Exhibit 10.7

CITY OFFICE REIT, INC.

EQUITY INCENTIVE PLAN

1. Purpose. This Plan is intended (a) to provide incentives to key personnel,
employees, officers, directors, advisors, consultants and other individuals
expected to provide significant services to the Company and its subsidiaries,
including the personnel, employees, officers and directors of the Participating
Companies, and (b) to encourage a proprietary interest in the Company thereby
aligning the interests of Company service providers with the interests of the
Company’s stockholders.

The Plan permits awards of equity-based incentives to key personnel, employees,
officers and directors of, and certain other providers of services to, the
Company, either directly or through a Participating Company.

2. Definitions. As used in this Plan, the following definitions apply:

(a) “Act” shall mean the Securities Act of 1933, as amended.

(b) “Advisor” shall mean City Office Real Estate Management, Inc. the Company’s
advisor.

(c) “Agreement” shall mean a written agreement entered into between the Company
and a Grantee pursuant to the Plan.

(d) “Board” shall mean the Board of Directors of the Company.

(e) “Cause” shall mean, unless otherwise provided in the Grantee’s 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, the Subsidiaries, the Advisor
or any of their respective affiliates, (iii) the Grantee’s conviction of, or
plea of nolo contendere to, a felony or a crime of moral turpitude, or any crime
involving the Company, the Subsidiaries, the Advisor or any of their respective
affiliates, (iv) fraud, misappropriation, embezzlement or material or repeated
insubordination, (v) a material breach of the Grantee’s employment agreement (if
any) with the Company, the Subsidiaries, the Advisor or any of their respective
affiliates (other than a termination of employment by the Grantee), or (vi) any
illegal act detrimental to the Company, the Subsidiaries, the Advisor or any of
their respective affiliates, all as determined by the Committee.

(f) “Code” shall mean the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.

(g) “Committee” shall mean the Compensation Committee of the Company as
appointed by the Board in accordance with Section 4 of the Plan; provided,
however, that the Committee shall at all times consist solely of persons who, at
the time of their appointment, are qualified as a “Non-Employee Director” under
Rule 16b-3(b)(3)(i) promulgated under the Exchange Act and, to the extent that
relief from the limitation of Section 162(m) of the Code is sought, as an
“Outside Director” under Section 1.162-27(e)(3)(i) of the Treasury Regulations.

 

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(h) “Common Stock” shall mean the Company’s common stock, par value $0.01 per
share, either currently existing or authorized hereafter.

(i) “Company” shall mean City Office REIT, Inc., a Maryland corporation.

(j) “DER” shall mean a right awarded under Section 12 of the Plan to receive (or
have credited) the equivalent value (in cash or Shares) of dividends paid on
Common Stock.

(k) “Disability” shall mean, unless otherwise provided by the Committee in the
Grantee’s Agreement, the occurrence of an event which would entitle the Grantee
to the payment of disability income under one of the Company’s approved
long-term disability income plan or a long-term disability as determined by the
Committee in its absolute discretion pursuant to any other standard as may be
adopted by the Committee. Notwithstanding the foregoing, no circumstances or
condition shall constitute a Disability to the extent that, if it were, an
excise tax would be imposed under Section 409A of the Code.

(l) “Eligible Persons” shall mean officers, directors, advisors, personnel and
employees of the Participating Companies, but only to the extent Shares to be
issued hereunder to any such potential Eligible Person is eligible for
registration under a United States Securities and Exchange Commission Form S-8.

(m) “Employee” shall mean an individual, including an officer of a Participating
Company, who is employed by the Participating Company.

(n) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(o) “Exercise Price” shall mean the price per Share of Common Stock, determined
by the Board or the Committee, at which an Option may be exercised.

(p) “Fair Market Value” shall mean the value of one share of Common Stock,
determined as follows:

(i) If the 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 the 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.

(iii) If neither (i) nor (ii) applies, such value as the Committee in its
discretion may in good faith determine. Notwithstanding the foregoing, where the
Shares are listed or traded, the Committee may make discretionary determinations
in good faith where the Shares have not been traded for 10 trading days.

 

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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 determined in accordance with Treasury
Regulation 1.409A-1(b)(5)(iv).

(q) “Grant” shall mean the issuance of an Incentive Stock Option, Nonqualified
Stock Option, Restricted Stock, Restricted Stock Units, Phantom Share, DER, or
other equity-based grant as contemplated herein or any combination thereof as
applicable to an Eligible Person.

(r) “Grantee” shall mean an Eligible Person to whom Options, Restricted Stock,
Restricted Stock Units, Phantom Shares, DERs or other equity-based awards are
granted hereunder.

(s) “Incentive Stock Option” shall mean an Option of the type described in
Section 422(b) of the Code issued to an Employee of (i) the Company, or (ii) a
“subsidiary corporation” or a “parent corporation” as defined in Section 424(f)
of the Code.

(t) “LTIP Unit” means an LTIP Unit as set forth in the Amended and Restated
Agreement of Limited Partnership of City Office REIT Operating Partnership, L.P.

(u) “Nonqualified Stock Option” shall mean an Option not described in
Section 422(b) of the Code.

(v) “Option” shall mean any option, whether an Incentive Stock Option or a
Nonqualified Stock Option, 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 Agreement, a number of Shares
determined by the Committee.

(w) “Optionee” shall mean any Eligible Person to whom an Option is granted, or
the Successors of the Optionee, as the context so requires.

(x) “Participating Companies” shall mean the Company, the Subsidiaries, the
Advisor and any of their respective affiliates, which, with the consent of the
Board participates in the Plan.

(y) “Phantom Share” shall mean a right, pursuant to the Plan, of the Grantee to
payment of the Phantom Share Value.

(z) “Phantom Share Value,” per Phantom Share, shall mean the Fair Market Value
of a Share 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.

(aa) “Plan” shall mean this Equity Incentive Plan, as the same may from time to
time be amended.

(bb) “Purchase Price” shall mean the Exercise Price times the number of Shares
with respect to which an Option is exercised.

 

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(cc) “Restricted Stock” shall mean an award of Shares that are subject to
restrictions hereunder.

