Exhibit 10.13


 


EXECUTION VERSION 





 


CLIPPER REALTY INC.


 


2015 EXECUTIVE INCENTIVE COMPENSATION PLAN



 


		1.	Purpose



 


The purpose of the Clipper Realty Inc. 2015
Executive Incentive Compensation Plan (as amended from time to time, the “Plan”) is to help the Company
(as hereinafter defined) attract, retain and motivate participating eligible executives by providing incentive awards that ensure
a strong pay-for-performance linkage, and to permit the incentive awards to qualify as performance-based compensation under Section
162(m) (taking into account any transition relief available thereunder).


 


		2.	Definitions of Certain Terms



 


(a)          “Award”
means an amount calculated and awarded to a Participant pursuant to the Plan. Awards may be cash-based or based on the Company’s
Shares (i.e., stock-based).


 


(b)          “Board”
means the Board of Directors of Clipper Realty Inc., a Maryland corporation (“Clipper Realty”).


 


(c)          “Code”
means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto, and the applicable rulings and
regulations thereunder.


 


(d)          “Committee”
has the meaning set forth in Section 3(a).


 


(e)          “Company”
means Clipper Realty and any Subsidiary, and any successor entity thereto.


 


(f)          “Eligible
Executive” means an employee of the Company who, in the discretion of the Committee, is likely to be a “covered
employee” under Section 162(m) for the year in which an Award is payable and any other executives of the Company who are
selected by the Committee for participation in the Plan.


 


(g)          “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto, and the applicable
rules and regulations thereunder.


 


(h)          “Fiscal
Year” means Clipper Realty’s fiscal year.


 




     


     


    

 


 


(i)          “GAAP”
has the meaning set forth in Section 5(a).


 


(j)          “Omnibus
Plan” means the 2015 Clipper Realty Inc. Omnibus Incentive Plan.


 


(k)          “Participant”
means an Eligible Executive participating in the Plan for a Performance Period as provided in Section 4(b).


 


(l)          “Performance
Criteria” has the meaning set forth in Section 5(a).


 


(m)          “Performance
Goals” has the meaning set forth in Section 5(a).


 


(n)          “Performance
Period” means a Fiscal Year or other period of time (which may be longer or shorter than a Fiscal Year) set by the
Committee during which the achievement of the Performance Goals is to be measured.


 


(o)          “Section
162(m)” means Section 162(m) of the Code and the applicable rulings and regulations thereunder.


 


(p)          “Section
162(m) Exemption” means the exemption from the limitation on deductibility imposed by Section 162(m) as set forth
in Section 162(m)(4)(C) of the Code and the applicable rulings and regulations thereunder.


 


(q)          “Section
409A” means Section 409A of the Code, including any amendments or successor provisions to that section, and any regulations
and other administrative guidance thereunder, in each case as they may be from time to time amended or interpreted through further
administrative guidance.


 


(r)          “Shares”
means shares of common stock of Clipper Realty, par value $0.01 per share.


 


(s)          “Subsidiary”
means any corporation, partnership, limited liability company or other legal entity in which Clipper Realty, directly or indirectly,
owns stock or other equity interests possessing 25% or more of the total combined voting power of all classes of the then-outstanding
stock or other equity interests.


 


		3.	Administration of the Plan



 


(a)          Committee.
The Compensation Committee of the Board (as constituted from time to time, and including any successor committee, the “Committee”)
will administer the Plan. The Committee will be appointed by the Board and will consist of not less than two members of the Board
who are intended to meet the definition of “outside director” under the provisions of Section 162(m) and the definition
of “non-employee director” under the provisions of the Exchange Act, and each of whom is intended to be “independent”
as set forth in the applicable rules and regulations of the Securities and Exchange Commission and the New York Stock Exchange.


