Document:

Exhibit

Exhibit 10.4

EXELIXIS, INC.
CHANGE IN CONTROL AND SEVERANCE BENEFIT PLAN

		
	SECTION 1.
	INTRODUCTION.

The Exelixis, Inc. Change in Control and Severance Benefit Plan (the “Plan”), established on December 9, 2005, and amended and restated effective December 23, 2008 and December 1, 2010, is hereby further amended and restated effective September 6, 2017 (the “Effective Date”).  The purpose of the Plan is to provide for the payment of severance benefits to certain eligible employees of Exelixis, Inc. and its wholly owned subsidiaries in the event that such employees are subject to qualifying employment terminations and additional benefits if such qualifying employment termination occurs in connection with a Change in Control.  This Plan shall supersede any severance benefit plan, contract, agreement, policy or practice maintained by the Company on the Effective Date; provided, however, that if any provision relating to stock options or other awards contained in any equity incentive plan adopted by the Company (the “Equity Incentive Plan”), or a stock option agreement or other agreement under the Equity Incentive Plan, is more favorable to an employee than the corresponding provision or the absence of such corresponding provision in the Plan, then such more favorable provision in the Equity Incentive Plan or such agreement shall govern, but the remainder of the Plan and such agreement shall continue in full force and effect.  This document also is the Summary Plan Description for the Plan.
		
	SECTION 2.
	DEFINITIONS.

For purposes of the Plan, except as otherwise provided in the applicable Participation Notice, the following terms are defined as follows:
(a)    “Base Salary” means the Participant’s annual base pay (excluding incentive pay, premium pay, commissions, overtime, bonuses and other forms of variable compensation), at the higher of (i) the rate in effect during the last regularly scheduled payroll period immediately preceding the date of the Participant’s Covered Termination, or (ii) in the event of a Covered Termination that is a Constructive Termination based on a reduction of the Participant’s base salary, the rate in effect during the last regularly scheduled payroll period immediately preceding the date of such reduction, in each case divided by twelve (12). 
(b)    “Board” means the Board of Directors of Exelixis, Inc.
(c)    “Bonus” means the Participant’s target bonus established by the Company’s  Compensation Committee for the year in which the Covered Termination occurs divided by twelve (12).
(d)    “Change in Control” means one of the following events or a series of more than one of the following events: (i) when a person, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) acquires beneficial ownership of the Company's capital stock equal to 50% or more of either (x) the then-outstanding shares of the Company's common stock or (y) the combined voting power of the Company's then-outstanding securities entitled to vote generally in the election of directors; (ii) upon the consummation by the Company of (x) a reorganization, merger or consolidation, provided that, in each case, the persons who were the Company's stockholders immediately prior to the reorganization, merger or consolidation do not, immediately after, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company's then outstanding voting securities, or (y) a liquidation or dissolution of the Company or the sale of all or substantially all of the Company's assets; or (iii) when the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of a successor corporation to the Company), where the term "Continuing Director" means at any date a member of the Board (x) who was a member of the Board on the date of the initial adoption of this Plan by the Board or (y) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board, is excluded from clause (iii)(y) above.  For the purposes of this definition, (i) prior to a Change in Control, “Company” shall mean only Exelixis, Inc. or its successor and shall not include (A) its wholly owned subsidiaries or (B) the surviving or controlling entity resulting from a Change in Control or the entity to which the Company’s 

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assets were transferred in the case of an asset sale constituting a Change in Control and (ii) following a Change in Control, “Company” shall mean only Exelixis, Inc. (or its successor) and any surviving or controlling entity resulting from such Change in Control or the entity to which the Company’s assets were transferred in the case of an asset sale constituting such a Change in Control and shall not include any wholly owned subsidiaries. 
(e)    “Change in Control Termination” means a Covered Termination which occurs within one (1) month prior to, as of, or within thirteen (13) months following the effective date of a Change in Control.
(f)    “Change in Control Termination Date” means the later of (i) the effective date of the Participant’s Change in Control Termination or (ii) the effective date of the applicable Change in Control.
(g)    “COBRA Period” means (i) in the case of a Change in Control Termination, the applicable number of months set forth in Section 4(a)(iii) and (ii) in the case of a Covered Termination that is not a Change in Control Termination, (x) in the case of an Executive Participant, twelve (12) months and (y) in the case of a Participant who is not an Executive Participant, six (6) months.
(h)    “Code” means the Internal Revenue Code of 1986, as amended.
(i)    “Company” means Exelixis, Inc., its wholly owned subsidiaries, any successor to Exelixis, Inc. and, following a Change in Control, the surviving or controlling entity resulting from such a Change in Control or the entity to which the Company’s assets were transferred in the case where the Change in Control is an asset sale.
(j)    “Constructive Termination” means a voluntary termination of employment with the Company resulting in a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h) (without regard to any permissible alternative definition of “termination of employment” thereunder) by a Participant after one of the following is undertaken without the Participant’s written consent: (i) reduction of such Participant’s base salary by more than ten percent (10%) as in effect immediately prior to the time such reduction occurs; (ii) the occurrence of a material diminution in the package of welfare benefit plans, taken as a whole, in which such Participant is entitled to participate immediately prior to the time such material diminution occurs (except that such Participant’s contributions may be raised to the extent of any cost increases imposed by third parties); provided, however, that a separation from service based on such material diminution qualifies as an “involuntary separation from service” as provided under Treasury Regulation Section 1.409A-1(n)(2)(i) or (ii); (iii) a change in such Participant’s responsibilities, authority or offices that, taken as a whole, result in a material diminution of position; provided, however, that a change in the Participant’s title or reporting relationships shall not by itself constitute a Constructive Termination; (iv) a request that such Participant relocate to a worksite that is more than thirty-five (35) miles from such Participant’s prior worksite, unless such Participant accepts such relocation opportunity; (v) a material reduction in duties; (vi) a failure or refusal of any successor company to assume the obligations of the Company under an agreement with such Participant; or (vii) a material breach by the Company of any of the material provisions of an agreement with such Participant, including, without limitation, a breach of the terms of any agreement or program providing for the payment of bonus compensation. Notwithstanding any provision of this definition of “Constructive Termination” to the contrary, (i) an event or action by the Company shall not give the Participant grounds to voluntarily terminate employment as a Constructive Termination unless the Participant gives the Company written notice within thirty (30) days of the initial existence of such event or action that the event or action by the Company would give the Participant such grounds to so terminate employment and such event or action is not reversed, remedied or cured, as the case may be, by the Company as soon as possible but in no event later than within thirty (30) days of receiving such written notice from the Participant and (ii) in order to constitute a Constructive Termination, the Participant must terminate employment with the Company within thirty (30) days following the end of the period within which the Company was entitled to reverse, remedy or cure such event or action but failed to do so.  For the avoidance of doubt, the cessation of employment followed by the immediate commencement of services as an independent contractor for the Company, which does not result in a “separation from service” with the Company within the meaning of Treasury Regulation Section 1.409A-1(h), shall not constitute a Constructive Termination.  
(k)    “Covered Termination” means (x) an Involuntary Termination Without Cause or (y) a Constructive Termination if such Constructive Termination occurs any time after the date that is one (1) month prior to the effective date of the first Change in Control that occurs after the Participant commences participation in the Plan.  Termination of employment of a Participant due to death or disability shall not constitute a Covered Termination unless a voluntary termination of employment by the Participant immediately prior to the Participant’s death or disability would have qualified as a Constructive Termination.
(l)    “Covered Termination Date” means (i) in the case of a Covered Termination that is an Involuntary Termination Without Cause, the effective date of the Participant’s Involuntary Termination Without Cause, or (ii) in the case 

