Exhibit 10.3


 


 


 


GRAMERCY CAPITAL CORP.


 


DIRECTORS’ DEFERRAL PROGRAM


 


 


 





















 


TABLE OF CONTENTS


 


	
  1.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Grants
  Under the Equity Incentive Plan; Administration of Program

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Effective
  Date of Program; Termination of the Program

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Eligibility

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Cash Fees and Options

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Phantom Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Dividend Equivalent Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Settlement and Withdrawal

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Amendment and Modification

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Captions

  	
   

  



 


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GRAMERCY CAPITAL CORP.


 


DIRECTORS’ DEFERRAL PROGRAM


 


Gramercy Capital Corp., a
corporation organized under the laws of the State of Maryland, maintains the
Equity Incentive Plan.  Among the forms
of compensation contemplated by the Equity Incentive Plan are awards to Directors.  The Company wishes to align further the
interests of Directors and stockholders and generally increase the
effectiveness of its compensation structure for Directors, by implementing the
Program.  In furtherance thereof, and by
the authority to make grants under the Equity Incentive Plan, the Program is
adopted to implement certain such grants, and to govern the manner in which the
Shares underlying such grants shall be delivered, as set forth herein.  In addition, the Program provides for other
deferrals of certain directors’ fees and Shares received upon the exercise of
certain options in accordance with the terms hereof.


 


1.                                       Definitions.


 


Capitalized terms used
herein without definitions shall have the meanings given to those terms in the
Equity Incentive Plan.  In addition,
whenever used herein, the following terms shall have the meanings set forth
below except as the context requires otherwise:


 


“Account” means a
deferred compensation account established for a Participant in accordance with Section 4.2(d).


 


“Equity Incentive Plan”
means the Gramercy Capital Corp. 2004 Equity Incentive Plan, as amended from
time to time.


 


“Participant” means a
Director of the Company who is credited hereunder with one or more Phantom
Shares or who has otherwise deferred receipt of fees hereunder as permitted by
the Board.


 


“Program” means the
Company’s Directors’ Deferral Program, as set forth herein and as the same may
from time to time be amended.


 


2.                                       Grants Under the Equity Incentive
Plan; Administration of Program.


 


The grants of Phantom
Shares and Dividend Equivalent Rights shall constitute grants under and
governed by the Equity Incentive Plan to Directors.  Thus, the Phantom Shares shall be subject in
all respects to the provisions of the Equity Incentive Plan governing grants to
Directors; provided that the Committee shall not be designated to act
hereunder, and all functions of the Committee shall be fulfilled by the
Board.  Cash payments under the Program
not relating to Phantom Shares or Dividend Equivalent Rights shall also be
governed by the same rules as are established under the Equity Incentive
Plan as to interpretation, beneficiary designation, exculpation (and
indemnification) and all other matters of administration.  Without limiting the generality of the
forgoing, the provisions of Sections 7.4 and 7.5 of the Plan shall be
applicable in respect of the Account, credits thereto and distributions
therefrom.


 





















 


3.                                       Effective Date of Program;
Termination of the Program.


 


The effective date of the
Program is                   ,
2005.  The Program shall terminate on,
and no Phantom Shares or Dividend Equivalent Rights shall be granted or other
deferrals made hereunder on or after, the 10-year anniversary of, the effective
date of the Program (and, in the case of Phantom Shares and Dividend Equivalent
Rights, the date of termination or expiration of the Equity Incentive Plan, if
earlier).


 


4.                                       Eligibility.


 


Except as otherwise
determined by the Board, each individual who is a Director of the Company shall
be eligible to participate in the Program.


 


5.                                       Cash Fees and Options.


 


5.1                                 Types of Fees.


 


In consideration of each
Director’s service as a member of the Board, each Director may be eligible from
time to time, under the Company’s director compensation arrangements, to
receive as compensation (i) periodic retainer fees, a portion of which is
payable in cash or Shares, as elected by the Participant (a “Cash Retainer”),
and a portion of which is payable in Shares (an “Equity Retainer”); (ii) in
the case of the chairman of each of the committees of the Board, additional
periodic retainer fees (“Chairmen’s Retainers”); (iii) a fee per Board
meeting attended, to be paid following each meeting (a “Meeting Fee”); and (iv) a
fee per committee meeting attended, to be paid following each meeting (a “Committee
Meeting Fee”).  These amounts are subject
to deferral under the Program, as set forth herein.