 


(b)          Administration.
The Committee will have all the powers vested in it by the terms of this Plan, such powers to include the authority (within the
limitations described herein) to select the persons to be granted awards under the Plan, to determine the time when Awards will
be granted, to determine whether objectives and conditions for earning Awards have been met, to determine whether Awards will be
paid at the end of the Performance Period or deferred (consistent with Section 409A), and to determine whether an Award or payment
of an Award should be reduced or eliminated. The Committee will have full power and authority to administer and interpret the Plan
and to adopt such rules, regulations, agreements, guidelines and instruments for the administration of the Plan and for the conduct
of its business as the Committee deems necessary or advisable. The Committee’s interpretations of the Plan, and all actions
taken and determinations made by the Committee pursuant to the powers hereunder, will be final, binding and conclusive for all
purposes and on all parties, including the Company, Clipper Realty’s shareholders, its employees and any person receiving
an Award under the Plan, as well as their respective successors in interest. The provisions of the Plan are intended to ensure
that all Awards granted hereunder qualify for the Section 162(m) Exemption (taking into account any transition relief available),
and this Plan is intended to be interpreted and operated consistent with this intention. No member of the Committee will be liable
for any action taken or determination made in good faith with respect to the Plan or any Award.


 




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(c)          Guidelines.
The Committee may adopt from time to time written policies or rules as it deems necessary or desirable for the Committee’s
implementation and administration of the Plan.


 


(d)          Delegation
of Administrative Authority. The Committee may delegate its responsibilities for administering the Plan to employees
of the Company as it deems necessary or appropriate for the proper administration of the Plan. In delegating its authority, the
Committee will consider the extent to which any delegation may cause Awards to fail to be deductible under Section 162(m)
(taking into account any transition relief available).


 


		4.	Eligibility and Participation



 


(a)          Eligibility.
All Eligible Executives are eligible to participate in the Plan for any Performance Period.


 


(b)          Participation.
For each Performance Period, the Committee, in its discretion, will select the Eligible Executives who will participate in this
Plan. The Committee will select the Participants no later than 90 days after the beginning of the Performance Period (or, if shorter,
before 25% of the Performance Period has elapsed) in accordance with Section 162(m).


 


		5.	Awards



 


(a)          Performance
Goals. The “Performance Goals” means the written, objective performance goals established
by the Committee for each Performance Period. The Performance Goals will be based on one or more of the following business criteria
(either separately or in combination) with regard to Clipper Realty (or a Subsidiary, division, other operational unit or administrative
department of Clipper Realty) (“Performance Criteria”): measures of efficiency (including operating efficiency,
productivity ratios or other similar measures); measures of achievement of expense targets, costs reductions, working capital,
cash levels or general expense ratios; asset growth; earnings per share or net earnings; enterprise value or value creation targets;
combined net worth; debt to equity ratio; revenues, sales, net revenues or net sales measures; gross profit or operating profit
measures (including before or after taxes or other similar measures); investment performance; income or operating income measures
(with or without investment income or income taxes, before or after risk-adjustment, or other similar measures); cash flow; margin;
net income, before or after taxes; earnings before interest, taxes, depreciation and/or amortization; return measures (including
return on capital, invested capital, total capital, tangible capital, expenses, tangible expenses, equity, revenue, investment,
assets, or net assets or total shareholder return or similar measures); market share measures; measures of balance sheet achievements
(including debt reductions, leverage ratios or other similar measures); increase in the fair market value of a Share; changes (or
the absence of changes) in the per share or aggregate fair market value of a Share; the achievement of specific Company milestones
such as the completion of an initial public offering or the registration and listing of Shares sold in connection with the Rule
144A offering; and number of securities sold and funds from operations.


 




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Except as otherwise expressly provided, all
financial terms are used as defined under Generally Accepted Accounting Principles (“GAAP”) or such other
objective principles, as may be designated by the Committee. To the extent financial terms are defined under GAAP, all determinations
will be made in accordance with GAAP, as applied by the Company in the preparation of its periodic reports to stockholders. Any
Performance Goals may be measured in absolute terms or relative to historic performance or the performance of other companies or
an index.


 


To the extent permitted under Section 162(m)
(including, without limitation, compliance with any requirements for stockholder approval), for each Fiscal Year, the Committee
may (i) designate additional business criteria on which the Performance Goals may be based or (ii) provide for objectively
determinable adjustments, modifications or amendments to any of the Performance Criteria described above, as the Committee may
deem appropriate (including, but not limited to, 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 business under GAAP or (E) attributable to the business operations of any entity acquired by the Company during a Fiscal Year).


