ex10-1.htm


    Exhibit
      10.1

    


      CENTERLINE
        HOLDING COMPANY

       

      ROSS
        NON-QUALIFIED SHARE OPTION AGREEMENT

       

      THIS
        NON-QUALIFIED SHARE OPTION
        AGREEMENT (this “Agreement”) is made as of July 13,
        2007 (the “Grant Date”), by and between Centerline
        Holding Company, a Delaware statutory trust (the
“Company”), and Stephen M. Ross (the
“Optionee”).

       

      WHEREAS,
        in consideration of the Optionee agreeing to serve as Non-Executive Chairman
        of
        the Board of Trustees of the Company (“Non-Executive
        Chairman”), the Company has undertaken to issue to the Optionee an
        option to purchase common shares of beneficial interest of the Company (the
        “Company Shares”) in accordance with the further terms
        of this Agreement.

       

      NOW,
        THEREFORE, the parties hereto agree as follows:

       

      Section
        1.               Grant
        of Option.

       

      The
        Company hereby grants to the Optionee the right and option (the
“Option”) to purchase all or any part of an aggregate
        of 800,000 common shares of beneficial interest of the Company (the
“Option Shares”), subject to, and in accordance with,
        the terms and conditions set forth in this Agreement.  The Option is
        not intended to qualify as an Incentive Stock Option within the meaning of
        Section 422 of the Internal Revenue Code of 1986, as amended.

       

      Section
        2.               Purchase
        Price.

       

      The
        price
        at which the Optionee shall be entitled to purchase Option Shares upon the
        exercise of the Option shall be $17.78 per Option
        Share.

       

      Section
        3.               Shares
        Subject to this Agreement.

       

      The
        Company shall reserve for issuance, for the purposes of this Agreement, out
        of
        its authorized but unissued Company Shares, or out of Company Shares held
        in the
        Company’s treasury, or partly out of each, the Option Shares.  If the
        Option expires or terminates, according to the applicable provisions hereunder,
        for any reason without having been exercised in full, the Optionee shall
        not
        have any rights with respect to the Company Shares subject to the unexercised
        portion of the Option.

       

      Section
        4.               Duration
        of the Option.

       

      The
        Option shall be exercisable to the extent and in the manner provided herein
        to
        and including November 17, 2013 (the “Exercise Term”);
provided, however, that the Option may be terminated
        earlier as
        provided in Section 5(b), 7(a), 7(b), 11(a) or 11(b).  Any unexercised
        portion of the Option that is not exercised during the Exercise Term shall
        be
        deemed

       


      
        
          
          

        

        
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      terminated
        at the end of the Exercise Term (or at such earlier time as provided in Section
        5(b), 7(a), 7(b), 11(a) or 11(b)).

       

      Section
        5.               Exercisability
        of Option.

       

      (a)           Unless
        otherwise provided in this Agreement, the Option shall entitle the Optionee
        to
        purchase, in whole at any time, or in part from time to time, 400,000 of
        the
        total number of Option Shares covered by the Option on and after the date
        hereof, an additional 200,000 Option Shares on and after November 17, 2007,
        and
        the remaining 200,000 Option Shares on and after November 17, 2008, and each
        such right of purchase shall be cumulative and shall continue, unless sooner
        exercised or terminated as herein provided, during the remaining period of
        the
        Exercise Term.

       

      (b)           If
        the Optionee dies during the Exercise Term and the Option has not otherwise
        terminated in accordance with the terms of this Agreement, all Option Shares
        covered by the Option that have not already vested pursuant to Section 5(a)
        shall vest upon the death of the Optionee and the unexercised portion of
        the
        Option may be exercised during the Exercise Term by the executor or
        administrator of the Optionee’s estate, or by the person(s) to whom the
        unexercised portion of the Option is transferred by will or the laws of decent
        and distribution.

       

      Section
        6.               Manner
        of Exercise and Payment.

