Document:

UNCONDITIONAL GUARANTY AGREEMENT

 

THIS GUARANTY AGREEMENT is executed as of November 8, 2004, by GMH
COMMUNITIES TRUST, a Maryland real estate investment trust (“Guarantor”),
for the benefit of the Credit Parties defined below.  Capitalized terms used herein shall, unless
otherwise indicated, have the respective meanings set forth in the Credit
Agreement  (as defined below).

 

R E  C  I  T  A
L  S:

 

1.             GMH Communities,
LP, a Delaware limited partnership (“GMH Operating Partnership”), and
each of the Subsidiary Borrowers (GMH Operating Partnership and the Subsidiary
Borrowers are collectively, “Borrowers” and individually a “Borrower”)
may from time to time be indebted to Credit Parties pursuant to that certain
Credit Agreement dated of even date herewith (herein referred to, together with
all amendments, modifications, restatements, or supplements thereof, as the “Credit
Agreement”), by and between Borrowers, Guarantor, Bank of America, N.A., a
national banking association (“Administrative Agent”), as Administrative
Agent, and Lenders defined therein (Administrative Agent and Lenders, together
with their respective successors and assigns are herein called “Credit
Parties”).

 

2.             The Credit Parties
are not willing to make loans under the Credit Agreement or otherwise extend
credit to Borrowers unless Guarantor unconditionally guarantees payment of all
present and future indebtedness and obligations of Borrowers to Credit Parties
under the Credit Agreement and the Loan Documents.

 

3.             Guarantor will
benefit from Credit Parties’ extension of credit to Borrowers.

 

NOW, THEREFORE, as an inducement to Credit Parties to enter into the
Credit Agreement and to make loans to Borrowers thereunder, and to extend such
credit to Borrowers as Credit Parties may from time to time agree to extend,
and for other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, Guarantor hereby guarantees
payment of the Guaranteed Obligations (hereinafter defined) as more
specifically described hereinbelow in Section 1 and hereby agrees as
follows:

 

1.             Guaranty.   Guarantor hereby absolutely
and unconditionally guarantees, as a guarantee of payment and not merely as a
guarantee of collection, prompt payment when due, whether at stated maturity,
upon acceleration or otherwise, and at all times thereafter, of any and all
existing and future indebtedness and liabilities of every kind, nature and
character, direct or indirect, absolute or contingent, liquidated or
unliquidated, voluntary or involuntary, of each Borrower to Credit Parties
arising under the Credit Agreement and all instruments, agreements and other
documents of every kind and nature now or hereafter executed in connection with
the Credit Agreement (including all renewals, extensions and modifications
thereof and all costs, attorneys’ fees and expenses incurred by Lender in
connection with the collection or enforcement thereof) (collectively, the “Guaranteed
Obligations”).  The Administrative
Agent’s books and records showing the amount of the Guaranteed Obligations
shall be admissible in evidence in any action or proceeding, and shall be
binding upon Guarantor and conclusive for the purpose of establishing the
amount of the Guaranteed Obligations. 
This Guaranty shall not be affected by the genuineness, validity,
regularity or enforceability of the Guaranteed Obligations or any instrument or
agreement evidencing any Guaranteed Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor, or by any
fact or circumstance relating to the Guaranteed Obligations which might
otherwise constitute a defense to the obligations of Guarantor under this
Guaranty.  The obligations of Guarantor
hereunder shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Section 548 of

 

 

the Bankruptcy Code (Title 11, United States Code) or any comparable
provisions of any applicable state law.

 

2.             No Setoff or
Deductions; Taxes.   Guarantor
represents and warrants that it is incorporated and resident in the United
States of America. All payments by Guarantor hereunder shall be paid in full,
without setoff or counterclaim or any deduction or withholding whatsoever,
including, without limitation, for any and all present and future taxes. If
Guarantor must make a payment under this Guaranty, Guarantor represents and
warrants that it will make the payment from one of its U.S. resident offices to
Credit Parties so that no withholding tax is imposed on the payment.  If notwithstanding the foregoing, Guarantor
makes a payment under this Guaranty to which withholding tax applies, or any
taxes (other than taxes on net income (a) imposed by the country or any
subdivision of the country in which any Credit Party’s principal office or
actual lending office is located and (b) measured by the United States taxable
income Credit Parties would have received if all payments under or in respect
of this Guaranty were exempt from taxes levied by Guarantor’s country) are at
any time imposed on any payments under or in respect of this Guaranty
including, but not limited to, payments made pursuant to this Paragraph 2,
Guarantor shall pay all such taxes to the relevant authority in accordance with
applicable law such that Lender receives the sum it would have received had no
such deduction or withholding been made and shall also pay to Credit Parties,
on demand, all additional amounts which Credit Parties specify as necessary to
preserve the after-tax yield Credit Parties would have received if such taxes
had not been imposed.  Guarantor shall
promptly provide Administrative Agent with an original receipt or certified
copy issued by the relevant authority evidencing the payment of any such amount
required to be deducted or withheld.

 

3.             No Termination.   This Guaranty is a
continuing and irrevocable guaranty of all Guaranteed Obligations now or
hereafter existing and shall remain in full force and effect until all
Guaranteed Obligations and any other amounts payable under this Guaranty are
indefeasibly paid and performed in full and any commitments of Credit Parties
or facilities provided by Credit Parties with respect to the Guaranteed
Obligations are terminated.  At Lender’s
option, all payments under this Guaranty shall be made to Administrative
Agent’s office in U.S. Dollars.

 

4.             Waiver of Notices.   Guarantor waives notice of
the acceptance of this Guaranty and of the extension or continuation of the
Guaranteed Obligations or any part thereof. Guarantor further waives
presentment, protest, notice, dishonor or default, demand for payment and any
other notices to which Guarantor might otherwise be entitled.

 

5.             Subrogation.   Guarantor shall exercise no
right of subrogation, contribution or similar rights with respect to any
payments it makes under this Guaranty until all of the Guaranteed Obligations
and any amounts payable under this Guaranty are indefeasibly paid and performed
in full and any commitments of Credit Parties or facilities provided by Credit
Parties with respect to the Guaranteed Obligations are terminated.  If any amounts are paid to Guarantor in
violation of the foregoing limitation, then such amounts shall be held in trust
for the benefit of Credit Parties and shall forthwith be paid to Credit Parties
to reduce the amount of the Guaranteed Obligations, whether matured or
unmatured.

 

6.             Waiver of
Suretyship Defenses.   Guarantor
agrees that Administrative Agent on behalf of Lenders may, at any time and from
time to time, and without notice to Guarantor, make any agreement with any
Borrower or with any other person or entity liable on any of the Guaranteed
Obligations or providing collateral as security for the Guaranteed Obligations,
for the extension, renewal, payment, compromise, discharge or release of the
Guaranteed Obligations or any collateral (in whole or in part), or for any
modification or amendment of the terms thereof or of any instrument or
agreement evidencing the Guaranteed Obligations or the provision of collateral,
all without in any way impairing, releasing, discharging or otherwise affecting
the obligations of Guarantor under this Guaranty.  Guarantor waives

 

 

any defense arising by reason of any disability or other defense of any
Borrower or any other guarantor, or the cessation from any cause whatsoever of
the liability of any Borrower, or any claim that Guarantor’s obligations exceed
or are more burdensome than those of any Borrower and waives the benefit of any
statute of limitations affecting the liability of Guarantor hereunder.  Guarantor waives any right to enforce any
remedy which any Credit Party now has or may hereafter have against any
Borrower and waives any benefit of and any right to participate in any security
now or hereafter held by Credit Parties. 
Further, Guarantor consents to the taking of, or failure to take, any action
which might in any manner or to any extent vary the risks of Guarantor under
this Guaranty or which, but for this provision, might operate as a discharge of
Guarantor.

