Document:

Exhibit 10.2

 

SEVERANCE
AGREEMENT FOR MICHIO SOGA

 

This SEVERANCE AGREEMENT
(the “Agreement”) is made and entered into as of the 16th day of June, 2005, by
and between PHARMACOPEIA DRUG DISCOVERY,
INC., a Delaware corporation (hereinafter, the “Company”), and MICHIO SOGA, an individual (hereinafter, “Employee”).

 

RECITALS

 

WHEREAS, the Company desires to
provide certain benefits and payments to Employee in the event of the
termination of his employment with the Company; and

 

WHEREAS, Employee desires to accept
such benefits and payments on the terms and subject to the conditions set forth
in this Agreement;

 

NOW, THEREFORE, in consideration of their
mutual promises and intending to be legally bound, the parties agree as
follows:

 

1.   TERMINATION AND EFFECT OF TERMINATION. 
Employee’s employment hereunder is AT WILL and may be terminated at any
time by the Company for any reason.  In
the event of termination of Employee’s employment, the Company shall have no
liability to Employee for compensation or benefits except as specified in this Section 1
or as required by the Company’s benefits policy.

 

(a)  Termination by the Company for Cause. 
Employee’s employment may be terminated by the Company for Cause at any
time upon delivery of written notice to Employee.  Upon such a termination, the Company shall
have no obligation to Employee other than the payment of all accrued, but
unpaid, Base Salary and any unpaid expenses or expense reimbursements prior to
the effective date of such termination. 
For purposes of this Agreement, “Cause” means the occurrence of any one
or more of the following events or conditions:

 

(i)  any gross failure on the part of Employee (other than
by reason of disability as provided in Section 1(e) below) to
faithfully and professionally carry out Employee’s duties or to comply with any
other material provision of this Agreement, which failure continues for thirty
(30) days after written notice detailing such failure is delivered by the
Company; provided, that the Company shall not be required to provide such
notice in the event that such failure (A) is not susceptible to remedy or (B) relates
to the same type of acts or omissions as to which notice has been given on a
prior occasion;

 

(ii)  Employee’s dishonesty (which shall include
without limitation any misuse or misappropriation of the Company’s assets), or
other willful misconduct (including without limitation any conduct on the part
of Employee intended to or likely to injure the business of the Company);

 

(iii)  Employee’s conviction of any felony or of any other crime
involving moral turpitude, whether or not relating to Employee’s employment;

 

(iv)  Employee’s insobriety or use of drugs, chemicals or
controlled substances either (A) in the course of performing Employee’s
duties and

 

1

 

responsibilities
under this Agreement, or (B) otherwise affecting the ability of Employee
to perform the same;

 

(v)  Employee’s failure to comply with a lawful written direction
of the Company; or

 

(vi)  any wanton or willful dereliction of duties by Employee.

 

(b)  Involuntary Termination by the Company
without Cause.  The Company may involuntarily terminate
Employee’s employment under this Agreement at any time without Cause upon
delivery of written notice to Employee. 
Subject to the provisions of Section 1(g) hereof (concerning
termination in connection with a Change of Control (as defined in Section 1(g)), if Employee’s
employment is terminated involuntarily by the Company without Cause pursuant to
this Section 1(b), the Company shall:

 

(i)  pay Employee all compensation and
benefits accrued, but unpaid, up to the effective date of termination;

 

(ii)  pay Employee in a lump sum one year’s Base
Salary in effect as of the effective date of termination;

 

(iii)  pay  Employee
in a lump sum within thirty (30) days after termination; a pro
rata portion of Employee’s  Target
Incentive Bonus for the calendar year in which Employee’s employment is
terminated as provided in this Section 1(b), such portion to be based on
the number of full months for which Employee was employed  during the year of  termination; and.

 

(iv)  maintain Employee’s group medical
coverage until the earlier of (a) the end of a period of twelve months following
the effective date of such termination, or (b) until such time as
comparable medical coverage is obtained by the Employee.