(dd) “Restricted Stock Unit” shall mean a bookkeeping entry representing an
amount equal to the Fair Market Value of one Share, granted pursuant to
Section 10. Each Restricted Stock Unit represents an unfunded and unsecured
obligation of the Company.

(ee) “Shares” shall mean shares of Common Stock, as adjusted in accordance with
Section 16 of the Plan (if applicable).

(ff) “Subsidiary” shall mean any corporation, partnership, limited liability
company or other entity at least 50% of the economic interest in the equity of
which is owned, directly or indirectly, by the Company or by another subsidiary.

(gg) “Successors of the Optionee” shall mean 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 upon the death of the
Optionee.

(hh) “Termination of Service” shall mean the time when the employee-employer
relationship or directorship, or other service relationship, between the Grantee
and the Participating Companies is terminated for any reason, with or without
Cause, including, but not limited to, any termination by resignation, discharge,
death or Disability; provided, however, Termination of Service shall not include
a termination where there is a simultaneous continuation of service by the
Grantee for a different Participating Company. For this purpose, the service
relationship shall be treated as continuing intact while the Grantee is on
military leave, sick leave or other bona fide leave of absence (to be determined
in the discretion of the Committee). Notwithstanding the foregoing, with respect
to any Grant that is subject to Section 409A of the Code, Termination of Service
shall be interpreted to mean a “separation from service” within the meaning of
Section 409A of the Code and Treasury Regulation 1.409A-1(h).

3. Effective Date. The effective date of the Plan is April 14, 2014.

4. Administration.

(a) Membership on Committee. The Plan shall be administered by the Committee
appointed by the Board. If no Committee is designated by the Board to act for
those purposes, the full Board shall have the rights and responsibilities of the
Committee hereunder and under the Agreements.

(b) Grant of Awards.

(i) The Committee shall from time to time at its discretion select the Eligible
Persons who are to be issued Grants and determine the number and type of Grants
to be issued under any Agreement to an Eligible Person. In particular, the
Committee shall (A) determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Grants awarded hereunder (including, but not
limited to, the performance goals and periods applicable to the award of Grants
and whether Grants cover Common Stock or LTIP Units); (B) determine the time or
times when and the manner and condition in which each Option shall be
exercisable

 

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and the duration of the exercise period; and (C) determine or impose other
conditions to the Grant or exercise of Options under the Plan as it may deem
appropriate. The Committee may establish such rules, regulations and procedures
for the administration of the Plan as it deems appropriate (including, without
limitation, establishing rules, regulations and procedures or creation of a
sub-plan for the purpose of satisfying applicable foreign laws, for qualifying
for favorable tax treatment under applicable foreign laws or facilitating
compliances with foreign laws), determine the extent, if any, to which Options,
Phantom Shares, Shares (whether or not Shares of Restricted Stock), Restricted
Stock Units, DERs or other equity-based awards shall be forfeited (whether or
not such forfeiture is expressly contemplated hereunder), and 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. The Committee shall also cause each Option to be
designated as an Incentive Stock Option or a Nonqualified Stock Option, except
that no Incentive Stock Options may be granted to an Eligible Person who is not
an Employee of the Company or a “subsidiary corporation” or a “parent
corporation” as defined in Section 424(f) of the Code. The Grantee 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 Grantee pursuant to the express provisions of the Plan and the Agreement.
DERs will be exercisable separately or together with Options, and paid in cash
or other consideration at such times and in accordance with such rules, as the
Committee shall determine in its discretion. Unless expressly provided
hereunder, the Committee, with respect to any Grant, may exercise its discretion
hereunder at the time of the award or thereafter. The Committee shall have the
right and responsibility to interpret the Plan, and make all decisions necessary
under the Plan, and the interpretation and construction by the Committee of any
provision of the Plan or of any Grant thereunder, or any decision made by the
Committee with respect to the Plan or Grants, including, without limitation, in
the event of a dispute, shall be final and binding on all Grantees and other
persons to the maximum extent permitted by law. Without limiting the generality
of Section 24, no member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Grant
hereunder.

(ii) Notwithstanding clause (i) of this Section 4(c), any award under the Plan
to an Eligible Person who is a member of the Committee shall be made by the full
Board, but for these purposes the directors of the Corporation who are on the
Committee shall be required to be recused in respect of such awards and shall
not be permitted to vote.

(c) Awards.

(i) Agreements. Grants to Eligible Persons shall be evidenced by written
Agreements in such form as the Committee shall from time to time determine. Such
Agreements shall comply with and be subject to the terms and conditions set
forth below.

(ii) Number of Shares. Each Grant issued to an Eligible Person shall state the
number of Shares to which it pertains or which otherwise underlie the Grant and
shall provide for the adjustment thereof in accordance with the provisions of
Section 16 hereof.

 

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5. Participation.

(a) Eligibility. Only Eligible Persons shall be eligible to receive Grants under
the Plan.

(b) Limitation of Ownership. No Grants shall be issued under the Plan to any
person who after such Grant (including settlement or exercise thereof) would
beneficially own more than 9.8% by value or number of shares, whichever is more
restrictive, of the outstanding shares of Common Stock of the Company, or 9.8%
by value or number of shares, whichever is more restrictive, of the outstanding
capital stock of the Company, unless the foregoing restriction is expressly and
specifically waived by action of the independent directors of the Board.

(c) Stock Ownership. For purposes of Section 5(b) above, in determining stock
ownership a Grantee shall be considered as owning the stock owned, directly or
indirectly, by or for his brothers, sisters, spouses, ancestors and lineal
descendants. Stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be considered as being owned proportionately
by or for its stockholders, partners or beneficiaries. Stock with respect to
which any person holds an Option shall be considered to be owned by such person.
Ownership of LTIP Units shall be treated as ownership of shares of Common Stock
on a 1-for-1 basis.

