Exhibit 10.1

SEPARATION AGREEMENT

Separation Agreement (“Agreement”) made as of this 15th day of April, 2010 by
and between Centerline Holding Company, a Delaware business trust (“CHC”), and
Centerline Capital Group, Inc., a Delaware corporation (“CCG” and together with
CHC, “Centerline”), and Marc D. Schnitzer.

A.           Mr. Schnitzer is employed by CCG as Chief Executive Officer of CHC
and as an officer and director of various Centerline affiliates.

B.           Mr. Schnitzer has announced his intention to retire from his
employment with Centerline and resign as a trustee, director and officer of
Centerline and any and all of Centerline’s parents, subsidiaries, affiliates and
any other entities organized in connection with, or related to, Centerline or
its affiliates (collectively, the “Company Group”); which defined term shall
exclude any entities wholly owned by Schnitzer and/or his family members through
which Mr. Schnitzer owns his interests in entities constituting the Company
Group.

1.           Last Day of Employment.  Mr. Schnitzer’s last day of employment
with Centerline shall be April 15, 2010 (the “Effective Date”).   Mr. Schnitzer
agrees that except as expressly set forth herein, he shall not be entitled to
any payment or benefit from Centerline subsequent to the Effective Date.

2.           Separation Benefits.  In exchange for Mr. Schnitzer’s execution of
this Agreement and subject to Section 2(e) hereof, Centerline will provide Mr.
Schnitzer with the benefits set forth in subsections (a) through (d) below
(collectively, the “Separation Benefits”), to which he is not otherwise
entitled:

(a)   Within thirty (30) days of the Effective Date, Centerline shall pay Mr.
Schnitzer $ 750,000 as severance pay (the “Separation Payment”).  Mr. Schnitzer
acknowledges that no payment for any bonus or wages for any prior period are due
him other than unpaid base wages through the Effective Date.

(b)   Centerline shall reimburse Mr. Schnitzer for the cost of federal, state
and local tax return preparation with respect to each of his 2009 and 2010 tax
returns; provided, however, that the amount of the reimbursement for each of the
2009 and 2010 tax preparations shall not materially exceed the amount of
reimbursement for his 2008 tax preparation.

(c)   Within thirty (30) days of the Effective Date, Centerline shall pay Mr.
Schnitzer the amount of $8,780 which represents the premiums for two (2) years
on a $3 million term life insurance policy owned by Mr. Schnitzer or a life
insurance trust established by him or his spouse and Centerline shall have no
further responsibility for payment or reimbursement of any premiums due on
account of such policy.

(d)   Mr. Schnitzer (and his spouse and eligible dependents) shall be entitled
to continue to participate in Centerline’s medical, dental and vision plans on
the same terms and conditions as active executives of Centerline for the period
extending from the Effective Date until the date which is ten (10) years from
the Effective Date and Centerline shall pay the full cost of coverage; provided,
however, if such continued participation is not permitted under the terms of the
plans, Centerline shall use all commercially reasonable efforts to (i) assist
Mr. Schnitzer (and his spouse and dependents) in obtaining coverage that is
reasonably comparable to Centerline’s active employee coverage in terms of both
cost to Mr. Schnitzer and range of benefits and health care providers offered,
and (ii) ensure that all pre-existing condition exclusions and actively at work
requirements are waived in connection with such coverage, and shall pay for such
new coverage.  Mr. Schnitzer’s right to coverage pursuant to this Section 2(d)
shall lapse if Mr. Schnitzer becomes a participant  in a comparable medical,
dental and vision plan offered by a subsequent employer.
 
 
 
 
 
 

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(e)           As a condition to receiving the Separation Benefits, Mr. Schnitzer
agrees to execute and deliver the release attached hereto as Exhibit E (the
“Release”).  If Mr. Schnitzer revokes the Release, he will not be eligible to
receive the Separation Benefits.

(f)           Mr. Schnitzer shall promptly, but no later than thirty (30) days
after the Effective Date, submit to Centerline all amounts which may be due him
from Centerline as reimbursable expenses for payment in accordance with
Centerline’s expense reimbursement policy, but no later than thirty (30) days
after submission.