 

(v)  allow all vested options or other
incentive securities to be exercised pursuant to the terms of the option
agreement or other agreements under which such options or other incentive
securities were granted.

 

(c)  Termination by Employee for Good Reason. 
Employee may terminate his employment under this Agreement for Good
Reason upon the provision of advance written notice to the Company specifying
in reasonable detail the events or conditions upon which Employee is basing
such termination.  The Company will be
given the opportunity, but shall have no obligation, to “cure” such events or
conditions within thirty (30) days after the provision by Employee of such
notice.  Subject to the provisions of Section 1(g) hereof
(concerning termination in connection with a Change of Control), if the Company
elects in a written notice to Employee not to cure such events or conditions or
otherwise fails to so cure such events or conditions within such thirty (30)
day period, Employee may terminate his employment with the Company for Good
Reason pursuant to this Section 1(c) and in the event of such
termination, the Company shall:

 

(i)  pay Employee all compensation and
benefits accrued, but unpaid, up to the effective date of termination;

 

2

 

(ii)  pay Employee in a lump sum one
year’s Base Salary in effect as of the effective date of termination.

 

(iii)  pay Employee within thirty
(30) days after termination, a pro rata portion of Employee’s  Target Incentive Bonus for the calendar year
in which Employee’s employment is terminated as provided in this Section 1(c),
such portion to be based on the number of full months for which Employee was
employed during the year of termination; and

 

(iv)  maintain Employee’s group medical coverage until the
earlier of (a) the end of a period of twelve months following the
effective date of such termination, or (b) until such time as comparable
medical coverage is obtained by the Employee.

 

(v)  allow all vested options or other
incentive securities to be exercised pursuant to the terms of the option
agreement or other agreements under which such options or other incentive
securities were granted.

 

For purposes of this Agreement, Good Reason means any one or more of
the following events or conditions:

 

(A)  the Company’s material
breach of any of the terms of this Agreement or the letter agreement dated the
date hereof between Employee and the Company (the “Letter Agreement”);

 

(B)  the Company’s requiring Employee,
without his consent, to relocate from his residence or to commute more than
fifty (50) miles from the offices of the Company at which he was principally
employed on the date of this Agreement;

 

(C)  a diminution in Employee’s
Executive Vice President or Chief Financial Officer titles, or material
diminution in the duties or responsibilities or conditions of his employment
from those in effect on the date hereof; or

 

(D)  a reduction by more than twenty percent (20%) in
Employee’s annual Base Salary as in effect on the date of this Agreement or as
the same may be increased from time to time after such date and prior to the delivery of such notice (other
than such a reduction applicable generally to substantially all employees of
the Company). 

 

(d)  Termination by Employee without Good Reason
(Voluntary Resignation).  Employee may voluntarily resign
his position and terminate his employment under this Agreement without Good
Reason at any time.  Upon such a
termination, the Company shall have no obligation to pay compensation and
provide benefits to Employee other than the payment of all accrued and unpaid
Base Salary and any other unpaid expenses or expense reimbursements prior to
the effective date of such termination.

 

(e)  Disability.  If
Employee becomes disabled for more than one hundred eighty (180) days in any
twelve (12) month period, the Company shall have the right to terminate
Employee’s employment without further liability upon written notice to
Employee.  Without limiting the
generality of the

 

3

 

foregoing, Employee shall be deemed disabled for purposes of this
Agreement either (i) if Employee is deemed disabled for purposes of any
long-term disability insurance policy paid for by the Company and at the time
in effect, or (ii) if in the exercise of the Company’s reasonable
judgment, due to accident, mental or physical illness, or any other reason,
Employee cannot perform Employee’s duties. 
In the event the Company shall terminate Employee due to disability, as
described above, Employee shall be entitled to receive only those benefits
provided under the Company’s Long Term Disability Plan and the employee’s stock
options will be treated under the Disability section of the 2004 Stock
Incentive Plan (the “2004 Plan”).

