Exhibit 10.4

CENTERLINE

 

2007 SHARE INCENTIVE PLAN

___________________________________

 

Annual Incentive Bonus Program “B”

 

(as adopted by the Compensation Committee on March __, 2007)

___________________________________

 

1.

Purpose and Authority; Effective Date.

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

2.

Definitions.

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

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

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

“Cash Bonus Pool” shall equal a fixed percentage of CAD, with such percentage
being equal to ten and eight-tenths percent (10.8%) for Fiscal Year 2007, with
the Committee to determine such fixed percentage in accordance with the
Company’s Fiscal Year budget, as reported to the Committee by the CEO, not later
than three months after the first day of the Fiscal Year to which the percentage
will apply, and with the current Fiscal

 

 

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Year’s percentage being renewed for the ensuing Fiscal Year in the absence of a
timely Committee determination to change such percentage.

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

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

“Eligible “B” Person” shall mean, for each Fiscal Year, the Company’s CEO and
Vice Chairman as constituted on the first day of the Fiscal Year, as well as
each other Employee who shall be notified in writing, by the Company’s CEO,
Vice-Chairman or the Committee, of being eligible for the specified Fiscal Year
to receive a Cash Participation Award, a Share Participation Award, or both
pursuant to the terms of the Incentive Program “B”.

 

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

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

 

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

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

“Share Bonus Pool” shall equal a fixed percentage of CAD, with such percentage
being equal to two and seven tenths percent (2.7%) for Fiscal Year 2007, with
the Committee to determine such fixed percentage in accordance with the
Company’s Fiscal Year budget, as reported to the Committee by the CEO, not later
than three months after the first day of the Fiscal Year to which the percentage
will apply, and with the current Fiscal Year’s percentage being renewed for the
ensuing Fiscal Year in the absence of a timely Committee determination to change
such percentage.

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

3.

Administration.

(a)           General. The general administration of Incentive Program “B” and
the responsibility for carrying out the provisions of Incentive Program “B”
shall be placed in the Committee and the Board as provided herein, subject to
(i) the right of the CEO and Vice-Chairman to make Cash and/or Share
Participation Awards and to make Bonus determinations reserved to them pursuant
to Section 4 below, and (ii) the Committee’s right to delegate administrative
actions to the CEO, the Vice-Chairman, and other Employees and

 

 

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any Affiliate (who will act with respect to such delegated matters only at the
pleasure of the Committee) The Committee may make such rules and regulations and
establish such procedures for the administration of the Incentive Program “B”,
as it deems appropriate.

(b)           Modification of Award Conditions or Vesting. The Committee may, in
its absolute discretion, without amendment to Incentive Program “B”, accelerate
the lapse of restrictions, or waive any condition imposed hereunder, with
respect to any Bonus, or otherwise adjust any of the terms applicable to any
such determination relating to a Bonus; provided, however, that no action under
this Section shall adversely affect any Participant without the Participant’s
specific written consent.

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

4.

Awards and Bonuses.

(a)           Participation Awards. For each Fiscal Year, commencing with Fiscal
Year 2007, (i) the Committee may, in its sole and absolute discretion, make Cash
Participation Awards and Share Participation Awards to the Company’s CEO,
Vice-Chairman, and other executive officers who are reporting persons for
purposes of Rule 16 under the Exchange Act, and (ii) the CEO and Vice-Chairman,
acting together and in writing, may award the balance of the Cash and/or Share
Participation Awards to Eligible “B” Persons other than themselves and Rule 16
reporting persons for such Fiscal Year. In the event the position of either the
CEO or Vice-Chairman shall be vacant, the Committee shall designate another
named executive officer of the Company to participate in the award
decision-making process. The total Cash Participation Awards and the total Share
Participation Awards awarded for each Fiscal Year shall, each respectively,
equal one hundred percent (100%) of the respective pools. Cash and/or Share
Participation Awards may be made with respect to any Fiscal Year at any time
during the year or within thirty (30) days after the close thereof, and may be
made to Eligible “B” Persons whose Continuous Service is for less than the full
Fiscal Year, and/or their heirs and successors. All awards of Cash and/or Share
Participation Awards shall be made substantially in the form of individual
written award agreements (substantially in the form attached as Exhibit A)
executed by the Company.

(b)           Bonus Determinations and Conditions. Each Participant’s Bonus for
a Fiscal Year shall be paid as soon as reasonably practicable after the close of
the Fiscal Year to which the Bonus relates, and the Committee may in its sole
discretion pay projected Bonuses

 

 

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prior to such time based upon an estimate of the respective Cash Bonus Pool and
Share Bonus Pool, subject to adjustment upon final determination of the Cash
Bonus Pool and the Share Bonus Pool in any way that the Committee or the CEO and
Vice-Chair (as the case may be depending on who made the underlying award of
Cash and/or Share Participation Awards) determines is necessary or proper to
assure that each Participant receives and retains only the aggregate Bonus due
for the Fiscal Year (based upon the final CAD. In order to collect a Bonus for a
Fiscal Year, a Participant must either (i) be employed on the Bonus payment date
established by the Committee for the Fiscal Year, or (ii) be employed on the
last day of the Fiscal Year and after the end of the Fiscal Year have terminated
Continuous Service thereafter either (I) without Cause by the Company, (II) due
to the Participant’s death, Retirement, or Disability, or (III) pursuant to an
employment-related agreement under which the Participant is entitled to resign
(for example, for “good reason” as defined in the agreement) with a right to
collect severance benefits equivalent to those payable upon a termination of
service without Cause by the Company. The amount of each Participant’s Bonus, if
any, for a Fiscal Year shall equal the sum of –

