Exhibit 10.12


 





EXECUTION VERSION 


 





 


CLIPPER REALTY INC.


 


2015 NON-EMPLOYEE DIRECTOR PLAN


 




     


     


    

 


	ARTICLE I GENERAL	1
	 	 	 
	1.1	Purpose	1
	1.2	Definitions of Certain Terms	1
	1.3	Administration	4
	1.4	Persons Eligible for Awards	7
	1.5	Types of Awards Under Plan	7
	1.6	Shares of Common Stock Available for Awards	7
	 	 	 
	ARTICLE II AWARDS UNDER THE PLAN	8
	 	 	 
	2.1	Agreements Evidencing Awards	8
	2.2	No Rights as a Stockholder	9
	2.3	Options	9
	2.4	Stock Appreciation Rights	10
	2.5	Restricted Shares	11
	2.6	Restricted Stock Units	11
	2.7	LTIP Units	12
	2.8	Dividend Equivalent Rights	13
	2.9	Other Stock-Based or Cash-Based Awards	13
	2.10	Repayment If Conditions Not Met	13
	 	 	 
	ARTICLE III MISCELLANEOUS	13
	 	 	 
	3.1	Amendment of the Plan	13
	3.2	Tax Withholding	14
	3.3	Required Consents and Legends	14
	3.4	Right of Offset	15
	3.5	Nonassignability; No Hedging	15
	3.6	Change in Control	16
	3.7	Right of Discharge Reserved	17
	3.8	Nature of Payments	17
	3.9	Non-Uniform Determinations	17
	3.10	Other Payments or Awards	18
	3.11	Plan Headings	18
	3.12	Termination of Plan	18
	3.13	Clawback/Recapture Policy	18
	3.14	Section 409A	18
	3.15	Governing Law	19
	3.16	Disputes; Choice of Forum	20
	3.17	Waiver of Jury Trial	20
	3.18	Waiver of Claims	21
	3.19	Severability; Entire Agreement	21
	3.20	No Liability With Respect to Tax Qualification or Adverse Tax Treatment	21
	3.21	No Third-Party Beneficiaries	21
	3.22	Successors and Assigns of the Company	21
	3.23	Date of Adoption and Approval of Stockholders	22




     


     


    

 


CLIPPER REALTY INC.

2015 NON-EMPLOYEE DIRECTOR PLAN


 


ARTICLE
I

GENERAL 


 


1.1    Purpose


 


The purpose of the Clipper Realty Inc. 2015 Non-Employee Director
Plan (as amended from time to time, the “Plan”) is to: (1) attract, retain and motivate non-employee
directors of the Board of Directors of Clipper Realty Inc., a Maryland corporation (“Clipper Realty”)
(each such director, a “Non-Employee Director”); (2) align the interests of such persons with Clipper
Realty’s stockholders; and (3) promote ownership of Clipper Realty’s equity.


 


1.2    Definitions
of Certain Terms


 


For purposes of this Plan, the following terms have the meanings
set forth below:


 


1.2.1        “Award”
means an award made pursuant to the Plan.


 


1.2.2        “Award
Agreement” means the written document by which each Award is evidenced, and which may, but need not be (as determined
by the Committee) executed or acknowledged by a Grantee as a condition to receiving an Award or the benefits under an Award, and
which sets forth the terms and provisions applicable to Awards granted under the Plan to such Grantee. Any reference herein to
an agreement in writing will be deemed to include an electronic writing to the extent permitted by applicable law.


 


1.2.3       “Board”
means the Board of Directors of Clipper Realty.


 


1.2.4       “Business
Combination” has the meaning provided in the definition of Change in Control.


 


1.2.5       “Certificate”
means a stock certificate (or other appropriate document or evidence of ownership) representing Shares.


 


1.2.6       “Change
in Control” means, except in connection with any initial public offering of the Common Stock, the occurrence of any
of the following events after the completion of the initial public offering of the Company:


 


(a)          during
any period of not more than 36 months, individuals who constitute the Board as of the beginning of the period (the “Incumbent
Directors”) cease for any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the beginning of such period, whose election or nomination for election was approved by
a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy
statement of Clipper Realty in which such person is named as a nominee for director, without written objection to such nomination)
will be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director
of Clipper Realty as a result of an actual or publicly threatened election contest with respect to directors or as a result of
any other actual or publicly threatened solicitation of proxies by or on behalf of any person other than the Board will be deemed
to be an Incumbent Director;


 




     


     


    

  


(b)          any
“person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act), is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of Clipper Realty representing 30% or more of the combined voting power of Clipper
Realty’s then-outstanding securities eligible to vote for the election of the Board (“Company Voting Securities”);
provided, however, that the event described in this paragraph (b) will not be deemed to be a Change in Control
by virtue of the ownership, or acquisition, of Company Voting Securities:  (A) by the Company, (B) by any employee
benefit plan (or related trust) sponsored or maintained by the Company, (C) by any underwriter temporarily holding securities pursuant
to an offering of such securities or (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (c) of this definition);


 


(c)          the
consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving Clipper Realty
that requires the approval of Clipper Realty’s stockholders, whether for such transaction or the issuance of securities in
the transaction (a “Business Combination”), unless immediately following such Business Combination: (A) more
than 50% of the total voting power of (x) the entity resulting from such Business Combination (the “Surviving
Entity”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership
of at least 95% of the voting power, is represented by Company Voting Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant
to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting
power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person
(other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Entity or the parent), is or
becomes the beneficial owner, directly or indirectly, of 30% or more of the total voting power of the outstanding voting securities
eligible to elect directors of the parent (or, if there is no parent, the Surviving Entity) and (C) at least 50% of the members
of the board of directors of the parent (or, if there is no parent, the Surviving Entity) following the consummation of the Business
Combination were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing
for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) of this
paragraph (c) will be deemed to be a “Non-Qualifying Transaction”); or


 


(d)          the
consummation of a sale of all or substantially all of Clipper Realty’s assets (other than to an affiliate of Clipper Realty);
or


 


(e)          Clipper
Realty’s stockholders approve a plan of complete liquidation or dissolution of Clipper Realty.