       

      (a)           Subject
        to the terms and conditions of this Agreement, the Option may be exercised
        by
        delivery of written notice to the Company, in substantially the form attached
        hereto as Appendix I, at its principal executive office.  Such
        notice shall state that the Optionee is electing to exercise the Option and
        the
        number of Option Shares to be exercised under the Option and shall be signed
        by
        the Optionee.  If requested by the Company, the Optionee shall (i)
        deliver this Agreement to the Company which shall endorse thereon a notation
        of
        such exercise and (ii) provide satisfactory proof as to the right of the
        Optionee to exercise the Option.

       

      (b)           The
        notice of exercise described in Section 6(a) hereof shall be accompanied by
        the full purchase price for the Option Shares to be acquired under the Option
        by
        any one or a combination of the following: (i) cash (by certified check or
        wire
        transfer of immediately available funds), (ii) if requested by the Optionee,
        to
        the extent permitted by applicable law, transferring fully paid Company Shares
        held at least six (6) months to the Company with a Fair Value (as defined
        in
        Section 15(c) below) equal to the aggregate purchase price (less any portion
        paid in cash pursuant to clause (i) or by the surrender of a vested right
        to
        Option Shares pursuant to clause (iii)) or (iii) if requested by the Optionee,
        to the extent permitted by applicable law, surrendering the vested right
        of the
        Optionee to exercise this Option for Option Shares with a Fair Value in excess
        of the Exercise Price for such Option Shares equal to the aggregate purchase
        price (less any portion paid in cash pursuant to clause (i) or by transfer
        of
        Company Shares pursuant to clause (ii)).  In addition, the Optionee
        may provide instructions to the Company that upon receipt of the Option purchase
        price in cash, by certified check or by wire transfer of immediately available
        funds, from a broker or dealer acting at the direction of the Optionee, in
        payment for any Option Shares pursuant to the exercise of the Option, the
        Company shall issue such Option Shares directly to the designated broker
        or
        dealer.  Any Company Shares to be valued in connection with a transfer
        of Company Shares to the Company

       


      
        
          
          

        

        
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      or
        Option
        Shares to be valued in connection with a surrender of vested rights to exercise
        this Option for Option Shares as payment of the purchase price under the
        Option
        shall be valued at their Fair Value on the day preceding the date of exercise
        of
        the Option.  No fractional Option Shares (or cash in lieu thereof)
        shall be issued upon exercise of an Option and the number of Option Shares
        that
        may be purchased upon exercise shall be rounded to the nearest number of
        whole
        Option Shares.

       

      (c)           Upon
        receipt of notice of exercise and full payment for the Option Shares in respect
        of which the Option is being exercised, the Company shall, subject to Section
        9
        of this Agreement, take such action as may be necessary to effect the transfer
        to the Optionee of the number of Option Shares as to which such exercise
        was
        effective within five (5) Business Days thereof, including, without limitation,
        issuing and delivering the
        Option
        Shares to the Optionee and entering the Optionee’s name as a shareholder of
        record on the books of the Company with respect to the Option
        Shares.

       

      (d)           The
        Optionee shall not be deemed to be
        the holder of, or to have any of the rights of a holder with respect to,
        any
        Option Shares subject to the Option until (i) the Option shall have been
        exercised pursuant to the terms of this Agreement and the Optionee shall
        have
        paid the full purchase price for the number of Option Shares to be acquired
        under the Option, (ii) the Company shall have issued and delivered the
        Option Shares to the Optionee, and (iii) the Optionee’s name shall have
        been entered as a shareholder of record on the books of the Company with
        respect
        to the Option Shares, whereupon the Optionee shall have full voting and other
        ownership rights with respect to such Option Shares.  Except as
        otherwise expressly provided in this Agreement, no adjustment shall be made
        for
        cash dividends or other distributions or rights for which the record date
        is
        prior to the date on which any Option Shares are issued.

       

      Section
        7.              Termination
        of Option.