 

7.             Exhaustion of Other
Remedies Not Required.   The obligations of Guarantor hereunder are those of
primary obligor, and not merely as surety, and are independent of the
Guaranteed Obligations.  Guarantor waives
diligence by Credit Parties and action on delinquency in respect of the
Guaranteed Obligations or any part thereof, including, without limitation any
provisions of law requiring Credit Parties to exhaust any right or remedy or to
take any action against any Borrower, any other guarantor or any other person,
entity or property before enforcing this Guaranty against Guarantor.

 

8.             Reinstatement.   Notwithstanding anything in
this Guaranty to the contrary, this Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of any portion of
the Guaranteed Obligations is revoked, terminated, rescinded or reduced or must
otherwise be restored or returned upon the insolvency, bankruptcy or
reorganization of any Borrower or any other person or entity or otherwise, as
if such payment had not been made and whether or not Administrative Agent is in
possession of or has released this Guaranty and regardless of any prior
revocation, rescission, termination or reduction.

 

9.             Subordination.   Guarantor hereby
subordinates the payment of all obligations and indebtedness of each Borrower
owing to Guarantor, whether now existing or hereafter arising, including but
not limited to any obligation of each Borrower to Guarantor as subrogee of
Credit Parties or resulting from Guarantor’s performance under this Guaranty,
to the indefeasible payment in full of all Guaranteed Obligations. If
Administrative Agent so requests, any such obligation or indebtedness of any
Borrower to Guarantor shall be enforced and performance received by Guarantor
as trustee for Lender and the proceeds thereof shall be paid over to Lender on
account of the Guaranteed Obligations, but without reducing or affecting in any
manner the liability of Guarantor under this Guaranty.

 

10.          Information.   Guarantor agrees to furnish
promptly to Administrative Agent any and all financial or other information
regarding Guarantor or its property as Administrative Agent may reasonably
request in writing.

 

11.          Stay of Acceleration.   In the event that
acceleration of the time for payment of any of the Guaranteed Obligations is
stayed, upon the insolvency, bankruptcy or reorganization of any Borrower or
any other person or entity, or otherwise, all such amounts shall nonetheless be
payable by Guarantor immediately upon demand by Administrative Agent.

 

12.          Expenses.   Guarantor shall pay on
demand all out-of-pocket expenses (including reasonable attorneys’ fees and
expenses and the allocated cost and disbursements of internal legal counsel) in
any way relating to the enforcement or protection of Credit Parties’ rights under
this Guaranty, including any incurred in the preservation, protection or
enforcement of any rights of Credit Parties in any case commenced by or against
Guarantor under the Bankruptcy Code (Title 11, United States Code) or any
similar or successor statute.  The
obligations of Guarantor under the preceding sentence shall survive termination
of this Guaranty.

 

 

13.          Amendments.   No provision of this
Guaranty may be waived, amended, supplemented or modified, except by a written
instrument executed by Administrative Agent and Guarantor.

 

14.          No Waiver;
Enforceability.   No failure by
Credit Parties to exercise, and no delay in exercising, any right, remedy or
power hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy or power hereunder
preclude any other or further
exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative
and not exclusive of any remedies provided by law or in equity.  The unenforceability or invalidity of any
provision of this Guaranty shall not affect the enforceability or validity of any
other provision herein.

 

15.          Assignment; Governing
Laws; Jurisdiction.   This Guaranty
shall (a) bind Guarantor and its successors and assigns, provided that Guarantor may not assign its rights or
obligations under this Guaranty without the prior written consent of
Administrative Agent (and any attempted assignment without such consent shall
be void), (b) inure to the benefit of Credit Parties and their successors
and assigns and Credit Parties may, without notice to Guarantor and without
affecting Guarantor’s obligations hereunder, assign or sell participations in
the Guaranteed Obligations and this Guaranty, in whole or in part, and (c) be
governed by the internal laws of the State of New York.  Guarantor hereby irrevocably (i) submits
to the non-exclusive jurisdiction of any United States Federal or State
court sitting in New York, New York in any action or proceeding arising out of
or relating to this Guaranty, and (ii) waives to the fullest extent
permitted by law any defense asserting an inconvenient forum in connection
therewith.  Service of process by Credit
Parties in connection with such action or proceeding shall be binding on
Guarantor if sent to Guarantor by registered or certified mail at its address
specified in Section 10.02 of the Credit Agreement.  Guarantor agrees that Credit Parties may
disclose to any prospective purchaser and any purchaser of all or part of the
Guaranteed Obligations any and all information in Credit Parties’ possession
concerning Guarantor, this Guaranty and any security for this Guaranty.

 

16.          Condition of
Borrowers.   Guarantor
acknowledges and agrees that it has the sole responsibility for, and has
adequate means of, obtaining from each Borrower such information concerning the
financial condition, business and operations of such Borrower as Guarantor
requires, and that Credit Parties have no duty, and Guarantor is not relying on
Credit Parties at any time, to disclose to Guarantor any information relating
to the business, operations or financial condition of any Borrower.

 

17.          Setoff.   If and to the extent any
payment is not made when due hereunder, Credit Parties may setoff and charge
from time to time any amount so due against any or all of Guarantor’s accounts
or deposits with Credit Parties.

 

18.          Other Guarantees.   Unless otherwise agreed by
Administrative Agent and Guarantor in writing, this Guaranty is not intended to
supersede or otherwise affect any other guaranty now or hereafter given by
Guarantor for the benefit of Credit Parties or any term or provision thereof.

 

19.          Representations and
Warranties.   Guarantor represents
and warrants that (i) it is duly organized and in good standing under the
laws of the jurisdiction of its organization and has full capacity and right to
make and perform this Guaranty, and all necessary authority has been obtained;
(ii) this Guaranty constitutes its legal, valid and binding obligation
enforceable in accordance with its terms; (iii) the making and performance
of this Guaranty does not and will not violate the provisions of any applicable
law, regulation or order, and does not and will not result in the breach of, or
constitute a default or require any consent under, any material agreement,
instrument, or document to which it is a party or by which it or any of its
property may be bound or affected; (iv) all consents, approvals, licenses
and authorizations of, and filings and registrations with, any governmental
authority required under applicable law and regulations for the making and
performance of this Guaranty have been

 

 

obtained or made and are in full force and effect; (v) by virtue
of its relationship with Borrowers, the execution, delivery and performance of
this Guaranty is for the direct benefit of Guarantor and it has received
adequate consideration for this Guaranty; and (vi) the financial
information, that has been delivered to Administrative Agent by or on behalf of
Guarantor, is complete and correct in all respects and accurately presents the
financial condition and the operational results of Guarantor and since the date
of the most recent financial statements delivered to Administrative Agent,
there has been no material adverse change in the financial condition or
operational results of Guarantor.