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of a Covered Termination that is a Constructive Termination that occurs any time after the date that is one (1) month prior to the effective date of the first Change in Control that occurs after the Participant commences participation in the Plan, the later of (x) the effective date of the Participant’s Constructive Termination or (y) the effective date of such Change in Control.
(m)    “Equity Incentive Plan” means any equity incentive plan adopted by the Company. 
(n)    “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
(o)    “Involuntary Termination Without Cause” means a Participant’s involuntary termination of employment by the Company resulting in a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h) (without regard to any permissible alternative definition of “termination of employment” thereunder) for a reason other than Cause.  “Cause” means the occurrence of any one or more of the following: (i) the Participant’s conviction of, or plea of no contest with respect to, any crime involving fraud, dishonesty or moral turpitude; (ii) the Participant’s attempted commission of or participation in a fraud or act of dishonesty against the Company that results in (or might have reasonably resulted in) material harm to the business of the Company; (iii) the Participant’s intentional, material violation of any contract or agreement between the Participant and the Company, any statutory duty the Participant owes to the Company, or any material Company policy; or (iv) the Participant’s conduct that constitutes gross misconduct, insubordination, incompetence or habitual neglect of duties and that results in (or might have reasonably resulted in) material harm to the business of the Company; provided, however, that the conduct described under clause (iii) or (iv) above will only constitute Cause if such conduct is not cured within fifteen (15) days after the Participant’s receipt of written notice from the Company or the Board specifying the particulars of the conduct that may constitute Cause.  The determination that a termination of a Participant’s employment is for Cause shall not be made unless and until there shall have been delivered to such Participant a copy of a resolution duly adopted by the affirmative vote of at least a majority of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to such Participant and an opportunity for such Participant, together with such Participant’s counsel, to be heard before the Board), finding that in the good faith opinion of the Board, such Participant was guilty of the conduct constituting “Cause” and specifying the particulars.  For the avoidance of doubt, if, in connection with a Change in Control, an employee is terminated and offered “immediate reemployment” by the surviving or controlling entity resulting from a Change in Control or the entity to which the Company’s assets were transferred in the case of an asset sale constituting a Change in Control, then such termination shall not constitute an Involuntary Termination Without Cause.  For purposes of the foregoing, “immediate reemployment” shall mean that the employee's employment with the surviving or controlling entity resulting from a Change in Control or the entity to which the Company’s assets were transferred in the case of an asset sale constituting a Change in Control, results in uninterrupted employment such that the employee does not suffer a lapse in pay as a result of the Change in Control and the terms of such reemployment, taken as a whole, are not less favorable than the terms of employment with the Company immediately prior to such employee’s termination of employment.  For the avoidance of doubt, the cessation of employment followed by the immediate commencement of services as an independent contractor for the Company, which does not result in a “separation from service” with the Company within the meaning of Treasury Regulation Section 1.409A-1(h), shall not constitute an Involuntary Termination Without Cause.  
(p)    “Participant” means an individual (i) who is employed by the Company as its Chief Executive Officer, President, executive vice president, senior vice president, vice president or any other officer with a rank of vice president or above and (ii) who has received a Participation Notice from and executed and returned such Participation Notice to the Company.  The determination of whether an employee is a Participant shall be made by the Plan Administrator, in its sole discretion, and such determination shall be binding and conclusive on all persons.  “Executive Participant” means a Participant who has been designated as an Executive Participant on the Participant’s Participation Notice.  For purposes of determining any benefits under the Plan, the position or level of any individual (as the Chief Executive Officer, an Executive Participant, or a Participant who is not an Executive Participant) will be the higher of (i) such individual’s position or level on the effective date of his or her Covered Termination, or (ii) in the event of a Covered Termination that is a Constructive Termination based on a material diminution of such individual’s position, such individual’s position or level immediately preceding the date of such diminution.     
(q)    “Participation Notice” means the latest notice delivered by the Company to a Participant informing the employee that the employee is a Participant in the Plan, substantially in the form of Exhibit A hereto.  
(r)    “Plan Administrator” means the Board or any committee duly authorized by the Board to administer the Plan.  The Plan Administrator may, but is not required to be, the Compensation Committee of the Board.  The Board may at any time administer the Plan, in whole or in part, notwithstanding that the Board has previously appointed a committee to act as the Plan Administrator.