       

      (a)           Service
        as Non-Executive Chairman.  Except to the extent otherwise
        provided in Section 5(b), if the Optionee resigns, retires or otherwise
        voluntarily ceases to serve as Non-Executive Chairman or as a Managing Trustee
        of the Company, the right to exercise the Option shall terminate immediately
        on
        the date the Optionee resigns, retires or otherwise voluntarily ceases to
        serve
        as Non-Executive Chairman or as a Managing Trustee with respect to any Option
        Shares that have not vested on such date.  The Optionee may exercise
        the Option with respect to any Option Shares that have vested prior to such
        date
        during the Exercise Period.

       

      (b)           Breach
        of Future Relations Agreement.  In the event the Optionee or the
        Contributor Affiliated Parties (as defined in the Future Relations Agreement,
        dated as of November 17, 2003 (the “Future Relations
        Agreement”), by and among Centerline Capital Company LLC (“CCC”,
        formerly known as CharterMac Capital Company, LLC), the Optionee, Related
        General II L.P. and The Related Companies, L.P.) are in material breach of
        the
        Future Relations Agreement and such breach is not cured within thirty (30)
        days
        following the giving by the Company of written notice of such breach, specifying
        in reasonable detail the nature of such breach, to the Optionee (or, if the
        breach is not capable of cure within such thirty (30) day period and the
        Optionee is proceeding diligently to cure such breach, within sixty (60)
        days
        following

       


      
        
          
          

        

        
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      the
        giving by the Company of written notice of such breach to the Optionee),
        the
        Option shall terminate immediately upon the expiration of the thirty (30)
        day
        (or, if applicable, sixty (60) day) cure period with respect to any Option
        Shares that have not vested on such date; provided, however, that the Option
        shall not terminate if (i) the breach is a single occurrence that is incapable
        of being cured and (ii) Optionee is able to make the Company and CCC whole
        with
        respect to the breach and promptly does so to the Company’s and CCC’s reasonable
        satisfaction following receipt by Optionee of written notice of such breach
        from
        the Company.  The Optionee may exercise the Option with respect to any
        Option Shares that have vested prior to the applicable termination date during
        the Exercise Period.  Notwithstanding any provision hereof to the
        contrary, the Optionee’s right to exercise all or any portion of the Option
        shall be suspended during the period beginning on the date notice of breach
        is
        given to the Optionee and ending on the date that the breach has been
        cured.

       

      Section
        8.              
Nontransferability.

       

      The
        Option shall not be assignable or transferable by the Optionee, either
        voluntarily or by operation of law, except by will or the laws of descent
        and
        distribution; provided, however, that following the fifth anniversary of
        the
        Grant Date the Option may be assigned or transferred to any Permitted Transferee
        or any other Person consented to by the Company if such Permitted Transferee
        or
        other Person shall furnish to the Company a written agreement to be bound
        by and
        comply with the provisions of this Agreement applicable to the
        Optionee.

       

      Section
        9.              
General Restrictions.

       

      (a)           
        Optionee Representations.  As a condition to any exercise of
        rights to purchase Option Shares the Optionee shall be required to represent
        and
        warrant that he is acquiring the Option Shares solely for his own account
        for
        the purpose of investment and not with a view to or for sale in connection
        with
        any distribution of any thereof.  The Optionee shall be required to
        agree that he will not, directly or indirectly, offer, transfer, sell, pledge,
        hypothecate or otherwise dispose of the Option Shares (or solicit any offers
        to
        buy, purchase or otherwise acquire or take a pledge of the Option Shares)
        except
        in compliance with the Securities Act of 1933, as amended, and the rules
        and
        regulations thereunder.  Certificates representing the Option Shares
        issued upon exercise of the Option shall bear such legends as are deemed
        appropriate by legal counsel to the Company, unless the Optionee provides
        a
        written opinion of legal counsel, satisfactory to the Company, that any such
        legend is not required.

       

      (b)          
         Compliance with Securities Laws.  The Company shall
        provide the Optionee with such information, statements, discussions and analyses
        with respect to the Company in such manner and at such times as may be required
        under state or federal securities laws.