3.           Resignations.  On the Effective Date, Mr. Schnitzer shall resign as
a trustee, director, and officer of the entities set forth on Schedule A to his
resignation letter, the form of which is attached hereto as Exhibit A.  Mr.
Schnitzer also shall resign as a trustee and officer of American Mortgage
Acceptance Company, pursuant to a resignation letter attached hereto as part of
Exhibit A.  Mr. Schnitzer shall sign the resignation letter to carry out the
effect of the foregoing within five (5) days of delivery of same (such delivery
to be deemed to occur in accordance with the notice delivery provisions set
forth in Section 17 hereof).   In the event that it becomes evident to
Centerline at any time after the Effective Date that there are additional
Company Group entities that are subsidiaries of Centerline in which Mr.
Schnitzer holds a position as trustee, director or officer, Centerline will so
notify Mr. Schnitzer in writing and request his written resignation within five
(5) business days of delivery of such written notice.  In the event Mr.
Schnitzer does not respond within such five-day period, Mr. Schnitzer agrees
that the Attorney-in-Fact (as defined below) may execute any such resignation
letter on his behalf in accordance with Section 8 hereof.  This section shall
not apply to any voting rights Mr. Schnitzer has by virtue of his position as a
member of any entity, which rights shall be governed by Section 4 hereof.

4.           Schnitzer Interests. On the Effective Date, Mr. Schnitzer shall
withdraw as a member of and transfer his interest in the following entities to
the other members/shareholders of such entities: (i) Centerline GP Holdings
LLC  (ii) Centerline GP Dispositions LLC.  and (iii) 111 Pine Avenue Court
Corp.  In connection with such withdrawal and transfer Mr. Schnitzer shall
execute and deliver those documents and instruments attached hereto as Exhibits
B, C and D.  Centerline shall indemnify and hold Mr. Schnitzer harmless from any
and all claims by third parties (including all costs and expenses) arising out
of or relating to these interests, except claims arising from his fraud, gross
negligence or willful wrongdoing.
 
 
 
 
 
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5.           Business Materials.  All written materials, records and documents
made by Mr. Schnitzer or coming into his possession concerning the business or
affairs of the Company Group shall be the sole property of Centerline and Mr.
Schnitzer shall return the same to Centerline and shall retain no copies in any
form or media, except as expressly permitted by Centerline; provided, however,
it is understood that Mr. Schnitzer shall be entitled to retain all personal
files.  Except as provided in Section 6, Mr. Schnitzer shall also return to
Centerline on the Effective Date all other property in his possession owned by
Centerline, including but not limited to his office keys and access card.
 
 
6.           Office Equipment.  From and after the Effective Date, Centerline
shall not pay for Mr. Schnitzer’s cellular telephone, Blackberry devise or any
other wireless services; provided, however, Mr. Schnitzer shall, subject to
Section 5 above, be entitled to retain his Blackberry device and telephone
number.  Mr Schnitzer shall be entitled to retain the computer equipment
provided to him by Centerline, subject to a review of the files contained on
such computer equipment so that any files or other materials which Centerline,
in its sole discretion, determines that Mr. Schnitzer should not be allowed to
retain pursuant to Section 5 above may be permanently deleted.  Mr. Schnitzer
shall also be entitled to remove and take with him three (3) framed prints in
his current office, which are his personal property, and a black Barcelona chair
in his current office, which is the property of Centerline.
 

7.           Cooperation.

(a)           Mr. Schnitzer agrees that he will cooperate in providing the
Company Group with information and other assistance relating to the Company
Group’s businesses conducted prior to the Effective Date, and that he will be
reasonably available during business hours to provide such cooperation.

(b)           Mr. Schnitzer  agrees that he will assist and cooperate with the
Company Group in connection with the defense or prosecution of any claim that
may be made against or by the Company Group, or in connection with any ongoing
or future investigation or dispute or claim of any kind involving the Company
Group, including any proceeding before any arbitral, administrative, judicial,
legislative, or other body or agency, including testifying in any proceeding to
the extent such claims, investigations or proceedings are related to knowledge
possessed by him, or any act or omission by him.  Centerline shall reimburse Mr.
Schnitzer for all reasonable expenses actually incurred in connection with his
provision of testimony or assistance.
(c)           Mr. Schnitzer agrees promptly to perform such acts and deeds, and
to execute and deliver such conveyances, assignments, proxies, consents,
agreements, instruments, HUD 2530 forms or letters of resignation, as the
Company Group may at any time reasonably request in writing in connection with
the implementation of this Agreement or in order to better assure and confirm
unto the parties hereto their respective rights, powers and remedies hereunder,
or in connection with the management transition resulting from his resignation,
including, but not limited to the execution of any documents reasonably
requested by any lender, partner or affiliate of the Company Group (the
“Documentation”).
 