 




    	 	-2-	 



     


    

 


Notwithstanding the foregoing, a Change
in Control will not be deemed to occur solely because any person acquires beneficial ownership of more than 30% of the Company
Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of
Company Voting Securities outstanding; provided that if after such acquisition by the Company such person
becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a Change in Control will then occur.


 


1.2.7        “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.


 


1.2.8        “Committee”
has the meaning set forth in Section 1.3.1.


 


1.2.9        “Common
Stock” means the common stock of Clipper Realty, par value $0.01 per share, and any other securities or property
issued in exchange therefor or in lieu thereof pursuant to Section 1.6.3.


 


1.2.10        “Company”
means Clipper Realty and any Subsidiary, and any successor entity thereto.


 


1.2.11        “Company
Voting Securities” has the meaning provided in the definition of Change in Control.


 


1.2.12        “Consent”
has the meaning set forth in Section 3.3.2.


 


1.2.13        “Covered
Person” has the meaning set forth in Section 1.3.4.


 


1.2.14        “Effective
Date” has the meaning set forth in Section 3.23.


 


1.2.15        “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.


 


1.2.16        “Fair
Market Value” means, with respect to a Share, the closing price reported for the Common Stock on the applicable date
as reported on the New York Stock Exchange or, if not so reported, as determined in accordance with a valuation methodology
approved by the Committee, unless determined as otherwise specified herein. For purposes of the grant of any Award, the applicable
date will be the trading day on which the Award is granted or, if the date the Award is granted is not a trading day, the trading
day immediately prior to the date the Award is granted. For purposes of the exercise of any Award, the applicable date is the date
a notice of exercise is received by the Company or, if such date is not a trading day, the trading day immediately following the
date a notice of exercise is received by the Company.


 


1.2.17         “Grantee”
means a Non-Employee Director who receives an Award.


 


1.2.18         “Incumbent
Directors” has the meaning provided in the definition of Change in Control.


 


1.2.19         “LTIP
Units” has the meaning set forth in Section 2.7.1.





 





1.2.20         
“Non-Employee Director” has the meaning set forth in Section 1.1.


 






    	 	-3-	 



     


    

 


1.2.21       “Non-Qualifying
Transaction” has the meaning provided in the definition of Change in Control.


 


1.2.22       “Operating
Partnership” has the meaning set forth in Section 2.7.1.


 


1.2.23       
“Other Stock-Based or Cash-Based Awards” has the meaning set forth in Section 2.8.


 


1.2.24       “Plan”
has the meaning set forth in Section 1.1.


 


1.2.25       “Plan
Action” has the meaning set forth in Section 3.3.1.


 


1.2.26       “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.


 


1.2.27       “Securities
Act” means the Securities Act of 1933, as amended from time to time, or any successor thereto, and the applicable
rules and regulations thereunder.


 


1.2.28       “Share
Limit” has the meaning set forth in Section 1.6.1.


 


1.2.29       “Shares”
means shares of Common Stock.


 


1.2.30       “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.


 


1.2.31       “Surviving
Entity” has the meaning provided in the definition of Change in Control.


 


1.2.32       “Treasury
Regulations” means the regulations promulgated under the Code by the United States Treasury Department, as amended.


 


1.3   Administration


 


1.3.1       The
Compensation Committee of the Board (as constituted from time to time, and including any successor committee, the “Committee”)
will administer the Plan. In particular, the Committee will have the authority in its sole discretion to:


 


(a)          exercise
all of the powers granted to it under the Plan;


 


(b)          construe,
interpret and implement the Plan and all Award Agreements;


 


(c)          prescribe,
amend and rescind rules and regulations relating to the Plan, including rules governing the Committee’s own operations;





 


(d)          make
all determinations necessary or advisable in administering the Plan;


 






    	 	-4-	 



     


    

 


(e)          correct
any defect, supply any omission and reconcile any inconsistency in the Plan;


 


(f)          amend
the Plan to reflect changes in applicable law;


 


(g)          grant,
or recommend to the Board for approval to grant, Awards and determine who will receive Awards, when such Awards will be granted
and the terms of such Awards, including setting forth provisions with regard to the effect of a termination of directorship on
such Awards and conditioning the vesting of, or the lapsing of any applicable vesting restrictions or other vesting conditions
on, Awards upon continued service;


 


(h)          amend
any outstanding Award Agreement in any respect, including, without limitation, to


 


(1) accelerate the time or times at
which the Award becomes vested, unrestricted or may be exercised (and, in connection with such acceleration, the Committee may
provide that any Shares acquired pursuant to such Award will be restricted shares, which are subject to vesting, transfer, forfeiture
or repayment provisions similar to those in the Grantee’s underlying Award),


 


(2) accelerate the time or times at
which Shares are delivered under the Award (and, without limitation on the Committee’s rights, in connection with such acceleration,
the Committee may provide that any Shares delivered pursuant to such Award will be restricted shares, which are subject to vesting,
transfer, forfeiture or repayment provisions similar to those in the Grantee’s underlying Award),


 


(3) waive or amend any goals, restrictions,
vesting provisions or conditions set forth in such Award Agreement, or impose new goals, restrictions, vesting provisions and conditions
or


 


(4) reflect a change in the Grantee’s
circumstances (e.g., a change in position, duties or responsibilities); and


 


(i)          determine
at any time whether, to what extent and under what circumstances and method or methods, subject to Section 3.14,


 


(1) Awards may be


 


(A) settled in cash, Shares, other
securities, other Awards or other property (in which event, the Committee may specify what other effects such settlement will have
on the Grantee’s Award, including the effect on any repayment provisions under the Plan or Award Agreement),


 


(B) exercised or





 


(C) canceled, forfeited or suspended,


 






    	 	-5-	 



     


    

 


(2) Shares, other securities, other
Awards or other property and other amounts payable with respect to an Award may be deferred either automatically or at the election
of the Grantee thereof or of the Committee,


 


(3) to the extent permitted under
applicable law, loans (whether or not secured by Common Stock) may be extended by the Company with respect to any Awards,


 


(4) Awards may be settled by Clipper
Realty, any of its Subsidiaries or affiliates or any of their designees and


 


(5) the exercise price for any stock
option or stock appreciation right may be reset.