6. Stock. Subject to adjustments pursuant to Section 16, Grants with respect to
an aggregate of no more than 1,263,580 Shares may be granted under the Plan (all
of which may be issued as Options). Subject to adjustments pursuant to
Section 16, in the case of Grants intended to qualify for relief from the
limitations of Section 162(m) of the Code, (i) the maximum number of Shares with
respect to which any Options may be granted in any one year to any Grantee shall
not exceed 150,000, and (ii) the maximum number of Shares that may underlie
Grants, other than Grants of Options, in any one year to any Grantee shall not
exceed 150,000. Notwithstanding the first sentence of this Section 6, (i) Shares
that have been granted as Restricted Stock or that have been reserved for
distribution in payment for Options, Restricted Stock Units or Phantom Shares
but are later forfeited or for any other reason are not payable under the Plan;
and (ii) Shares as to which an Option is granted under the Plan that remains
unexercised at the expiration, forfeiture or other termination of such Option,
may be the subject of the issue of further Grants. Shares of Common Stock issued
hereunder may consist, in whole or in part, of authorized and unissued shares,
or treasury shares. The certificates for Shares issued hereunder may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer hereunder or under the Agreement, or as the Committee may otherwise
deem appropriate. For the avoidance of doubt, Shares subject to DERs shall be
subject to the limitation of this Section 6. Notwithstanding the limitations
above in this Section 6, except in the case of Grants intended to qualify for
relief from the limitations of Section 162(m) of the Code, there shall be no
limit on the number of Phantom Shares or DERs to the extent they are paid out in
cash that may be granted under the Plan. If any Phantom Shares or DERs are paid
out in cash, the underlying Shares may again be made the subject of Grants under
the Plan, notwithstanding the first sentence of this Section 6. A Grant of LTIP
Units under Section 13 hereof shall be treated for purposes of the limits in
this Section 6 as a Grant covering Shares on a 1 Share for 1 LTIP Unit basis.

 

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7. Terms and Conditions of Options.

(a) Exercise Price. Each Agreement with an Eligible Person shall state the
Exercise Price. The Exercise Price for any Option shall not be less than the
Fair Market Value on the date of Grant.

(b) Medium and Time of Payment. Except as may otherwise be provided below, the
Purchase Price for each Option granted to an Eligible Person shall be payable in
full in United States dollars upon the exercise of the Option. In the event the
Company determines that it is required to withhold taxes as a result of the
exercise of an Option, as a condition to the exercise thereof, an Employee may
be required to make arrangements satisfactory to the Company to enable it to
satisfy such withholding requirements in accordance with Section 21. If the
applicable Agreement so provides, or the Committee otherwise so permits, the
Purchase Price may be paid in one or a combination of the following:

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

(ii) by the surrender of Shares in good form for transfer, owned by the person
exercising the Option and having a Fair Market Value on the date of exercise
equal to the Purchase Price, or in any combination of cash and Shares, as long
as the sum of the cash so paid and the Fair Market Value of the Shares so
surrendered equals the Purchase Price and provided that accepting such Shares
will not result in any adverse accounting consequences to the Company as
determined by the Committee in its sole discretion;

(iii) by cancellation of indebtedness owed by the Company to the Grantee;

(iv) subject to Section 18(e), by a loan or extension of credit from the Company
evidenced by a full recourse promissory note executed by the Grantee. The
interest rate and other terms and conditions of such note shall be determined by
the Committee (in which case the Committee may require that the Grantee pledge
his or her Shares to the Company for the purpose of securing the payment of such
note, and in no event shall the certificate(s) representing such Shares be
released to the Grantee until such note shall have been paid in full); or

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

Except in the case of Options exercised by certified or bank cashier’s check,
the Committee may impose such 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. Any fractional
shares of Common Stock resulting from a Grantee’s election that are accepted by
the Company shall in the discretion of the Committee be paid in cash.

 

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(c) Term and Nontransferability of Grants and Options.

(i) Each Agreement reflecting the Grant of an Option shall state the time or
times which all or part of the Option becomes exercisable, subject to the
restrictions set forth in this subsection (c).

(ii) No Option shall be exercisable except by the Grantee or a transferee
permitted hereunder.

(iii) No Option shall be assignable or transferable, except by will or the laws
of descent and distribution of the state wherein the Grantee 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
is otherwise appropriate and desirable.

(iv) No Option shall be exercisable until such time as set forth in the
applicable Agreement (but in no event after the expiration of such Grant).

(v) No Option may be exercised more than 10 years after the date the Option was
granted.

(vi) No modification of an Option shall, without the consent of the Optionee,
alter or impair any rights or obligations under any Option previously granted.

(d) Termination of Service, Other Than by Death or Disability. Unless otherwise
provided in the applicable Agreement, upon any Termination of Service for any
reason other than his or her death or Disability, an Optionee shall have the
right, subject to the restrictions of Section 4(c) above, to exercise his or her
Option at any time within three months after Termination of Service, but only to
the extent that, at the date of Termination of Service, the Optionee’s right to
exercise such Option had vested pursuant to the terms of the applicable
Agreement and had not previously been exercised; provided, however, that, unless
otherwise provided in the applicable Agreement, if there occurs a Termination of
Service by a Participating Company for Cause, any Option not exercised in full
prior to such termination shall be canceled.

(e) Death of Optionee. Unless otherwise provided in the applicable Agreement, if
an Optionee dies while an Eligible Person and has not fully exercised the
Option, then the Option may be exercised in full, subject to the restrictions of
Section 4(c) above, at any time within 12 months after the Optionee’s death, by
the Successor of the Optionee, but only to the extent that, at the date of
death, the Optionee’s right to exercise such Option had vested and had not been
forfeited pursuant to the terms of the Agreement and had not previously been
exercised.

(f) Disability of Optionee. Unless otherwise provided in the Agreement, upon any
Termination of Service for reason of his or her Disability, an Optionee shall
have the right, subject to the restrictions of Section 4(c) above, to exercise
the Option at any time within 12 months after Termination of Service, but only
to the extent that, at the date of Termination of Service, the Optionee’s right
to exercise such Option had accrued pursuant to the terms of the applicable
Agreement and had not previously been exercised.

 

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(g) Rights as an Owner. An Optionee, a Successor of the Optionee, or the holder
of a DER shall have no rights as the owner of the Shares covered thereby
(including rights as a stockholder, if applicable) until, in the case of an
Optionee, the date of the issuance of a certificate for such Shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property), distributions or other rights for which the
record date is prior to the date such certificate is issued, except as provided
in Section 16.