 


Separate Performance Goals may be established
by the Committee for Clipper Realty or a Subsidiary, division, or individual thereof, and different Performance Criteria
may be given different weights. To the extent permissible for Awards to qualify for the Section 162(m) Exemption (taking into account
any transition relief), the Committee may establish other subjective or objective goals, including individual Performance Goals,
which it deems appropriate, for purposes of applying negative discretion in determining the Award amount.


 


(b)          Grant
of Awards. In connection with the grant of each Award, the Committee will (i) establish the Performance Goal(s)
and the Performance Period applicable to such Award, (ii) establish the formula for determining the amounts payable based on achievement
of the applicable Performance Goal(s), (iii) determine the consequences for the Award of the Participant’s termination of
employment for various reasons or the Participant’s demotion or promotion during the Performance Period and (iv) establish
such other terms and conditions for the Award as the Committee deems appropriate. The foregoing will be accomplished (1) while
the outcome for the Performance Period is substantially uncertain and (2) no more than 90 days after the commencement of the
Performance Period or, if the Performance Period is less than one year, the number of days which is equal to 25% of the Performance
Period.


 




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(c)          Certification
of Performance. Following the completion of the Performance Period, the Committee will certify in writing the degree
to which the Performance Goal(s) applicable to each Participant for the Performance Period were achieved or exceeded. No Awards
will be paid for the Performance Period until such certification is made by the Committee. Subject to Section 5(d), the
Award for each Participant will be determined by applying the applicable formula for the Performance Period based upon the level
of achievement of the Performance Goal(s) certified by the Committee.


 


(d)          Committee
Discretion. Notwithstanding anything to the contrary in the Plan, the Committee may, in its sole discretion, reduce
or eliminate, but not increase, any Award payable to any Participant for any reason, including without limitation to reflect individual
or business performance and/or unanticipated or subjective factors.


 


(e)          Maximum
Awards. No Participant may receive with respect to any Fiscal Year an Award under the Plan of more than $2,000,000.
In addition, no Participant may receive with respect to any Fiscal Year an Award under the Plan of more than 300,000 Shares.
In the event the Performance Period for an Award is more than one Fiscal Year, then for purposes of the limits above, the Award
amount will be proportionately spread across the actual Performance Period (provided that for this purpose, the Award
amount may not be spread across more than four (4) years).


 


(f)          Timing
of Payment. Awards will generally be payable by the Company to Participants promptly following the determination and written
certification of the Committee for the Performance Period pursuant to Section 5(c) above. Notwithstanding the prior sentence,
the Committee, in its discretion, may defer the payout or vesting of any Award and/or provide to Participants the opportunity to
elect to defer the payment of any Award, subject to Section 6(i).


 


(g)          Form
of Payment. Awards may be paid in cash or in the form of stock-based awards. Awards that are granted and denominated in
cash may be paid under the Plan, the Omnibus Plan or any other plan maintained by the Company, and Awards that are granted in the
form of stock-based awards will be issued pursuant to the Omnibus Plan or any other plan maintained by the Company for stock-based
awards at the time of grant.


 


(h)          Certain
Participants not Eligible. To be eligible for payment of any Award, the Participant must be employed by the Company on
the last day of the Performance Period unless the Committee specifies otherwise.


 


6.          Miscellaneous
Provisions


 


(a)          Effect
on Benefit Plans. Awards under the Plan will not be considered eligible pay under other plans, benefit arrangements or
fringe benefit arrangements of the Company unless otherwise provided under the terms of such other plans.