 


1.3.2        Actions
of the Committee may be taken by the vote of a majority of its members present at a meeting (which may be held telephonically).
Any action may be taken by a written instrument signed by a majority of the Committee members, and action so taken will be as fully
effective as if it had been taken by a vote at a meeting. The determination of the Committee on all matters relating to the Plan
or any Award Agreement will be final, binding and conclusive. The Committee may allocate among its members and delegate to any
person who is not a member of the Committee, or to any administrative group within the Company, any of its powers, responsibilities
or duties. In delegating its authority, the Committee will consider the extent to which any delegation may cause Awards to fail
to meet the requirements of Rule 16(b)-3(d)(1) or Rule 16(b)-3(e) under the Exchange Act. Except as specifically provided to the
contrary, references to the Committee include any administrative group, individual or individuals to whom the Committee has delegated
its duties and powers.


 


1.3.3        Notwithstanding
anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards
or administer the Plan. In any such case, the Board will have all of the authority and responsibility granted to the Committee
herein.


 


1.3.4        No
member of the Committee or any person to whom the Committee delegates its powers, responsibilities or duties in writing, including
by resolution (each such person, a “Covered Person”), will have any liability to any person (including
any Grantee) for any action taken or omitted to be taken or any determination made with respect to the Plan or any Award, except
as expressly provided by statute. Each Covered Person will be indemnified and held harmless by the Company against and from:


 


(a)          any
loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred by such Covered Person
in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such
Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement, in each
case, in good faith and


 





(b)          any
and all amounts paid by such Covered Person, with the Company’s approval, in settlement thereof, or paid by such Covered
Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person, provided that
the Company will have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company
gives notice of its intent to assume the defense, the Company will have sole control over such defense with counsel of the Company’s
choice.


 






    	 	-6-	 



     


    

 


The foregoing right of indemnification will
not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication,
in either case, not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the
indemnification claim resulted from such Covered Person’s bad faith, fraud or willful misconduct. The foregoing right of
indemnification will not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under Clipper
Realty’s articles of incorporation or bylaws, pursuant to any individual indemnification agreements between such Covered
Person and the Company, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such persons
or hold them harmless.


 


1.4   Persons
Eligible for Awards


 


Awards under the Plan may be made only to
Non-Employee Directors.


 


1.5   Types
of Awards Under Plan


 


Awards may be made under the Plan in the
form of cash-based or stock-based Awards. Stock-based Awards may be in the form of any of the following, in each case in respect
of Common Stock:


 


(a)          stock
options,


 


(b)          stock
appreciation rights,


 


(c)          restricted
shares,


 


(d)          restricted
stock units,


 


(e)          operating
partnership units


 


(f)          dividend
equivalent rights and


 


(g)          other
equity-based or equity-related Awards (as further described in Section 2.8), that the Committee determines to be consistent
with the purposes of the Plan and the interests of the Company.


 


1.6   Shares
of Common Stock Available for Awards


 


1.6.1        Common
Stock Subject to the Plan. Subject to the other provisions of this Section 1.6, the total number of Shares
that may be granted under the Plan will be 350,000 (the “Share Limit”). Aggregate Awards to any one Grantee
in respect of any fiscal year, solely with respect to his or her service as a director of the Board, may not exceed $1,000,000
based on the aggregate value of cash Awards and Fair Market Value of stock-based Awards, in each case, determined as of the date
of grant; provided that the limitation in this sentence will not apply to the grants of LTIP Units to non-employee
directors in connection with the Rule 144A offering of the Shares where such grants are disclosed to Clipper Realty’s stockholders
in the applicable offering memorandum.


 




    	 	-7-	 



     


    

 


1.6.2        Replacement
of Shares. Shares subject to an Award that is forfeited (including any restricted shares repurchased by the Company
at the same price paid by the Grantee so that such Shares are returned to the Company), expires or is settled for cash (in whole
or in part), to the extent of such forfeiture, expiration or cash settlement will be available for future grants of Awards under
the Plan and will be added back in the same number of Shares as were deducted in respect of the grant of such Award. The payment
of dividend equivalent rights in cash in conjunction with any outstanding Awards will not be counted against the Shares available
for issuance under the Plan. Shares tendered by a Grantee or withheld by the Company in payment of the exercise price of a stock
option or to satisfy any tax withholding obligation with respect to an Award will not again be available for Awards.


 


1.6.3        Adjustments.
The Committee will:


 


(a)          adjust
the number of Shares authorized pursuant to, and adjust the individual Grantee limitation set forth in, Section 1.6.1, and


 


(b)          adjust
the terms of any outstanding Awards (including, without limitation, the number of Shares covered by each outstanding Award, the
type of property or securities to which the Award relates and the exercise or strike price of any Award),


 


in such manner as it deems appropriate (including,
without limitation, by payment of cash) to prevent the enlargement or dilution of rights, as a result of any increase or decrease
in the number of issued Shares (or issuance of shares of stock other than Shares) resulting from a recapitalization, stock split,
reverse stock split, stock dividend, spinoff, split up, combination, reclassification or exchange of Shares, merger, consolidation,
rights offering, separation, reorganization or liquidation or any other change in the corporate structure or Shares, including
any extraordinary dividend or extraordinary distribution; provided that no such adjustment may be made if or to the
extent that it would cause an outstanding Award to cease to be exempt from, or to fail to comply with, Section 409A of the Code.