 

(f)  Death.  In
the event of the death of Employee, this Agreement shall automatically
terminate and any obligation to continue to pay compensation and benefits shall
cease as of the date of death, except for the payment of all accrued, but
unpaid, Base Salary and any other unpaid expenses or expense reimbursement
prior to the date of death.  In
the event of Employee’s death, the Employee’s stock options shall be treated
under the Death section of the 2004 Plan.

 

(g)  Change in Control Termination.

 

(i)  Benefits. 
In the event
Employee’s employment under this Agreement is terminated by the Company
involuntarily without Cause or Employee terminates his employment with the
Company for Good Reason as defined in Section 1 (c), in either case at any
time during the period commencing two (2) months before and ending twelve
(12) months after the occurrence of a Change in Control, the Company shall:

 

(A) pay Employee all compensation and benefits
accrued, but unpaid, up to the effective date of termination;

 

(B) pay Employee a lump sum amount equal
to one and one-half (1.5) times Employee’s annual Base Salary in effect as of
the effective date of termination;

 

(C) pay Employee a lump sum amount
equal to one and one half (1.5) times the Employee’s Target Incentive Bonus;

 

(D) maintain Employee’s group medical coverage until the earlier
of (a) the end of a period of eighteen (18) months following the effective
date of termination or (b) such time as comparable medical coverage is
obtained by the employee.

 

Anything
contained in this Section to the contrary notwithstanding, Employee shall
not be entitled to any of the benefits set forth in this Section 1(g)(i) if
Employee either resigns and terminates such employment voluntarily (other than
for Good Reason, as described above) or is terminated by the Company for Cause,
with the exception of accrued but unpaid compensation, benefits and
unreimbursed business expenses borne by Employee as of the date of termination.

 

4

 

For
purposes of Section 1(g) hereof, the term the “Company” shall include
any Acquiring Company (as defined below) and all obligations of the Company
under such Section shall be assumed by any Acquiring Company.

 

(ii)  Stock
Options.  In the event Employee’s employment under this
Agreement is terminated by the Company involuntarily without Cause or Employee
terminates his employment with the Company for Good Reason, in either case at
any time during the period commencing two (2) months before and ending
twelve (12) months after the occurrence of a Change in Control:

 

(A) notwithstanding anything to the contrary contained in
the 2004 Plan or any other stock option or incentive compensation plan of the
Company, any unvested stock options or other incentive securities which were
granted to Employee prior to or during the term of this Agreement under the
2004 Plan or any such other stock option or incentive compensation plan shall
immediately vest on the date of such termination of Employee’s employment, the
expiration date of the exercise period for such options or other securities
shall be the earlier of (1) one (1) year following the date of
termination or (2) the expiration of the term of the option, and the
Company shall take all actions necessary or advisable to give effect to this Section 1(g)(ii)(A);
and

 

(B) all vested options or other incentive securities held
by Employee which were issued pursuant to the 2004 Plan or any such other plan
shall be exercisable pursuant to the terms of the stock option agreement or
other agreement(s) under which the options or other incentive securities were
granted, and the Company shall take all actions necessary or advisable to give
effect to this Section 1(g) (ii) (B).

 

Anything contained in this Section to the
contrary notwithstanding, Employee shall not be entitled to any of the benefits
set forth in this Section 1(g) (ii) if Employee either resigns
and terminates such employment voluntarily (other than for Good Reason, as
described above) or is terminated by the Company for Cause.

 

(iii) 
Definition of “Change in Control.”  The definition of “Change in Control” set
forth in the 2004 Plan is incorporated, and made a part hereof, by reference.

 

(iv)  Definition of “Acquiring Company.”  For purposes of Section 1(g) of this Agreement, an “Acquiring
Company” shall mean the resulting or surviving corporation, or the company
issuing cash or securities (or its ultimate parent company), in a merger,
sale, asset purchase, or assignment of all or substantially all of the Company’s
assets, consolidation or share exchange involving the Company, or the successor
corporation to the Company (whether in any such transaction or otherwise).

 

2.  GENERAL RELEASE.  Notwithstanding anything in this Agreement to the contrary, no payments
shall be made or benefits provided by the Company under Section 1 prior to
the execution by Employee at the time of termination of a general release in
favor of the Company and its affiliates, and its and their respective officers,
employees and directors.  A form of
general release is attached hereto as Exhibit A.