 

20.          WAIVER OF JURY TRIAL;
FINAL AGREEMENT.   TO THE EXTENT
ALLOWED BY APPLICABLE LAW, GUARANTOR AND CREDIT PARTIES EACH WAIVE TRIAL BY
JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING ON OR ARISING OUT OF
THIS GUARANTY.  THIS GUARANTY REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

[Remainder of page
intentionally left blank.  Signature page
to follow]

 

 

	
   

  	
  GUARANTOR:

  
	
   

  	
   

  	
   

  
	
   

  	
  GMH COMMUNITIES TRUST,

  
	
   

  	
  a Maryland real estate
  investment trust, as Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  GARY M. HOLLOWAY

  	
   

  
	
   

  	
  Name:

  	
  Gary M. Holloway

  	
   

  
	
   

  	
  Title:

  	
  President, Chief Executive OfficerExhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is entered into as of November 9, 2004
by and between iStar Financial Inc., a Maryland corporation (together with its
successors and assigns, the “Company”), and Jay S. Nydick (the “Executive”).

 

WITNESSETH :

 

WHEREAS, the
Company wishes to offer employment to the Executive, and the Executive desires
to accept such offer, on the terms and conditions set forth below;

 

NOW, THEREFORE, IT IS AGREED by
and between the Company and the Executive (the “Parties”) as follows:

 

1.              Employment
Period.  The Company agrees to
employ the Executive, and the Executive agrees to such employment on the terms
and conditions set forth in this Agreement. 
The term of the Executive’s employment under this Agreement shall
commence as of November 1, 2004 (the “Effective Date”) and, unless earlier
terminated in accordance with Section 5, shall continue through
December 31, 2007 (the “Initial  Employment  Period”).  Upon the
expiration of the Initial Employment Period and upon each anniversary thereof,
the term of the Executive’s employment hereunder, if not previously ended,
shall automatically be extended for an additional employment period of one
year, subject to earlier termination in accordance with Section 5
(collectively, the “Additional Employment Period”), unless either Party shall
have given written notice to the other Party of its decision not to extend the
Initial Employment Period, or further extend the Additional Employment Period,
at least 30 days prior to the scheduled expiration of the Initial Employment
Period or the Additional Employment Period, as the case may be (the period
during which the Executive is employed hereunder being hereinafter referred to
as the “Term”).

 

2.              Position
and Duties.

 

(a)          The
Executive shall become an employee of the Company as of the Effective Date and
shall serve as President of the Company during the remainder of the Term.  The Executive shall have the authorities,
duties and responsibilities that are customarily assigned to the president of a
company (of the size and nature of the Company) whose primary responsibility is
to manage the execution of new business strategies, and such other duties and
responsibilities not inconsistent therewith as may from time to time be
assigned to him by the Board of Directors of the Company and the Chief
Executive Officer of the Company.  The
Executive agrees that upon the termination of his employment as President of
the Company, he shall promptly execute any administrative documents evidencing
such termination that the Company may reasonably request him to execute.

 

(b)         In
his capacity as President of the Company, the Executive shall report directly
to the Chief Executive Officer of the Company.

 

(c)          During
the Term, the Executive shall devote substantially all of his business time and
attention to the business and affairs of the Company and shall perform,
faithfully and diligently, his duties and responsibilities hereunder.  It shall not be considered a violation of the
foregoing for the Executive to: (i) serve on corporate, industry, civic,
social or charitable boards or committees or engage in charitable activities
and community affairs; provided that,
the Chief Executive Officer approves the Executive’s service on any such
corporate or industry boards or committees; or (ii) manage his own
personal investments and affairs; provided that,
the foregoing activities do not materially interfere with the performance of
the Executive’s responsibilities hereunder.

 

 

(d)         The
Executive agrees to discharge his duties and obligations under this Agreement
in accordance with such reasonable policies, not inconsistent with the express
terms of this Agreement and generally applicable to the Company’s similarly
situated executives, as the Company may from time to time (either before or
after the Effective Date) adopt and communicate to the Executive.

(e)          During
the Term, the Executive’s principal office, and principal place of employment,
shall be at the Company’s principal executive offices in Manhattan.  The requirement of the preceding sentence
shall not be considered to be violated merely because the Executive is
required, in connection with the execution, management, maintenance or
administration of new business strategies for the Company (including without
limitation the management, maintenance or administration of particular
companies or other initiatives), to travel frequently, upon request by the
Company in its reasonable discretion, to other locations in the United States
or outside the United States, it being expressly understood and agreed that
extensive travel may be required.

 

3.              Compensation.

 

(a)          Base
Salary.  During the Term, the
Executive shall receive a base salary (“Base Salary”) at a rate of $350,000 per
annum, subject to annual review for upward (but not downward) adjustment by the
Company’s Board of Directors (the “Board”), or its Compensation Committee (the “Compensation
Committee”), in their sole discretion. 
The Base Salary shall be paid in accordance with the Company’s customary
payroll practices for its senior executives.

 

(b)         Annual
Bonus.  The Executive shall, to the
extent provided in this Section 3(b), be eligible to receive an annual
cash incentive award (each, an “Annual Bonus”), based upon the Executive’s
performance, in respect of each fiscal year of the Company that ends during the
Term, beginning with the fiscal year ending December 31, 2005.  Beginning with the bonus for the fiscal year
ending December 31, 2005, the Executive’s Annual Bonus target for any such year
shall be $650,000, subject to annual review for upward adjustment (each, a “Target
Bonus”).  Such Annual Bonus shall be
payable in cash to the Executive on or about January 31 of the year following
the last day of the fiscal year to which the bonus relates.  For 2004, the Executive shall be eligible to
receive an Annual Bonus based upon a Target Bonus of $650,000, but prorated to
reflect the portion of the year during which the Executive is employed
hereunder.

 

(c)          Fringe
Benefits.

 

(i)                                     Reimbursement
of Expenses.  The Company shall promptly
pay or reimburse the Executive in accordance with the Company’s standard
policies as in effect from time to time, upon the presentation of appropriate
documentation of such expenses, for all reasonable travel and other expenses
incurred by the Executive in the course of performing services for or on behalf
of the Company.

 

(ii)                                  Participation
in Benefit Plans.  The Executive
shall be entitled to participate, during the Term, in all welfare and
retirement benefit plans, programs and arrangements that are generally
available to senior executives of the Company, including but not limited to
qualified and non-qualified pension and retirement plans, supplemental pension
and retirement plans, group hospitalization, health, medical, vision, dental
care, death benefit, disability, and post-retirement welfare plans, and other
present and future welfare and retirement benefit plans, programs and
arrangements, on no less favorable terms than those that apply to other senior
executives of the Company generally.  For
avoidance of doubt, the foregoing shall not be construed as a guaranty of, or
as an obligation on the part of the Company to provide, any future awards
(including, but not limited to, stock options, restricted 

 

2

 

stock, phantom shares, high performance units or other performance
awards) under any Company incentive plan from time to time in effect for its
senior executives or other employees.