 


ARTICLE
II

AWARDS UNDER THE PLAN


 


2.1    Agreements
Evidencing Awards


 


Each Award granted under the Plan will be evidenced by an Award
Agreement that will contain such provisions and conditions as the Committee deems appropriate. Unless otherwise provided herein,
the Committee may grant Awards in tandem with or, subject to Section 3.14, in substitution for or satisfaction of any other
Award or Awards granted under the Plan or any award granted under any other plan of the Company. By accepting an Award pursuant
to the Plan, a Grantee thereby agrees that the Award will be subject to all of the terms and provisions of the Plan and the applicable
Award Agreement.




    	 	-8-	 



     


    

 


2.2   No
Rights as a Stockholder


 


No Grantee (or other person having rights pursuant to an Award)
will have any of the rights of a stockholder of Clipper Realty with respect to Shares subject to an Award until the delivery
of such Shares. Except as otherwise provided in Section 1.6.3, no adjustments will be made for dividends, distributions
or other rights (whether ordinary or extraordinary, and whether in cash, Common Stock, other securities or other property) for
which the record date is before the date the Certificates for the Shares are delivered, or in the event the Committee elects to
use another system, such as book entries by the transfer agent, before the date in which such system evidences the Grantee’s
ownership of such Shares.


 


2.3   Options


 


2.3.1        Grant.
Stock options may be granted to eligible recipients in such number and at such times during the term of the Plan as the Committee
may determine.


 


2.3.2        Exercise
Price. The exercise price per share with respect to each stock option will be determined by the Committee but, except
as otherwise permitted by Section 1.6.3, may never be less than the Fair Market Value of a share of Common Stock. Unless
otherwise noted in the Award Agreement, the Fair Market Value of the Common Stock will be its Fair Market Value on the date of
grant of the Award of stock options.


 


2.3.3        Term
of Stock Option. In no event will any stock option be exercisable after the expiration of 10 years from the date
on which the stock option is granted.


 


2.3.4        Vesting
and Exercise of Stock Option and Payment for Shares. A stock option may vest and be exercised at such time or times
and subject to such terms and conditions as will be determined by the Committee at the time the stock option is granted and set
forth in the Award Agreement. Subject to any limitations in the applicable Award Agreement, any Shares not acquired pursuant to
the exercise of a stock option on the applicable vesting date may be acquired thereafter at any time before the final expiration
of the stock option.


 


To exercise a stock option, the Grantee
must give written notice to the Company specifying the number of Shares to be acquired and accompanied by payment of the full purchase
price therefor in cash or by certified or official bank check or in another form as determined by the Company, which may include:


 


(a)       personal check,


 


(b)       Shares, based on the Fair Market Value
as of the exercise date,


 


(c)       any
other form of consideration approved by the Company and permitted by applicable law and


 


(d)       any
combination of the foregoing.


 




    	 	-9-	 



     


    

 


The Committee may also make arrangements
for the cashless exercise of a stock option. Any person exercising a stock option will make such representations and agreements
and furnish such information as the Committee may, in its sole discretion, deem necessary or desirable to effect or assure compliance
by the Company on terms acceptable to the Company with the provisions of the Securities Act, the Exchange Act and any other applicable
legal requirements. The Committee may, in its sole discretion, also take whatever additional actions it deems appropriate to effect
such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents
and registrars. If a Grantee so requests, Shares acquired pursuant to the exercise of a stock option may be issued in the name
of the Grantee and another jointly with the right of survivorship.


 


2.3.5        Repricing.
Except as otherwise permitted by Section 1.6.3, reducing the exercise price of stock options issued and outstanding
under the Plan, including through amendment, cancellation in exchange for the grant of a substitute Award or repurchase for cash
or other consideration (in each case that has the effect of reducing the exercise price), will require approval of Clipper Realty’s
stockholders.


 


2.4    Stock
Appreciation Rights


 


2.4.1        Grant.
Stock appreciation rights may be granted to eligible recipients in such number and at such times during the term of the Plan
as the Committee may determine.


 


2.4.2        Exercise
Price. The exercise price per share with respect to each stock appreciation right will be determined by the Committee
but, except as otherwise permitted by Section 1.6.3, may never be less than the Fair Market Value of the Common Stock. Unless
otherwise noted in the Award Agreement, the Fair Market Value of the Common Stock will be its Fair Market Value on the date
of grant of the Award of stock appreciation rights.


 


2.4.3        Term
of Stock Appreciation Right. In no event will any stock appreciation right be exercisable after the expiration of
10 years from the date on which the stock appreciation right is granted.


 


2.4.4        Vesting
and Exercise of Stock Appreciation Right and Delivery of Shares. Each stock appreciation right may vest and be exercised
in such installments as may be determined in the Award Agreement at the time the stock appreciation right is granted. Subject to
any limitations in the applicable Award Agreement, any stock appreciation rights not exercised on the applicable vesting date may
be exercised thereafter at any time before the final expiration of the stock appreciation right.


 


To exercise a stock appreciation right,
the Grantee must give written notice to the Company specifying the number of stock appreciation rights to be exercised. Upon exercise
of stock appreciation rights, Shares, cash or other securities or property, or a combination thereof, as specified by the Committee,
equal in value to:


 


(a)        the
excess of:


 


(1)        the Fair Market Value of the
Common Stock on the date of exercise over


 


(2)        the exercise price of such
stock appreciation right


 




    	 	-10-	 



     


    

 


multiplied by


 


(b)          the
number of stock appreciation rights exercised, will be delivered to the Grantee.


 


Any person exercising a stock appreciation
right will make such representations and agreements and furnish such information as the Committee may, in its sole discretion,
deem necessary or desirable to effect or assure compliance by the Company on terms acceptable to the Company with the provisions
of the Securities Act, the Exchange Act and any other applicable legal requirements. If a Grantee so requests, Shares purchased
may be issued in the name of the Grantee and another jointly with the right of survivorship.