 

5

 

3.  TAXES.  The
Company may withhold tax on any payments or benefits provided to Employee as
required by law or regulation.  If any of
the benefits or payments under this Agreement, or under any other agreement
with or plan of the Company (in the aggregate, the “Total Payments”), will be
subject to the tax (the “Excise Tax”) imposed by Section 4999 of the
Internal Revenue Code, the Company shall pay Employee in cash an additional
amount (the “Gross-Up Payment”) such that the net amount retained by Employee
after deduction of any Excise Tax upon the Total Payments and any federal,
state and local income tax and Excise Tax upon the Gross-Up Payment shall be
equal to the Total Payments.  Such payments shall be made by the Company
to Employee as soon as practical following a determination that any of the
Total Payments will be subject to the Excise Tax, but in no event beyond thirty
(30) days from such date.  All
determinations required to be made, including whether any of the Total Payments
will be subject to the Excise Tax and the amounts of such Excise Tax, shall be
made by a nationally recognized accounting firm (the “Accounting Firm”)
mutually acceptable to the Company and Employee.  The Accounting Firm
shall provide detailed supporting calculations both to the Company and to
Employee within 10 days after a request for such determinations are made by
Employee or the Company.  Any such determination by the Accounting Firm
shall be binding upon the Company and Employee.  For purposes of
determining the amount of the Gross-Up Payment, Employee shall be deemed to pay
Federal, state and local income taxes at the highest marginal rates applicable
to Employee as of the date of the determination.

 

4.  NON-COMPETITION;
NON-SOLICITATION.

 

(a)  Restrictions.  Employee
shall not, during the course of Employee’s employment with the Company or for a
period of twelve (12) months thereafter, directly or indirectly:

 

(i) be employed by, engaged in or participate in the ownership,
management, operation or control of, or act in any advisory or other capacity
(including as an individual, principal, agent employee, consultant or
otherwise) for, any Competing Entity which conducts its business within the
Territory (as the terms Competing Entity and Territory are hereinafter
defined); provided, however, that notwithstanding any of the foregoing,
Employee may make solely passive investments in any Competing Entity the common
stock of which is “publicly held” and of which Employee shall not own or
control, directly or indirectly, in the aggregate securities which constitute
5% or more of the voting power of such Competing Entity;

 

(ii) solicit or divert any business or any customer or known
prospective customer from the Company or assist any person or entity in doing
so or attempting to do so;

 

(iii) cause or seek to cause any person or entity to refrain from
dealing or doing business with the Company or assist any person or entity in
doing so; or

 

(iv) solicit for employment, or advise or recommend to any other
person or entity that he, she or it employ or solicit for employment or
retention as an employee

 

6

 

or
consultant, any person who is an employee of, or exclusive consultant to, the
Company.

 

(b)  Effect on the Company’s
Obligations.  The Company’s obligation to make payments and
provide the other benefits pursuant to Section 1 above shall terminate in
the event that, and at such time as, Employee is in breach of Employee’s
obligations set forth in Section 4(a) above.

 

(c)  Definitions.  For purposes of this Section 4:

 

(i) ”Competing Entity” means any entity
which is presently or hereafter engaged in any business of the type or
character engaged in by the Company or any of its subsidiaries including,
without limitation, (a) the business of providing to third parties
products or services for pre-clinical drug discovery or chemical development
which (x) include the outlicensing of small molecule libraries, the undertaking
of drug candidate screening, and/or related drug optimization activities, or
(y) utilize combinatorial chemistry or high-throughput screening technologies
in offering pre-clinical drug discovery services or (b) any business which
is engaged in the discovery and development of human therapeutic products for
the specific targets and indications in which the Company was actively engaged
at the time of the termination of Employee’s employment with the Company.

 

(ii) ”Territory” means
North America, Europe and Japan.

