arising from
or related to the Plan, the decision of the Committee, except as provided in
clause (ii) of the foregoing sentence, shall be final and binding upon all
persons. Unless otherwise expressly provided hereunder, the Committee, with
respect to any grant, may exercise its discretion hereunder at the time of the
Award or thereafter. The Board may amend the Plan as it shall deem advisable,
except that no amendment may adversely affect a Participant with respect to an
Award previously granted unless such amendments are required in order to comply
with applicable laws.

 

14. CHANGES IN CAPITAL STRUCTURE.

 

(a)    If (i) the Company or its Subsidiaries shall at any time be involved in a
merger, consolidation, dissolution, liquidation, reorganization, exchange of
shares, sale of all or substantially all of the assets or stock of the Company
or its Subsidiaries or a transaction similar thereto, (ii) any stock dividend,
stock split, reverse stock split, stock combination, reclassification,
recapitalization or other similar change in the capital structure of the Company
or its Subsidiaries, or any distribution to holders of Common Stock other than
ordinary cash dividends (but including special or extraordinary cash dividends),
shall occur or (iii) any other event shall occur which in the judgment of the
Committee necessitates action by way of adjusting the terms of the outstanding
Awards, then:

 

17

 

 

(x) the maximum aggregate number of Shares which may be made subject to Options
and Dividend Equivalent Rights under the Plan after the effective date hereof,
the maximum aggregate number and kind of Shares of Restricted Stock that may be
granted under the Plan after the effective date hereof, the maximum aggregate
number of Phantom Shares and other Awards which may be granted under the Plan
after the effective date hereof, shall be appropriately adjusted by the
Committee; and

 

(y) with respect to Awards issued on or after the effective date hereof, the
Committee shall take any such action as shall be necessary to maintain each
Participants’ rights hereunder (including under their Award Agreements) with
respect to Options, Phantom Shares and Dividend Equivalent Rights (and, as
appropriate, other Awards under Section 9), so that they are substantially
proportionate to the rights existing in such Options, Phantom Shares and
Dividend Equivalent Rights (and other Awards under Section 9) prior to such
event, including, without limitation, adjustments in (A) the number of Options,
Phantom Shares and Dividend Equivalent Rights (and other Awards under Section 9)
granted, (B) the number and kind of shares or other property to be distributed
in respect of Options, Phantom Shares and Dividend Equivalent Rights (and other
Awards under Section 9 as applicable), (C) the Option Price and Phantom Share
Value, and (D) performance-based criteria established in connection with Awards;
provided that, the foregoing clause (D) shall also be applied in the case of any
event relating to a Subsidiary if the event would have been covered under this
Section 14(a) had the event related to the Company. For purposes of clause (x)
and this clause (y), the manner in which any of the above described adjustments
are made shall in all events be subject to approval of the Committee.

 

To the extent that such action shall include an increase or decrease in the
number of Shares (or units of other property then available) subject to all
outstanding Awards, the number of Shares (or units) available under Section 4
shall be increased or decreased, as the case may be, proportionately, as may be
determined by the Committee.

 

(b)    Any Shares or other securities distributed to a Grantee with respect to
Restricted Stock or otherwise issued in substitution of Restricted Stock shall
be subject to the restrictions and requirements imposed by Section 6, including
depositing the certificates therefor with the Company together with a stock
power and bearing a legend as provided in Section 6.2(a).

 

(c)     If the Company shall be consolidated or merged with another corporation
or other entity, each Grantee who has received Restricted Stock that is then
subject to restrictions imposed by Section 6.3(a) may be required to deposit
with the successor corporation the certificates, if any, for the stock or
securities or the other property that the Grantee is entitled to receive by
reason of ownership of Restricted Stock in a manner consistent with Section
6.2(b), and such stock, securities or other property shall become subject to the
restrictions and requirements imposed by Section 6.3(a), and the certificates
therefor or other evidence thereof shall bear a legend similar in form and
substance to the legend set forth in Section 6.2(a).

 

(d)     If a Change in Control shall occur, then the Committee, as constituted
immediately before the Change in Control, may make such adjustments as it, in
its discretion, determines are necessary or appropriate in light of the Change
in Control, provided that the Committee determines that such adjustments do not
have an adverse economic impact on the Participant as determined at the time of
the adjustments.

 

18

 

 

(e)     The judgment of the Committee with respect to any matter referred to in
this Section 14 shall be conclusive and binding upon each Participant without
the need for any amendment to the Plan.

 

15. MISCELLANEOUS.

 

15.1     No Rights to Employment or Other Service.

 

Nothing in the Plan or in any grant made pursuant to the Plan shall confer on
any individual any right to continue in the employ or other service of the
Company or its Subsidiaries or interfere in any way with the right of the
Company or its Subsidiaries and its shareholders to terminate the individual’s
employment or other service at any time.