 

(iii)                               Vacation.  During the Term, the Executive shall be entitled
to four weeks’ paid vacation per annum. 
The Executive shall not be entitled to any cash payment in respect of
any unused vacation time.

 

(iv)                              Other
Fringe Benefits and Perquisites. 
During the Term, the Executive shall be entitled to participate in all
fringe benefits and perquisites available to senior executives of the Company
generally at levels, and on terms and conditions, that are commensurate with
his position and responsibilities at the Company and shall be entitled to
receive such additional fringe benefits and perquisites as the Company may, in
its discretion, from time to time provide.

 

4.              Equity-Based
Compensation; High Performance Units.

 

(a)          High
Performance Units.  It is
acknowledged that, commencing herewith, the Executive is purchasing interests
in each of the Company’s 2005 (20% of the Plan) and 2006 (20% of the Plan)
Executive and Director High Performance Unit Plans pursuant to a subscription
agreement, a copy of which is attached hereto as Exhibit A.  The Executive shall have the option to
purchase interests representing 25.0% of the total interests in the Company’s
2007 Executive and Director High Performance Unit Plan, 30.0% of the total
interests in the Company’s 2008 Executive and Director High Performance Unit
Plan and 35.0% of the total interests in the Company’s 2009 Executive and
Director High Performance Unit Plan.  The
Executive understands that, while it is currently anticipated that the terms of
the 2008 and 2009 High Performance Unit Programs will be substantially similar to
the terms of the 2007 High Performance Unit Program, the Board of Directors
reserves the right to make such changes as it deems to be in the best interests
of the Company’s shareholders.  The
purchase price for interests in the High Performance Unit Plans shall be the
fair market value for such interests as determined by the Company, subject to
review by its independent auditors.

 

(b)         New
Business Crossed Incentive Compensation. 
The Executive shall receive an allocation of 25.0% of the interests (the
“New Business Interests”) in the Company’s proposed New Business Crossed
Incentive Compensation Program, which is a program that is intended to provide
incentive compensation based upon the performance of new business lines to be
identified by the Company.  To the extent
that the New Business Interests are not fully Vested upon receipt, the New
Business Interests shall be fully Vested upon a change of control (as may be
defined under the program for such purposes or, if there is no such definition,
as is defined in the 2005 High Performance Unit Plan).  For purposes of this Agreement, the New
Business Interests shall be considered “Vested” if (1) they are not
forfeitable, (2) any repurchase thereof will be for not less than fair market
value, as determined under the plan, and (3) if the terms of the New Business
Interests include a “valuation date” concept similar to that applicable to the
High Performance Units, they are not subject to repurchase before the valuation
date without the Executive’s consent. 
The program providing for New Business Interests shall provide that, if
it is determined that any payment or distribution by the Company to or for the
benefit of the Executive under such program is subject to the excise tax
imposed by Section 4999 of the Code, or any interest or penalties with respect
to such excise tax, then the Executive will be entitled to receive an
additional payment or payments (a “Gross-Up Payment”) in an amount such that,
after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any excise tax,
imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the excise tax.  It is
understood and agreed that the procedures for determining whether and in what
amount a Gross-Up Payment is owed, and other procedural details regarding the
Gross-Up Payment, shall be governed by such definitive rules as may be provided
under or in connection with such program.

 

3

 

5.              Termination
of Employment.

 

(a)          Death
or Disability.  The Executive’s
employment with the Company shall terminate automatically upon the Executive’s
death.  To the extent permitted by
applicable law, the Company shall be entitled to terminate the Executive’s
employment with the Company in the event of the Executive’s Disability.  “Disability” shall mean that the Executive
shall have been unable, for a period of not less than six consecutive months,
to substantially perform his duties for the Company, as a result of physical or
mental illness, injury or impairment.

 

(b)         By
the Company.

 

(i)                                     The
Company may terminate the Executive’s employment with the Company for Cause or
Without Cause.  “Cause” shall mean
(x) the Executive is convicted of, or pleads guilty or nolo contendere to, any felony, (y) the Executive
engages in misconduct that constitutes a willful gross breach of this Agreement,
or in other willful gross misconduct, and in either case such misconduct results
in material and demonstrable damage to the business or reputation of the
Company, or (z) willful and complete abandonment by the Executive of his
duties for the Company; (not due to physical or mental illness, injury or impairment);
provided, however,
that no abandonment shall constitute Cause under clause (z) unless the
Executive shall have failed to fully cure such abandonment no later than
10 days after receiving written notice from the Board requesting full
cure.

 

(ii)                                  A
termination of the Executive’s employment for Cause may only be effected in
accordance with the following procedures. 
The Board shall give the Executive written notice (“Notice of Potential
Termination for Cause”) of its intention to terminate the Executive’s
employment for Cause, setting forth in reasonable detail the specific
circumstances that it considers constitute Cause and the specific provision(s)
of this Agreement on which it relies, and stating the date, time and place of a
special meeting of the Board called and held specifically for the purpose of considering
the Executive’s termination for Cause. 
Such special meeting shall take place not less than 10, and not more
than 20, days after the Executive receives the Notice of Potential Termination
for Cause.  At such special meeting, the
Executive shall be given an opportunity, together with his counsel, to demonstrate
to the Board that Cause does not exist (including, in the case of
clause (z) of Section 4(b)(i), an opportunity to demonstrate that the
Executive has fully cured the abandonment that would otherwise constitute
Cause).  A termination of the Executive’s
employment with the Company for Cause shall be effective when and if a
resolution is duly adopted at such special meeting of the Board, by the
affirmative vote of a majority of the members of the Board other than the
Executive, terminating the Executive’s employment for Cause, subject to de novo review of the question whether Cause existed through
arbitration in accordance with Section 12 (provided,
for avoidance of doubt, that if Cause is determined through such arbitration
not to have existed, the termination of the Executive’s employment shall not be
reversed and shall instead be treated as a termination “Without Cause” as such
term is defined in Section 4(b)(iii)).

 

(iii)                               A
termination of the Executive’s employment by the Company “Without Cause” (that
is, neither for Cause nor for death, nor Disability, in each case as determined
in accordance with this Agreement) shall be effected by the Company giving the
Executive prior written notice of the termination, which notice shall specify
the Date of Termination (as defined below). 
A termination of the Executive’s employment Without Cause by the Company
shall not constitute a breach of this Agreement.

 

4

 

(c)          By
the Executive.

 

(i)                                     The
Executive may terminate his employment hereunder for Good Reason or without
Good Reason.  “Good Reason” means any of
the following that is not cured within 30 calendar days following written
notice thereof from the Executive to the Company:

(A)      failure
by the Company to maintain the Executive as President of the Company with such
duties as are described in Section 2(a);

 

(B)        the
assignment to the Executive of any duty or responsibility that is inconsistent
in any respect with those customarily associated with the position to be held
by the Executive pursuant to this Agreement; or any diminution in the Executive’s
position, authority, duties or responsibilities in a manner inconsistent with
the terms and provisions of this Agreement;

 

(C)        any
violation by the Company of Section 2(e);

 

(D)       the
failure of any successor to all or substantially all of the assets or business
of the Company to promptly assume in writing all of the obligations of the
Company under this Agreement; or

 

(E)         any
other material breach of this Agreement by the Company, including any failure
by June 30, 2005 to comply with the provisions of Section 4(b) or provide an
equivalent alternative value to the Executive.