 


2.4.5        Repricing.
Except as otherwise permitted by Section 1.6.3, reducing the exercise price of stock appreciation rights issued and outstanding
under the Plan, including through amendment, cancellation in exchange for the grant of a substitute Award or repurchase for cash
or other consideration (in each case that has the effect of reducing the exercise price), will require approval of Clipper Realty’s
stockholders.


 


2.5    Restricted
Shares


 


2.5.1        Grants.
The Committee may grant or offer for sale restricted shares in such amounts and subject to such terms and conditions as the
Committee may determine. Upon the delivery of such shares, the Grantee will have the rights of a stockholder with respect to the
restricted shares, subject to any other restrictions and conditions as the Committee may include in the applicable Award Agreement.
Each Grantee of an Award of restricted shares will be issued a Certificate in respect of such shares, unless the Committee elects
to use another system, such as book entries by the transfer agent, as evidencing ownership of such shares. In the event that a
Certificate is issued in respect of restricted shares, such Certificate may be registered in the name of the Grantee, and will,
in addition to such legends required by applicable securities laws, bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such Award, but will be held by the Company or its designated agent until the time the restrictions
lapse.


 


2.5.2        Right
to Vote and Receive Dividends on Restricted Shares. Each Grantee of an Award of restricted shares will, during the
period of restriction, be the beneficial and record owner of such restricted shares and will have full voting rights with respect
thereto. Unless the Committee determines otherwise in an Award Agreement, during the period of restriction, all ordinary cash dividends
or other ordinary distributions paid upon any restricted share will be paid to the relevant Grantee (any extraordinary dividends
or other extraordinary distributions will be treated in accordance with Section 1.6.3).


 






    	 	-11-	 



     


    

 


2.6    Restricted
Stock Units


 





The Committee may grant Awards of restricted
stock units in such amounts and subject to such terms and conditions as the Committee may determine. A Grantee of a restricted
stock unit will have only the rights of a general unsecured creditor of Clipper Realty, until delivery of Shares, cash or other
securities or property is made as specified in the applicable Award Agreement. On the delivery date specified in the Award Agreement,
the Grantee of each restricted stock unit not previously forfeited or terminated will receive one share of Common Stock, cash or
other securities or property equal in value to a share of Common Stock or a combination thereof, as specified by the Committee.
Unless otherwise specified in an Award Agreement, in the event that a Grantee is removed or terminated as a director, or otherwise
ceases to be a director of the Company, then, subject to and in accordance with the terms of this Plan, each vested restricted
stock unit then held by the Grantee as of the date of such cessation of services will be settled as of such date.


  


2.7   LTIP
Units


 


2.7.1        Grants.
The Committee may grant Awards of undivided fractional limited partnership interests in Clipper Realty L.P., a Maryland limited
partnership (together with any successor entity, the “Operating Partnership”), the entity through which
Clipper Realty conducts its business and an entity that has elected to be treated as a partnership for federal income tax purposes,
of one or more classes (“LTIP Units”) established pursuant to the Operating Partnership’s agreement
of limited partnership, as amended from time to time. Awards of LTIP Units will be valued by reference to, or otherwise determined
by reference to or based on, Shares, and may be in such amounts and subject to such terms and conditions as the Committee may determine.
LTIP Units awarded under the Plan may be (1) convertible, exchangeable or redeemable for other limited partnership interests in
the Operating Partnership or Shares, or (2) valued by reference to the book value, fair value or performance of the Operating Partnership.
Awards of LTIP Units are intended to qualify as “profits interests” within the meaning of IRS Revenue Procedure 93-27,
as clarified by IRS Revenue Procedure 2001-43, with respect to a Grantee in the Plan who is rendering services to or for the benefit
of the Operating Partnership, including its Subsidiaries.


 


2.7.2        Calculation
of Share Amount. In order to calculate the number of Shares underlying an award of LTIP Units for purposes of the Share
Limit, the Committee will establish in good faith the maximum number of Shares to which a Grantee receiving such award of LTIP
Units may be entitled upon fulfillment of all applicable conditions set forth in the relevant award documentation, including vesting
conditions, partnership capital account allocations, value accretion factors, conversion ratios, exchange ratios and other similar
criteria. If and when any such conditions are no longer capable of being met, in whole or in part, the number of Shares underlying
such awards of LTIP Units (and for purposes of the Share Limit) will be reduced accordingly by the Committee. Awards of LTIP Units
may be granted either alone or in addition to other Awards. The Committee may allow awards of LTIP Units to be held through a limited
partnership, or similar “look-through” entity, and the Committee may require such limited partnership or similar entity
to impose restrictions on its partners or other beneficial owners that are not inconsistent with the provisions of this Section
2.7. For the avoidance of doubt, LTIP Units awarded under this Section 2.7 may be issued for no cash consideration.


 






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2.8   Dividend
Equivalent Rights


 





The Committee may include in the Award Agreement with respect
to any Award a dividend equivalent right entitling the Grantee to receive amounts equal to all or any portion of the regular cash
dividends that would be paid on the Shares covered by such Award if such Shares had been delivered pursuant to such Award. The
grantee of a dividend equivalent right will have only the rights of a general unsecured creditor of Clipper Realty until
payment of such amounts is made as specified in the applicable Award Agreement. In the event such a provision is included in an
Award Agreement, the Committee will determine whether such payments will be made in cash, in Shares or in another form (including,
but not limited to, additional LTIP Units), whether they will be conditioned upon the exercise of the Award to which they relate
(subject to compliance with Section 409A of the Code), the time or times at which they will be made, and such other terms and conditions
as the Committee will deem appropriate.