 

Notwithstanding anything in the above to the
contrary, Employee may engage in the activities set forth in Section 4(a) hereof
with the prior written consent of the Company, which consent shall not be
unreasonably withheld.  Further, in
determining whether a specific activity by Employee for a Competing Entity
shall be permitted, the Company will consider, among other things, the nature
and scope of (A) the duties to be performed by Employee and (B) the
business activities of the Competing Entity at the time of Employee’s proposed
engagement by such entity.

 

(d)  Acknowledgement. 
Employee acknowledges and agrees that the covenants set forth in this Section are
reasonable and necessary in all respects for the protection of the Company’s
legitimate business interests (including without limitation the Company’s
confidential, proprietary information and trade secrets and client good-will,
which represents a significant portion of the Company’s net worth and in which
the Company has a property interest). 
Employee acknowledges and agrees that, in the event that Employee
breaches any of the covenants set forth in this Section, the Company shall be
irreparably harmed and shall not have an adequate remedy at law; and,
therefore, in the event of such a breach, the Company shall be entitled to
injunctive relief, in addition to (and not exclusive of) any other remedies
(including monetary damages) to which the Company may be entitled under
law.  If any covenant set forth in this Section 4
is deemed invalid or unenforceable for any reason, it is the parties’ intention
that such covenants be equitably reformed or modified to the extent necessary
(and only to such extent) to render it valid and enforceable in all
respects.  In the event that the time
period and geographic scope referenced above is deemed unreasonable, overbroad,
or otherwise invalid, it is the parties’ intention that the enforcing court
shall reduce or modify the time period and/or geographic scope to the extent
necessary (and only to such extent necessary) to render such covenants
reasonable, valid and enforceable in all respects.

 

7

 

5.  ARBITRATION.  Any
and all disputes between the parties (except actions to enforce the provisions
of Section 4 of this Agreement) arising under or relating to this
Agreement or any other dispute arising between the parties, including claims
arising under any employment discrimination laws, may be adjudicated and
resolved exclusively through binding arbitration before the American
Arbitration Association pursuant to the American Arbitration Association’s
then-in-effect National Rules for the Resolution of Employment Disputes
(hereinafter, “Rules”).  The initiation
and conduct of any arbitration hereunder shall be in accordance with the Rules and,
unless expressly required by law, each side shall bear its own costs and
counsel fees in such arbitration.  Any
arbitration hereunder shall be conducted in Princeton, New Jersey or at such
other location as mutually agreed by the parties.  Any arbitration award shall be final and
binding on the parties.  The arbitrator
shall have no authority to depart from, modify, or add to the written terms of
this Agreement.  The arbitration
provisions of this Section shall be interpreted according to, and governed
by, the Federal Arbitration Act, 9 U.S.C. § 1 et seq., and any
action pursuant to such Act to enforce any rights hereunder shall be brought
exclusively in any United States District Court in the State of New
Jersey.  The parties consent to the
jurisdiction of (and the laying of venue in) any such court.

 

6.  NOTICES. 
For the purposes of this Agreement, notices, demands and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified) mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:

 

(a)                                  If to the Company, to:

Pharmacopeia Drug Discovery, Inc.

3000 Eastpark Blvd.

Cranbury, NJ  08512

Attn.:                 Leslie J. Browne, PhD

 

(b)                                 If to Employee, to:

 

Michio Soga

 

or
to such other address as a party hereto shall designate to the other party by
like notice, provided that notice of a change of address shall be effective
only upon receipt thereof.

 

7.  WAIVER.  The
waiver by the Company or Employee of any breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach by Employee or the Company, as applicable of any provision of this
Agreement.

 

8.  SEVERABILITY.  The parties have carefully reviewed the
provisions of this Agreement and agree that they are fair and equitable.  However, in light of the possibility of
differing interpretations of law and changes of circumstances, the parties
agree that in the event that any section, paragraph or term of this Agreement
shall be determined to be invalid or unenforceable by any competent authority
or tribunal for any reason, the remainder of this Agreement shall be unaffected
thereby and shall remain in full force and effect.  Moreover, if any of the provisions of this
Agreement is determined by a court of competent jurisdiction to be excessively
broad as to duration, activity, geographic application or subject, it shall be
construed by limiting or reducing it to the extent legally permitted so as to
be enforceable to the extent compatible with then applicable law.