(h) 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 Shares, cash or a combination thereof, in the
discretion of the Committee, 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 Purchase Price, as determined as of the day the Option is exercised.

(i) Deferral. 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 Optionees will have Phantom Shares
subject to Section 10 credited upon their exercise of Options, rather than
receiving Shares at that time.

(j) Other Provisions. The Agreement authorized under the Plan may contain such
other provisions not inconsistent with the terms of the Plan (including, without
limitation, restrictions upon the exercise of the Option) as the Committee shall
deem advisable. Notwithstanding any provision herein to the contrary, in no
event may the Company provide any payment, cash or otherwise, to cancel or
replace an Option with an Exercise Price greater than then Fair Market Value
without first obtaining stockholder approval.

8. Special Rules for Incentive Stock Options.

(a) Each Option will be designated in the Award Agreement as either an Incentive
Stock Option or a Nonqualified Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first time
by the Participant during any calendar year (under all plans of the Company and
any parent corporation or Subsidiary) exceeds one hundred thousand dollars
($100,000), such Options will be treated as Nonqualified Stock Options. For
purposes of this Section 8(a), Incentive Stock Options will be taken into
account in the order in which they were granted. The Fair Market Value of the
Shares will be determined as of the time the Option with respect to such Shares
is granted.

(b) In the case of an individual described in Section 422(b)(6) of the Code
(relating to certain 10% owners), the Exercise Price with respect to an
Incentive Stock Option shall not be less than 110% of the Fair Market Value of a
Share on the day the Option is granted and the term of an Incentive Stock Option
shall be no more than five years from the date of grant.

 

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(c) If Shares acquired upon exercise of an Incentive Stock Option are disposed
of in a disqualifying disposition within the meaning of Section 422 of the Code,
such Optionee shall notify the Company in writing as soon as practicable
thereafter of the date and terms of such disposition and, if the Company
thereupon has a tax-withholding obligation, shall pay to the Company an amount
equal to any withholding tax the Company is required to pay as a result of the
disqualifying disposition.

9. Provisions applicable to Restricted Stock.

(a) Vesting Periods. In connection with the grant of Restricted Stock, whether
or not Performance Goals 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 9, the applicable 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) Grant of Restricted Stock. Subject to the other terms of the Plan, the
Committee may, in its discretion as reflected by the terms of the applicable
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 to the grant of Restricted Stock under
the Plan as it may deem appropriate. As a condition to the Grant of Restricted
Stock, the Grantee must agree to not file, with respect to such Grant, an
election to recognize income under Section 83(b) of the Code without the
permission of the Company.

(c) Certificates.

(i) Each Grantee of Restricted Stock shall be issued a certificate in respect of
Shares of Restricted Stock awarded under the Plan. Such certificate shall be
registered in the name of the Grantee. Without limiting the generality of
Section 6, in addition to any legend that might otherwise be required by the
Board or the Company’s charter, bylaws or other applicable documents, the
certificates for Shares of Restricted Stock issued hereunder may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer hereunder or under the applicable Agreement, or as the Committee may
otherwise deem appropriate, and, without limiting the generality of the
foregoing, shall bear a legend referring to the terms, conditions, and
restrictions applicable to such Grant, substantially in the following form:

THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE
SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF THE CITY OFFICE
REIT, INC. EQUITY INCENTIVE PLAN, AND AN AGREEMENT ENTERED INTO BETWEEN THE
REGISTERED OWNER AND CITY OFFICE REIT, INC. COPIES OF SUCH PLAN AND AWARD
AGREEMENT ARE ON FILE IN THE OFFICES OF CITY OFFICE REIT, INC. AT 1075 WEST
GEORGIA STREET, SUITE 2600, VANCOUVER, BRITISH COLUMBIA, V6E 3C9.

 

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(ii) The Committee shall require that the certificates evidencing such Shares be
held in custody by the Company until the restrictions hereunder shall have
lapsed and that, as a condition of any grant of Restricted Stock, the Grantee
shall have delivered a stock power, endorsed in blank, relating to the stock
covered by such Grant. If and when such restrictions so lapse, the certificates
shall be delivered by the Company to the Grantee or his or her designee as
provided in Section 9(d).

(d) Restrictions and Conditions. Unless otherwise provided by the Committee in
an Agreement, the Shares of Restricted Stock awarded pursuant to the Plan shall
be subject to the following restrictions and conditions:

(i) Subject to the provisions of the Plan and the applicable Agreement, during a
period commencing with the date of such Grant 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
applicable Agreement and clauses (iii) and (iv) below, the period of forfeiture
with respect to Shares granted hereunder shall lapse as provided in the
applicable 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) or in Section 16, the
Grantee shall have, in respect of the Shares of Restricted Stock, all of the
rights as an owner of such Shares, including the right to vote the Shares if
applicable and, as provided in the applicable Agreement, to receive dividends;
provided, however, that if the Shares of Restricted Stock will not vest solely
on account of continued employment or service, cash dividends on such Shares
shall be held by the Company (unsegregated as a part of its general assets)
until the period of forfeiture lapses (and forfeited if the underlying Shares
are forfeited), and paid over to the Grantee as soon as practicable after such
period lapses (if not forfeited) to the extent that the underlying Shares vest.
Certificates for Shares (not subject to restrictions hereunder) shall be
delivered to the Grantee or his or her designee (or where permitted, transferee)
promptly after, and only after, the period of forfeiture shall lapse without
forfeiture in respect of such Shares of Restricted Stock.

(iii) Termination of Service. Unless otherwise provided in the applicable
Agreement, and subject to clause (iv) below, if the Grantee has a Termination of
Service, during the applicable period of forfeiture, then (A) all Restricted
Stock still subject to restriction shall thereupon, and with no further action,
be forfeited by the Grantee, along with any dividends or other amounts paid with
respect to those Shares of Restricted Stock 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 9(b), and (y) the
Fair Market Value on the date of termination of the forfeited Restricted Stock.

 

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10. Provisions applicable to Restricted Stock Units.

(a) Vesting.

(i) In connection with the grant of Restricted Stock Units, whether or not
Performance Goals apply thereto, the Committee shall establish one or more
vesting periods with respect to the Restricted Stock Units, the length of which
shall be determined in the discretion of the Committee.