 


5.2                                 Election to Defer Cash Fees.


 


(a)                                  The Participant may elect that up to 100%
(in increments of 1%) of the Participant’s Cash Retainer, Chairmen’s Retainer,
Meeting Fee and Committee Meeting Fee (collectively, the “Cash Fees”) shall be
payable as compensation deferred under the Program.  With respect to a Participant’s election to
defer all or a portion of the Cash Fees for a calendar year, such election
shall be made prior to December 1st of the year preceding such calendar
year, except that (i) with respect to 2005, a Participant may make an
election prior to               
    , 2005 with respect to Cash Fees otherwise payable in
2005 for services performed after the date of such election, and (ii) in
the case of a new Participant, the Participant may make an election within 30
days after such Participant first becomes eligible to participate in accordance
with Section 4, with respect to Cash Fees otherwise payable in the
calendar year of the election, for services performed after the effective date
of such election.  All deferrals under
this Section 5.2 shall be fully vested; provided that, before or
concurrently with any deferral, and in the event that there are vesting
conditions applicable in respect of the underlying Cash Fees, the Board may
provide for vesting conditions to be applicable in respect of the corresponding
deferral.


 


(b)                                 The election described in Section 5.2(a) shall
be made in writing substantially in such form as the Board may prescribe from
time to time, within the times


 


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specified herein.  With respect
to a Participant’s election to defer amounts described in Section 5.1,
such election shall, except as otherwise permitted by the Board (taking into
account, without limitation, the application of Section 409A of the Code, as the Board may deem appropriate), be
irrevocable as of the first day of the applicable annual period.  Except as may be permitted by the Board,
elections described in Section 5.2(a) shall continue in effect from
year to year unless revoked prior to the beginning of the applicable year.


 


(c)                                  Unless otherwise elected by the
Participant, Cash Fees deferred under this Section 5.2 of the Program
shall not be paid currently but rather shall be credited to such Participant in
the form of Phantom Shares.  Unless
otherwise determined by the Board, the number of Phantom Shares to be credited
with respect to cash fees deferred pursuant to Section 5.2 (a) above
shall be equal to (i) the amount of cash fees to be paid divided by (ii) the
Fair Market Value of a Share on the date such cash fees otherwise would have
been paid.


 


(d)                                 A Participant may elect, prior to earning
a Cash Fee, to defer such a Cash Fee in the form of a credit to the Participant’s
Account, to be adjusted for accruals of any earnings and losses over time as
set forth below, rather than in the form of Phantom Shares.  Upon such an election, the amount of the
deferred fee shall not be paid currently but rather shall be credited to the
Participant’s Account.  Such credits
shall be made when Cash Fees would otherwise have been paid to the Participant
but for an election pursuant to Section 5.2(a).  A separate subaccount under each Participant’s
Account may in the discretion of the Board be established to record each year’s
deferrals, and the credits and deductions with respect thereto.  With respect to credits under this Section 5.2(d),
earnings and losses shall accrue on the balance in the applicable Participant’s
Account at the rate or rates specified in advance of the effective time of the
applicability of such rate or rates, and from time to time, by the Board.  As determined by the Board, such rate or
rates may be a fixed rate, and may be established by reference to an index or
indices, or may be a return on one or more specific investments or on a
specific investment fund or funds.  If
the Board does not select a rate, the rate shall be equal to the 30-day LIBOR
rate in effect at the beginning of a month plus 2%.  Earnings and losses shall be credited to
Participants’ Accounts as of the end of each calendar month and, with respect
to any particular Participant’s Account, shall continue to be credited thereto
until all amounts are distributed with respect to the Participant’s Account in
accordance with the Program.  Upon
distribution, any accrued earnings shall be credited to the Participant’s
Account and distributed therewith, and any accrued losses shall reduce the
amount of distributions hereunder.


 


(e)                                  Subject to Section 8, the Board may
permit a Participant to elect, one time during each 12-month period, to convert
as of the end of the calendar month of the election, Phantom Shares to Account
credits, and vice-versa, in whole or in part (but, in the case of Phantom
Shares, only in whole Phantom Shares) with credits and liquidation of Phantom
Shares to be effected based on the Phantom Share Value as of the end of such
month, and credits and liquidation of Accounts to be effected based on Account
values as of the end of such month.


 


(f)                                    The establishment and maintenance of, and
credits to and deductions from, the Participant’s Account shall be mere
bookkeeping entries, and shall not vest in the Participant or his beneficiary
any right, title or interest in or to any specific assets of the Company.  A


 


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separate subaccount under each Participant’s Account shall be
established to record each year’s deferrals, and the credits and deductions
with respect thereto.


 


5.3                                 Stock Options.


 


Subject to the provisions
of the Program, and notwithstanding the terms of any applicable Award
Agreement, the Board may permit, on such terms and conditions as it may adopt
(taking into account, without limitation, the application of Section 409A
of the Code, as the Board may deem
appropriate), a Director to be credited with Phantom Shares pursuant to
the Director’s election to defer delivery of shares of Common Stock which
otherwise would be delivered to him or her upon exercise of a previously
unexercised stock option.