 

(ii)                                  A
termination of employment by the Executive (including a termination for Good
Reason), other than for death or Disability, in each case determined in
accordance with this Agreement, and not by notice of non-extension in
accordance with Section 1, shall be effected by his giving the Company prior
written notice, no less than 30 days before the Date of Termination, specifying
the Date of Termination.  Termination of
the Executive’s employment in accordance with this
Section 5(c)(ii) shall not constitute a breach of this Agreement.

 

(d)         No
Waiver.  The failure to set forth any
fact or circumstance shall not constitute a waiver of the right to assert, and
shall not preclude the Party giving notice from asserting, such fact or
circumstance in an attempt to enforce any right under, or in connection with,
this Agreement.

 

(e)          Date
of Termination.  “Date of Termination”
means the date of the Executive’s death, the date on which the termination of
the Executive’s employment with the Company by the Company on account of
Disability is effective, the date on which the termination of the Executive’s
employment with the Company by the Company for Cause or Without Cause is
effective, the date on which the termination of the Executive’s employment for
Good Reason is effective, or the date on which the Executive terminates his employment
without Good Reason.

 

6.              Obligations
of the Company upon Termination.

 

(a)          Death.  In the event that the Executive’s employment
hereunder is terminated by the Executive’s death, then:

 

(i)                                     the
Executive’s estate or beneficiaries shall be entitled to receive any Base
Salary and other benefits earned and accrued under this Agreement prior to the
Date of Termination (and reimbursement under this Agreement for expenses
incurred prior to the Date of Termination); and

 

5

 

(ii)                                  the
Executive shall receive such additional compensation, rights and benefits as
may be provided under the compensation and benefit plans and programs of the
Company and its affiliates in accordance with the provisions of such plans and
programs, if any;

 

(iii)                               the
Executive’s High Performance Units for the 2005 and 2006 plans shall not be
subject to repurchase until after the occurrence of a valuation date under the
plan for the applicable year, at which time they shall be subject to repurchase
in accordance with the terms of the plan); provided that,
any repurchase of the Executive’s High Performance Units shall be for fair
market value as determined under the plan (rather than for the Executive’s
cost); and the Executive’s New Business Interests shall be Vested at a minimum
percentage of 30% plus 5% for each full year of service during the Term; and

 

(iv)                              the
Executive’s estate and beneficiaries shall have no further rights to any other
compensation or benefits hereunder on or after the termination of employment,
or any other rights hereunder, except as may otherwise be provided under the
agreements described in Section 4 of this Agreement or otherwise expressly
under this Agreement.

 

(b)         Disability.  In the event that the Executive’s employment
hereunder is terminated for Disability in accordance with this Agreement, then:

 

(i)                                     the
Executive or his legal representative, as the case may be, shall be entitled to
receive any Base Salary and other benefits earned and accrued under this
Agreement prior to the Date of Termination (and reimbursement under this
Agreement for expenses incurred prior to the Date of Termination);

 

(ii)                                  the
Executive shall receive Company-paid, continued medical insurance coverage, as
then provided generally to employees of the Company and their eligible
dependents, for the Executive and his eligible dependents for a period of one
year following the Date of Termination; which coverage shall be included as
part of any required COBRA coverage; provided, however, that the COBRA coverage
shall terminate with respect to the Executive and his eligible dependents as of
the earliest date allowed by law;

 

(iii)                               the
Executive shall receive such additional compensation, rights and benefits as
may be provided under the compensation and benefit plans and programs of the
Company and its affiliates in accordance with the provisions of such plans and
programs, if any;

 

(iv)                              the
Executive’s High Performance Units for the 2005 and 2006 plans shall not be
subject to repurchase until after the occurrence of a valuation date under the
plan for the applicable year, at which time they shall be subject to repurchase
in accordance with the terms of the plan; provided that, any repurchase of the
Executive’s High Performance Units shall be for fair market value as determined
under the plan (rather than for the Executive’s cost); and the Executive’s New
Business Interests shall be Vested at a minimum percentage of 30% plus 5% for
each full year of service during the Term; and

 

(v)                                 the
Executive shall have no further rights to any other compensation or benefits
hereunder on or after the termination of employment, or any other rights
hereunder, except as may otherwise be provided under the agreements described
in Section 4 of this Agreement or otherwise expressly under this Agreement.

 

6

 

(c)          Without
Cause by the Company or for Good Reason by the Executive.  In the event that the Executive’s employment
hereunder is terminated Without Cause by the Company or for Good Reason by the
Executive, in each case in accordance with this Agreement, then:

 

(i)                                     the
Executive shall be entitled to receive any Base Salary and other benefits
earned and accrued under this Agreement prior to the Date of Termination (and
reimbursement under this Agreement for expenses incurred prior to the Date of
Termination);

 

(ii)                                  the
Executive shall be paid a single-sum payment equal to one year’s Base Salary,
at the then-current rate, within seven days following the Date of Termination
(subject, for the avoidance of doubt, to Section 6(e));

 

(iii)                               if
the Date of Termination occurs at a time when the Company has not yet fulfilled
its obligations under Section 4(b) or provided the Executive with an
alternative of equivalent value as the New Business Interests contemplated by
Section 4(b), the Executive shall be paid a single-sum payment equal to
$325,000 within seven days following the Date of Termination (subject, for the
avoidance of doubt, to Section 6(e));

 

(iv)                              the
Executive shall receive Company-paid, continued medical insurance coverage, as
then provided generally to employees of the Company and their eligible
dependents, for the Executive and his eligible dependents for a period of one
year following the Date of Termination; which coverage shall be included as
part of any required COBRA coverage; provided, however, that the COBRA coverage
shall terminate with respect to the Executive and his eligible dependents as of
the earliest date allowed by law;

 

(v)                                 the
Executive shall receive such additional compensation, rights and benefits as
may be provided under the compensation and benefit plans and programs of the
Company and its affiliates in accordance with the provisions of such plans and
programs, if any;

 

(vi)                              the
Executive’s High Performance Units for the 2005 and 2006 plans shall not be
subject to repurchase until after the occurrence of a valuation date under the
plan for the applicable year, at which time they shall be subject to repurchase
in accordance with the terms of the plan; provided that, any repurchase of the
Executive’s High Performance Units shall be for fair market value as determined
under the plan (rather than for the Executive’s cost); and, if clause (iii)
above is not applicable, the Executive’s New Business Interests shall be Vested
at a minimum percentage of 30% plus 5% for each full year of service during the
Term; and

 

(vii)                           the
Executive shall have no further rights to any other compensation or benefits
hereunder on or after the termination of employment, or any other rights
hereunder, except as may otherwise be provided under the agreements described
in Section 4 of this Agreement or otherwise expressly under this Agreement.