       

      Section
        10.             Recapitalization.

       

      In
        the
        event that the outstanding Company Shares are changed into or exchanged for
        a
        different number or kind of shares or other securities of the Company by
        reason
        of any recapitalization, reclassification, stock split, stock dividend,
        combination or subdivision, an

       


      
        
          
          

        

        
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      appropriate
        and proportionate adjustment shall be made in the number and kind of shares
        subject to this Agreement and in the number, kind and per share exercise
        price
        of shares subject to the unexercised portion of the Option.  Any such
        adjustment to the unexercised portion of the Option shall be made without
        change
        in the total price applicable to the unexercised portion of the Option as
        of the
        date of such adjustment.

       

      Section
        11.             Reorganization.

       

      (a)           In
        the event that the Company is merged, consolidated or otherwise reorganized
        with
        another entity or person other than an Affiliate, and the Company is not
        a
        surviving entity, the board of directors or other governing body of any entity
        assuming the obligations of the Company shall either (i) make appropriate
        provision for the protection of the unexercised portion of the Option by
        the
        substitution on an equivalent basis of appropriate shares or other securities
        of
        the merged, consolidated or otherwise reorganized entity that will be issuable
        in respect of the Option Shares (provided that no additional benefits shall
        be
        conferred upon the Optionee as a result of such substitution), or (ii) upon
        written notice to the Optionee, provide that the unexercised portion of the
        Option is vested in full (if not already so vested) and must be exercised
        within
        a specified number of days of the date of such notice or the unexercised
        portion
        of the Option will be terminated, or (iii) upon written notice to the
        Optionee, provide that the unexercised portion of the Option is vested in
        full
        (if not already so vested) and shall be purchased by the successor entity
        within
        a specified number of days of the date of such notice at a price equal to
        the
        value the Optionee would have received if he then exercised his unexercised
        portion of the Option and immediately received full payment in respect of
        such
        exercise, as determined in good faith by the successor entity; provided,
        however, that in the event the common shareholders of the Company will receive
        shares or other securities of the merged, consolidated or otherwise reorganized
        entity, the board of directors or other governing body of any entity assuming
        the obligations of the Company shall make appropriate provision for the
        protection of the unexercised portion of the Option by the substitution on
        an
        equivalent basis of such shares or other securities of the merged, consolidated
        or otherwise reorganized entity that will be issuable in respect of the Option
        Shares (provided that no additional benefits shall be conferred upon the
        Optionee as a result of such substitution).

       

      (b)           In
        the event that all or substantially all of the assets or more than 51% of
        the
        outstanding equity securities of the Company entitled to vote for trustees
        is
        acquired by any other entity or person other than an Affiliate or an entity
        or
        person or any Affiliate thereof owning 5% or more of the outstanding voting
        stock of the Company, or there is a liquidation of the Company, the Company
        may
        either (i) upon written notice to the Optionee, provide that the unexercised
        portion of the Option is vested in full (if not already so vested) and must
        be
        exercised within a specified number of days of the date of such notice or
        the
        unexercised portion of the Option will be terminated, or (ii) upon written
        notice to the Optionee, provide that the unexercised portion of the Option
        is
        vested in full (if not already so vested) and shall be purchased by the Company
        or its successor within a specified number of days of the date of such notice
        at
        a price equal to the value the Optionee would have received if he then exercised
        his unexercised portion of the Option and immediately received full payment
        in
        respect of such exercise, as determined in good faith by the
        Company.

       


      
        
          
          

        

        
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      Section
        12.               Trustee
        Rights.

       

      Nothing
        contained in this Agreement shall constitute evidence of any agreement or
        understanding, express or implied, that the Optionee has a right to continue
        as
        a Managing Trustee for any period of time.

       

      Section
        13.               Withholding
        of Taxes and Notice of Disposition.