 

(i)

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

 

(ii)

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

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

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

Value of Shares

Vesting Period

Below $5,000

Immediate vesting

$5,000 to $25,0000

100% on the first annual anniversary of the

 

 

 

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Grant Date

$25,000 to $50,000

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

Over $50,000

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

 

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

 

(i)

allocations of Cash and Share Participation Awards shall occur before or within
thirty (30) days after the closing date of the Change in Control, as determined
only by those individuals authorized to make allocation decisions on the date
six months before the Change in Control occurs (with any replacement of any such
individual whose service ends due to resignation or death, being made by
majority vote of the other individuals described herein);

 

 

(ii)

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

 

 

(iii)

as soon as practicable after the Change in Control, Bonus awards will

occur in accordance with Section 4(c) above, subject to being made      by those
determined pursuant to clause (i) hereof.

(e)    Recapture for Financial Restatement. Notwithstanding any terms of this
Incentive Program “B”, the 2007 Plan, or any Bonus award hereunder, each and
every Bonus and all cash, Restricted Shares, Unrestricted Shares, settlement in
Shares, or proceeds from the sale of Shares, made or earned pursuant to this
Incentive Program “B” shall be subject to the right of the Company to full
recovery (with reasonable interest thereon) in the event that the Board
determines reasonably and in good faith that any Participant’s fraud or
misconduct has caused or partially caused the need for a material restatement of
the Company’s financial statements for the Fiscal Year to which the Bonus award
relates

5.

Continuance of Employment.

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

 

 

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impose any obligation on the Company or the Manager to continue the employment
of any Participant.

6.

Requirements of Law.

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

7.

Miscellaneous.

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

(b)            Incorporation of the 2007 Plan; Interpretation by Committee. This
Incentive Program “B” is subject in all respects to the terms, conditions,
limitations and definitions contained in the 2007 Plan. In the event of any
discrepancy or inconsistency between Incentive Program “B” and the 2007 Plan,
the terms and conditions of the 2007 Plan shall control. Without limiting the
generality of the foregoing, the Committee may interpret the 2007 Plan and
Incentive Program “B”, and take any other actions and make any other
determinations or decisions that it deems necessary or appropriate in connection
with the 2007 Plan, this Incentive Program “B” or the administration or
interpretation thereof, with such interpretations, actions, determinations, and
decisions to be conclusive and binding on all persons and otherwise accorded the
maximum deference permitted by law, provided that the Committee’s
interpretations, actions, determinations, and decisions shall not be entitled to
deference on and after a Change in Control except to the extent that such
interpretations are made exclusively by members of the Committee who are
individuals who served as Committee members before the Change in Control. In the
event of any dispute or disagreement as to interpretation of the 2007 Plan or
this Incentive Program “B” or of any rule, regulation or procedure, or as to any
question, right or obligation arising from or related to the 2007 Plan or this
Incentive Program “B”, the decision of the Committee shall, except as provided
above, be final and binding upon all persons.

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

(d)           Withholding of Tax. Anything to the contrary notwithstanding, all
Bonus payments required to be made by the Company hereunder shall be subject to
the withholding of such amounts as the Company reasonably may determine that it
is required to withhold pursuant to applicable federal, state or local law or
regulation. The Company’s obligation to deliver share certificates (or evidence
of book entry) to any Participant is

 

 

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subject to and conditioned on tax withholding obligations being satisfied by
such Participant, subject to the terms of the Incentive Program “B” and of the
2007 Plan applicable thereto.

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

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

(g)           Governing Law; Jurisdiction. The Incentive Program “B” shall be
construed, administered, and enforced in accordance with the laws of the State
of Delaware, without giving effect to the conflict of laws principles thereof.
The Company and each Participant agree that the state and federal courts of New
York shall have jurisdiction over any suit, action or proceeding arising out of,
or in any way related to, the 2007 Plan, any Cash or Share Participation Award,
or any Bonus. The parties waive, to the fullest extent permitted by law, any
objection which any of them may have to the venue of any such suit, action or
proceeding brought in such courts, and any claim that such suit, action or
proceeding brought in such courts has been brought in an inconvenient forum. In
the event that any party shall not have appointed an agent for service of
process in New York, the party agrees that it may be served with process by
registered or certified mail, return receipt requested, to the party at its
respective address as reflected on the records of the Company. All notices shall
be deemed to have been given as of the date so delivered or mailed.

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

 

 

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

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

 

(I)

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

 

(II)

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

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

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

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

 

 

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

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

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

 

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

 

 

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CENTERLINE

2007 SHARE INCENTIVE PLAN

___________________________________

 

Annual Incentive Compensation Program “B”

 

Exhibit A

___________________________________

[DATE]

CONFIDENTIAL

[Name]

[Address]

 

 

Re:

Your Cash and/or Share Participation Award

Dear [Name]:

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

 

1.

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

 

2.

your Share Participation Award will be ___ Restricted and ______ Unrestricted
Shares.

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

 

Yours truly,

 

 

 

ACKNOWLEDGED BY:

 

 

 

[            ]

 

 

 

   

A Duly Authorized Trustee or

Executive Officer

 

 

 

[Name of Incentive Program “B” Participant

 

 

 

 

 

 

 

   

 

 

 

 

[Date]

 

 

 

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