 

(d)         For
Cause by the Company, or by the Executive without Good Reason; by Expiration of
the Term.  In the event that the
Executive’s employment hereunder is terminated (x) by the Company for
Cause in accordance with this Agreement, (y) by the Executive without Good
Reason, or (z) upon the scheduled expiration of the Initial Employment Period
or any Additional Employment Period in accordance with Section 1, then the
Executive shall be entitled solely to the following benefits:

 

(i)                                     the
Executive shall be entitled to receive any Base Salary and other benefits
earned and accrued, excluding any accrued but unpaid annual bonus that may be
payable pursuant to Section 3(b), under this Agreement prior to the Date of
Termination (and reimbursement 

 

7

 

under this Agreement for expenses incurred prior to the Date of
Termination); provided that, in the event  that the Executive’s employment is terminated pursuant to
clause (z) at a time at which there does not exist Cause, the Executive’s New
Business Interests shall be Vested at a minimum percentage of 30% plus 5% for
each full year of service during the Term;

 

(ii)                                  the
Executive shall receive such additional compensation, rights and benefits as
may be provided under the compensation and benefit plans and programs of the
Company and its affiliates in accordance with the provisions of such plans and
programs, if any; and

 

(iii)                               the
Executive shall have no further rights to any other compensation or benefits
hereunder on or after the termination of employment, or any other rights
hereunder.

 

(e)          General
Release.  The Company’s obligation to
make any payment pursuant to Section 6(c)(ii) and (iii) shall be
contingent upon, and is the consideration for, the Executive executing and
delivering to the Company, a general release (the “Release”), in customary
form, releasing the Company, its affiliates and all current and former members,
officers and employees of the Company (the “Releasees”) from any claims
relating to his employment hereunder, other than claims relating to continuing
obligations under, or preserved by, (x) this Agreement or (y) any
compensation or benefit plan, program or arrangement in which the Executive was
participating as of the Date of Termination, and no such amounts shall be
provided until the Executive executes and delivers to the Company a letter
which provides that the Executive had not revoked such Release after seven days
following the date of the Release; subject to no Releasee initiating or
maintaining any proceeding or claim against the Executive or any of his heirs,
beneficiaries or legal representatives or against his estate, other than
proceedings and claims relating solely to enforcing the Executive’s continuing
obligations under this Agreement or any of the agreements, plans, programs and
arrangements referred to in clause (y) of this Section 6(e).

 

(f)            No
Offset, Etc..  The Company’s
obligation to make the payments provided for in, and otherwise to perform its
obligations under, this Agreement shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action that the
Company or any Releasee may have against the Executive or others.  In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amount payable to the Executive under any of the provisions of this Agreement,
and such amounts shall not be reduced, regardless of whether the Executive
obtains other employment or receives benefits or compensation in connection
therewith.  Amounts due under this
Section 6 are considered to be reasonable by the Company and are not in the
nature of a penalty.  The payments and
benefits provided for in this Section 6 are intended to constitute both
liquidated damages and, in the case of the payment described in Section
6(c)(ii) and (iii), consideration for the general release described in Section
6(e).

 

7.              Withholding.  Notwithstanding any other provision of this
Agreement, the Company may withhold from amounts payable under this Agreement
all Federal, state, local and foreign taxes that it determines are required to
be withheld by applicable law or regulation.

 

8.              Confidential
Information.

 

(a)          The
Executive shall hold all secret or confidential information, knowledge or data
relating to the Company or any of its affiliates and their respective
businesses that the Executive obtains during his employment hereunder and that
is not public knowledge (other than as a result of the Executive’s violation of
this Section 8) (“Confidential  Information”)
in strict confidence.  The Executive
shall not communicate, divulge or disseminate Confidential Information at any
time during or after the Executive’s employment with the Company, except
(i) in the course of performing his duties for the Company or its
affiliates, (ii) in confidence to any attorney, accountant or other
professional for the 

 

8

 

purpose of securing professional advice, (iii) to the extent
reasonably necessary to enforce his rights, (iv) with the prior written
consent of the Company or (v) as otherwise required by law, regulation or
legal process.  If the Executive is
requested pursuant to, or required by, applicable law, regulation or legal
process to disclose any Confidential Information, the Executive shall provide
the Company, as promptly as the circumstances reasonably permit, with notice of
such request or requirement and, unless a protective order or other appropriate
relief is previously obtained, the Confidential Information subject to such
request may be disclosed pursuant to and in accordance with the terms of such
request or requirement; provided that,
the Executive shall use his best reasonable efforts, at the Company’s
reasonable request and sole expense, to limit any such disclosure to the
precise terms of such request or requirement.

 

(b)         All
memoranda, notes, lists, records, property and any other tangible product and
documents (and all copies thereof), whether visually perceptible,
machine-readable or otherwise, made, produced or compiled by the Executive or
made available to the Executive concerning the business of the Company or its
affiliates, (i) shall at all times be the property of the Company (and, as
applicable, any affiliates) and shall be delivered to the Company at any time
upon its request, and (ii) upon the Executive’s termination of employment,
shall be immediately returned to the Company.

 

9.              Non-Competition/Non-Solicitation.

 

(a)          The
Executive acknowledges that the services to be rendered by him to the Company
(which, as used in this Section 9, shall be deemed to include the Company
and each of its Subsidiaries) are of a special and unique character and that
the Executive will have access to Confidential Information.  In consideration of his employment hereunder,
the Executive agrees, for the benefit of the Company, that he will not (other
than in connection with performing his duties for the Company or its
affiliates):

 

(i)                                     during
the Term and (provided that, the Company shall not, after the Date of
Termination, have remained in material breach of any of its material
obligations to Executive, under this Agreement or otherwise, for more than 10
days after Executive shall have given the Company written notice requesting
cure of such material breach), if the Executive’s employment hereunder is
terminated (x) by the Company for any reason other than a termination Without
Cause or (y) by the Executive other than for Good Reason, for 12 months
thereafter: (i) engage, directly or indirectly, whether as principal,
agent, representative, consultant, employee, partner, stockholder, limited
partner or other investor (other than an investment of not more than (x) 5% of
the stock or equity of any corporation the capital stock of which is publicly
traded or (y) 5% of the ownership interest of any limited partnership or
other entity) or otherwise, within the United States of America, in any
business that competes directly or materially with the business conducted by
the Company as of the Date of Termination or (ii) solicit or entice, or attempt
to solicit or entice, away from the Company, either for his own account or for
any individual, firm or corporation, any person known by him to have been, at
any time during the 12 months prior to such solicitation, enticement or
attempt, a customer of, a lender to, or a direct and material participant in a
substantial financial transaction with, the Company, or to have been actively
solicited by the Company to become a customer of, a lender to, or a direct and
material participant in a substantial financial transaction with, the Company; provided, however, that the provisions of this Section
9(a)(ii) shall not apply to, and thus shall not be deemed to restrict, any
solicitation, enticement or attempt made on behalf of a venture or business
that does not compete directly and materially with the Company in investment
activities relating to the real estate industry; or

 

(ii)                                  during
the Term and (provided  that,
the Company shall not, after the Date of Termination, have remained in material
breach of any of its material obligations to Executive, under this Agreement or
otherwise, for more than 10 days after Executive shall have given the Company
written notice requesting cure of such material breach) for 12 months
thereafter:  (x) solicit or entice,
or 

 

9

 

attempt to solicit or entice, away from the Company any individual who
is known by the Executive to then be an officer or employee of the Company
either for his own account or for any individual, firm or corporation, whether
or not such individual would commit a breach of a contract of employment by
reason of leaving the service of the Company or (y) employ, directly or
indirectly, any person who is known by the Executive to have been, during the
12 months prior to employment by the Executive, an officer, employee or sales
representative of the Company.