 


6.                                       Phantom Shares.


 


6.1                                 Credits of Phantom Shares.


 


Each Director may elect
to receive a credit of Phantom Shares in respect of each portion of an Equity
Retainer that would be payable on any particular date without regard to the
Program.  With respect to a Participant’s
election to defer an Equity Retainer for a calendar year, such election shall
be made prior to December 1st of the year preceding such calendar year,
except that (i) with respect to 2005, a Participant may make an election
prior to             
    , 2005 with respect to the Equity Retainer otherwise
payable in 2005 for services performed after the date of such election, and (ii) in
the case of a new Participant, the Participant may make an election within 30
days after such Participant first becomes eligible to participate in accordance
with Section 4, with respect to the Equity Retainer otherwise payable in
the calendar year of the election, for services performed after the effective
date of such election.


 


6.2                                 Vesting.


 


Phantom Shares deferred
under Section 6.1 shall be fully vested; provided that, before or
concurrently with any grant under Section 6.1, the Board may provide
(consistently with such vesting conditions as may be applicable in respect of
the underlying Cash Fee or Equity Retainer, as applicable) for different
vesting conditions to be applicable to such grant.


 


7.                                       Dividend Equivalent Rights.


 


(a)                                  Except as may otherwise be provided by
the Board at or before the time the applicable Phantom Share is credited,
Directors will receive a Dividend Equivalent Right in respect of any credited
Phantom Shares (whether from deferred Cash Fees or from the Equity Retainer, or
in connection with the exercise of stock options), which right consists of the
right to receive a cash payment in an amount equal to the regular cash dividend
distributions paid on a Share from time to time. Except as provided in Section 7(b),
or as may otherwise be provided by the Board at or before the time the
applicable Phantom Share is paid, payment in respect of a Dividend Equivalent
Right shall be made at the same time as dividends are paid on the Common Stock.


 


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(b)                                 Instead of the form of payment as
contemplated by Section 7(a) above, except as may otherwise may be
provided by the Board, a Participant may elect, in accordance with the rules of
Section 5.2(a), to have Phantom Shares credited, or credits to the Participant’s
Account made, in respect of the Dividend Equivalent Rights referred to in Section 7(a).  Unless otherwise determined by the Board, the
number of Phantom Shares (if any) to be credited with respect to a Dividend
Equivalent Right shall be equal to (i) the amount of the payment in
respect of the Dividend Equivalent Right otherwise to be made divided by (ii) the
Fair Market Value of a Share on the date the corresponding dividend
distribution is made to stockholders of the Company; provided that such Phantom
Share shall vest at such time as the underlying Phantom Share vests.  In the case of a credit to the Account, the
amount of the credit shall be equal to the amount of the applicable cash
dividend (such credit to be made on the date the corresponding dividend
distribution is made to stockholders of the Company); provided that the portion
of the Account relating to such credit, as adjusted for earnings and losses,
shall vest at such time as the underlying Phantom Share vests.


 


8.                                       Settlement and Withdrawal.  


 


Distributions
with respect to vested Phantom Shares will be made in cash (in accordance with
the Plan) or, if elected in accordance with rules provided by the Board
(taking into account, without limitation, the application of Section 409A
of the Code, as the Board may deem appropriate), in Shares (in accordance with
the Plan); provided, however, that (x) Phantom Shares into which Account
credits are converted under Section 5.2(e) (if any) shall always be
distributed in cash and (y) Phantom Shares payable in Shares may not be
converted into Account credits under Section 5.2(e).  Distributions with respect to cash deferrals
from a Participant’s Account will be settled by a cash payment to the
Participant, in an amount equal to the value of the Participant’s Account as of
the last day of the calendar month coincident with or immediately prior to the
date of such distribution, or as of such additional dates as the Board my
designate.  The rules governing the
timing and form of distributions from the Account shall be substantially
similar to those governing distributions in respect of Phantom Shares, as
determined in the discretion of the Board (taking into account, without
limitation, the application of Section 409A of the Code, as the Board may
deem appropriate).


 


9.                                       Amendment and Modification.


 


(a)                                  The Board may amend the Program as it
shall deem advisable, except that no amendment may adversely affect a
Participant with respect to deferred Cash Fees or equity awards previously
credited unless such amendments are required in order to comply with applicable
laws; provided that the Board may not make any amendment to the Program that
would, if such amendment were not approved by the holders of the Common Stock,
cause the Program to fail to comply with any requirement of applicable law or
regulation, unless and until the approval of the holders of such Common Stock
is obtained.


 


(b)                                 The Board may make such changes to the
Program as may be necessary or appropriate to comply with the rules and
regulations of any government authority or to obtain tax benefits applicable to
deferred equity units.


 


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(c)                                  Notwithstanding any election under an
Award Agreement, to the extent any deferral under the Program is determined by
the Board to be ineffective for U.S. federal income tax purposes or otherwise
inconsistent with the U.S. federal tax laws, due to a change in U.S. federal
tax law, such amounts shall be distributed to the Participant as soon as
practicable following such determination.


 


10.                                 Captions.


 


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


 


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