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Exhibit 10.8  

EXECUTION COPY  

 
 

EMPLOYMENT AGREEMENT    
    

        THIS AGREEMENT is made as of February 11, 2004 by and between iStar Financial Inc., a Maryland
corporation (together with its successors and assigns, the "Company"), and Jay Sugarman ("Executive"). 

W I T N E S S E T H    T H A T  

        WHEREAS, Executive has been employed as Chief Executive Officer of the Company pursuant to an employment agreement
made as of March 31, 2001 between Executive and the Company (the "Old Agreement"); and 

        WHEREAS, the term of the Old Agreement is due to end on March 30, 2004; and 

        WHEREAS, the Company wishes to provide for the continued employment by the Company of Executive upon the expiration of the Old Agreement,
and Executive wishes to continue to serve the Company, in the capacities and on the terms and conditions set forth in this Agreement; 

        NOW, THEREFORE, Executive and the Company (the "Parties") hereby agree as follows: 

        1.    Employment Period.    The Company shall continue to employ
Executive, and Executive shall continue to serve the Company, on the terms and conditions set forth in this Agreement. The term of Executive's employment shall continue under the Old Agreement through
and including 12:00 a.m., New York time, on March 30, 2004, at which time the Executive's term of employment under the Old Agreement shall expire. The term of Executive's employment
under this Agreement shall commence at 12:01 a.m., New York time, on March 31, 2004 (the "Effective Date") and, unless earlier terminated
in accordance with Section 5, shall continue through the later of March 30, 2007 and the first anniversary of the last "Change of Control" (as defined in Section 6(a)) that occurs
on or before March 30, 2007 (the "Initial Employment Period"). Upon the expiration of the Initial Employment Period and upon each anniversary
thereof, the term of Executive's employment hereunder, if not previously ended, shall automatically be extended for an additional employment period ending at the later of the first anniversary of the
date of extension and the first anniversary of the last Change of Control that occurs on or before that first anniversary of the date of extension, subject to earlier termination in accordance with
Section 4 (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 to further extend the Additional Employment Period at least ninety (90) days prior to the scheduled expiration of the Initial Employment
Period or the Additional Employment Period, as the case may be. (The Initial Employment Period and Additional Employment Period together are the "Employment
Period.")

        2.    Position and Duties.    

         (a)   During the term of his employment hereunder (the "Term"), Executive shall serve as Chief
Executive Officer of the Company and (subject to Executive's re-election to the Board of Directors of the Company (the "Board") by the
Company's shareholders) as a member of, and the Chairman of, the Board. Executive shall have the authorities, duties and responsibilities that are customarily assigned to the chief executive officer
and chairman of the board of a company of the size and nature of the Company; and shall have such other duties and responsibilities, not inconsistent therewith, as may from time to time reasonably be
assigned to him by the Board. The Company shall use all reasonable efforts to maintain Executive as a member of, and Chairman of, the Board, and as Chief Executive Officer of the Company, throughout
the Term. Executive agrees that upon the termination of his employment as Chief Executive Officer of the Company, his chairmanship of, and membership on, the Board shall immediately and automatically
terminate 

 

and
he shall promptly execute any documents evidencing such termination that the Company may reasonably request him to execute. 

        (b)   In his capacity as Chief Executive Officer of the Company, Executive shall report solely and directly to the Board. All other senior
executives
of the Company shall, during the Term and unless Executive otherwise directs, report directly to Executive. 

         (c)   During the Term, and excluding any periods of vacation and sick leave to which Executive is entitled, Executive shall perform, faithfully
and
diligently, his duties and responsibilities hereunder. It shall not be considered a violation of the foregoing for Executive to: (i) serve on
corporate, industry, civic, social or charitable boards or committees or engage in charitable activities and community affairs; provided that Executive
shall obtain approval of the Board before commencing service on a board of directors or other governing body of a publicly-traded entity organized for profit;  (ii) accept and fulfill a reasonable
number of speaking engagements; or (iii) manage his
own personal investments and affairs; provided that the foregoing activities do not materially interfere with the performance of Executive's
responsibilities hereunder. 

        (d)   Executive agrees to discharge his duties and obligations under this Agreement in accordance with such reasonable policies, consistent with
the
express terms of this Agreement, as the Company may from time to time (either before or after the Effective Date) adopt and communicate to Executive. 

         (e)   During the Term, Executive's principal office, and principal place of employment, shall be at the Company's principal executive offices
in
Manhattan. 

        3.    Compensation.    

        (a)    Base Salary.    During the Term, Executive shall receive a base
salary ("Base Salary") at a rate of $1,000,000 per annum, subject to upward (but not downward) adjustment by 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. For the fiscal year ending December 31, 2004, Executive's Base Salary under this Agreement and the Old Agreement shall be prorated based upon the term of Executive's
employment under each agreement during that fiscal year, such that Executive's aggregate Base Salary under this Agreement and the Old Agreement for the fiscal year ending December 31, 2004 is
$1,000,000. 

        (b)    Annual Bonus.    Executive shall, to the extent provided in
this Section 3(b), be entitled to an opportunity to earn an annual incentive award (the "Incentive Award") in respect of each fiscal year of the
Company that ends during the Term. Executive's annual incentive award for any such year shall be an amount up to $5.0 million (including for the fiscal year ending December 31, 2004);
however, no payment is to be made under Section 6(d) of the Old Agreement, which is superseded. An annual Incentive Award of $5.0 million shall be awarded for a fiscal year if Executive
meets specified levels of performance in the following three areas, (1) Total Shareholder Rate of Return (as defined below); (2) the Company's' financial position (balance sheet) and
results of operations (income statement and adjusted earnings) and (3) qualitative factors including, but not limited to, succession planning, investor relations, personnel management and
relations, and attainment of strategic goals. The three areas of performance evaluation shall each carry an equal weighting of one-third and the performance criteria within each area of
evaluation may include both objective and subjective criteria. The Compensation Committee shall, in good-faith consultation with Executive, select the performance criteria and establish
the levels of performance that, if achieved, will result in an award of a full $5.0 million Incentive Award. Such criteria and performance levels will be set for each fiscal year prior to the
sixtieth (60th) day of such fiscal year (except in the case of fiscal year 2004, for which the day shall be July 15, 2004). To 