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	SECTION 3.
	ELIGIBILITY FOR BENEFITS.

(a)    General Rules.  Subject to the provisions set forth in this Section and Section 7, in the event of a Covered Termination, the Company will provide the severance benefits described in Section 4 of the Plan to the affected Participant.
(b)    Exceptions to Benefit Entitlement.  An employee, including an employee who otherwise is a Participant, will not receive benefits under the Plan (or will receive reduced benefits under the Plan) in the following circumstances, as determined by the Company in its sole discretion:
(i)    The employee has executed an individually negotiated employment contract or agreement with the Company relating to severance or change in control benefits that is in effect on his or her termination date, in which case such employee’s severance benefit, if any, shall be governed by the terms of such individually negotiated employment contract or agreement.
(ii)    The employee voluntarily terminates employment with the Company in order to accept employment with another entity that is controlled (directly or indirectly) by the Company or is otherwise an affiliate of the Company.
(iii)    The employee does not confirm in writing that he or she shall be subject to the Company’s Employee Proprietary Information and Inventions Agreement.
(c)    Termination of Benefits.  A Participant’s right to receive the payment of benefits under this Plan shall terminate immediately if, at any time prior to or during the period for which the Participant is receiving benefits hereunder, the Participant, without the prior written approval of the Company:
(i)    willfully breaches a material provision of the Participant’s Employee Proprietary Information and Inventions Agreement with the Company, as referenced in Section 3(b)(iii); or
(ii)    willfully encourages or solicits any of the Company’s then current employees to leave the Company’s employ.
		
	SECTION 4.
	AMOUNT OF BENEFITS.

(a)    Cash Severance Benefits.  Except as provided in the applicable Participation Notice:
(i)    Each Participant who incurs a Covered Termination that is not also a Change in Control Termination shall be entitled to receive a cash severance benefit equal to (x) twelve (12) months of Base Salary in the case of an Executive Participant and (y) six (6) months of Base Salary in the case of a Participant who is not an Executive Participant.  Any cash severance benefits provided under this Section 4(a)(i) shall be paid pursuant to the provisions of Section 5.   
(ii)    Each Participant who incurs a Change in Control Termination shall be entitled to receive a cash severance benefit equal to the sum of the Participant’s Base Salary plus Bonus for the applicable number of months set forth in Section 4(a)(iii).  If a Participant serves in two or more positions set forth in the table below, such cash severance benefit shall be for the position with the greatest number of months of cash severance, with no additional cash severance for the other position(s).  Any cash severance benefits provided under this Section 4(a)(ii) shall be paid pursuant to the provisions of Section 5.
(iii)    For the purposes of determining (x) the number of months of severance benefits in the event of a Change in Control Termination pursuant to Section 4(a)(ii) and (y) the COBRA Period in the event of a Change in Control Termination, the following periods shall be used.