       

      The
        Company shall have the right to deduct from any distribution of cash to the
        Optionee an amount equal to the federal, state and local income taxes and
        other
        amounts as may be required by law to be withheld (the “Withholding
        Taxes”) with respect to the Option.  In addition, if the
        Optionee is entitled to receive Option Shares upon exercise of the Option,
        the
        Optionee shall pay the Withholding Taxes to the Company in cash prior to
        the
        issuance, or release from escrow, of such Option Shares.  In
        satisfaction of the obligation to pay Withholding Taxes to the Company, the
        Company may, in its discretion and subject to compliance with applicable
        securities laws and regulations, withhold Option Shares having an aggregate
        Fair
        Value on the date preceding the date of such issuance equal to the Withholding
        Taxes.

       

      Section
        14.              Modification
        of Agreement.

       

      This
        Agreement may be modified, amended, suspended or terminated, and any
        terms  or conditions may be waived, but only by a written instrument
        executed by the parties hereto (which, in the case of the Company, shall
        require
        the approval of a majority of the independent trustees of the
        Company).

       

      Section
        15.             Definitions.

       

      (a)           Affiliate.  The
        term “Affiliate” shall mean a corporation or other entity or person which, at
        the time of reference, directly or indirectly through one or more
        intermediaries, controls, is controlled by, or is under common control with,
        the
        Company.

       

      (b)           Business
        Day.  The term “Business Day” shall mean any day that the New York
        Stock Exchange is open for business.

       

      (c)           Fair
        Value.  The term “Fair Value” of an Option Share or a Company
        Share, as applicable, shall mean (i) if the Company Shares are traded on a
        national securities exchange, the closing price for the Company Shares on
        the
        day immediately preceding the date of determination or if there is no closing
        price on such date, the last preceding closing price, (ii) if the Company
        Shares are not traded on a national securities exchange, the mean of the
        high
        bid and ask quotes of the Company Shares as reported in the NASDAQ/NMS reports
        or the National Quotation Bureau Inc.’s pink sheets or in the NASD Bulletin
        Board on the day immediately preceding the date of determination or if there
        were no high bid and ask quotes on such date, the last preceding day that
        there
        were, and (iii) if neither (i) or (ii) are applicable, as determined in
        good faith by the Company (which determination shall require the approval
        of a
        majority of the independent trustees of the Company).

       


      
        
          
          

        

        
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      (d)           Managing
        Trustee.  The term “Managing Trustee” shall have the meaning
        ascribed thereto in the Second Amended and Restated Trust Agreement of the
        Company dated as of November 17, 2003.

       

      (e)           Permitted
        Transferee.  The term “Permitted Transferee” shall mean: (i) any
        spouse, parent, lineal descendent, parent-in-law, nephew, niece, brother,
        sister, brother-in-law, sister-in-law, stepchild, son-in-law and daughter-in-law
        of the Optionee or his spouse; (ii) any corporation, limited partnership
        or
        limited liability company in which all of the shares, partnership interests
        or
        membership interests are owned by the Optionee or the persons listed in (i)
        above; (iii) in case of the death of any of the foregoing persons, a transfer
        by
        will or by the laws of the intestate succession to executors, administrators,
        testamentary trustees, legatees or beneficiaries; or (iv) trusts, the only
        beneficiaries of which are the Optionee, the persons listed in (i), (ii)
        and
        (iii) and/or are charitable organizations.

       

      Section
        16.             Severability.

       

      Should
        any provision of this Agreement be held by a court of competent jurisdiction
        to
        be unenforceable or invalid for any reason, the remaining provisions of this
        Agreement shall not be affected by such holding and shall continue in full
        force
        in accordance with their terms.

       

      Section
        17.             Governing
        Law.

       

      The
        validity, interpretation, construction and performance of this Agreement
        shall
        be governed by the laws of the State of New York without giving effect to
        the
        conflicts of laws principles thereof.

       

      Section
        18.             Successors
        in Interest.

       

      This
        Agreement shall inure to the benefit of and be binding upon any successor
        to the
        Company.  This Agreement shall inure to the benefit of the Optionee’s
        legal representatives.  All obligations imposed upon the Optionee and
        all rights granted to the Company under this Agreement shall be final, binding
        and conclusive upon the Optionee’s heirs, executors, administrators and
        successors.