 

(b)         The
Executive understands that the provisions of this Section 9 may limit his
ability to earn a livelihood in a business similar to the business of the
Company but nevertheless agrees and hereby acknowledges that (A) such
provisions do not impose a greater restraint than is necessary to protect the
goodwill or other business interests of the Company, (B) such provisions
contain reasonable limitations as to time and scope of activity to be
restrained, (C) such provisions are not harmful to the general public,
(D) such provisions are not unduly burdensome to the Executive, and
(E) the consideration provided hereunder is sufficient to compensate the
Executive for the restrictions contained in such provisions.  In consideration thereof and in light of the
Executive’s education, skills and abilities, the Executive agrees that the
Executive will not assert in any forum that such provisions prevent the
Executive from earning a living or otherwise are void or unenforceable or
should be held void or unenforceable.

 

(c)          Notwithstanding
anything herein to the contrary, the Executive shall not be restricted from
engaging in a non-competing business pursuant to Section 9(a) even if another
division, subsidiary or affiliate of that enterprise does compete with the
Company, so long as he does not perform any services for such division,
subsidiary or affiliate.

 

10.       Rights
and Remedies Upon Breach of Section 8 or 9.

 

(a)          The
Executive acknowledges and agrees that any breach by him of any of the
provisions of Sections 8 or 9 (the “Restrictive Covenants”) would result in
irreparable injury and damage for which money damages would not provide an
adequate remedy.  Therefore, if the
Executive breaches, or threatens to commit a breach of, any of the provisions
of Section 8 or Section 9, the Company and its affiliates shall have, in
addition to, and not in lieu of, any other rights and remedies available to the
Company and its affiliates under law or in equity (including, without
limitation, the recovery of damages), the right and remedy to have the
Restrictive Covenants specifically enforced (without posting bond and without
the need to prove damages) by any court having equity jurisdiction, including,
without limitation, the right to an entry against the Executive of restraining
orders and injunctions (preliminary, mandatory, temporary and permanent)
against violations, threatened or actual, and whether or not then continuing,
of such covenants.

 

(b)         The
Executive agrees that in any action seeking specific performance or other
equitable relief, he will not assert or contend that any of the provisions of
Sections 8 or 9 are unreasonable or otherwise unenforceable.  The existence of any claim or cause of action
by the Executive, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement of the Restrictive Covenants.

 

11.       Arbitration.  Any claim or dispute arising out of or
relating to this Agreement (other than a controversy or claim arising under
Section 8 or Section 9, to the extent necessary for the Company (or its
affiliates, where applicable) to avail itself of the rights and remedies
referred to in Section 10), any other agreement between the Executive and the
Company or any of its affiliates, the Executive’s employment with the Company
or the termination thereof (collectively, “Covered Claims”) shall be resolved
by binding arbitration, to be held in the Borough of Manhattan, in accordance
with the Commercial Arbitration Rules (and not the National Rules for the
Resolution of Employment Disputes) of the 

 

10

 

American Arbitration Association and this Section 11.  Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.  To the extent that it is determined that the
Executive is the prevailing party with respect a Covered Claim, the Company
shall promptly pay all costs and expenses (including without limitation
attorneys’ fees and other charges of counsel) reasonably incurred by Executive
or his beneficiaries in resolving any such Covered Claim.

 

12.       Successors;
Beneficiaries.

 

(a)          This
Agreement is personal to the Executive and, without the prior written consent
of the Company, shall not be assignable by the Executive; provided,
however, that any of the Executive’s
rights to compensation hereunder may be transferred by will or by the laws of
descent and distribution or as provided in Section 12(d).

 

(b)         This
Agreement shall inure to the benefit of and be binding upon the Parties and
their respective successors, heirs (in the case of the Executive) and assigns.

 

(c)          No
rights of the Company under this Agreement may be assigned or transferred by
the Company, other than to a successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company that promptly and expressly agrees to
assume and perform this Agreement in the same manner and to the same extent
that the Company would have been required to perform it if no such succession
had taken place.  As used in this
Agreement, the terms “Board” and “Board of Directors” shall include the board
of directors, board of trustees, or analogous governing person or body of any
successor to all or substantially all of the business or assets of the Company.

 

(d)         The
Executive shall be entitled, to the extent permitted under any applicable law,
any applicable plans, programs and arrangements of the Company, to select and
change the beneficiary or beneficiaries to receive any compensation or benefit
payable hereunder following the Executive’s death by giving the Company written
notice thereof.  In the event of the
Executive’s death or a judicial determination of his incompetence, references
in this Agreement to the Executive shall be deemed, where appropriate, to refer
to his beneficiary, estate or other legal representative.

 

(e)          Except
to the extent otherwise provided in Sections 12(a) and 12(d), the rights
and benefits of the Executive under this Agreement may not be anticipated,
assigned, alienated or subjected to attachment, garnishment, levy, execution or
other legal or equitable process.  Any
attempt by the Executive to anticipate, alienate, assign, sell, transfer,
pledge, encumber or charge such rights or benefits, except as required by law
or court order or as provided in Sections 12(a) and 12(d), shall be
void.  Payments hereunder shall not be
considered assets of the Executive in the event of insolvency or bankruptcy unless
and until paid, or due to be paid, to the Executive.

 

13.       Representations.  The Executive represents to the Company that
he is not subject or a party to any employment or consulting agreement,
non-competition covenant or other agreement, covenant or understanding which
might prohibit him from executing this Agreement or limit his ability to
fulfill his responsibilities hereunder. 
The Company represents and warrants that:

 

(i)                                     it
is fully and specifically authorized, by action of the Board and/or the Compensation
Committee and of any other person or body whose action is required, to enter
into this Agreement and to perform its obligations under it;

 

11

 

(ii)                                  the
execution, delivery and performance of this Agreement by the Company does not
violate any applicable law, regulation, order, judgment or decree or any
agreement, plan or corporate governance document to which the Company is a
party or by which it is bound; and

 

(iii)                               upon
the execution and delivery of this Agreement by the Parties, this Agreement
shall be the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except to the extent enforceability
may be limited by applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors’ rights generally.

 

14.       Indemnification
of Executive.

 

(a)          The
Company shall promptly indemnify and hold harmless Executive, to the fullest
extent permitted by law and to the extent that he acted neither in deliberate
bad faith nor in a manner that he believed to be opposed to the interests of
the Company, against all costs, expenses, liabilities and losses (including,
without limitation, attorneys’ fees reasonably incurred, reasonable costs of
investigation,  judgments, fines,
penalties, ERISA excise taxes, interest and amounts paid, or to be paid, in
settlement) incurred by Executive in connection with any Proceeding or Claim.

 

(b)         The
Company shall advance to Executive all costs and expenses (including, without
limitation, attorneys’ fees) incurred by him in connection with any Proceeding
or Claim within 20 days after receipt by the Company of a written request
for such advance (except to the extent prohibited by law).  Such request shall include an itemized list
of the costs and expenses and an undertaking by Executive to repay the amount
of such advance if it shall ultimately be determined that he is not entitled to
be indemnified against such costs and expenses. 
Upon a request under this subsection (b), Executive shall be deemed
to have met any standard of conduct required for indemnification of such costs
and expenses unless the contrary shall be established by a court of competent
jurisdiction or through arbitration in accordance with Section 11.