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	Position or Level
	Months

	Chief Executive Officer
	24 months

	Executive Participants other than the Chief Executive Officer
	18 months

	Participants who are not Executive Participants
	12 months

(b)    Accelerated Stock Award Vesting and Extended Exercisability of Stock Options.  If a Participant incurs a Change in Control Termination, then effective as of the later of the Participant’s Change in Control Termination Date or, if applicable, the effective date of the release described in Section 7(a), (i) the vesting and exercisability of all outstanding options to purchase the Company’s common stock (or stock appreciation rights or similar rights or other rights with respect to stock of the Company issued pursuant to the Equity Incentive Plan) that are held by the Participant on the effective date of such Change in Control Termination shall be accelerated in full, and (ii) any reacquisition or repurchase rights held by the Company in respect of common stock issued or issuable (or in respect of similar rights or other rights with respect to stock of the Company issued or issuable pursuant to the Equity Incentive Plan) pursuant to any other stock award granted to the Participant by the Company shall lapse.  In order to give effect to the intent of this provision, in the event of a Participant’s Change in Control Termination, notwithstanding anything to the contrary set forth in the Equity Incentive Plan or an option or other stock award agreement under the Equity Incentive Plan, in no event will any portion of the Participant’s option or other stock award be forfeited or terminate prior to the later of the Participant’s Change in Control Termination Date or, if applicable, the effective date of the release described in Section 7(a). 
In addition, if a Participant incurs a Change in Control Termination, the post-termination of employment exercise period of any outstanding option (or stock appreciation right or similar right or other rights with respect to stock of the Company issued pursuant to the Equity Incentive Plan) held by the Participant on the date of his or her Change in Control Termination shall be extended, if necessary, such that the post-termination of employment exercise period shall not terminate prior to the later of (i) the date twelve (12) months after the Change in Control Termination Date or (ii) the post-termination exercise period provided for in such option or other stock award; provided, however, that such stock right shall not be exercisable after the expiration of its maximum term.  Notwithstanding the foregoing, stock rights granted prior to the Effective Date shall not be exercisable after the later of (A) the 15th day of the third month following the date at which, or (B) December 31 of the calendar year in which, the stock right would otherwise have expired if the stock right had not been extended. 
Notwithstanding the provisions of this Section 4(b), in the event that the provisions of this Section 4(b) regarding acceleration of vesting of an option or other stock award or extended exercisability of an option or other stock award would adversely affect a Participant’s option or other stock award (including, without limitation, its status as an incentive stock option under Section 422 of the Code) that is outstanding on the date the Participant commences participation in the Plan, such acceleration of vesting and/or extended exercisability shall be deemed null and void as to such option or other stock award unless the affected Participant consents in writing to such acceleration of vesting or extended exercisability as to such option or other stock award within thirty (30) days after becoming a Participant in the Plan.
(c)    Continued Medical Benefits.  If a Participant incurs a Covered Termination and the Participant was enrolled in a health, dental, or vision plan sponsored by the Company immediately prior to such Covered Termination, the Participant may be eligible to continue coverage under such health, dental, or vision plan (or to convert to an individual policy), at the time of the Participant’s termination of employment, under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).  The Company will notify the Participant of any such right to continue such coverage at the time of termination pursuant to COBRA.  No provision of this Plan will affect the continuation coverage rules under COBRA, except that the Company’s payment, if any, of applicable insurance premiums will be credited as payment by the Participant for purposes of the Participant’s payment required under COBRA.  Therefore, the period during which a Participant may elect to continue the Company’s health, dental, or vision plan coverage at his or her own expense under COBRA, the length of time during which COBRA coverage will be made available to the Participant, and all other rights and obligations of the Participant under COBRA (except the obligation to pay insurance premiums that the Company pays, if any) will be applied in the same manner that such rules would apply in the absence of this Plan.

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If a Participant timely elects continued coverage under COBRA, the Company shall pay the full amount of the Participant’s COBRA premiums on behalf of the Participant for the Participant’s continued coverage under the Company’s health, dental and vision plans, including coverage for the Participant’s eligible dependents, during the number of months equal to the COBRA Period; provided, however, that if the COBRA Period exceeds the length of time that the Participant is entitled to coverage under COBRA (including any additional period under analogous provisions of state law), the Company or any resulting or acquiring entity or transferee entity (in the case of an asset sale) involved in a Change in Control, as applicable, shall be required to provide health, dental and vision insurance coverage for the Participant and his or her eligible dependents for any portion of the COBRA Period that exceeds the length of time that the Participant is entitled to coverage under COBRA (including any additional period under analogous provisions of state law), at a level of coverage that is substantially similar to the continued coverage that the Participant and his or her eligible dependents received under the Company’s health, dental and vision plans; provided further, however, that no such premium payments (or any other payments for medical, dental or vision coverage by the Company) shall be made following the Participant’s death or the effective date of the Participant’s coverage by a medical, dental or vision insurance plan of a subsequent employer.  Each Participant shall be required to notify the Company immediately if the Participant becomes covered by a medical, dental or vision insurance plan of a subsequent employer.  Upon the conclusion of the COBRA Period (or such shorter period during which the Company is obligated to pay premiums pursuant to this Section 4(c)), the Participant will be responsible for the entire payment of premiums required under COBRA.
For purposes of this Section 4(c), (i) references to COBRA shall be deemed to refer also to analogous provisions of state law and (ii) any applicable insurance premiums that are paid by the Company shall not include any amounts payable by the Participant under an Internal Revenue Code Section 125 health care reimbursement plan, which amounts, if any, are the sole responsibility of the Participant.
Notwithstanding the foregoing, if the Company, in its sole discretion, determines that it cannot provide the foregoing subsidy of COBRA coverage without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company instead shall provide to the Participant a taxable monthly payment in an amount equal to the monthly COBRA premium that the Participant would be required to pay to continue the group health coverage in effect on the date of the Covered Termination (which amount shall be based on the premium for the first month of COBRA coverage), which payments shall be made regardless of whether the Participant elects COBRA continuation coverage, shall commence on the later of (i) the first day of the month following the month in which the Covered Termination Date or Change in Control Termination Date, as applicable, occurs, (ii) the effective date of the release described in Section 7(a), if applicable, and (iii) the effective date of the Company’s determination of violation of applicable law, and shall end on the earliest of (x) the Participant’s death, (y) the effective date on which the Participant becomes covered by a medical, dental or vision insurance plan of a subsequent employer, and (z) the last day of the COBRA Period.
(d)    Outplacement Services.  If a Participant incurs a Change in Control Termination, the Company shall pay, on behalf of the Participant, for outplacement services with an outplacement service provider selected by the Company for the applicable time period specified below; provided, however, that the payments made by the Company for such outplacement services shall not exceed the applicable maximum amount set forth below; provided further, however, that such payments qualify for the exception provided by Treasury Regulation Sections 1.409A-1(b)(9)(v)(A) and (C).  
	