       

      [Signature
        page follows]

       


      
        
          
          

        

        
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      IN
        WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
        date
        first written above written.

       

      
        	 	
                CENTERLINE
                  HOLDING
                  COMPANY

              
	 	 	 
	 	
                By:

              	
                /s/
                  Marc D. Schnitzer 

              
	 	
                Name:

              	
                Marc
                  D. Schnitzer

              
	 	
                Title:

              	
                Chief
                  Executive Officer and President

              


      

      


       

      
        	 	
                OPTIONEE:

              
	 	 
	 	 /s/
                Steven M. Ross
	 	
                STEPHEN
                  M. ROSS

              


      

      


       

      


      


      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      Appendix
        I

      NOTICE
        OF EXERCISE OF OPTION UNDER
        THE

      CENTERLINE
        HOLDING
        COMPANY

      NON-QUALIFIED
        SHARE OPTION
        AGREEMENT

      


      


      Centerline
        Holding
        Company

      625
        Madison Avenue

      New
        York, New
        York  10022

      


      Gentlemen:

      


      I
        hereby exercise my option to purchase
        common shares of beneficial interest (the “Option Shares”) in Centerline Holding
        Company (the “Company”), under the terms and conditions of that certain
        Non-Qualified Share Option Agreement, dated as of July [__], 2007, by and
        between Stephen M. Ross and the Company, as follows:

      


      (1)           Number
        of shares:

      (2)           Option
        price per
        share:

      (3)           Aggregate
        purchase price [(1) x
        (2)]:

      


      


      Enclosed
        or accompanying delivery of
        this notice is payment in the form of:

      


      
        	
                 

              	
                (a)

              	
                Cash.  Cash,
                  certified check,
                  or wire transfer of immediately available funds in United States
                  dollars
                  payable to the order of the Company in the amount of the aggregate
                  purchase price [(3) above].

              


      

      


      
        	
                 

              	
                (b)

              	
                Company
                  Shares.  To
                  the extent
                  permitted by applicable law, certificates duly endorsed in blank
                  for
                  Company Shares with a Fair Value on the day preceding the date
                  of this
                  notice equal to the aggregate purchase price [(3)
                  above].

              


      

      


      
        	
                 

              	
                (c)

              	
                Surrender
                  of Option
                  Rights.  To
                  the extent
                  permitted by applicable law, surrender of my vested right to exercise
                  the
                  Option for Option Shares with a Fair Value in excess of the
                  Exercise Price for such Option Shares equal to the aggregate purchase
                  price [(3) above].

              


      

      


      
        	
                 

              	
                (d)

              	
                Any
                  combination of the
                  above.

              


      

      


      
        	
                Note:

              	
                If
                  any portion of the payment is
                  to be made in Company Shares, please consult the Company prior
                  to
                  submitting this form as to the proper method of
                  payment.

              


      

      


      Upon
        receipt of the aggregate purchase
        price [(3) above], please issue the certificates as follows:

      


      (a)           In
        my name; or

      
        	
                 

              	
                (b)

              	
                In
                  the name of my designated
                  broker or dealer, to the extent the Company has received in cash,
                  certified check or wire transfer of immediately available funds,
                  the
                  aggregate purchase price [(3) above] from such broker or dealer
                  acting at
                  my direction.

              


      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

                                 

       

                     Please
        deliver the certificates (including those representing excess shares submitted)
        and/or any excess cash to:

       

      

        
 

      

       

      
        	 Issue
                to:	 	     Mail
                or
                deliver to:
	
                 Name

                 

              	 	 Name
	
                 Address

                 

              	 	 
	
                 City

                    

              	 State	 Zip
                Code	 	 City	 State	 Zip
                Code
	
                 Social
                  Security Number

                 

              	 	 


      

      


      


      
        	
                Dated:

              	 	 	 
	 	 	 	
                (Signature)