2

 

the
extent that the actual performance for a fiscal year, so measured, falls short of the specified levels so established, a lesser amount than the $5.0 million target amount may be awarded;  provided,
however, that the Company and Executive agree that if a Total Rate of Shareholder Return of at least 15% is achieved for a fiscal year, the
Incentive Award to be awarded in respect of that year shall be equal to at least $1,650,000.00. Executive shall be paid his annual Incentive Award (if any) for a fiscal year no later than the earlier
of (x) the date that other senior executives of the Company are paid their annual incentive awards (if any) for such year and (y) the sixtieth (60th) day following the last day of such
year; provided that payment may be deferred, upon Executive's prior written election, in accordance with any compensation deferral program of the
Company then available to Executive or to senior executives of the Company generally. 

        For
purposes of this Agreement, the term "Total Shareholder Rate of Return" in respect of a fiscal year shall mean the quotient of
(i) the sum of (A) the total amount of dividends per share of common stock declared and paid from January 1 through December 31 of such fiscal year and (B) the net
gain or loss per share on the common stock between the Base Price and relevant Determination Price for such fiscal year divided by (ii) the Base Price for such fiscal year. For these purposes,
(1) the term "Base Price" shall mean the average closing price of the Company's common stock on the New York Stock Exchange for the first 20 full
trading days in the relevant fiscal year, and (2) the term "Determination Price" shall mean the average closing price of the Company's common
stock on the New York Stock Exchange for the last 20 full trading days in the relevant fiscal year, in each case assuming a fiscal year beginning on January 1 and ending on December 31. 

        For
the purpose of determining the amount of dividends per share of common stock to be used in calculating Total Shareholder Rate of Return, all dividends on a share of common stock
shall be assumed to be invested in additional shares of common stock ("Deemed Purchase Shares") at the per-share closing price one trading
day prior to the dividend payment date. Such Deemed Purchase Shares shall be deemed to generate additional dividends, at the same time and at
the same rate as dividends are paid on actual shares of common stock (and such deemed dividends shall be deemed invested in additional Deemed Purchase Shares). 

        (c)    Performance Retention Grant.    As of the Effective Date, the
Company grants to Executive an award of shares of the Company's common stock ("Common Stock"), pursuant to the Company's Amended and Restated
Long-Term Incentive Plan, which award shall have a value of $10.0 million, based upon the average closing price of the Company's common stock on the New York Stock Exchange for the
20 trading days ending on and including March 30, 2004. Concurrently with the execution of this Agreement, the Parties shall memorialize this Performance Retention Grant of shares by entering
into an agreement in substantially the form attached hereto as Exhibit A (the "Performance Retention Grant Agreement"). 

        (d)    Purchase of High Performance Units.    The Company confirms
that on the date of this Agreement, the Company has sold to Executive, and Executive has purchased, an 80% interest in the Company's 2006 Executive and Director High Performance Unit Plan at a
purchase price of $286,080.00 in cash, which purchase price has been fully paid by Executive to the Company. 

        (e)    Fringe Benefits.    

        (i)    Reimbursement of Expenses and Administrative Support.    The
Company shall promptly pay or reimburse Executive, upon the presentation of appropriate documentation of such expenses, for all reasonable travel and other expenses incurred by Executive in the course
of performing services for or on behalf of the Company. The Company further agrees to furnish Executive with office space, administrative support and any other assistance and accommodations as shall
be reasonably required by Executive in the performance of services for or on behalf of the Company. 

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        (ii)    Participation in Benefit Plans.    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 (collectively, the "Benefit
Plans"), on no less favorable terms than those that apply to other senior executives of the Company generally, but without duplication of benefits under multiple benefit plans.
Executive shall continue to be credited with seven years of deemed service prior to the Effective Date, as well as with his actual service on and after the Effective Date, for purposes of determining
his entitlements and benefits under any such Benefit Plans; provide that in the event that the grant of such deemed service would cause any of the Benefit Plans to lose its tax qualified or tax
favored status, the Executive shall receive the after-tax cash equivalent of such benefit in lieu thereof. 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 stock, phantom shares, or other performance awards) under any Company incentive plan from time to time in effect for its senior executives or other employees. 

        (iii)    Life Insurance.    In addition to and without limiting the
generality of the foregoing, the Company shall continue to maintain a term life insurance policy on Executive's life in the face amount of $10,000,000, which policy shall be owned by Executive or his
designee, from a nationally-recognized insurance carrier reasonably acceptable to Executive. Upon termination of Executive's employment with the Company for any reason, the Company shall have no
further obligation to pay premiums on such policy. 

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

        (v)    Other Fringe Benefits and Perquisites.    During the Term,
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 positions 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. 

        (f)    Other Rights and Benefits.    Nothing in this Agreement shall
prevent or limit Executive's continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliates for which Executive may qualify (including,
without limitation, any compensation deferral plan or arrangement), nor shall anything in this Agreement limit or otherwise affect such rights as Executive may have under any contract, agreement or
arrangement with the Company or any of its affiliates. 

        4.    Termination of Employment.    

        (a)    Death or Disability.    Executive's employment with the Company
shall terminate automatically upon Executive's death. Either Party shall be entitled to terminate Executive's employment with the Company in the event of Executive's Disability.
"Disability" shall mean that Executive shall have been unable, as determined by an "Approved Physician" (as defined below), for a period of not less
than (x) 120 consecutive days, or (y) 180 days within any 12 month period, to perform his duties for the Company, as a result of physical or mental illness, injury or
impairment. A termination of Executive's employment by either Party for Disability shall be communicated to the other Party by written notice, and shall be effective on the 30th day after receipt of
such notice by the other Party (such 30th day being the "Disability Effective Date"), 

4

 

unless
Executive returns to full-time performance of his duties for the Company before the Disability Effective Date. For purposes of this Agreement, "Approved
Physician" shall mean an independent medical doctor selected by the Parties; provided that if the Parties cannot promptly agree
on such a doctor, each Party shall promptly select an independent medical doctor and the two medical doctors thus selected shall promptly select a third independent medical doctor who shall be the
"Approved Physician". 