 

(c)          For
the purposes of this Section 14, (i) the term “Proceeding” shall mean
any action, suit or proceeding, whether civil, criminal, administrative,
investigative or other, in which Executive is made, or is threatened to be
made, a party or a witness by reason of the fact that he is or was an officer
or employee of the Company or is or was serving as an officer, director,
member, employee, trustee or agent of any other entity at the request of, or on
behalf of, the Company, whether or not the basis of such Proceeding arises out
of or in connection with Executive’s alleged action or omission in an official
capacity, and (ii) the term “Claim” shall mean any claim, demand,
investigation, discovery request, or request for testimony or information that
arises out of or relates to Executive’s service as an officer, employer, agent
or representative of the Company or service at the Company’s request, or on the
Company’s behalf, as a director, officer, employee, agent, manager, consultant,
advisor, or representative of any other entity.

 

(d)         The
Company shall not settle any Proceeding or Claim in a manner that would impose
on Executive any penalty or limitation without his prior written consent.  Executive shall not settle any Proceeding or
Claim in a manner that would impose any indemnification obligation on the
Company pursuant to this Section 14 without the prior written consent of
the Company.  Neither the Company nor
Executive shall unreasonably delay or withhold its or his consent under this
Section 14(d) to any proposed settlement.

 

(e)          The
indemnification, and right to advancement of expenses, provided in this
Section 14 shall continue as to Executive even if he has ceased to serve
in any of the capacities referred to in Section 14(c) and shall inure to
the benefit of Executive’s heirs, executors and administrators.

 

12

 

(f)            The
indemnification provided in this Section 14 shall not extend to any claims
or disputes arising between the Company and the Executive under, pursuant to,
or with respect to, this Agreement or any agreement or plan referred to in
Section 3 above.  In the event of
any such claim or dispute, such claim or dispute shall be resolved in
accordance with Section 11.

 

(g)         During
the Term and for six years thereafter, the Company shall keep in place, or
cause to be kept in place, a directors’ and officers’ liability insurance
policy (or policies) providing coverage to Executive that is in no respect less
favorable than the coverage then provided to any other present or former
officer, director or trustee of the Company.

 

15.       Miscellaneous.

 

(a)          This
Agreement shall be governed, construed, performed and enforced in accordance
with its express terms, and otherwise in accordance with the laws of the State
of New York, without reference to any principles of conflicts of laws that
could cause the application of any laws other than the laws of the State of New
York.  No provision of this Agreement may
be amended or modified except by a written agreement that is executed by the
Parties or their respective successors and legal representatives and that
expressly refers to the provision(s) of this Agreement that are being amended
or modified.  In the event of any
inconsistency between any provision of this Agreement and any provision of any
plan, employee handbook, personnel manual, program, policy, arrangement or
agreement of the Company or any of its affiliates, the provisions of this
Agreement shall control unless the Executive otherwise agrees in a writing that
expressly refers to the provision of this Agreement whose control he is
waiving.  Without limiting the generality
of the foregoing, it is expressly agreed that (i) Sections 4, 5 and 6 hereof
override any provisions of any agreements, contracts or other documentation
governing the High Performance Units and/or the New Business Interests relating
to the consequences of the termination of the Executive’s employment or a
change of control to the extent the latter provisions are both inconsistent
with, and less favorable to the Executive than, Sections 4, 5 and 6, and (ii)
Sections 8, 9 and 10 hereof shall control in lieu of any provisions of any such
agreements, contracts or other documentation relating to restrictive covenants
imposed upon the Executive, except, in each case, unless the Executive
otherwise agrees in a writing that expressly refers to the affected Section of
this Agreement.

 

(b)         All
notices, requests, consents and other communications under this Agreement shall
be in writing and shall be given (i) by hand delivery or (ii) by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows or (iii) by nationally recognized overnight courier,
addressed as follows:

 

If to the Executive:

 

Jay S. Nydick

c/o iStar Financial Inc.

1114 Avenue of the Americas, 27th Floor

New York, NY 10036

 

with a copy to the Executive at the address of his
primary residence as it then appears in the records of the Company and a copy
to:

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 
10019-6131

Attn:  Michael
S. Katzke

 

13

 

If to the Company:

 

iStar Financial Inc.

1114 Avenue of the Americas, 27th Floor

New York, NY 10036

Attn:  General
Counsel

 

with copy each to:

 

iStar Financial Inc.

1114 Avenue of the Americas, 27th Floor

New York, NY 
10036

Attn:  Chairman,
Compensation Committee of the Board of Directors

 

and

 

Clifford Chance US LLP

31 West 52nd 
Street

New York, NY 10019-6131

Attn:  Kathleen
L. Werner, Esq.

 

or to such other address or addresses as either Party furnishes to the
other in writing in accordance with this Section 15(b).  Notices and other communications shall be
effective when actually received by the addressee.

 

(c)          If
any provision of this Agreement, including but not limited to Section 8, 9 or
10 or the application of any such provision to any person or circumstances
shall be determined by any court or arbitrator of competent jurisdiction to be
invalid or unenforceable to any extent, then (i) the remainder of this
Agreement, and the application of such provision to such person or
circumstances other than those to which it is so determined to be invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall
be enforced to the fullest extent permitted by law and (ii) such court or
arbitrator shall have the power, and is hereby directed, to reduce the scope,
duration or area of the provision, to delete specific words or phrases and to
replace any invalid or unenforceable provision with a provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable provision, and this Agreement shall be enforced as so
modified.

 

(d)         Anything
contained in this Agreement to the contrary notwithstanding, the provisions of
Sections 7 through 11, and the other provisions of this Agreement to the extent
necessary to effectuate the survival of Sections 7 through 11, shall survive
termination of this Agreement and any termination of the Executive’s employment
hereunder.

 

(e)          The
Company shall reimburse to the Executive (or pay directly if requested by the
Executive) any legal fees reasonably incurred by the Executive in connection
with the negotiation of this Agreement, up to a maximum of $25,000.

 

(f)            The
captions and headings in this Agreement are not part of the provisions hereof
and shall have no force or effect.

 

(g)         No
waiver by any person or entity of any breath of any condition or provision
contained in this Agreement shall be deemed a waiver of any similar or
dissimilar condition or provision at the same or any prior or subsequent
time.  To be effective, any waiver must
be set forth in a writing 

 

14

 

signed by (or on behalf of) the waiving person or entity and must
specifically refer to the condition(s) or provision(s) of this Agreement being
waived.

 

(h)         The
Parties acknowledge that this Agreement supersedes any other agreement between
them concerning the specific subject matter hereof.

 

[Rest of Page Intentionally Left
Blank]

 

15

 

This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and said counterparts
shall constitute one and the same instrument. 
Signatures delivered by facsimile shall be valid and binding for all
purposes.

 

IN WITNESS WHEREOF,
the Parties have executed this Agreement as of the day and year first above
written.

 

	
   

  	
  JAY S. NYDICK

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	 

	
   

  	
  Jay S. Nydick

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  iSTAR FINANCIAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						

 

16

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