 
 
 
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(d)           Centerline shall cooperate in providing Mr. Schnitzer with such
information regarding the Company Group entities in which Mr. Schnitzer owns an
interest as such entities are required to provide to similarly situated interest
holders.  Mr. Schnitzer, at his sole expense, shall have the right to inspect
and copy the books and records of such entities to the same extent such entities
are required to provide such rights to similarly situated interest holders
entities during normal business hours upon reasonable written notice, provided
that such inspection and copying does not interfere with the normal business
operations of Centerline or the applicable Company Group entity; and provided
further that such inspection and copying is for a purpose reasonably related to
his interest as a partner, member or shareholder of the applicable entity.  Mr.
Schnitzer shall have the right to audit the books and records of Company Group
entities in which he owns an interest, at his sole expense, during normal
business hours upon reasonable written notice, provided that such audit does not
interfere with the normal business operations of Centerline or the applicable
Company Group entity.

(e)           Unless Centerline in good faith determines for a particular matter
that cooperation or assistance with Mr. Schnitzer would be inconsistent with its
obligations to its shareholders or other fiduciary duties, Centerline will
assist and cooperate with Mr. Schnitzer in connection with the defense of any
claim that may be brought against him, or in connection with any investigation
or dispute or claim of any kind involving his work for Centerline and/or its
affiliates, including any proceeding before any arbitral, administrative,
judicial, legislative, or other body or agency, including, without limitation,
providing Mr. Schnitzer with access to relevant non-privileged documents in the
possession of Centerline.  Under no circumstances shall such cooperation or
assistance require Centerline and/or any of its affiliates to disclose any
privileged communication.

(f)           The parties shall agree on the wording of the public announcement
of Mr. Schnitzer’s retirement from Centerline in advance of such announcement;
provided, however, that the Company Group shall not be required to obtain Mr.
Schnitzer’s consent to disclose information that the Company Group is required
to disclose by law in the opinion of the Company Group’s counsel.

8.           Power of Attorney.  If, for any reason or no reason, Mr. Schnitzer
shall fail to execute any Documentation (exclusive of any Federal, state or
local filings) within five (5) business days following delivery of a written
request therefor, Mr. Schnitzer hereby makes and appoints the General Counsel of
Centerline, as his attorney-in-fact (“Attorney-in-Fact”) to act in his name,
place and stead for the purpose of making, executing and delivering the
Documentation (exclusive of any Federal, state or local filings), and, without
limiting the foregoing, for the purpose of making, executing and delivering all
documents and doing such lawful things which the Attorney-in-Fact deems
necessary to (i) effect the resignation of Mr. Schnitzer as a trustee, director
or officer of any entity related to the Company Group; (ii) execute and deliver
consents pursuant to Sections 4 and 7(c) hereof; and (iii) take any further
ministerial actions as may be necessary to effect the foregoing.  This power is
coupled with an interest, is irrevocable, and all powers conferred upon the
Attorney-in-Fact herein above shall remain at all times in full force and
effect, notwithstanding Mr. Schnitzer’s incapacity, disability, death, or any
uncertainty with regard thereto.  Mr. Schnitzer hereby consents and agrees that
any third party shall be entitled to accept the provisions hereof as conclusive
evidence of the right of the Attorney-in-Fact to execute and deliver the
Documentation and to effect any other action pursuant to the provisions hereof,
notwithstanding any other notice or direction to the contrary heretofore or
hereafter given by or on behalf of Mr. Schnitzer.  Upon exercise of this power
of attorney, the Attorney-in-Fact will deliver written notice to Mr. Schnitzer,
including a copy of the executed Documentation.
 
 
 
 
 