        (b)    By the Company.    

           (i)  The Company may terminate Executive's employment with the Company for Cause or Without Cause.
"Cause" shall mean (x) Executive is convicted of, or pleads guilty or nolo contendere to, any
felony, (y) Executive knowingly 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 Executive of his duties for the Company; (not due to physical or
mental illness, injury or impairment); provided, however, that no act or failure to act shall be
considered "knowing" for purposes of this Agreement unless it is done, or omitted to be done, without reasonable belief that such action or omission was in, or not opposed to, the best interests of
the Company; and provided, further, that no abandonment shall constitute Cause under clause (z)
unless Executive shall have failed to fully cure such abandonment no later than ten (10) days after receiving written notice from the Board requesting full cure. 

          (ii)  A termination of Executive's employment for Cause may only be effected in accordance with the following procedures. The Board shall give
Executive written notice ("Notice of Potential Termination for Cause") of its intention to terminate 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 Executive's termination for Cause. Such special meeting shall take place not less than ten (10), and not more than
twenty (20), days after Executive receives the Notice of Potential Termination for Cause. At such special meeting, 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 Executive has fully cured the abandonment that would
otherwise constitute Cause). A termination of 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 three quarters (3/4) of the members of the Board other than Executive, terminating Executive's employment for
Cause, subject to de novo review of the question whether Cause existed through arbitration in accordance with Section 11
(provided, for avoidance of doubt, that if Cause is determined through such arbitration not to have existed, the termination of 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 Executive's employment by the Company "Without Cause" (that is, neither for
Cause nor for Disability, in each case as determined in accordance with this Agreement, and not by notice of non-extension in accordance with Section 1) shall be effected by the
Company giving Executive prior written notice of the termination, which notice shall specify the Date of Termination. A termination of Executive's employment Without Cause by the Company shall not
constitute a breach of this Agreement. 

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        (c)    By Executive.    

          (i)  Executive may terminate his employment with the Company with Good Reason or Without Good Reason. "Good
Reason" shall mean the occurrence of any of the following events without, in the case of clauses (B) through (F) only, full cure by the Company no later than ten
(10) days after receiving notice from Executive requesting cure:

         (A)  failure by the Company, the Board, and/or the holders of the Company's "Voting Securities" (as defined in Section 6(a)(ii)) to maintain
Executive as the Chief Executive Officer of the Company and as a member of the Board; 

        (B)  the assignment to Executive of any duty or responsibility that is inconsistent in any respect with those customarily associated with the
positions to be held by Executive pursuant to this Agreement; or any material diminution in Executive's positions, authorities, duties or responsibilities; 

         (C)  any requirement that Executive's services for the Company be rendered primarily at a location or locations other than the principal executive
offices of the Company in the Borough of Manhattan; 

        (D)  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; 

         (E)  any person is appointed by, or at the direction of, the Board or any committee thereof to be a senior executive of the Company without prior
notice to Executive or over his objection; provided that it shall neither be "Good Reason", nor constitute a breach of this Agreement, if the Board by a
vote of a majority its members directs Executive to terminate the employment of another executive of the Company or itself acts directly to do so; 

         (F)   any other material breach of this Agreement by the Company; or 

         (G)  any election by Executive, on at least ten (10) days' notice to the Company, to terminate his employment with the Company at any time
during the ninety (90) day period that commences on the first anniversary of any Change of Control. 

         (ii)  A termination of his employment with the Company by Executive with Good Reason shall be effected by his giving the Company prior written
notice
of the termination setting forth in reasonable detail the circumstances (including expiration of any applicable cure period without full cure) that constitute Good Reason and the specific provision or
provisions of this Agreement on which Executive relies and specifying the Date of Termination ("Notice of Termination for Good Reason"). For avoidance
of doubt, a termination of his employment with the Company by Executive shall be treated as with Good Reason only if Good Reason in fact existed, and otherwise shall be treated as a termination
Without Good Reason. 

       (iii)  A termination of his employment with the Company by Executive "Without Good Reason" (that is,
neither with Good Reason nor for 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 thirty (30) days before the Date of Termination, specifying the Date of Termination. Termination of Executive's employment
in accordance with this Section 4(c)(iii) shall not constitute a breach of this Agreement. 

        (d)    No Waiver.    The failure to set forth any fact or circumstance
in a Notice of Potential Termination for Cause or a Notice of Termination for Good Reason shall not constitute a waiver 

6

 

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 Executive's death, the Disability Effective Date, the date on which the termination of Executive's employment with the Company by the Company for
Cause or Without Cause or by Executive with Good Reason or Without Good Reason is
effective, or the date, if different, on which Executive's employment with the Company terminates pursuant to the provisions of Section 1. 

        5.    Obligations of the Company upon Termination.    

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

           (i)  the Company shall, within seven (7) days following the date of his death, pay to Executive's designated beneficiary or
beneficiaries (or,
if there is no such beneficiary, to Executive's estate or legal representative) a lump-sum amount of $2,000,000; and 

          (ii)  the Company shall continue to provide Executive's spouse and eligible dependents, at its expense, with the medical benefits and
insurance
coverages (including, without limitation, dental, vision, prescription drug and hospital benefits and coverages) then provided generally to spouses and eligible dependents of senior executives of the
Company through the earlier of the first anniversary of the date of his death and the date that Executive's spouse and eligible dependents receive equivalent coverages and benefits under any plans,
programs and/or arrangements of another entity. Benefits provided pursuant to this Section 5(a)(ii) shall be included as part of any required COBRA coverage. 

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

           (i)  the Company shall, within seven (7) days following the Date of Termination, pay to Executive a lump-sum amount of $2,000,000;
and 

         (ii)  the Company shall continue to provide Executive and his spouse and eligible dependents, at its expense, with the medical benefits and
insurance
coverages (including, without limitation, dental, vision, prescription drug and hospital benefits and insurance coverages) then provided generally to senior executives of the Company and their spouses
and eligible dependents through the earlier of the first anniversary of the Disability Effective Date and the date that Executive's spouse and eligible dependents receive equivalent coverages and
benefits under any plans, programs and/or arrangements of another entity. Benefits provided pursuant to this Section 5(b)(ii) shall be included as part of any required COBRA coverage. 