			
	Position or Level
	Time Period
	Maximum Amount

	Chief Executive Officer
	24 months
	$50,000

	Executive Participants other than the Chief Executive Officer
	18 months
	$30,000

	Participants who are not Executive Participants
	12 months
	$20,000

(e)    Other Employee Benefits.  All other benefits (such as life insurance, disability coverage, and 401(k) plan coverage) shall terminate as of the Participant’s termination date (except to the extent that a conversion privilege may be available thereunder).
(f)    Additional Benefits.  Notwithstanding the foregoing, the Company may, in its sole discretion, provide additional or enhanced benefits to those benefits provided for pursuant to Sections 4(a), 4(b), 4(c) and 4(d) to Participants 

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or employees who are not Participants (“Non-Participants”) chosen by the Company, in its sole discretion, and the provision of any such benefits to a Participant or a Non-Participant shall in no way obligate the Company to provide such benefits to any other Participant or to any other Non-Participant, even if similarly situated.  If benefits under the Plan are provided to a Non-Participant, references in the Plan to “Participant” (with the exception of Sections 4(a), 4(b), 4(c) and 4(d)) shall be deemed to refer to such Non-Participants.
		
	SECTION 5.
	TIME AND FORM OF SEVERANCE PAYMENTS.

(a)    General Rules.  Subject to Section 5(b), any cash severance benefit provided under Section 4(a) shall be paid in installments, pursuant to the Company’s regularly scheduled payroll periods, commencing on the first regularly scheduled payroll period following the later of (i) the Participant’s Covered Termination Date or Change in Control Termination Date, as applicable, or (ii) the effective date of the release described in Section 7(a), if applicable, and shall be subject to all applicable withholding for federal, state and local taxes.  In the event of a Participant’s death prior to receiving all installment payments of his or her cash severance benefit under Section 4(a), any remaining installment payments shall be made to the Participant’s estate on the same payment schedule as would have occurred absent the Participant’s death.  In no event shall payment of any Plan benefit be made prior to the Participant’s Covered Termination Date or Change in Control Termination Date, as applicable, or prior to the effective date of the release described in Section 7(a), if applicable.  
(b)    Application of Section 409A.  
(i)    All payments provided under this Plan are intended to constitute separate payments for purposes of Treasury Regulation Section 1.409A-2(b)(2).  
(ii)    If a Participant is a “specified employee” of the Company or any affiliate thereof (or any successor entity thereto) within the meaning of Section 409A(a)(2)(B)(i) of the Code on the date of a Covered Termination, then any cash severance payments pursuant to Section 4(a) and any other benefits payable under the Plan (collectively, the “Severance Payments”) shall be delayed until the date that is six (6) months after the date of the Covered Termination (such date, the “Delayed Payment Date”), and the Company (or the successor entity thereto, as applicable) shall (A) pay to Participant a lump sum amount equal to the sum of the Severance Payments that otherwise would have been paid to Participant on or before the Delayed Payment Date, without any adjustment on account of such delay, and (B) continue the Severance Payments in accordance with any applicable payment schedules set forth for the balance of the period specified herein.  Notwithstanding the foregoing, (i) Severance Payments scheduled to be paid from the date of a Covered Termination through March 15th of the calendar year following such termination shall be paid to the maximum extent permitted pursuant to the “short-term deferral” rule set forth in Treasury Regulation Section 1.409A-1(b)(4); (ii) Severance Payments scheduled to be paid that are not paid pursuant to the preceding clause (i) shall be paid as scheduled to the maximum extent permitted pursuant to an “involuntary separation from service” as permitted by Treasury Regulation Section 1.409A-1(b)(9)(iii), but in no event later than the last day of the second taxable year following the taxable year of the Covered Termination; and (iii) any Severance Payments that are not paid pursuant to either the preceding clause (i) or the preceding clause (ii) shall be subject to delay, if necessary to avoid the imposition of the adverse personal tax consequences under Section 409A of the Code, as provided in the previous sentence.  Except to the extent that payments may be delayed until the Delayed Payment Date, on the first regularly scheduled payroll period following the later of (x) the Participant’s Covered Termination Date or Change in Control Termination Date, as applicable, or (y) the effective date of the release described in Section 7(a), if applicable, the Company will pay the Participant the cash severance payments pursuant to Section 4(a) the Participant would otherwise have received under the Plan on or prior to such date but for the delay in payment related to the effectiveness of the release described in Section 7(a), if any, with the balance of such payments being paid as otherwise provided herein.  
(iii)    If the Company determines that any benefit payable under the Plan constitutes “deferred compensation” under Section 409A of the Code and the Participant’s Covered Termination occurs at a time during the calendar year when the release described in Section 7(a) could become effective in the calendar year following the calendar year in which such Covered Termination occurs, then for purposes of such benefit, such release will not be deemed effective any earlier than the latest permitted effective date set forth therein (which date, in all cases, will be in the subsequent calendar year).
(iv)    Benefits provided under Section 4(b) are intended to be provided pursuant to the exception provided by Treasury Regulation Sections 1.409A-1(b)(5)(v)(C)(1) and 1.409A-1(b)(5)(v)(E), to the extent applicable.  Amounts paid under Section 4(c) are not intended to be delayed pursuant to Section 409A(a)(2)(B)(i) of the Code and are intended to be paid pursuant to the exception provided by Treasury Regulation Section 1.409A-1(b)(9)(v)(B), to the extent applicable.  Amounts paid under Section 4(d) are intended to qualify for the exception provided under Treasury Regulation Sections 1.409A-1(b)(9)(v)(A) and (C).  

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	SECTION 6.
	REEMPLOYMENT.  

In the event of a Participant’s reemployment by the Company during the period of time in respect of which severance benefits pursuant to Section 4(a) or Section 4(f) have been paid, the Company, in its sole and absolute discretion, may require such Participant to repay to the Company all or a portion of such severance benefits as a condition of reemployment.  
		
	SECTION 7.
	LIMITATIONS ON BENEFITS.