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9.           Covenant Not to Disclose.  Mr. Schnitzer acknowledges and agrees
that, by virtue of the performance of the normal duties of his position with
Centerline and by virtue of the relationship of trust and confidence between Mr.
Schnitzer and Centerline, Centerline has permitted Mr. Schnitzer to have access
to and Mr. Schnitzer has become familiar with, acquired knowledge of and
developed or maintained the Company Group’s Confidential Information (as defined
below), which Mr. Schnitzer recognizes permits the Company Group to enjoy a
competitive advantage and the premature disclosure of which would irreparably
injure the Company Group.  Mr. Schnitzer covenants and agrees that he will not,
at any time, directly or indirectly use, disclose (in any manner, including
transmitting via or posting on the Internet), reproduce, distribute, reverse
engineer or otherwise provide, in whole or in part, to or on behalf of any
person (other than the Company Group) or use for his own account, any data or
knowledge of operations of the Company Group which are proprietary in nature
and/or confidential, whether in writing, in computer or other form or conveyed
orally, including but not limited to confidential or proprietary records, data,
trade secrets, pricing policies, bid amounts, bid strategies, rate structures,
personnel policies, methods or practices of obtaining or doing business by the
Company Group, or any other confidential or proprietary information whatsoever
(the “Confidential Information”), whether or not obtained with the knowledge and
permission of Centerline and whether or not developed, devised or otherwise
created in whole or in part by the efforts of Mr. Schnitzer; provided, however,
that Confidential Information shall not be deemed to include any information
that (i) is or hereafter becomes generally available to the public other than
through disclosure by Mr. Schnitzer, or (ii) is rightfully received by Mr.
Schnitzer following the Effective Date from a third party who Mr. Schnitzer has
no reason to believe is under a confidentiality agreement with Centerline.  Mr.
Schnitzer further covenants and agrees that he shall retain all such knowledge
and information which he has acquired or developed respecting such Confidential
Information in trust for the sole benefit of the Company Group and its
successors and assigns.  Mr. Schnitzer shall not, without the prior written
consent of Centerline, unless compelled pursuant to the order of a court or
other governmental or legal body having jurisdiction over such matter,
communicate or divulge any such Confidential Information to anyone other than
Centerline and those designated by it.  In the event Mr. Schnitzer is compelled
by order of a court or other governmental or legal body to communicate or
divulge any Confidential Information to anyone other than Centerline and those
designated by it, Mr. Schnitzer shall promptly notify Centerline of any such
order and shall cooperate fully with Centerline (and the owner of such
Confidential Information) in protecting such information to the extent possible
under applicable law; provided, that such Confidential Information may be
disclosed if Mr. Schnitzer is advised by counsel that failure to disclose would
subject him to risk of penalty or fine.  Anything contained in this Section 9 to
the contrary notwithstanding, nothing herein shall prohibit Mr. Schnitzer from
(A) discussing any matters with his attorney for the purposes of seeking legal
advice, provided that Mr. Schnitzer notifies his attorney of his obligation
under this Section 9 or (B) using Confidential Information in connection with
(i) his raising capital for affordable housing investments for an affiliate of
Island Capital Group, provided such use is consistent with the terms of the
Management Agreement between Centerline and Island Capital Manager LLC or (ii)
his direct representation of the Company Group with respect to the capital
raises for affordable housing investments.
 
 
 
 
 
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10.           Non-Interference Covenant.  To protect Centerline’s legitimate
business interests, including Centerline’s Confidential Information and business
relationships, Mr. Schnitzer covenants and agrees that he will not, for a period
of one (1) year subsequent to the Effective Date, directly or indirectly, for
whatever reason, whether for his own account or for the account of any other
person, firm, company or other organization:  (i) solicit for employment, hire,
assist others to solicit for employment or hire , or otherwise deal with in a
manner which interferes with the Company Group’s relationship with any person or
entity who is (A) at the time of such action an employee, officer or director of
the Company Group or who constitutes a bona fide prospective employee, officer,
trustee or director of the Company Group or (B) at any time during the six (6)
month period preceding such action was an employee, officer or director of the
Company Group, if such action is taken with respect to a business that competes
with the Company Group; provided, however, Mr. Schnitzer will not be deemed to
be in violation of this clause (i) if an employee of the Company Group is hired
by Mr. Schnitzer’s future employers, including, but not limited to Island
Capital Group,  provided that Mr. Schnitzer either obtained the prior written
consent of Centerline to take such action or did not otherwise violate this
provision, (ii) interfere in any manner with any of the Company Group's
contracts or relationships with any investor, customer, client or supplier (of
services or tangible or intangible property) of the Company Group, or any person
or entity who is a bona fide prospective, investor customer, client or supplier
of the Company Group; (iii) interfere with any existing or proposed contract or
relationship between the Company Group and any other party or (iv) speak or
write in any manner which is disparaging of the Company Group, its business
practices, employees, officers, trustees or directors; provided that nothing in
this Section 10 shall preclude Mr. Schnitzer to make any disclosures required by
applicable law, regulation or legal process.  Similarly, no officer or director
of the Company Group shall speak or write in any manner that is disparaging of
Mr. Schnitzer.