(ii) Subject to the provisions of this Section 10, the applicable Agreement and
the other provisions of the Plan, Restricted Stock Units shall vest as provided
in the applicable Agreement.

(b) Termination of Service. Unless otherwise provided by the Committee in the
applicable Agreement, if the Grantee has a Termination of Service, all of the
Grantee’s unvested Restricted Stock Units, and any dividends or other amounts
paid with respect to those unvested Restricted Stock Units, shall thereupon, and
with no further action, be forfeited by the Grantee and cease to be outstanding,
and no payments shall be made with respect to such forfeited Restricted Stock
Units.

(c) Earning Restricted Stock Units. Upon meeting the applicable vesting
criteria, the Grantee will be entitled to receive a payout as determined by the
Committee. Notwithstanding the foregoing, at any time after the grant of
Restricted Stock Units, the Committee, in its sole discretion, may reduce or
waive any vesting criteria that must be met to receive a payout.

(d) Form and Timing of Payment. Payment of earned Restricted Stock Units will be
made upon the date(s) determined by the Committee and set forth in the
applicable Agreement. The Committee, in its sole discretion, may only settled
earned Restricted Stock Units in cash, Shares or a combination of both.

(e) Cancellation. On the date set forth in the applicable Agreement, all
unearned Restricted Stock Units will be forfeited to the Company.

(f) Other Restricted Stock Unit Provisions.

(i) 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 settlement of Restricted Stock Units
may be deferred for periods in addition to those otherwise contemplated by the
foregoing provisions of this Section 10.

(ii) Rights to payments with respect to Restricted Stock Units 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.

 

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11. Provisions applicable to Phantom Shares.

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

(b) Vesting. Subject to Section 11(c), Phantom Shares shall vest as provided in
the applicable Agreement.

(c) Termination of Service. Unless otherwise provided in the applicable
Agreement, if the Grantee has a Termination of Service, all of the Grantee’s
unvested Phantom Shares, and any dividends, or other amounts paid with respect
to more unvested Phantom Shares, shall thereupon, and with no further action, be
forfeited by the Grantee and cease to be outstanding, and no payments shall be
made with respect to such forfeited Phantom Shares.

(d) Settlement of Phantom Shares.

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

(ii) Each Phantom Share shall be settled with a single-sum payment by the
Company; provided, however, that, with respect to Phantom Shares of a Grantee
which have a common Settlement Date (as defined below), 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. If the Grantee’s Phantom Shares are paid out in
installment payments, such installment payments shall be treated as a series of
separate payments for purposes of Section 409A of the Code.

(iii) Unless determined otherwise by the Committee in the applicable Agreement,
the settlement date with respect to a Grantee is the first day of the month to
follow the Grantee’s Termination of Service (“Settlement Date”); provided,
however, that a Grantee may elect, in accordance with procedures to be adopted
by the Committee, that such Settlement Date will be deferred as elected by the
Grantee to a time permitted by the Committee under procedures to be established
by the Committee. Notwithstanding the prior sentence, all initial elections to
defer the Settlement Date shall be made in accordance with the requirements of
`Section 409A of the Code.

(e) Other Phantom Share Provisions.

(i) 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,

 

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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.

(ii) 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 with
respect thereto 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.

(iii) Notwithstanding any other provision of this Section 10, any fractional
Phantom Share will be paid out in cash at the Phantom Share Value as of the
Settlement Date.

(iv) No Phantom Share shall 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 12, no provision of the Plan shall be interpreted to
confer upon any Grantee of a Phantom Share any voting, dividend or derivative or
other similar rights with respect to any Phantom Share.

(v) Notwithstanding any provision herein to the contrary, in no event may the
Company provide any payment, cash or otherwise, to cancel or replace a Grant of
Phantom Shares with a base value per Phantom Share greater than then Fair Market
Value without first obtaining stockholder approval.

(f) Claims Procedures.

(i) 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:

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

(2) if the claim is wholly or partially denied, advise the claimant of such
denial by furnishing to him or her 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

 

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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 11(f) as the provision setting forth the claims
procedure under the Plan.

(ii) The claimant may request a review of any denial of his or her 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.

12. Provisions applicable to Dividend Equivalent Rights.

(a) Grant of DERs. Subject to the other terms of the Plan, the Committee shall,
in its discretion as reflected by the terms of the Agreements, authorize the
granting of DERs to Eligible Persons based on the dividends declared on Common
Stock, to be credited as of the dividend payment dates, during the period
between the date a Grant is issued, and the date such Grant is exercised, vests
or expires, as determined by the Committee. Such DERs 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. With respect to DERs granted
with respect to Options intended to be qualified performance-based compensation
for purposes of Section 162(m) of the Code, such DERs shall be payable
regardless of whether such Option is exercised. If a DER is granted in respect
of another Grant hereunder, then, unless otherwise stated in the Agreement, or,
in the appropriate case, as determined by the Committee, in no event shall the
DER be in effect for a period beyond the time during which the applicable
related portion of the underlying Grant has been exercised or otherwise settled,
or has expired, been forfeited or otherwise lapsed, as applicable. With respect
to DERs granted with respect to Grants that vest upon satisfaction of criteria
other than solely continued service, payment in settlement of the DERs shall not
be made to the Grantee prior to the date on which, and only to the extent that,
the related Grant vests and the DERs shall be forfeited in the event, and to the
extent, the related Grant is forfeited.

(b) Certain Terms.

(i) The term of a DER shall be set by the Committee in its discretion.

(ii) Payment of the amount determined in accordance with Section 12(a) shall be
in cash, in Shares or a combination of the both, as determined by the Committee
at the time of grant.

(c) Other Types of DERs. The Committee may establish a program under which DERs
of a type whether or not described in the foregoing provisions of this
Section 12 may be granted to Eligible Persons. For example, without limitation,
the Committee may grant a DER 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 12(d)) to receive a cash payment in an amount equal to the dividend
distributions paid on a Share from time to time.

 

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(d) Deferral. The Committee may establish a program under which distributions
with respect to DERs may be deferred. 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 Grantees may
select from among hypothetical investment alternatives for such deferred amounts
in accordance with procedures established by the Committee.