 

8

 

9.  SUCCESSORS AND ASSIGNS.  This Agreement shall bind and inure to the
benefit of the successors and assigns of the Company and the heirs, executors
or personal representatives of Employee. 
This Agreement may not be assigned by Employee.  This Agreement may be assigned to any
successor in interest to the Company (including by way of merger, consolidation
or reorganization, or by way of any assignment of all or substantially all of
the Company’s assets, business or properties), and Employee hereby consents to
such assignment.

 

10.  ENTIRE AGREEMENT; AMENDMENTS.  This Agreement, the Letter Agreement and the
applicable bylaws and policies of the Company, constitute the entire Agreement
between the parties hereto and there are no other understandings, agreements or
representations, expressed or implied. 
This Agreement supersedes any and all prior or contemporaneous
agreements, oral or written, concerning Employee’s employment and
compensation.  This Agreement may be
amended only in writing signed by Employee and the Chief Executive Officer or
Executive Vice President, Human Resources of the Company.

 

11.  COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

 

12.  GOVERNING LAW; FORUM SELECTION.  This
Agreement shall be governed by and construed in accordance with the laws (other
than conflicts of laws principles) of the State of New Jersey applicable to
contracts executed in and to be performed entirely within such State.  The parties consent to jurisdiction and
laying of venue in the state and federal courts of New Jersey for purposes of
resolving disputes under this Agreement

 

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

 

	
   

  	
  PHARMACOPEIA DRUG DISCOVERY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Leslie J. Browne

  	
   

  
	
   

  	
   

  	
  Leslie J. Browne, Ph.D.

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Michio Soga

  
	
   

  	
   

  	
  Michio Soga

  

 

9

 

EXHIBIT A

 

General
Release

 

IN
CONSIDERATION OF the terms and conditions contained in the Severance Agreement,
dated as of the    th day of               ,
20   , (the “Severance Agreement”) by and between                          
(“Employee”) and Pharmacopeia Drug Discovery, Inc. (the “Company”), and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, Employee on behalf of himself and his heirs, executors, administrators,
and assigns, releases and discharges the Company and its subsidiaries,
divisions, affiliates and parents, and their respective past, current and
future officers, directors, employees, agents, and/or owners, and their
respective successors, and assigns and any other person or entity claimed to be
jointly or severally liable with the Company or any of the aforementioned
persons or entities (collectively the “Released Parties”) from any and all
manner of actions and causes of action, suits, debts, dues, accounts, bonds,
covenants, contracts, agreements, judgments, charges, claims, and demands
whatsoever (“Claims “) which Employee and his heirs, executors, administrators,
and assigns have, had, or may hereafter have, against the Released Parties or
any of them arising out of or by reason of any cause, matter, or thing
whatsoever from the beginning of the world to the date hereof.  This General Release of Claims includes,
without limitation, any and all matters relating to Employee’s employment by the
Company and the cessation thereof, and any and all matters arising under any
federal, state, or local statute, rule, or regulation, or principle of contract
law or common law, including but not limited to, the Family and Medical Leave
Act of 1993, as  amended, 29 U.S.C. §§ 2601 et  seq.,
Title VII of the Civil Rights Act of 1964, as  amended, 42 U.S.C. §§ 2000
et  seq., the Age Discrimination in Employment Act of 1967, as
amended, 29 U.S.C. §§ 621 et  seq. (the “ADEA”), the
Americans with Disabilities Act of 1990, as  amended, 42 U.S.C. §§ 12101
et  seq., the Worker Adjustment and Retraining Notification Act of
1988, as  amended, 29 U.S.C. §§2101 et  seq.,
Employee Retirement Income Security Act of 1974, as  amended, 29
U.S.C. §§ 1001 et  seq. (“ERISA”), the New Jersey Law Against
Discrimination, N.J.S.A. 10:15-1, et seq., the New Jersey Conscientious
Executive Protection Act, N.J.S.A. 34:19-1 to 19-8, the New Jersey Wage and
Hour Act, N.J.S.A. 34-11-56a, et seq., and any other equivalent or similar
federal, state, or local statute; provided, however, that Employee does not
release or discharge the Released Parties from (i) any of the Company’s
obligations to him under the Severance Agreement, and (ii) any vested
benefits to which he may be entitled under any employee benefit plan or program
subject to ERISA.  It is understood that
nothing in this General Release is to be construed as an admission on behalf of
the Released Parties of any wrongdoing with respect to Employee, any such
wrongdoing being expressly denied.