11.           Remedies.  It is expressly understood, acknowledged and agreed by
the Mr. Schnitzer that (i) the restrictions contained in Sections 3, 4, 7, 9 and
10  of this Agreement represent a reasonable and necessary protection of the
legitimate interests of Centerline and that his failure to observe and comply
with his covenants and agreements in Sections 3, 4, 7, 9 or 10  will cause
irreparable harm to Centerline; (ii) it is and will continue to be difficult to
ascertain the nature, scope and extent of the harm; and (iii) a remedy at law
for such failure by Mr. Schnitzer will be inadequate.  Accordingly, it is the
intention of the parties that, in addition to any other rights and remedies
which Centerline may have in the event of any breach of said Sections,
Centerline shall be entitled, and is expressly and irrevocably authorized by Mr.
Schnitzer, to demand and obtain specific performance, including without
limitation temporary and permanent injunctive relief, and all other appropriate
equitable relief against Mr. Schnitzer in order to enforce against Mr.
Schnitzer, or in order to prevent any breach or any threatened breach by Mr.
Schnitzer, of the covenants and agreements contained in those Sections in any
court of competent jurisdiction without the need to post any bond or
undertaking.  Any action, suit or other legal proceeding to resolve any matter
arising as a result of a breach of the restrictions contained in Sections 3, 4,
7, 9 or 10, may be commenced in any court of competent jurisdiction and the
parties hereby consent to the jurisdiction of such a court.  The parties hereto
unconditionally waive their respective right to demand a jury trial in any
dispute relating to this Agreement.
 
 
 
 
 
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12.           Indemnification.  Notwithstanding anything contained in the
Release or this Agreement, Centerline shall indemnify Mr. Schnitzer, defend and
hold him harmless and provide him with the advancement of expenses arising in
connection with his employment to the full extent that it does or is required to
do so with respect to all other officers and directors of the Company Group,
whether by operation of law or pursuant to the Company Group’s governing
instruments.  Centerline shall continue to maintain for a period of six (6)
years from March 5, 2010 a tail director and officers’ insurance policy covering
Mr. Schnitzer on the same basis as all other officers and directors as of such
date.

13.           Governing Law.  This Agreement shall be governed by the laws of
the State of New York without regard to the conflicts of principles thereof.

14.           Amendment and Modification.  This Agreement may be modified,
amended or supplemented only by an instrument in writing signed by all of the
parties hereto.

15.           Waiver of Compliance.  Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent other
failure.

16.           Severability.  The invalidity or unenforceability of any provision
of this Agreement in any such jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction, or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.  Upon such determination that any provision is
invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to affect the original
intentions of the parties as closely as possible in an acceptable manner to the
end that the transactions contemplated hereby and thereby are fulfilled to the
extent possible.

17.           Notices.  All notices, Documents and other communications given or
made pursuant hereto shall be in writing and delivered by hand or sent by
registered or certified mail (postage prepaid, return receipt requested),
facsimile or by nationally recognized overnight air courier service and shall be
deemed to have been duly given or made as of the date delivered if delivered
personally or by facsimile, or if mailed, on the third business day after
mailing (on the first business day after mailing in the case of a nationally
recognized overnight air courier service) to the parties at the following
addresses:

If to Mr. Schnitzer:
 
Marc D. Schnitzer
21 Hampton Road
Scarsdale, NY 10583
 

 
 
 
 
 
 
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with a copy to:
 
Paul, Hastings, Janofsky & Walker LLP
75 East 55th Street
New York, New York 10022
Attention:  Alan S. Cohen, Esq.
   
If to Centerline:
 
Centerline Holding Company
625 Madison Avenue
New York, New York 10022
Attention:  General Counsel
 
with a copy to
 
Paul, Hastings, Janofsky & Walker LLP
75 East 55th Street
New York, New York 10022
Attention:  Michael Zuppone, Esq.

18.           Entire Agreement.  This Agreement and the Employment Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, supersedes all prior agreements and undertakings, both
written and oral, and may not be modified in any way except in writing by the
parties hereto.

19.           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

20.           Tax withholding. Any compensation or benefits payable under this
Agreement shall be subject to applicable federal, state and local withholding
taxes.  Mr. Schnitzer agrees that (i) he shall bear sole responsibility for
payment of any federal, state or local income or other taxes or related
penalties associated with his receipt of any amounts pursuant to this Agreement
and (ii) Centerline shall have no obligation to mitigate or hold Mr. Schnitzer
harmless from any such tax obligations.

[The next page is the signature page]
 
 
 
 
 
 
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IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this
Agreement as of the date set forth below:

/s/ Marc D. Schnitzer
Marc D. Schnitzer
 
Date:
April 21, 2010
   
CENTERLINE HOLDING COMPANY
   
By:
/s/ Robert Levy
 
Robert Levy
 
Chief Operating Officer
   
Date:
April 21, 2010
   
CENTERLINE CAPITAL GROUP INC.
   
By:
/s/ Robert Levy
 
Robert Levy
 
Chief Operating Officer
 
Date:
April 21, 2010

 
 
 
 
 
 
 
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