 

15.2      Right of First Refusal; Right of Repurchase.

 

At the time of grant, the Committee may provide in connection with any grant
made under the Plan that Shares received hereunder shall be subject to a right
of first refusal pursuant to which the Company shall be entitled to purchase
such Shares in the event of a prospective sale of the Shares, subject to such
terms and conditions as the Committee may specify at the time of grant or (if
permitted by the Award Agreement) thereafter, and to a right of repurchase,
pursuant to which the Company shall be entitled to purchase such Shares at a
price determined by, or under a formula set by, the Committee at the time of
grant or (if permitted by the Award Agreement) thereafter.

 

15.3      No Fiduciary Relationship.

 

Nothing contained in the Plan (including without limitation Sections 7.5(c) and
8.4), and no action taken pursuant to the provisions of the Plan, shall create
or shall be construed to create a trust of any kind, or a fiduciary relationship
between the Company or its Subsidiaries, or their officers or the Committee, on
the one hand, and the Participant, the Company, its Subsidiaries or any other
person or entity, on the other.

 

15.4     No Fund Created.

 

Any and all payments hereunder to any Participant under the Plan shall be made
from the general funds of the Company (or, if applicable, a Participating
Company), no special or separate fund shall be established or other segregation
of assets made to assure such payments, and the Phantom Shares (including for
purposes of this Section 15.4 any accounts established to facilitate the
implementation of Section 7.4(c)) and any other similar devices issued hereunder
to account for Plan obligations do not constitute Common Stock and shall not be
treated as (or as giving rise to) property or as a trust fund of any kind;
provided, however, that the Company may establish a mere bookkeeping reserve to
meet its obligations hereunder or a trust or other funding vehicle that would
not cause the Plan to be deemed to be funded for tax purposes or for purposes of
Title I of the Employee Retirement Income Security Act of 1974, as amended. The
obligations of the Company under the Plan are unsecured and constitute a mere
promise by the Company to make benefit payments in the future and, to the extent
that any person acquires a right to receive payments under the Plan from the
Company, such right shall be no greater than the right of a general unsecured
creditor of the Company. (If any affiliate of the Company is or is made
responsible with respect to any Awards, the foregoing sentence shall apply with
respect to such affiliate.) Without limiting the foregoing, Phantom Shares and
any other similar devices issued hereunder to account for Plan obligations are
solely a device for the measurement and determination of the amounts to be paid
to a Grantee under the Plan, and each Grantee’s right in the Phantom Shares and
any such other devices is limited to the right to receive payment, if any, as
may herein be provided.

 

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15.5     Notices.

 

All notices under the Plan shall be in writing, and if to the Company, shall be
delivered to the Board or mailed to its principal office, addressed to the
attention of the Board; and if to the Participant, shall be delivered
personally, sent by facsimile transmission or mailed to the Participant at the
address appearing in the records of the Company. Such addresses may be changed
at any time by written notice to the other party given in accordance with this
Section 15.5.

 

15.6     Exculpation and Indemnification.

 

The Company shall indemnify and hold harmless the members of the Board and the
members of the Committee from and against any and all liabilities, costs and
expenses incurred by such persons as a result of any act or omission to act in
connection with the performance of such person’s duties, responsibilities and
obligations under the Plan, to the maximum extent permitted by law.

 

15.7     Compliance with Section 409A of the Code.

 

(a)     Any Award Agreement issued under the Plan that is subject to Section
409A of the Code shall include such additional terms and conditions as may be
required to satisfy the requirements of Section 409A of the Code.

 

(b)    With respect to any Award issued under the Plan that is subject to
Section 409A of the Code, and with respect to which a payment or distribution is
to be made upon a Termination of Service, if the Participant is determined by
the Company to be a “specified employee” within the meaning of Section
409A(a)(2)(B)(i) of the Code and any of the Company’s stock is publicly traded
on an established securities market or otherwise, such payment or distribution
may not be made before the date which is six months after the date of
Termination of Service (to the extent required under Section 409A of the Code).

 

(c)     Notwithstanding any other provision of the Plan, the Board and the
Committee shall administer the Plan, and exercise authority and discretion under
the Plan, to satisfy the requirements of Section 409A of the Code or any
exemption thereto.

 

15.8     Captions.

 

The use of captions in this Plan is for convenience. The captions are not
intended to provide substantive rights.

 

15.9     Governing Law.

 

THE PLAN SHALL BE GOVERNED BY THE LAWS OF MARYLAND WITHOUT REFERENCE TO
PRINCIPLES OF CONFLICT OF LAWS.

 

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