13. Other Equity-Based Awards. The Board shall have the right to issue other
Grants based upon the Shares or upon or covering LTIP Units having such terms
and conditions as the Board may determine, including, without limitation, the
grant of Shares or LTIP Units based upon specified conditions and the grant of
securities convertible into Common Stock.

14. Performance Goals. The Committee, in its discretion, shall in the case of
Grants (including, in particular, Grants other than Options) intended to qualify
for an exception from the limitation imposed by Section 162(m) of the Code
(“Performance-Based Grants”) (i) establish one or more performance goals
(“Performance Goals”) as a precondition to the issue of Grants, and
(ii) provide, in connection with the establishment of the Performance Goals, for
predetermined Grants to those Grantees (who continue to meet all applicable
eligibility requirements) with respect to whom the applicable Performance Goals
are satisfied. The Performance Goals shall be based upon the criteria set forth
in Exhibit A hereto which is hereby incorporated herein by reference as though
set forth in full. The Performance Goals shall be established in a timely
fashion such that they are considered preestablished for purposes of the rules
governing performance-based compensation under Section 162(m) of the Code.
Performance Goals which do not satisfy the foregoing provisions of this
Section 14 may be established by the Committee with respect to Grants not
intended to qualify for an exception from the limitations imposed by
Section 162(m) of the Code.

15. Term of Plan. Grants may be granted pursuant to the Plan until the
expiration of 10 years from the effective date of the Plan.

16. Recapitalization and Changes of Control.

(a) Subject to any required action by stockholders and to the specific
provisions of Section 17, if (i) the Company 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 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 any distribution to
holders of Common Stock other than ordinary 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 Grants,
then:

(i) the maximum aggregate number of Shares which may be made subject to Options
and DERs under the Plan, the maximum aggregate number and kind of Shares

 

16

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of Restricted Stock and Restricted Stock Units that may be granted under the
Plan, the maximum aggregate number of Phantom Shares and other Grants which may
be granted under the Plan may be appropriately adjusted by the Committee in its
discretion; and

(ii) the Committee shall take any such action as in its discretion shall be
necessary to maintain each Grantees’ rights hereunder (including under their
applicable Agreements) so that they are, in their respective Grants,
substantially proportionate to the rights existing in such Grants prior to such
event, including, without limitation, adjustments in (A) the number and kind of
shares or other property to be distributed in respect of the Grant, (B) the
Exercise Price, Purchase Price and Phantom Share Value, and
(C) performance-based criteria established in connection with Grants (to the
extent consistent with Section 162(m) of the Code, as applicable); provided
that, in the discretion of the Committee, the foregoing clause (C) may also be
applied in the case of any event relating to a Subsidiary if the event would
have been covered under this Section 16(a) had the event related to the Company.
In addition, the Committee may provide a cash bonus in lieu of adjustment if it
determines such a bonus is appropriate.

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 Grants, the number of Shares (or units) available under Section 6
above shall be increased or decreased, as the case may be, proportionately.

(b) Any Shares or other securities distributed to a Grantee with respect to
Restricted Stock or otherwise issued in substitution of Restricted Stock
pursuant to this Section 16 shall be subject to the restrictions and
requirements imposed by Section 9, including depositing the certificates
therefor with the Company together with a stock power and bearing a legend as
provided in Section 9(c)(i).

(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 9(d) may be required to deposit with
the successor corporation the certificates 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 9(c)(ii), and such stock,
securities or other property shall become subject to the restrictions and
requirements imposed by Section 9(d), and the certificates therefor or other
evidence thereof shall bear a legend similar in form and substance to the legend
set forth in Section 9(c)(i).

(d) The judgment of the Committee with respect to any matter referred to in this
Section 16 shall be conclusive and binding upon each Grantee without the need
for any amendment to the Plan.

(e) Subject to any required action by stockholders, if the Company is the
surviving corporation in any merger or consolidation, the rights under any
outstanding Grant shall pertain and apply to the securities to which a holder of
the number of Shares subject to the Grant would have been entitled.

 

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(f) To the extent that the foregoing adjustment related to securities of the
Company, such adjustments shall be made by the Committee, whose determination
shall be conclusive and binding on all persons.

(g) Except as expressly provided in this Section 16 , a Grantee shall have no
rights by reason of subdivision or consolidation of shares of stock of any
class, the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class or by reason of any dissolution,
liquidation, merger or consolidation or spin-off of assets or stock of another
corporation, and any issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
Shares subject to a Grant or the Exercise Price of Shares subject to an Option.

(h) Grants made pursuant to the Plan shall not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure, to merge or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business assets.

(i) Unless otherwise provided in the Agreement, upon the occurrence of a Change
of Control:

(i) The Committee as constituted immediately before the Change of Control may
make such adjustments to Grants as it, in its discretion, determines are
necessary or appropriate in light of the Change of Control (including, without
limitation, the substitution of stock other than stock of the Company as the
Shares optioned hereunder), provided that the Committee determines that such
adjustments do not have a substantial adverse economic impact on the Grantee as
determined at the time of the adjustments.

(ii) Notwithstanding the provisions of Section 10 (taking into account, without
limitation, the application of Section 409A of the Code, as the Committee may
deem appropriate), the Settlement Date for Phantom Shares shall be the date of
such Change of 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 of Control, unless such Grantee elects otherwise
in accordance with procedures established by the Committee.

(iii) Vesting of all Grants shall accelerate in full, with Options being
exercisable as to all of the covered Shares and all vesting criteria applicable
to other Grants treated as having been fully satisfied, immediately prior to,
put contingent on, the Change of Control.