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

           (i)  the Company shall, within seven (7) days following the Date of Termination, pay Executive a lump-sum amount of
(A) $2,000,000 in the case of a termination Without Cause or with Good Reason pursuant to Section 4(c)(i)(G) and (B) $5,000,000 in the case of a termination with Good Reason other
than pursuant to Section 4(c)(i)(G); and 

          (ii)  the Company shall continue to provide Executive, his spouse and his eligible dependents, at its expense, with the medical benefits and
insurance
coverages (including, without limitation, dental, vision, prescription drug and hospital benefits and insurance coverages) then provided generally to senior executives of the Company and their spouses
and eligible dependents, through the earlier of the first anniversary of the Date of Termination and 

7

 

the
date that Executive, his spouse, and his dependents receive equivalent coverages and benefits under any plans, programs and/or arrangements of a subsequent employer. Benefits provided pursuant to
this Section 5(c)(ii) shall be included as part of any required COBRA coverage. 

        Except
as otherwise provided in this Agreement, if Executive's employment is terminated by the Company Without Cause or by Executive with Good Reason neither Executive nor the Company
shall have any further rights or obligations under this Agreement other than those provided for in this Section 5. 

        (d)    For Cause by the Company or Without Good Reason by Executive or by Expiration of the Employment
Period.    In the event that Executive's employment hereunder is terminated (x) by the Company for Cause in accordance with this Agreement, (y) by
Executive Without Good Reason or (z) by expiration of the Employment Period pursuant to a notice of non-extension in accordance with Section 1, then Executive shall be
entitled solely to the benefits described in Section 5(e) below, except that in the event of a termination that is described in clause (z) of this sentence, Executive shall, in addition,
be entitled to an amount, in lieu of any annual Incentive Award for the fiscal year in which his employment hereunder terminates, determined and paid in accordance with Section 3(b) based on
the Company's performance for the entire fiscal year in which the Employment Period ended, but prorated based on the portion of that fiscal year in which Executive remained employed hereunder. 

        (e)    Miscellaneous.    On any termination of Executive's employment
with the Company, he (or his beneficiaries, legal representatives or estate, as the case may be) shall be entitled to:

           (i)  Base Salary through the Date of Termination; 

          (ii)  the balance of any annual, long-term, or other Incentive Award earned but not yet paid (including, without limitation, amounts (if
any) due under Section 3(b)); 

       (iii)  other or additional benefits in accordance with applicable plans, programs and arrangements of the Company and its affiliates (including,
without limitation, under Sections 3(e), 3(f), 6, 10 and 11, under any stock option grant or agreement and under the Old Agreement); and 

         (iv)  payment, promptly when due, of all amounts owed to Executive in connection with the termination or otherwise, such payments to be made by wire
transfer of same day funds to the extent reasonably requested by Executive. 

        (f)    General Release.    The Company's obligation to make any
payment pursuant to Section 5(c)(i) shall be contingent upon, and is the consideration for, Executive delivering to the Company, within thirty (30) days following the Date of
Termination, 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 (collectively, 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 Executive was participating as of the Date of
Termination (including, without limitation, any stock option grant or agreement and the agreements referred to in Section 3(b) of the Old Agreement); subject
to no Releasee initiating or maintaining any proceeding or claim against Executive or any of his heirs, beneficiaries or legal representatives or against his estate, other than
proceedings and claims relating solely to enforcing Executive's continuing obligations under this Agreement or under any of the agreements, plans, programs and arrangements referred to in
clause (y) of this Section 5(f). 

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        (g)    Survival of Obligations.    The respective obligations of the
Parties under Sections 4 through 15 shall survive any termination of Executive's employment. 

        (h)    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 Executive or others. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the
amounts payable to Executive under any of the provisions of this Agreement, and such amounts shall not be reduced, regardless of whether Executive obtains other employment or receives benefits or
compensation in connection therewith, other than as expressly provided in Sections 5(a)(ii), 5(b)(ii) and 5(c)(ii). Amounts due under this Section 5 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 5(c)(i), consideration for the general release described in this Section 5(f). 

        6.    Change of Control.    

        (a)    Change of Control.    For purposes of this Agreement, a
"Change of Control" shall be deemed to have taken place if:

           (i)  individuals who, as of the Effective Date, are members of the Board (the "Incumbent
Directors")
cease for any reason to constitute at least a majority of the members of the Board, provided that (x) any individual becoming a member of the
Board subsequent to the Effective Date whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a
specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without prior written objection to such nomination) shall be deemed to be an
Incumbent Director; and (y) no individual initially elected or nominated as a member of the Board as a result of an actual or threatened election contest with respect to members of the Board or
as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director; 

         (ii)  any "Person" (as such term is used as of the Effective Date in Section 13(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") but excluding any individual or entity to the extent provided pursuant to clauses (A)
through (C) of this Section 6(a)(ii)) is or becomes a "Beneficial
Owner" (as defined as of the Effective Date in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of 50% or more of the Company's
"Voting Securities" (measured either by value or by voting power); provided that, for purposes of this Agreement, "Voting
Securities" shall mean outstanding securities eligible (after giving effect to Section 160(c) of the General Corporation Law of Delaware and any similar or successor
provision governing "treasury shares") to vote for the election of members of the board of directors, or corresponding governing person or body, of the issuer of such securities; and  provided,
further, that any employee benefit plan (or related trust) sponsored or maintained by the
Company or by any entity of which the Company is the Beneficial Owner of more than fifty percent (50%) of the Voting Securities (measured both by value and by voting power) (a
"Subsidiary") shall be excluded pursuant to the first parenthetical of this Section 6(a)(ii); 

       (iii)  (x) the Company combines with another entity and is the surviving entity, or (y) all or substantially all of the business or
assets of the Company is disposed of pursuant to a sale, merger, consolidation or other transaction or series of transactions, unless the holders of
Voting Securities of the Company immediately prior to such combination, sale, merger, consolidation or other transaction or series of transactions (each a "Triggering
Event") immediately after such Triggering Event own, directly or indirectly, by reason of their 