 

Employee
represents and warrants that he fully understands the terms of this General
Release, that he is hereby advised to consult with legal counsel before
signing, and that he knowingly and voluntarily, of his own free will, without
any duress, being fully informed, and after due deliberation, accepts its terms
and signs below as his own free act. Except as otherwise provided herein,
Employee understands that as a result of executing this General Release, he
will not have the right to assert that the Company or any other of the Released
Parties unlawfully terminated his employment or violated any of his rights in
connection with his employment or otherwise.

 

Employee
further represents and warrants that he has not filed, and will not initiate,
or cause to be initiated on his behalf any complaint, charge, claim, or
proceeding against any of the Released Parties before any federal, state, or
local agency, court, or other body relating to any claims barred or released in
this General Release thereof, and will not voluntarily participate in such a
proceeding.  However, nothing in this
general release shall

 

10

 

preclude or
prevent Employee from filing a claim, which challenges the validity of this
general release solely with respect to Employee’s waiver of any Losses arising
under the ADEA. Employee shall not accept any relief obtained on his behalf by
any government agency, private party, class, or otherwise with respect to any
claims covered by this General Release.

 

Employee may
take twenty-one (21) days to consider whether to execute this General
Release.  Upon Employee’s execution of
this General Release, Employee will have seven (7) days after such
execution in which he may revoke such execution. In the event of revocation,
Employee must present written notice of such revocation to the Company’s Chief
Executive Officer.  If seven (7) days
pass without receipt of such notice of revocation, this General Release shall
become binding and effective on the eighth (8th) day after the execution hereof
(the “Effective Date”).

 

 

INTENDING TO
BE LEGALLY BOUND, I hereby set my hand below:

 

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  

 

 

NOTARIZATION

 

	
  State of

  	
  )

  	
   

  
	
  County of

  	
  )

  	
  ss.

  

 

On this            
day of                         
in the year            
before me, the undersigned, personally appeared                                                                          ;
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument, and
acknowledged to me that he executed the same in his capacity as an individual,
and that by his signature on the instrument he executed such instrument, and
that such individual made such appearance before the undersigned.

 

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

11EXHIBIT 10.1

 

DATE

 

CONFIDENTIAL

 

[Name]

[Address]

 

Re:          Participation In the Gramercy
Capital Corp. 2005 Outperformance Plan

 

Dear
[Name]:

 

You
have been selected to be a participant in the Gramercy Capital Corp. 2005
Outperformance Plan (the “Plan”).  If the
Company’s total shareholder return for the period June 1, 2005 to May 31,
2008 (as determined in accordance with the terms of the Plan) exceeds 30%, a
performance pool will be established in accordance with the terms of the
Plan.  If you are employed on the date
that the pool is established, you will receive       %
of the performance pool.  Your award will
be made in the form of partnership units that are convertible into shares of
common stock of the Company (“LTIP Units”). 
The LTIP Units will vest as follows: 
      % on the                 
anniversary of the date of grant and       % on
the                   
anniversary of the date of grant, subject to continued employment.

 

Special
provisions will apply to your award grant in the event of a change in control
of the Company, as described in the Plan before May 31, 2010.

 

If and
to the extent that any provision contained in this Participation Letter is
inconsistent with the Plan, the Plan shall govern.

 

Yours
truly,

 

 

Jeffrey
E. Kelter

Chairman,
Compensation Committee

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