(j) “Change of Control” shall mean the occurrence of any one of the following
events:

(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 or the Advisor, any
entity controlling, controlled by or under common control with the Company or
the Advisor, any trustee, fiduciary or other person or entity holding securities
under any employee benefit plan or trust of the Company or the Advisor or any
such entity, and, with respect to any particular

 

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Eligible Employee, the Eligible Employee and any “group,” (as such term is used
in Section 13(d)(3) of the Exchange Act) of which the Eligible Employee 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 more than 50% of either (A) the combined voting power of the
Company’s then outstanding securities or (B) the then outstanding Shares; or

(ii) members of the Board at the beginning of any consecutive 12-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
stockholders, was approved or ratified by a vote of at least a majority of the
members of the Board then still in office who were members of the Board at the
beginning of such 12-calendar-month period, shall be deemed to be an Incumbent
Director; or

(iii) there shall occur (A) any consolidation or merger of the Company or any
Subsidiary where the stockholders of the Company, immediately prior to the
consolidation or merger, would not, immediately after the consolidation or
merger, beneficially own (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, shares representing in the aggregate 50%
or more of the voting securities of the corporation issuing cash or securities
in the consolidation or merger (or of its ultimate parent corporation, if any),
(B) 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 or (C) the liquidation or
dissolution of the Company.

Notwithstanding the foregoing, no event or condition described in clauses
(i) through (iii) above shall constitute a Change of Control if it results from
a transaction between the Company and the Advisor, or an affiliate of the
Advisor.

Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have
occurred for purposes of the foregoing clause (i) solely as the result of an
acquisition of securities by the Company which, by reducing the number of Shares
or other voting securities outstanding, increases (x) the proportionate number
of Shares beneficially owned by any person to 50% or more of the Shares then
outstanding or (y) the proportionate voting power represented by the voting
securities beneficially owned by any person to 50% or more of the combined
voting power of all then outstanding voting securities; provided, however, that,
if any person referred to in clause (x) or (y) of this sentence shall thereafter
become the beneficial owner of any additional Shares or other voting securities
(other than pursuant to a stock split, stock dividend, or similar transaction),
then a “Change of Control” shall be deemed to have occurred for purposes of this
subsection (j).

Notwithstanding the foregoing, no event or condition shall constitute a Change
of Control to the extent that, if it were, an excise tax would be imposed upon
or with respect to any Grant under Section 409A of the Code; provided that, in
such a case, the event or condition shall continue to constitute a Change of
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 excise tax.

 

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17. Effect of Certain Transactions. In the case of (i) the dissolution or
liquidation of the Company, (ii) a merger, consolidation, reorganization or
other business combination in which the Company is acquired by another entity or
in which the Company is not the surviving entity, or (iii) 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, the Plan and the Grants issued hereunder shall
terminate upon the effectiveness of any such transaction or event, unless
provision is made in connection with such transaction for the assumption of
Grants theretofore granted, or the substitution for such Grants of new Grants,
by the successor entity or parent thereof, with appropriate adjustment as to the
number and kind of shares and the per share exercise prices, as provided in
Section 16.

18. Securities Law Requirements.

(a) Legality of Issuance. The issuance of any Shares pursuant to Grants under
the Plan and the issuance of any Grant shall be contingent upon the following:

(i) the obligation of the Company to sell Shares with respect to Grants issued
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;

(ii) 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 stock options; and

(iii) each grant of Options, Restricted Stock, Restricted Stock Units, Phantom
Shares (or issuance of Shares in respect thereof) or DERs (or issuance of Shares
in respect thereof), or other Grant under Section 13 (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, Restricted Stock Units, Phantom Shares, DERs, other Grants or
other Shares, no payment shall be made, or Phantom Shares or Shares issued or
grant of Restricted Stock or other Grant 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.

(b) Restrictions on Transfer. Regardless of whether the offering and sale of
Shares under the Plan has been registered under the Act or has been registered
or qualified under the securities laws of any state, the Company may impose
restrictions on the sale, pledge or other transfer of such Shares (including the
placement of appropriate legends on stock certificates) if, in the judgment of
the Company and its counsel, such restrictions are necessary or desirable in
order to achieve compliance with the provisions of the Act, the securities laws
of any state or any other law. In the event that the sale of Shares under the
Plan is not registered under the Act but an exemption is available which
requires an investment representation or other representation, each Grantee
shall be required to represent that such Shares are being acquired for
investment,

 

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and not with a view to the sale or distribution thereof, and to make such other
representations as are deemed necessary or appropriate by the Company and its
counsel. Any determination by the Company and its counsel in connection with any
of the matters set forth in this Section 18 shall be conclusive and binding on
all persons. Without limiting the generality of Section 6, certificates
evidencing Shares acquired under the Plan pursuant to an unregistered
transaction shall bear a restrictive legend, substantially in the following
form, and such other restrictive legends as are required or deemed advisable
under the provisions of any applicable law:

“THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”). ANY TRANSFER OF SUCH SECURITIES WILL BE
INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH
TRANSFER OR IN THE OPINION OF COUNSEL FOR THE ISSUER SUCH REGISTRATION IS
UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT.”

(c) Registration or Qualification of Securities. The Company may, but shall not
be obligated to, register or qualify the issuance of Grants and/or the sale of
Shares under the Act or any other applicable law. The Company shall not be
obligated to take any affirmative action in order to cause the issuance of
Grants or the sale of Shares under the Plan to comply with any law.

(d) Exchange of Certificates. If, in the opinion of the Company and its counsel,
any legend placed on a certificate representing Shares sold under the Plan is no
longer required, the holder of such certificate shall be entitled to exchange
such certificate for a certificate representing the same number of Shares but
lacking such legend.

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

19. Amendment of the Plan/Awards. The Board may from time to time, with respect
to any Shares at the time not subject to Grants, suspend or discontinue the Plan
or revise or amend it, or any outstanding Grants, in any respect, subject to the
limitations of the Plan. The Board may amend the Plan as it shall deem
advisable, except that no amendment may adversely affect a Grantee with respect
to Grants previously granted; provided, however, that the Plan may not be
amended without stockholder approval (a) to increase the total number of Shares
that may be subject to Awards set forth in Section 6 (other than through an
adjustment as provided otherwise in the Plan), (b) to change the class of
Eligible Persons, (c) to reprice any awards under the Plan, or (d) in any other
manner that in the absence of stockholder approval would cause the Plan to fail
to comply with any applicable legal requirement or applicable exchange or
similar state law requirements.

20. Application of Funds. The proceeds received by the Company from the sale of
Shares pursuant to the exercise of an Option, the sale of Restricted Stock or in
connection with other Grants under the Plan will be used for general corporate
purposes.