9

 

ownership
of Voting Securities of the Company immediately prior to such Triggering Event, more than fifty percent (50%) of the Voting Securities (measured both by value and by voting power) of:
(q) in the case of a combination in which the Company is the surviving entity, the surviving entity and (r) in any other case, the entity (if any) that succeeds to substantially all of
the business and assets of the Company; 

        (iv)  the holders of Voting Securities of the Company approve a plan of complete liquidation or dissolution of the Company; 

          (v)  neither Common Stock of the Company, nor securities into which Common Stock of the Company may by existing contractual right be converted
without
payment of consideration, or for which Common Stock of the Company may by existing contractual right be exchanged without payment of consideration, are listed for trading on a national securities
exchange or national market system in the United States; or 

        (vi)  any other transaction or event occurs that is, or has been, designated by the Board as a Change of Control. 

        (b)    Additional Payments by the Company.    

           (i)  If it is determined (as hereafter provided) that any payment, benefit or distribution that relates to Executive's employment with
the Company or
any termination of such employment, or that is made by the Company (or any of its affiliates) to or for the benefit of Executive (or any of his successors, assigns, beneficiaries or family members),
whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, the Performance Retention Grant Agreement, the Performance Retention Grant Agreement or otherwise,
including without limitation any stock option, restricted share, stock appreciation right or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of
the foregoing (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code (or any successor provision
thereto) or to any similar tax imposed by foreign, state or local law, or any interest or penalties with respect to such excise or similar tax (such tax or taxes, together with any such interest and
penalties, hereinafter being collectively referred to as the "Excise Tax"), then Executive shall be entitled to receive, prior to the time any such
Excise Tax is paid through withholding (pursuant to Section 8 or otherwise) or is due to be paid by Executive, an additional payment or payments (a "Gross-Up
Payment") in an amount such that, after payment by Executive of all income, excise, employment and other taxes (including any interest or penalties imposed with respect to such
taxes and taking into account any loss of deductions attributable to any Gross-Up Payment) imposed by any jurisdiction upon or by reason of any Gross-Up Payment (assuming in
each case application of the highest applicable marginal tax rates), Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or by reason of the Payments. 

         (ii)  Subject to the provisions of this Section 6(b), all determinations required to be made under this Section 6(b), including
whether
an Excise Tax is payable by Executive and the amount of such Excise Tax and whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall initially be
made by a "Big Four" firm of certified public accountants (the "Accounting Firm") selected by the Company reasonably and in good faith, which Accounting
Firm may be the Company's regular outside auditors. The Company shall direct the Accounting Firm to submit its determination and detailed supporting calculations to both the Company and Executive
(x) within thirty (30) days after the date of the transaction or event giving rise to a possible Excise Tax liability and (y) at any other time or times as may be requested by the
Company or Executive. The Company shall pay any required Gross-Up Payment to Executive no later than five (5) days prior to the date that the corresponding 

10

 

Excise
Tax is paid or due to be paid. Any withholding of amounts in respect of Excise Tax, pursuant to Section 7 or otherwise, shall be deemed to be a payment of Excise Tax for purposes of this
Section 6(b). If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall, at the same time as it makes such determination, furnish Executive with an opinion that he
has substantial authority not to report any Excise Tax on his foreign, Federal, state and local income and other tax returns. If the Accounting Firm determines that an Excise Tax is payable by
Executive, it shall, at the same time it makes such determination, furnish Executive with a written opinion that he has substantial authority not to report Excise Tax in excess of the amount so
determined on his foreign, Federal, state and local income and other tax returns. As a result of the uncertainty in the application of Section 4999 of the Code (or any successor provision
thereto) and the possibility of similar uncertainty regarding applicable foreign, state or local tax law at the time of any determination by the Accounting Firm hereunder, it is possible that one or
more Gross-Up Payments will not have been made by the Company that should have been made (an "Underpayment"). In the event that Executive
believes that an Underpayment has occurred, Executive shall so notify the Company, which shall then promptly direct the Accounting Firm to determine the amount of the Underpayment (if any) that has
occurred and to submit its determination and detailed supporting calculations to both the Company and Executive as promptly as possible, subject to de
novo review of such determination and calculations, at Executive's election, through arbitration in accordance with Section 11 below. Any such Underpayment shall be
promptly paid by the Company to, or for the benefit of, Executive within seven (7) days after receipt of such determination and calculations. 

       (iii)  The Company and Executive shall (at the Company's sole expense) each provide the Accounting Firm access to, and copies of, any books, records
and documents in the possession of the Company or Executive, as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate reasonably and in good faith with the Accounting
Firm in connection with the preparation and issuance of the determinations and opinions contemplated by Section 6(b)(ii). 

         (iv)  The foreign, Federal, state and local income and other tax returns filed by Executive shall be prepared and filed on a basis consistent with
the
written opinions of the Accounting Firm with respect to the Excise Tax payable by Executive. Executive shall, upon receipt from the Company of the full Gross-Up Payment relating thereto,
make proper payment of the amount of any Excise Tax, and shall at the request of the Company, provide to the Company true and correct copies (with any amendments) of any Federal income tax return
reflecting any Excise Tax as filed with the Internal Revenue Service and of corresponding foreign, state and local tax returns, if relevant, as filed with the
applicable taxing authorities, together with such other documents evidencing any Excise Tax payment to any taxing authority as the Company may reasonably request. If prior to the earlier of
(x) the payment to a tax authority of any Excise Tax to which a Gross-Up Payment previously paid to Executive relates and (y) the filing by Executive of any Federal income
tax return, or corresponding foreign, state or local tax return, reflecting any Excise Tax to which a Gross-Up Payment previously paid to Executive relates, the Accounting Firm determines
that the amount of such Gross-Up Payment should be reduced and delivers to Executive a reasoned written opinion to that effect, Executive shall within ten (10) days thereafter pay
to the Company the amount of such reduction on an after-tax basis. 