(a)    Release.  In order to be eligible to receive benefits under the Plan and if requested by the Company, a Participant also must execute, in connection with the Participant’s Covered Termination or Change in Control Termination, a general waiver and release in substantially the form attached hereto as Exhibit B, Exhibit C or Exhibit D, as appropriate, and such release must become effective in accordance with its terms; provided, however, (i) no such release shall require the Participant to forego any unpaid salary, any accrued but unpaid vacation pay or any benefits payable pursuant to this Plan, and (ii) cash severance benefits pursuant to Section 4(a) shall commence to be paid on the first regularly scheduled payroll period following the later of (x) the Participant’s Covered Termination Date or Change in Control Termination Date, as applicable, or (y) the effective date of such general waiver and release (the “Release Effective Date”), in accordance with and subject to Section 5, and any installment payments that, in the absence of the requirement of a general waiver and release, would have been paid between the Participant’s Covered Termination Date or Change in Control Termination Date, as applicable and the Release Effective Date shall be made together with the first installment payment that occurs following the Release Effective Date such that the duration of payments will not be affected by the timing of the Release Effective Date.  With respect to any outstanding option or other stock award held by the Participant, no provision set forth in this Plan granting the Participant any accelerated vesting or additional rights to exercise the option or other stock award will be effective unless and until the release, if requested, becomes effective.  The Company, in its sole discretion, may modify the form of the required release to comply with applicable law and shall determine the form of the required release, which may be incorporated into a termination agreement or other agreement with the Participant.
(b)    Certain Reductions.  The Company, in its sole discretion, shall have the authority to reduce a Participant’s severance benefits, in whole or in part, by any other severance benefits, pay in lieu of notice, or other similar benefits payable to the Participant by the Company that become payable in connection with the Participant’s termination of employment pursuant to (i) any applicable legal requirement, including, without limitation, the Worker Adjustment and Retraining Notification Act (the “WARN Act”), (ii) a written employment or severance agreement with the Company, or (iii) any Company policy or practice providing for the Participant to remain on the payroll for a limited period of time after being given notice of the termination of the Participant’s employment.  The benefits provided under this Plan are intended to satisfy, in whole or in part, any and all statutory obligations and other contractual obligations of the Company that may arise out of a Participant’s termination of employment, and the Plan Administrator shall so construe and implement the terms of the Plan.  The Company’s decision to apply such reductions to the severance benefits of one Participant and the amount of such reductions shall in no way obligate the Company to apply the same reductions in the same amounts to the severance benefits of any other Participant, even if similarly situated.  In the Company’s sole discretion, such reductions may be applied on a retroactive basis, with severance benefits previously paid being recharacterized as payments pursuant to the Company’s statutory or other contractual obligations.
(c)    Mitigation.  Except as otherwise specifically provided herein, a Participant shall not be required to mitigate damages or the amount of any payment provided under this Plan by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Plan be reduced by any compensation earned by a Participant as a result of employment by another employer or any retirement benefits received by such Participant after the date of the Participant’s termination of employment with the Company.
(d)    Non-Duplication of Benefits.  Except as otherwise specifically provided for herein, no Participant is eligible to receive benefits under this Plan or pursuant to other contractual obligations more than one time.  This Plan is designed to provide certain severance pay and change in control benefits to Participants pursuant to the terms and conditions set forth in this Plan.  The payments pursuant to this Plan are in addition to, and not in lieu of, any unpaid salary, bonuses or benefits (other than severance or change in control benefits) to which a Participant may be entitled for the period ending with the Participant’s Covered Termination.
(e)    Indebtedness of Participants.  If a Participant is indebted to the Company on the effective date of his or her Covered Termination, the Company reserves the right to offset any severance payments under the Plan by the amount of such indebtedness.

8.

(f)    Parachute Payments.  Except as otherwise provided in an agreement between a Participant and the Company, if any payment or benefit the Participant would receive in connection with a Change in Control from the Company or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be equal to the Reduced Amount.  The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax, or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Participant’s receipt of the greatest economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.  If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in a manner (the “Reduction Method”) necessary to provide the Participant with the greatest economic benefit.  If more than one manner of reduction of payments or benefits necessary to arrive at the Reduced Amount yields the greatest economic benefit, the payments and benefits shall be reduced pro rata (the “Pro Rata Reduction Method”).
Notwithstanding any provision of the foregoing paragraph to the contrary, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A of the Code that would not otherwise be subject to taxes pursuant to Section 409A of the Code, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, will be modified so as to avoid the imposition of taxes pursuant to Section 409A of the Code as follows: (A) as a first priority, the modification will preserve to the greatest extent possible, the greatest  economic benefit for the Participant as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g., being terminated without Cause), will be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A of the Code will be reduced (or eliminated) before Payments that are not “deferred compensation” within the meaning of Section 409A of the Code.
If a Participant receives a Payment for which the Reduced Amount was determined pursuant to clause (x) of the first paragraph of this Section 7(f) and the Internal Revenue Service determines thereafter that some portion of the Payment is subject to the Excise Tax, the Participant agrees to promptly return to the Company a sufficient amount of the Payment (after reduction pursuant to clause (x) of the first paragraph of this Section 7(f)) so that no portion of the remaining Payment is subject to the Excise Tax.  For the avoidance of doubt, if the Reduced Amount was determined pursuant to clause (y) of the first paragraph of this Section 7(f), the Participant will have no obligation to return any portion of the Payment pursuant to the preceding sentence.
		
	SECTION 8.
	RIGHT TO INTERPRET PLAN; AMENDMENT AND TERMINATION.