 




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(b)          Restriction
on Transfer. No Award (or any rights and obligations thereunder) granted under the Plan may be sold, exchanged,
transferred, assigned, pledged, hypothecated or otherwise disposed of or hedged, in any manner (including through the use of any
cash-settled instrument), whether voluntarily or involuntarily and whether by operation of law or otherwise, other than by will
or by the laws of descent and distribution. Notwithstanding the foregoing, the Committee may permit, under such terms and conditions
that it deems appropriate in its sole discretion, a Participant to transfer any Award to any person or entity that the Committee
so determines. Any sale, exchange, transfer, assignment, pledge, hypothecation, or other disposition in violation of the provisions
of this Section 6(b) will be null and void and any Award which is hedged in any manner will immediately be forfeited. All
of the terms and conditions of the Plan and the Award will be binding upon any permitted successors and assigns.


 


(c)          Tax
Withholding. Participants will be solely responsible for any applicable taxes (including, without limitation, income
and excise taxes) and penalties, and any interest that accrues thereon, that they incur in connection with the receipt or vesting
of any Award. As a condition to the delivery of any payment under this Plan or the lifting or lapse of restrictions on any Award,
or in connection with any other event that gives rise to a federal or other governmental tax withholding obligation on the part
of the Company relating to an Award (including, without limitation, Federal Insurance Contributions (FICA) tax), (i) the Company
may deduct or withhold (or cause to be deducted or withheld) from any payment or distribution to a Participant whether or not pursuant
to the Plan, (ii) the Committee will be entitled to require that the Participant remit cash to the Company (through payroll deduction
or otherwise) or (iii) the Company may enter into any other suitable arrangements to withhold, in each case in an amount not
to exceed in the opinion of the Company the minimum amounts of such taxes required by law to be withheld.


 


(d)          No
Rights to Awards. No Company employee or other person will have any claim or right to be granted an Award under
the Plan. Neither the adoption of the Plan nor the grant of any Award will confer upon any employee any right to continued employment
with the Company, nor will it interfere in any way with the right of the Company to terminate, or alter the terms and conditions
of, the employment at any time. The Committee’s determinations under the Plan and Awards need not be uniform and any such
determinations may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan (whether
or not such persons are similarly situated).


 


(e)          No
Funding of Plan. The Plan will be unfunded, and the Awards will be paid solely from the general assets of the Company.
The Company will not be required to establish any special or separate fund or to make any other segregation of assets to assure
the payment of any Award under the Plan. To the extent that any person acquires a right to receive payments under the Plan, the
right is no greater than the right of any other unsecured general creditor.


 


(f)          Right
of Offset. The Company will have the right to offset against any payments under the Plan any outstanding amounts (including,
without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards, or amounts
repayable to the Company pursuant to tax equalization, housing, automobile or other employee programs) that the Participant then
owes to the Company and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization policy or agreement.
Notwithstanding the foregoing, if an Award provides for the deferral of compensation within the meaning of Section 409A, the Committee
will have no such right if such offset could subject the Participant to the additional tax imposed under Section 409A in respect
of an outstanding Award.


 




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(g)          Other
Payments or Awards. Nothing contained in the Plan will be deemed in any way to limit or restrict the Company from making
any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.


 


(h)          Successors.
All obligations of Clipper Realty under the Plan will be binding on any successor to Clipper Realty whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise of all or substantially all of the
business or assets of Clipper Realty.


 


(i)          Section
409A. All Awards made under the Plan that are intended to be “deferred compensation” subject to Section 409A
will be interpreted, administered and construed to comply with Section 409A, and all Awards made under the Plan that are intended
to be exempt from Section 409A will be interpreted, administered and construed to comply with and preserve such exemption. The
Board and the Committee will have full authority to give effect to the intent of the foregoing sentence.