          (v)  All fees and expenses of the Accounting Firm, and all legal, accounting, copying and other fees and expenses reasonably incurred by
Executive, in
connection with any Excise Tax, any Gross-Up Payment, or any determination or calculation contemplated by Section 6(b)(ii) or 6(b)(iv) shall be paid by the Company, with payments of
fees and expenses reasonably 

11

 

incurred
by Executive being paid on a fully grossed-up after-tax basis. To the extent that any fees or expenses are initially advanced by Executive, the Company shall reimburse
Executive, on a fully grossed-up after-tax basis, for the full amount of such fees and expenses within seven (7) days after receipt from Executive of a statement
therefor and reasonable evidence of his payment thereof. 

        (vi)  Executive shall notify the Company in writing of any claim by the Internal Revenue Service or any other tax authority, with respect to an
Excise
Tax or otherwise, that, if successful, would require the payment by the Company of a Gross-Up Payment not previously paid. Such notification shall be given as promptly as practicable but
no later than seven (7) days after Executive actually receives notice of such claim and Executive shall further apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid (in each case, to the extent known by Executive). Executive shall not pay such claim prior to the earlier of (x) the expiration of the thirty (30) day period
following the date on which he gives such notice to the Company and (y) the date that any payment or amount with respect to such claim is due. If the Company notifies Executive in writing prior
to the expiration of such period that it desires to contest such claim, Executive shall:

         (A)  provide the Company (at the Company's sole expense) with copies of any written records or documents in his possession relating to such claim
that
the Company reasonably requests; 

         (B)  take such action (at the Company's sole expense) in connection with contesting such claim as the Company shall reasonably request from time to
time, including without limitation accepting legal representation with respect to such claim by an attorney competent in respect of the subject matter and reasonably selected by the Company; 

         (C)  cooperate with the Company reasonably and in good faith (at the Company's sole expense) in order effectively to contest such claim; and

         (D)  permit the Company to participate (at the Company's sole expense) in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses (including attorneys' and accountants' fees, interest and penalties) incurred by the Company or
Executive in connection with such claim and shall indemnify and hold harmless Executive, on a fully grossed-up after-tax basis, for and against any Excise Tax or income or
other tax, including interest and penalties with respect thereto, imposed in connection with such claim or in connection with any payment of fees, costs or expenses, or any provision of services,
pursuant to this Section 6(b). Subject to the provisions of this Section 6(b), the Company may control the defense and/or prosecution of any claim described in the first sentence of this
Section 6(b)(vi) and, in its reasonable good-faith discretion, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, in its reasonable good-faith discretion, either direct Executive to pay the amounts claimed and sue for a refund or contest the claim in any
permissible manner, and Executive agrees to prosecute such contest (at the Company's sole expense) to a determination before any administrative tribunal, in a court of initial jurisdiction and in one
or more appellate courts, as the Company may reasonably determine; 

provided, however, that if the Company directs Executive to pay any Excise Tax or other amounts claimed
and sue for a refund, the Company shall advance the amount of such payment to Executive on an interest-free basis and shall indemnify and hold Executive harmless, on a fully
grossed-up after-tax basis, from any Excise Tax or income or other tax, including interest or penalties with respect thereto, imposed with respect to such advance; and 

12

 

 provided further, however, that any extension of the statute of limitations relating to payment of taxes for a tax year of
Executive with respect to which any claim or claims described in the first sentence of this Section 6(b)(vi) is made shall, unless Executive otherwise consents, be limited solely to such claim
or claims. Furthermore, the Company's control of any such contested claim shall be limited solely to issues directly relevant to the amount of any Excise Tax or Gross-Up Payment that would
be payable hereunder and Executive shall be entitled, in his sole discretion, to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing
authority. 

        (vii)  If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 6(b)(vi), Executive receives any refund with
respect to any Excise Tax previously paid with funds provided by the Company, Executive shall (subject to the Company's complying with all of the requirements of this Section 6(b)) promptly pay
to the Company, on an after-tax basis, the amount of such refund (together with any interest paid or credited thereon after any taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Company pursuant to Section 6(b)(vi) in respect of a claim described in the first sentence of Section 6(b)(vi), a determination is made that
Executive is not entitled to any refund with respect to such claim and, in the event that such determination is made by a tax authority or a court, the Company does not notify
Executive in writing of its intent to contest such determination prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, on a dollar-for-dollar basis, the amount of Gross-Up Payment otherwise required to be paid
pursuant to this Section 6(b). For purposes of this Agreement, "after-tax basis" shall each mean (x) when used in respect of a
repayment by Executive, that the amount of any such repayment shall be limited to the net after-tax amount or benefit realized by Executive from receipt of any payment or benefit to which
such repayment relates, after deducting therefrom all foreign, Federal, state and local taxes thereon and adding back any reduction in any such taxes attributable to any deduction on account of such
repayment by Executive, assuming in each case application of the highest applicable marginal tax rates, and (y) when used in respect of a payment or benefit provided by the Company, that the
amount of such payment or benefit shall be fully grossed up, assuming application of the highest applicable marginal tax rates, for all foreign, Federal, state and local taxes imposed on or by reason
of (A) such payment or benefit or (B) any gross-up thereon. 

        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 are required to be withheld by applicable law or regulation. 

        8.    Confidential Information.    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 Executive obtains during his employment hereunder and that is not
public knowledge (other than as a result of Executive's violation of this Section 8) ("Confidential Information") in strict confidence. Executive
shall not communicate, divulge or disseminate Confidential Information at any time during or after 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 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 Executive is requested pursuant to, or required by, applicable law, regulation
or legal process to disclose any Confidential Information, 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 

13

 

requirement,
provided that 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. 