(a)    Exclusive Discretion.  The Plan Administrator shall have the exclusive discretion and authority to establish rules, forms, and procedures for the administration of the Plan and to construe and interpret the Plan and to decide any and all questions of fact, interpretation, definition, computation or administration arising in connection with the operation of the Plan, including, but not limited to, the eligibility to participate in the Plan and amount of benefits paid under the Plan.  The rules, interpretations, computations and other actions of the Plan Administrator shall be binding and conclusive on all persons. 
(b)    Amendment or Termination.  The Company reserves the right to amend or terminate this Plan, any Participation Notice issued pursuant to the Plan or the benefits provided hereunder at any time; provided, however, that (i) no such amendment or termination shall reduce or otherwise adversely affect the severance benefits provided in Sections 4(a)(i) or 4(c) to a Participant in connection with a Covered Termination that is not a Change in Control Termination, unless such Participant consents in writing to such amendment or termination and (ii) no such amendment or termination shall occur following the date one (1) month prior to a Change in Control as to any Participant who would be adversely affected by such amendment or termination unless such Participant consents in writing to such amendment or termination.  Any action amending or terminating the Plan or any Participation Notice shall be in writing and executed by a duly authorized officer of the Company.  Unless otherwise required by law, no approval of the shareholders of the Company shall be required for any amendment or termination including any amendment that increases the benefits provided under any option or other stock award.  
		
	SECTION 9.
	NO IMPLIED EMPLOYMENT CONTRACT.

The Plan shall not be deemed (i) to give any employee or other person any right to be retained in the employ of the Company or (ii) to interfere with the right of the Company to discharge any employee or other person at any time, with or without cause, which right is hereby reserved.

9.

		
	SECTION 10.
	LEGAL CONSTRUCTION.

This Plan shall be governed by and construed under the laws of the State of California (without regard to principles of conflict of laws), except to the extent preempted by ERISA.
		
	SECTION 11.
	CLAIMS, INQUIRIES AND APPEALS.  

(a)    Applications for Benefits and Inquiries.  Any application for benefits, inquiries about the Plan or inquiries about present or future rights under the Plan must be submitted to the Plan Administrator in writing by an applicant (or his or her authorized representative).  The Plan Administrator is: 
Exelixis, Inc.
Attn:  Corporate Secretary
210 East Grand Avenue
South San Francisco, CA 94080
(b)    Denial of Claims.  In the event that any application for benefits is denied in whole or in part, the Plan Administrator must provide the applicant with written or electronic notice of the denial of the application, and of the applicant’s right to review the denial.  Any electronic notice will comply with the regulations of the U.S. Department of Labor.  The notice of denial will be set forth in a manner designed to be understood by the applicant and will include the following:
		
	(1)
	the specific reason or reasons for the denial;

		
	(2)
	references to the specific Plan provisions upon which the denial is based;

		
	(3)
	a description of any additional information or material that the Plan Administrator needs to complete the review and an explanation of why such information or material is necessary; and

		
	(4)
	an explanation of the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the applicant’s right to bring a civil action under Section 502(a) of ERISA following a denial on review of the claim, as described in Section 11(d) below.

This notice of denial will be given to the applicant within ninety (90) days after the Plan Administrator receives the application, unless special circumstances require an extension of time, in which case, the Plan Administrator has up to an additional ninety (90) days for processing the application.  If an extension of time for processing is required, written notice of the extension will be furnished to the applicant before the end of the initial ninety (90) day period.
This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan Administrator is to render its decision on the application.  
(c)    Request for a Review.  Any person (or that person’s authorized representative) for whom an application for benefits is denied, in whole or in part, may appeal the denial by submitting a request for a review to the Plan Administrator within sixty (60) days after the application is denied.  A request for a review shall be in writing and shall be addressed to:
Exelixis, Inc.
Attn:  Corporate Secretary
210 East Grand Avenue
South San Francisco, CA 94080
A request for review must set forth all of the grounds on which it is based, all facts in support of the request and any other matters that the applicant feels are pertinent.  The applicant (or his or her representative) shall have the opportunity to submit (or the Plan Administrator may require the applicant to submit) written comments, documents, records, and other information relating to his or her claim.  The applicant (or his or her representative) shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to his or her claim.  The review shall take into account all comments, documents, records and other information submitted by the applicant (or his or her representative) relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

10.

(d)    Decision on Review.  The Plan Administrator will act on each request for review within sixty (60) days after receipt of the request, unless special circumstances require an extension of time (not to exceed an additional sixty (60) days), for processing the request for a review.  If an extension for review is required, written notice of the extension will be furnished to the applicant within the initial sixty (60) day period.  This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan Administrator is to render its decision on the review.  The Plan Administrator will give prompt, written or electronic notice of its decision to the applicant. Any electronic notice will comply with the regulations of the U.S. Department of Labor.  In the event that the Plan Administrator confirms the denial of the application for benefits in whole or in part, the notice will set forth, in a manner designed to be understood by the applicant, the following:
		
	(1)
	the specific reason or reasons for the denial;

		
	(2)
	references to the specific Plan provisions upon which the denial is based;

		
	(3)
	a statement that the applicant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to his or her claim; and

		
	(4)
	a statement of the applicant’s right to bring a civil action under Section 502(a) of ERISA. 