 


2.9   Other
Stock-Based or Cash-Based Awards


 


The Committee may grant other types of equity-based, equity-related
or cash-based Awards (including retainers and meeting-based fees and the grant or offer for sale of unrestricted Shares, performance
share awards, performance units settled in cash) (“Other Stock-Based or Cash-Based Awards”) in such amounts
and subject to such terms and conditions as the Committee may determine. Such Awards may entail the transfer of actual Shares to
Award recipients and may include Awards designed to comply with or take advantage of the applicable local laws of jurisdictions
other than the United States.


 


2.10   Repayment
If Conditions Not Met


 


If the Committee determines that all terms and conditions of
the Plan and a Grantee’s Award Agreement were not satisfied, and that the failure to satisfy such terms and conditions is
material, then the Grantee will be obligated to pay the Company immediately upon demand therefor, (a) with respect to a stock option
and a stock appreciation right, an amount equal to the excess of the Fair Market Value (determined at the time of exercise) of
the Shares that were delivered in respect of such exercised stock option or stock appreciation right, as applicable, over the exercise
price paid therefor, (b) with respect to restricted shares, an amount equal to the Fair Market Value (determined at the time such
shares became vested) of such restricted shares and (c) with respect to restricted stock units, an amount equal to the Fair Market
Value (determined at the time of delivery) of the Shares delivered with respect to the applicable delivery date, in each case with
respect to clauses (a), (b) and (c) of this Section 2.10, without reduction for any amount applied to satisfy withholding
tax or other obligations in respect of such Award.


 


ARTICLE
III

MISCELLANEOUS


 


3.1    Amendment
of the Plan


 


3.1.1        Unless
otherwise provided in the Plan or in an Award Agreement, the Board may at any time and from time to time suspend, discontinue,
revise or amend the Plan in any respect whatsoever but, subject to Sections 1.3, 1.6.3 and 3.7, no
such amendment may materially adversely impair the rights of the Grantee of any Award without the Grantee’s consent. Subject
to Sections 1.3, 1.6.3 and 3.7, an Award Agreement may not be amended to materially adversely impair
the rights of a Grantee without the Grantee’s consent.


 




    	 	-13-	 



     


    

 


3.1.2        Unless
otherwise determined by the Board, stockholder approval of any suspension, discontinuance, revision or amendment will be obtained
only to the extent necessary to comply with any applicable laws, regulations or rules of a securities exchange or self-regulatory
agency.


 


3.2   Tax
Withholding


 


Grantees 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, vesting or exercise of any Award. As a condition to the delivery of any Shares, cash or other securities
or property pursuant to any Award 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, the Federal Insurance Contributions Act (FICA) tax),


 


(a)          the
Company may deduct or withhold (or cause to be deducted or withheld) from any payment or distribution to a Grantee whether or not
pursuant to the Plan (including Shares otherwise deliverable),


 


(b)          the
Committee will be entitled to require that the Grantee remit cash to the Company (through payroll deduction or otherwise) or


 


(c)          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.


 


3.3   Required
Consents and Legends


 


3.3.1        If
the Committee at any time determines that any Consent (as hereinafter defined) is necessary or desirable as a condition of, or
in connection with, the granting of any Award, the delivery of Shares or the delivery of any cash, securities or other property
under the Plan, or the taking of any other action thereunder (each such action a “Plan Action”), then,
subject to Section 3.14, such Plan Action will not be taken, in whole or in part, unless and until such Consent will have
been effected or obtained to the full satisfaction of the Committee. The Committee may direct that any Certificate evidencing Shares
delivered pursuant to the Plan will bear a legend setting forth such restrictions on transferability as the Committee may determine
to be necessary or desirable, and may advise the transfer agent to place a stop transfer order against any legended shares.


 


3.3.2        The
term “Consent” as used in this Article III with respect to any Plan Action includes:


 


(a)          any
and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state,
or local law, or law, rule or regulation of a jurisdiction outside the United States,


 


(b)          any
and all written agreements and representations by the Grantee with respect to the disposition of Shares, or with respect to any
other matter, which the Committee may deem necessary or desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made,


 




    	 	-14-	 



     


    

 


(c)          any
and all other consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory body or any
stock exchange or self-regulatory agency,


 


(d)          any
and all consents by the Grantee to:


 


(i)          the
Company’s supplying to any third party recordkeeper of the Plan such personal information as the Committee deems advisable
to administer the Plan,


 


(ii)         the
Company’s deducting amounts from the Grantee’s wages, or another arrangement satisfactory to the Committee, to reimburse
the Company for advances made on the Grantee’s behalf to satisfy certain withholding and other tax obligations in connection
with an Award and


 


(iii)        the
Company’s imposing sales and transfer procedures and restrictions and hedging restrictions on Shares delivered under the
Plan and


 


(e)          any
and all consents or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise
required by the Committee. Nothing herein will require the Company to list, register or qualify the Shares on any securities exchange.


 


3.4   Right
of Offset


 


The Company will have the right to offset against its obligation
to deliver Shares (or other property or cash) under the Plan or any Award Agreement 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 programs) that the Grantee 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 of the Code, the Committee
will have no right to offset against its obligation to deliver Shares (or other property or cash) under the Plan or any Award Agreement
if such offset could subject the Grantee to the additional tax imposed under Section 409A of the Code in respect of an outstanding
Award.


 


3.5   Nonassignability;
No Hedging


 


Unless otherwise provided in an Award Agreement, no Award (or
any rights and obligations thereunder) granted to any person 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,
and all such Awards (and any rights thereunder) will be exercisable during the life of the Grantee only by the Grantee or the Grantee’s
legal representative. Notwithstanding the foregoing, the Committee may permit, under such terms and conditions that it deems appropriate
in its sole discretion, a Grantee 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 3.5 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 Agreements will be binding upon any permitted successors and assigns.