        9.    Non-Competition.    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. In
consideration of his employment hereunder, 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):

         (a)   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 ten (10) days after Executive shall have given the Company written
notice requesting cure of such material breach) for twelve (12) months thereafter: (i) engage, directly or indirectly, whether as
principal, agent, representative, consultant, employee, partner, stockholder, limited partner or other investor (other than a passive investment of not more than (x) five percent (5%) of the
stock or equity of any corporation the capital stock of which is publicly traded or (y) five percent (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 and 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 twelve (12) months prior to such solicitation, enticement or attempt, a borrower from, 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 borrower from, 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; and provided, further, that the restrictions set forth in this Section 9(a) shall not
apply after the Date of Termination if Executive's employment with the Company is terminated by the Company Without Cause, or by Executive with Good Reason in accordance with this Agreement,  and the
Company fails to pay Executive, within seven (7) days following the Date of Termination, a lump-sum amount
that—when added to the amount paid to him under Section 5(c)(i) and disregarding any other amount paid to him—results in his receiving an aggregate lump-sum
amount of $5,000,000 within seven (7) days following the Date of Termination; or 

         (b)   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 ten (10) days after Executive shall have given the Company written
notice requesting cure of such material breach) for twelve (12) months thereafter: (i) solicit or entice, or attempt to solicit or entice,
away from the Company any individual who is known by 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 (ii) employ, directly or
indirectly, any person who is known by Executive to have been, during the twelve (12) months prior to employment by Executive, an officer, employee or sales representative of the Company. 

        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 

14

 

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 Executive, and (E) the consideration provided hereunder is sufficient to compensate Executive for the restrictions contained
in such provisions. In consideration thereof and in light of Executive's education, skills and abilities, Executive agrees that Executive will not assert in any forum that such provisions prevent
Executive from earning a living or otherwise are void or unenforceable or should be held void or unenforceable. 

        10.    Indemnification.    

        (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 10, (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 10 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 10(d) to any proposed settlement. 

        (e)   The indemnification, and right to advancement of expenses, provided in this Section 10 shall continue as to Executive even if he has
ceased to serve in any of the capacities referred to in Section 10(c) and shall inure to the benefit of Executive's heirs, executors and administrators. 

         (f)    The indemnification provided in this Section 10 shall not extend to any claims or disputes arising between the Parties under,
pursuant to,
or with respect to, this Agreement or any agreement 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. 

15

 

         (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. 

        11.    Arbitration.    Any claim or dispute arising out of or relating
to this Agreement, any other agreement between Executive and the Company or any of its affiliates, 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 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. The Company
shall promptly pay all costs and expenses (including without limitation attorneys' fees and other charges of counsel) incurred by Executive or his beneficiaries in resolving any such Covered Claim,
subject to receiving a written undertaking from the recipient to repay any such reimbursed costs or expenses to the extent that it is finally determined that such recipient failed to substantially
prevail with respect to such Covered Claim. Pending the resolution of any Covered Claim, Executive (and his beneficiaries) shall, consistent with Section 4(b) and except to the extent that the
arbitrator(s) otherwise expressly provide, continue to receive all payments and benefits then due under this Agreement or otherwise. 

        12.    Successors; Beneficiaries.    

         (a)   This Agreement is personal to Executive and, without the prior written consent of the Company, shall not be assignable by Executive;
 provided, however, that any of 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
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 term
"Board" shall include both the "Board" as defined in the first sentence of Section 2(a) and 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)   Executive shall be entitled, to the extent permitted under any applicable law, to select and change the beneficiary or beneficiaries to
receive
any compensation or benefit payable hereunder following Executive's death by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his
incompetence, references in this Agreement to 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 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 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 Executive in the event of insolvency or bankruptcy unless and until paid, or due to be paid, to Executive. 

16

 

        13.    Representations.    

        (a)   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;  (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. 

         (b)   Executive represents and warrants that, to the best of his knowledge and belief,  (i) delivery and performance of this Agreement by him does not violate any applicable law, regulation, order, judgment or decree or any agreement
to which he is a party or by which he is bound and (ii) upon the execution and delivery of this Agreement by the Parties, this Agreement shall be
the valid and binding obligation of Executive, enforceable against him 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.    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 principles of conflict of laws. 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 Executive otherwise agrees in a writing that expressly refers to the provision of this Agreement whose control he is waiving. 

        (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 Executive:

Jay
Sugarman

c/o iStar Financial Inc.

1114 Avenue of the Americas, 27th Floor

New York, NY 10036 

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

If to the Company:

iStar
Financial Inc.

1114 Avenue of the Americas, 27th Floor

New York, NY 10036

Attn: General Counsel 

17

 

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

200 Park Avenue

New York, NY 10166

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 14(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 9, 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)   The captions and headings in this Agreement are not part of the provisions hereof and shall have no force or effect. 

        (e)   No waiver by any person or entity of any breach 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 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. 

         (f)    The Parties acknowledge that this Agreement supersedes any other agreement between them concerning the specific subject matter
hereof (including,
without limitation, the Old Agreement) except to the extent necessary to protect existing rights. 

[Rest
of Page Intentionally Left Blank] 

18

 

        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. 

	 	 	Executive
	

 	
 	

/s/  JAY SUGARMAN      
    Jay Sugarman
	

 	
 	
iStar Financial Inc.
	

 	
 	

By:	
 	

/s/  CATHERINE D. RICE      
 Name:  Catherine D. Rice

Title:    Chief Financial Officer

19

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Exhibit 10.9  

EXECUTION COPY  

 
 

PERFORMANCE RETENTION GRANT    
    

        THIS PERFORMANCE RETENTION GRANT AGREEMENT (the "Agreement") is dated as of the 11th day of February, 2004 (the "Award Date") and entered into by and between
iSTAR FINANCIAL INC. (the "Company") and Jay Sugarman (the "Participant"); 

WITNESSETH: 

        WHEREAS,
in connection with the effectiveness on March 31, 2004 (the "Effective Date") of a new employment agreement entered into on the date hereof between the Company and the
Participant (the "New Employment Agreement"), the Company wishes to award shares of common stock, $0.001 par value per share, of the Company (the "Common Stock") to the Participant, subject to certain
restrictions on transferability, pursuant to the iStar Financial Inc. 1996 Long-Term Incentive Plan, as amended and restated (the "Plan"); 

        NOW,
THEREFORE, IT IS AGREED between the Company and the Participant as follows: 

        1.    Award.    

        (a)   Subject
to the terms of this Agreement and the Plan, the Participant is hereby awarded a number of shares of Common Stock (the "Shares") equal to the quotient obtained
by dividing 10.0 million by the average closing price of the Company's Common Stock for the 20 trading days ending on and including
March 30, 2004. Except as otherwise defined herein, capitalized terms used in this Agreement have the respective meanings set forth in the Plan. 