 


Without limiting the generality of the foregoing,
with respect to any Award made under the Plan that is intended to be “deferred compensation” subject to Section 409A:
(i) any payment due upon a Participant’s termination of employment will be paid only upon such Participant’s separation
from service from the Company within the meaning of Section 409A; (ii) any payment to be made with respect to such Award in
connection with the Participant’s separation from service from the Company within the meaning of Section 409A (and any other
payment that would be subject to the limitations in Section 409A(a)(2)(B) of the Code) will be delayed until six months after the
Participant’s separation from service (or earlier death) in accordance with the requirements of Section 409A; (iii) if any
payment to be made with respect to such Award would occur at a time when the tax deduction with respect to such payment would be
limited or eliminated by Section 162(m), such payment may be deferred by the Company under the circumstances described in Section
409A until the earliest date that the Company reasonably anticipates that the deduction or payment will not be limited or eliminated;
(iv) if the Award includes a “series of installment payments” (within the meaning of Section 1.409A-2(b)(2)(iii)
of the Treasury Regulations), the Participant’s right to the series of installment payments will be treated as a right to
a series of separate payments and not as a right to a single payment; and (v) for purposes of determining whether the Participant
has experienced a separation from service from the Company within the meaning of Section 409A, “subsidiary” will mean
a corporation or other entity in a chain of corporations or other entities in which each corporation or other entity, starting
with Clipper Realty, has a controlling interest in another corporation or other entity in the chain, ending with such corporation
or other entity. For purposes of the preceding sentence, the term “controlling interest” has the same meaning as provided
in Section 1.414(c)-2(b)(2)(i) of the Treasury Regulations, provided that the language “at least 20 percent”
is used instead of “at least 80 percent” each place it appears in Section 1.414(c)-2(b)(2)(i) of the Treasury
Regulations.


 




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(j)          Section
162(m). The provisions of the Plan with respect to Section 162(m) will only be applicable to the extent necessary
to comply with Section 162(m). The Plan is intended to constitute a plan described in Treasury Regulation Section 1.162-27(f)(1),
pursuant to which the deduction limits under Section 162(m) do not apply during the applicable reliance period. The reliance
period will end on the earliest to occur of the following: (i) the first material modification of the Plan; (ii) the first meeting
of Clipper Realty shareholders at which members of the Board are to be elected that occurs after the close of the third calendar
year following the calendar year in which occurred the first registration of an equity security of Clipper Realty under Section 12
of the Exchange Act; or (iii) such other date required by Section 162(m) of the Code.


 


(k)          Clawback/Recapture
Policy. Awards under the Plan will be subject to any clawback or recapture policy that the Company may adopt from time
to time to the extent provided in such policy and, in accordance with such policy, may be subject to the requirement that the Awards
be repaid to the Company after they have been distributed to the Participant.


 


(l)          Severability;
Entire Agreement. If any of the provisions of the Plan or any Award agreement is finally held to be invalid, illegal
or unenforceable (whether in whole or in part), such provision will be deemed modified to the extent, but only to the extent, of
such invalidity, illegality or unenforceability and the remaining provisions will not be affected thereby; provided that
if any of such provisions is finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope determined
to be acceptable to permit such provision to be enforceable, such provision will be deemed to be modified to the minimum extent
necessary to modify such scope in order to make such provision enforceable hereunder. The Plan and any Award agreements contain
the entire agreement of the parties with respect to the subject matter thereof and supersede all prior agreements, promises, covenants,
arrangements, communications, representations and warranties between them, whether written or oral with respect to the subject
matter thereof.


 


(m)          Governing
Law. The Plan and all Awards made and actions taken thereunder will be governed by and construed in accordance with
the laws of the State of New York, without reference to principles of conflict of laws.


 


		7.	Effective Date, Amendments and Termination



 


(a)          Effective
Date. The Plan was adopted by the Board on August 3, 2015 and was approved by the stockholders of Clipper Realty
on August 3, 2015 (the “Effective Date”).


 


(b)          Amendments.
The Committee may at any time terminate or from time to time amend the Plan in whole or in part, but no such action will adversely
affect any rights or obligations with respect to any Awards made under the Plan. No such amendment or modification, however, may
be effective without approval of Clipper Realty’s shareholders if such approval is necessary to comply with the requirements
of the Section 162(m) Exemption (taking into account any transition relief available thereunder) including (i) any change to the
class of persons eligible to participate in the Plan, (ii) any change to the Performance Goals or Performance Criteria or (iii)
any increase to the maximum dollar amount that may be paid to a Participant for a Performance Period.


 


(c)          Termination.
The Plan will continue in effect until terminated by the Committee.


 




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