 




    	 	-15-	 



     


    

 


3.6   Change
in Control


 


3.6.1        Unless
the Committee determines otherwise or as otherwise provided in the applicable Award Agreement, each Award will become fully vested
(including the lapsing of all restrictions and conditions) and, as applicable, exercisable upon a Change in Control, and any Shares
deliverable pursuant to restricted stock units will be delivered promptly (but no later than 15 days) following such Change in
Control.


 


3.6.2        In
the event of a Change in Control, a Grantee’s Award will be treated, to the extent determined by the Committee to be permitted
under Section 409A, in accordance with one or more of the following methods as determined by the Committee in its sole discretion:
(i) settle such Awards for an amount (as determined in the sole discretion of the Committee) of cash or securities, where in the
case of stock options and stock appreciation rights, the value of such amount, if any, will be equal to the in-the-money spread
value (if any) of such awards; (ii) provide for the assumption of or the issuance of substitute awards that will substantially
preserve the otherwise applicable terms of any affected Awards previously granted under the Plan, as determined by the Committee
in its sole discretion; (iii) modify the terms of such awards to add events, conditions or circumstances (including termination
of directorship within a specified period after a Change in Control) upon which the vesting of such Awards or lapse of restrictions
thereon will accelerate; (iv) deem any performance conditions satisfied at target, maximum or actual performance through closing
or provide for the performance conditions to continue (as is or as adjusted by the Committee) after closing or (v) provide that
for a period of at least 20 days prior to the Change in Control, any stock options or stock appreciation rights that would not
otherwise become exercisable prior to the Change in Control will be exercisable as to all Shares subject thereto (but any such
exercise will be contingent upon and subject to the occurrence of the Change in Control and if the Change in Control does not take
place within a specified period after giving such notice for any reason whatsoever, the exercise will be null and void) and that
any stock options or stock appreciation rights not exercised prior to the consummation of the Change in Control will terminate
and be of no further force and effect as of the consummation of the Change in Control. For the avoidance of doubt, in the event
of a Change in Control where all stock options and stock appreciation rights are settled for an amount (as determined in the sole
discretion of the Committee) of cash or securities, the Committee may, in its sole discretion, terminate any stock option or stock
appreciation right for which the exercise price is equal to or exceeds the per share value of the consideration to be paid in the
Change in Control transaction without payment of consideration therefor. Similar actions to those specified in this Section
3.6.2 may be taken in the event of a merger or other corporate reorganization that does not constitute a Change in Control.


 






    	 	-16-	 



     


    

 


3.7   Right
of Discharge Reserved





 


Neither the adoption of the Plan nor the grant of any Award
(or any provision in the Plan or Award Agreement) will (1) confer upon any Grantee the right to remain in the service of Clipper
Realty or any of its Subsidiaries as a Non-Employee Director, (2) affect any right which Clipper Realty or any of its Subsidiaries
may have to terminate or alter the terms and conditions of such service or (3) create any obligation on behalf of the Board to
nominate any Non-Employee Director for re-election to the Board by Clipper Realty’s stockholders.


 


3.8   Nature
of Payments


 


3.8.1        Any
and all grants of Awards and deliveries of Common Stock, cash, securities or other property under the Plan will be in consideration
of services performed or to be performed for the Company by the Grantee. Awards under the Plan may, in the discretion of the Committee,
be made in substitution in whole or in part for cash or other compensation otherwise payable to a Grantee. Only whole Shares will
be delivered under the Plan. Awards will, to the extent reasonably practicable, be aggregated in order to eliminate any fractional
shares. Fractional shares may, in the discretion of the Committee, be forfeited or be settled in cash or otherwise as the Committee
may determine.


 


3.8.2        All
such grants and deliveries of Shares, cash, securities or other property under the Plan will constitute a special discretionary
incentive payment to the Grantee, will not entitle the Grantee to the grant of any future Awards and will not be required to be
taken into account in computing the amount of salary or compensation of the Grantee for the purpose of determining any contributions
to or any benefits under any pension, retirement, profit-sharing, bonus, life insurance, severance or other benefit plan of the
Company or under any agreement with the Grantee, unless the Company specifically provides otherwise.


 


3.9    Non-Uniform
Determinations


 


3.9.1        The
Committee’s determinations under the Plan and Award Agreements 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). Without limiting the generality of the foregoing, the Committee will be entitled, among other things, to make
non-uniform and selective determinations under Award Agreements, and to enter into non-uniform and selective Award Agreements,
as to (a) the persons to receive Awards, (b) the terms and provisions of Awards and (c) whether a Grantee’s directorship
has been terminated for purposes of the Plan.


 


3.9.2        To
the extent the Committee deems it necessary, appropriate or desirable to comply with foreign law or practices and to further the
purposes of the Plan, the Committee may, in its sole discretion and without amending the Plan, establish special rules applicable
to Awards to Grantees who are foreign nationals and grant Awards (or amend existing Awards) in accordance with those rules.


 






    	 	-17-	 



     


    

 


3.10    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.





 


3.11    Plan
Headings


 


The headings in the Plan are for the purpose of convenience
only and are not intended to define or limit the construction of the provisions hereof.


 


3.12    Termination
of Plan


 


The Board reserves the right to terminate the Plan at any time;
provided, however, that in any case, the Plan will terminate on the day before the tenth anniversary of the
Effective Date, and provided further, that all Awards made under the Plan before its termination will
remain in effect until such Awards have been satisfied or terminated in accordance with the terms and provisions of the Plan and
the applicable Award Agreements.


 


3.13    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 Grantee.


 


3.14    Section
409A


 


3.14.1         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. To the extent necessary to give effect to this
intent, in the case of any conflict or potential inconsistency between the Plan and a provision of any Award or Award Agreement
with respect to an Award, the Plan will govern.