        (b)   The
parties agree that on March 31, 2004, Schedule A hereto shall be amended to specify the number of Shares. 

        2.    Vesting.    

        (a)   The
Shares shall be fully vested when issued on March 31, 2004, if the Participant's employment as Chairman and Chief Executive Officer of the Company has not
terminated before such vesting date. If the Participant's employment as Chairman and Chief Executive Officer of the Company terminates prior to March 31, 2004, this Agreement shall terminate
and be of no force and effect, and neither party shall have any obligation to the other party hereunder. 

        (b)   Once
the Shares have vested, they shall not be subject to forfeiture under any circumstances. 

        3.    Restrictions on Shares.    

        (a)   Except
as provided in Section 3(b), the "Restricted Period" with respect to the Shares is the period commencing on the Effective Date and ending on the earlier of
(1) March 31, 2009 and (2) the occurrence of a Change of Control (as such term is defined under the New Employment Agreement). 

        (b)   In
addition to the events described in Section 3(a), the Restricted Period shall terminate on March 31 of each year during the Restricted Period with
respect to a number of Shares equal to 25% of the Shares awarded to Participant on the Effective Date if, during the 12 month period ending on March 31 of such year, the price of the
Common Stock has increased by 15% or more. For purposes of determining whether the price of the Common Stock has increased by 15% or more, the average closing price of the Common Stock on the
principal United States securities exchange on which the Common Stock is traded shall be compared for the first 20 trading days at the beginning of such 12 month period and the last 20 trading
days in such 12-month period. 

 

        (c)   During
the Restricted Period, Shares are not transferable except as designated by the Participant by will or by the laws of descent and distribution or, subject to such
procedures as the Administrator may establish, to or for the benefit of the Participant's family. Except as provided in this Section 3, Shares may not be sold, assigned, transferred, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law and otherwise) or be subject to execution, attachment or similar process. Any attempt to so sell, transfer, assign,
pledge, hypothecate, voluntarily encumber or otherwise dispose of the Shares shall be null and void. 

        (d)   Shares
shall be evidenced by a certificate registered in the name of the Participant. The certificate shall bear a legend to the effect that the Shares are subject to
contractual restrictions on transfer under this Agreement. In addition, for so long as the Participant is an affiliate of the Company within the meaning of Rule 144 under the Securities Act of
1933, as amended (the "Securities Act"), the certificate representing the Shares may bear a legend to the effect that the Shares must be sold pursuant to an effective registration statement or
pursuant to an exemption from the registration requirements of the Securities Act. 

        (e)   During
the Restricted Period, the Participant shall be entitled to vote and receive dividends with respect to all of the Shares. 

        4.    Adjustments to Number of Shares.    In the event of any change in the outstanding Shares by reason of any stock
dividend, split, spinoff, recapitalization or other similar change, the terms and the number of any outstanding Shares shall be equitably adjusted by the Administrator in its discretion to the extent
the Administrator determines that such adjustment is necessary to preserve the benefit of this Agreement for the Participant and the Company. Any additional shares resulting from such adjustment shall
be subject to restrictions on transferability hereunder to the same extent as the underlying shares. 

        5.    Agreement Not Contract of Employment.    This Agreement does not constitute a contract of employment, and does
not give the Participant the right to be retained in the employ of the Company. 

        6.    Successors and Assigns.    This Agreement shall be binding upon, and inure to the benefit of, the Company and
its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company's assets and business. 

        7.    Administration.    The authority to administer and interpret this Agreement shall be vested in the
Administrator, and the Administrator shall have all the powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of the Agreement by the Administrator and any
decision made by it with respect to the Agreement are final and binding on all persons. 

        8.    Representations.    The Company represents that the offer and sale of the Shares by the Company is registered
under the Securities Act, and any applicable state securities laws, pursuant to an effective registration statement; however, they may be subject to restrictions on resale for so long as the
Participant is an affiliate of the Company. The Participant hereby represents and covenants that any subsequent sale of any such Shares shall be made either pursuant to an effective registration
statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws. 

        9.    Plan Governs.    The terms of this Agreement shall be subject to the terms of the Plan, a copy of which may be
obtained by the Participant from the office of the Secretary of the Company. 

        10.    Amendment and Termination.    The Board of Directors of the Company may at any time amend or terminate the
Plan, provided that no such amendment or termination may materially adversely affect the rights of the Participant awarded hereunder without the written agreement of the Participant. 

2

 

        11.    Arbitration.    Any controversy, dispute or claim arising out of or related to this Agreement, a Participant's
rights or obligations hereunder or pursuant hereto or a Participant's employment by the Company shall be resolved in accordance with the terms and conditions set forth in a separate agreement between
the parties regarding arbitration of disputes relating to incentive awards and employment, the terms of which are incorporated herein by this reference. 

        12.    Waiver of Responsibility.    Participant understands that the Company has assumed no responsibility for
advising Participant as to the tax consequences to Participant of the grant of Shares under this Agreement. Participant should consult with his individual tax advisor concerning the applicability of
Federal, state and local tax laws to the Shares and to his personal tax circumstances. 

        13.    Counterparts.    This Agreement may be executed in counterparts. 

3

 

        IN
WITNESS WHEREOF, Participant and the Company have executed this Agreement, as of the date first above written. 

	 	 	PARTICIPANT
	

 	
 	

 	

 
	 	 	/s/  JAY SUGARMAN      
 Jay Sugarman
	

 	
 	

 	

 
	 	 	iSTAR FINANCIAL INC.
	

 	
 	

 	

 
	 	 	By:	/s/  CATHERINE D. RICE      
 Catherine D. Rice

4

 
 
 

SCHEDULE A    
    

Number
of Shares 

5

QuickLinks

PERFORMANCE RETENTION GRANT

SCHEDULE A

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