 

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21. Tax Withholding. Each Grantee shall, no later than the date as of which the
value of any Grant first becomes includable in the gross income of the Grantee
for federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Company regarding payment of any federal, state or local
taxes of any kind that are required by law to be withheld with respect to such
income. A Grantee may elect to have such tax withholding satisfied, in whole or
in part, by (i) authorizing the Company to withhold a number of Shares to be
issued pursuant to a Grant equal to the Fair Market Value as of the date
withholding is effected that would satisfy the withholding amount due,
(ii) transferring to the Company Shares owned by the Grantee with a Fair Market
Value equal to the amount of the required withholding tax, or (iii) in the case
of a Grantee who is an Employee of the Company at the time such withholding is
effected, by withholding from the Grantee’s cash compensation. Notwithstanding
anything contained in the Plan to the contrary, the Grantee’s satisfaction of
any tax-withholding requirements imposed by the Committee shall be a condition
precedent to the Company’s obligation as may otherwise by provided hereunder to
provide Shares to the Grantee, and the failure of the Grantee to satisfy such
requirements with respect to a Grant shall cause such Grant to be forfeited.

22. 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 Grantee, shall be
delivered personally or mailed to the Grantee at the address appearing in the
records of the Participating Company. Such addresses may be changed at any time
by written notice to the other party given in accordance with this Section 22.

23. Rights to Employment or Other Service. Nothing in the Plan or in any Grant
issued pursuant to the Plan shall confer on any individual any right to continue
in the employ or other service of the Participating Company (if applicable) or
interfere in any way with the right of the Participating Company and its
stockholders to terminate the individual’s employment or other service at any
time.

24. Exculpation and Indemnification. To the maximum extent permitted by law, 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, other than such liabilities, costs and expenses as
may result from the gross negligence, bad faith, willful misconduct or criminal
acts of such persons.

25. Compliance with Section 409A of the Code.

(a) Any 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 Grant 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 Grantee 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

 

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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). Any payments or distributions delayed in
accordance with the prior sentence shall be paid to the Grantee on the first day
of the seventh month following the Grantee’s Termination of Service.

(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.

26. No Fund Created. Any and all payments hereunder to any Grantee under the
Plan shall be made from the general funds of the Company (or, if applicable, a
Participating Company). The obligations of the Company (or, if applicable, a
Participating Company) under the Plan are unsecured and constitute a mere
promise by the Company (or, if applicable, a Participating 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 (or, if applicable, a
Participating Company), such right shall be no greater than the right of a
general unsecured creditor of the Company (or, if applicable, a Participating
Company). 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.

27. No Fiduciary Relationship. Nothing contained in the Plan, 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,
the Participating Companies, or their officers or the Committee, on the one
hand, and the Grantee, the Company, the Participating Companies or any other
person or entity, on the other.

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

29. Governing Law. THE PLAN SHALL BE GOVERNED BY THE LAWS OF MARYLAND, WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.

[SIGNATURE PAGE FOLLOWS]

 

 

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CITY OFFICE REIT, INC. By:   /s/ Anthony Maretic   Anthony Maretic   Consented
and Agreed to:

/s/ James Farrar

James Farrar

 

 

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EXHIBIT A

PERFORMANCE CRITERIA

Performance-Based Grants intended to qualify as “performance based” compensation
under Section 162(m) of the Code, may be payable upon the attainment of
objective performance goals that are established by the Committee and relate to
one or more Performance Criteria, in each case on specified date or over any
period, up to 10 years, as determined by the Committee. Performance Criteria may
be based on the achievement of the specified levels of performance under one or
more of the measures set out below relative to the performance of one or more
other corporations or indices.

“Performance Criteria” means the following business criteria (or any combination
thereof) with respect to one or more of the Company, any Participating Company
or any division or operating unit thereof:

 

  i) pre-tax income,

 

  ii) after-tax income,

 

  iii) net income (meaning net income as reflected in the Company’s financial
reports for the applicable period, on an aggregate, diluted and/or per share
basis),

 

  iv) operating income,

 

  v) cash flow,

 

  vi) earnings per share,

 

  vii) return on equity,

 

  viii) return on invested capital or assets,

 

  ix) cash and/or funds available for distribution,

 

  x) appreciation in the fair market value of the Common Stock,

 

  xi) return on investment,

 

  xii) total return to stockholders (meaning the aggregate Common Stock price
appreciation and dividends paid (assuming full reinvestment of dividends) during
the applicable period),

 

  xiii) net earnings growth,

 

  xiv) stock appreciation (meaning an increase in the price or value of the
Common Stock after the date of grant of an award and during the applicable
period),

 

  xv) related return ratios,

 

  xvi) increase in revenues,

 

  xvii) the Company’s published ranking against its peer group of real estate
investment trusts based on total stockholder return,

 

  xviii) net earnings,

 

  xix) changes (or the absence of changes) in the per share or aggregate market
price of the Company’s Common Stock,

 

  xx) number of securities sold,

 

  xxi) earnings before any one or more of the following items: interest, taxes,
depreciation or amortization for the applicable period, as reflected in the
Company’s financial reports for the applicable period, and

 

  xxii) total revenue growth (meaning the increase in total revenues after the
date of grant of an award and during the applicable period, as reflected in the
Company’s financial reports for the applicable period).

 

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Except as otherwise expressly provided, all financial terms are used as defined
under Generally Accepted Accounting Principles (“GAAP”) and all determinations
shall be made in accordance with GAAP, as applied by the Company in the
preparation of its periodic reports to stockholders.

To the extent permitted by Section 162(m) of the Code, unless the Committee
provides otherwise at the time of establishing the performance goals, for each
fiscal year of the Company, the Committee may provide for objectively
determinable adjustments, as determined in accordance with GAAP, to any of the
Performance Criteria described above for one or more of the items of gain, loss,
profit or expense: (A) determined to be extraordinary or unusual in nature or
infrequent in occurrence, (B) related to the disposal of a segment of a
business, (C) related to a change in accounting principle under GAAP,
(D) related to discontinued operations that do not qualify as a segment of a
business under GAAP, and (E) attributable to the business operations of any
entity acquired by the Company during the fiscal year.

 

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