 


3.14.2         Without
limiting the generality of Section 3.14.1, with respect to any Award made under the Plan that is intended to be “deferred
compensation” subject to Section 409A:


 


(a)          any
payment due upon a Grantee’s ceasing to provide services to the Company will be paid only upon such Grantee’s separation
from service from the Company within the meaning of Section 409A;


 


(b)        any payment to be made with respect
to such Award in connection with the Grantee’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 Grantee’s separation from service (or earlier death) in accordance with the requirements of Section 409A;


 






    	 	-18-	 



     


    

 


(c)          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) of the Code, 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;





 


(d)          to
the extent necessary to comply with Section 409A, any other securities, other Awards or other property that the Company may deliver
in lieu of Shares in respect of an Award will not have the effect of deferring delivery or payment beyond the date on which such
delivery or payment would occur with respect to the Shares that would otherwise have been deliverable (unless the Committee elects
a later date for this purpose in accordance with the requirements of Section 409A);


 


(e)          with
respect to any required Consent described in Section 3.3 or the applicable Award Agreement, if such Consent has not been
effected or obtained as of the latest date provided by such Award Agreement for payment in respect of such Award and further delay
of payment is not permitted in accordance with the requirements of Section 409A, such Award or portion thereof, as applicable,
will be forfeited and terminate notwithstanding any prior earning or vesting;


 


(f)          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 Grantee’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;


 


(g)          if
the Award includes “dividend equivalents” (within the meaning of Section 1.409A-3(e) of the Treasury Regulations),
the Grantee’s right to the dividend equivalents will be treated separately from the right to other amounts under the Award;
and


 


(h)          for
purposes of determining whether the Grantee 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.


 


3.15    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.


 






    	 	-19-	 



     


    

 


3.16         Disputes;
Choice of Forum








 


3.16.1         The
Company and each Grantee, as a condition to such Grantee’s participation in the Plan, hereby irrevocably submit to the exclusive
jurisdiction of any state or federal court located in the County of Manhattan, State of New York, over any suit, action or proceeding
arising out of or relating to or concerning the Plan or, to the extent not otherwise specified in any individual agreement between
the Company and the Grantee, any aspect of the Grantee’s continuation of service with the Company or the termination of that
service. The Company and each Grantee, as a condition to such Grantee’s participation in the Plan, acknowledge that the forum
designated by this Section 3.16.1 has a reasonable relation to the Plan and to the relationship between such Grantee and
the Company. Notwithstanding the foregoing, nothing herein will preclude the Company from bringing any action or proceeding in
any other court for the purpose of enforcing the provisions of this Section 3.16.1.


 


3.16.2         The
agreement by the Company and each Grantee as to forum is independent of the law that may be applied in the action, and the Company
and each Grantee, as a condition to such Grantee’s participation in the Plan, (i) agree to such forum even if the forum may
under applicable law choose to apply non-forum law, (ii) hereby waive, to the fullest extent permitted by applicable law, any objection
which the Company or such Grantee now or hereafter may have to personal jurisdiction or to the laying of venue of any such suit,
action or proceeding in any court referred to in Section 3.16.1, (iii) undertake not to commence any action arising out
of or relating to or concerning the Plan in any forum other than the forum described in this Section 3.16 and (iv)
agree that, to the fullest extent permitted by applicable law, a final and non-appealable judgment in any such suit, action or
proceeding in any such court will be conclusive and binding upon the Company and each Grantee.


 


3.16.3         Each
Grantee, as a condition to such Grantee’s participation in the Plan, hereby irrevocably appoints the General Counsel of the
Company as such Grantee’s agent for service of process in connection with any action, suit or proceeding arising out of or
relating to or concerning the Plan, who will promptly advise such Grantee of any such service of process.


 


3.16.4         Each
Grantee, as a condition to such Grantee’s participation in the Plan, agrees to keep confidential the existence of, and any
information concerning, a dispute, controversy or claim described in Section 3.18, except that a Grantee may disclose information
concerning such dispute, controversy or claim to the court that is considering such dispute, controversy or claim or to such Grantee’s
legal counsel (provided that such counsel agrees not to disclose any such information other than as necessary to the prosecution
or defense of the dispute, controversy or claim).


 


3.17         Waiver
of Jury Trial


 


EACH GRANTEE WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THE PLAN.


 






    	 	-20-	 



     


    

 


3.18    Waiver
of Claims


 


Each Grantee of an Award recognizes and agrees that before being
selected by the Committee to receive an Award the Grantee has no right to any benefits under the Plan. Accordingly, in consideration
of the Grantee’s receipt of any Award hereunder, the Grantee expressly waives any right to contest the amount of any Award,
the terms of any Award Agreement, any determination, action or omission hereunder or under any Award Agreement by the Committee,
the Company or the Board, or any amendment to the Plan or any Award Agreement (other than an amendment to the Plan or an Award
Agreement to which his or her consent is expressly required by the express terms of an Award Agreement). Nothing contained in the
Plan, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary
relationship between the Company and any Grantee. The Plan is not intended to be subject to the Employee Retirement Income Security
Act of 1974 (ERISA), as amended.





 


3.19    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.


 


3.20    No
Liability With Respect to Tax Qualification or Adverse Tax Treatment


 


Notwithstanding anything to the contrary contained herein, in
no event will the Company be liable to a Grantee on account of an Award’s failure to (a) qualify for favorable United States
or foreign tax treatment or (b) avoid adverse tax treatment under United States or foreign law, including, without limitation,
Section 409A.


 


3.21    No
Third-Party Beneficiaries


 


Except as expressly provided in an Award Agreement, neither
the Plan nor any Award Agreement will confer on any person other than the Company and the Grantee of any Award any rights or remedies
thereunder. The exculpation and indemnification provisions of Section 1.3.4 will inure to the benefit of a Covered Person’s
estate and beneficiaries and legatees.


 


3.22    Successors
and Assigns of the Company


 


The terms of the Plan will be binding upon and inure to the
benefit of the Company and any successor entity, including as contemplated by Section 3.6.


 






    	 	-21-	 



     


    

 


3.23    Date
of Adoption and Approval of Stockholders


 


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


 




    	 	-22-