(e)    Rules and Procedures.  The Plan Administrator will establish rules and procedures, consistent with the Plan and with ERISA, as necessary and appropriate in carrying out its responsibilities in reviewing benefit claims.  The Plan Administrator may require an applicant who wishes to submit additional information in connection with an appeal from the denial of benefits to do so at the applicant’s own expense.
(f)    Exhaustion of Remedies.  No legal action for benefits under the Plan may be brought until the applicant (i) has submitted a written application for benefits in accordance with the procedures described by Section 11(a) above, (ii) has been notified by the Plan Administrator that the application is denied, (iii) has filed a written request for a review of the application in accordance with the appeal procedure described in Section 11(c) above, and (iv) has been notified that the Plan Administrator has denied the appeal.  Notwithstanding the foregoing, if the Plan Administrator does not respond to an applicant’s claim or appeal within the relevant time limits specified in this Section 11, the applicant may bring legal action for benefits under the Plan pursuant to Section 502(a) of ERISA.  
		
	SECTION 12.
	BASIS OF PAYMENTS TO AND FROM PLAN.

All benefits under the Plan shall be paid by the Company.  The Plan shall be unfunded, and benefits hereunder shall be paid only from the general assets of the Company.
		
	SECTION 13.
	OTHER PLAN INFORMATION.

(a)    Employer and Plan Identification Numbers.  The Employer Identification Number assigned to the Company (which is the “Plan Sponsor” as that term is used in ERISA) by the Internal Revenue Service is 04-3257395.  The Plan Number assigned to the Plan by the Plan Sponsor pursuant to the instructions of the Internal Revenue Service is 507.
(b)    Ending Date for Plan’s Fiscal Year.  The date of the end of the fiscal year for the purpose of maintaining the Plan’s records is December 31.
(c)    Agent for the Service of Legal Process.  The agent for the service of legal process with respect to the Plan is:
Exelixis, Inc.
Attn:  Corporate Secretary
210 East Grand Avenue
South San Francisco, CA 94080
(d)    Plan Sponsor and Administrator.  The “Plan Sponsor” and the “Plan Administrator” of the Plan is:

11.

Exelixis, Inc.
Attn:  Corporate Secretary 
210 East Grand Avenue
South San Francisco, CA 94080
The Plan Sponsor’s and Plan Administrator’s telephone number is (650) 837-7000.  The Plan Administrator is the named fiduciary charged with the responsibility for administering the Plan.
		
	SECTION 14.
	STATEMENT OF ERISA RIGHTS.

Participants in this Plan (which is a welfare benefit plan sponsored by Exelixis, Inc.) are entitled to certain rights and protections under ERISA.  If you are a Participant, you are considered a participant in the Plan for the purposes of this Section 14 and, under ERISA, you are entitled to:

Receive Information About Your Plan and Benefits
(a)    Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as worksites, all documents governing the Plan and a copy of the latest annual report (Form 5500 Series), if applicable, filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration;
(b)    Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan and copies of the latest annual report (Form 5500 Series), if applicable, and an updated (as necessary) Summary Plan Description.  The Administrator may make a reasonable charge for the copies; and
(c)    Receive a summary of the Plan’s annual financial report, if applicable.  The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report.
Prudent Actions By Plan Fiduciaries
In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan.  The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries.  No one, including your employer, your union or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising your rights under ERISA.
Enforce Your Rights
If your claim for a Plan benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.
Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request a copy of Plan documents or the latest annual report from the Plan, if applicable, and do not receive them within thirty (30) days, you may file suit in a Federal court.  In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.
If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court.
If you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court.  The court will decide who should pay court costs and legal fees.  If you are successful, the court may order the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

12.

Assistance With Your Questions
If you have any questions about the Plan, you should contact the Plan Administrator.  If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.  You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

		
	SECTION 15.
	GENERAL PROVISIONS.

(a)    Notices.  Any notice, demand or request required or permitted to be given by either the Company or a Participant pursuant to the terms of this Plan shall be in writing and shall be deemed given when delivered personally or deposited in the U.S. mail, First Class with postage prepaid, and addressed to the parties, in the case of the Company, at the address set forth in Section 11(a) and, in the case of a Participant, at the address as set forth in the Company’s employment file maintained for the Participant as previously furnished by the Participant or such other address as a party may request by notifying the other in writing.
(b)    Transfer and Assignment.  The rights and obligations of a Participant under this Plan may not be transferred or assigned without the prior written consent of the Company.  This Plan shall be binding upon any surviving entity resulting from a Change in Control and upon any other person who is a successor by merger, acquisition, consolidation or otherwise to the business formerly carried on by the Company without regard to whether or not such person or entity actively assumes the obligations hereunder.
(c)    Waiver and Costs of Enforcement.  Any party’s failure to enforce any provision or provisions of this Plan shall not in any way be construed as a waiver of any such provision or provisions, nor prevent any party from thereafter enforcing each and every other provision of this Plan.  The rights granted to the parties herein are cumulative and shall not constitute a waiver of any party’s right to assert all other legal remedies available to it under the circumstances.  All out-of-pocket costs and expenses reasonably incurred by a Participant (including attorneys’ fees)  in connection with enforcing the Participant’s rights under the Plan (including the costs and expenses of complying with the provisions of Section 11) shall be paid by the Company if such rights relate to a Covered Termination that occurs any time after the date that is one (1) month prior to the effective date of the first Change in Control that occurs after the Participant commences participation in the Plan.  Notwithstanding the foregoing, if the Participant initiates any claim or action and the claim or action is totally without merit or frivolous, the Participant shall be responsible for the Participant’s own costs and expenses.
(d)    Severability.  Should any provision of this Plan be declared or determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.
(e)    Section Headings.  Section headings in this Plan are included for convenience of reference only and shall not be considered part of this Plan for any other purpose.
		
	SECTION 16.
	EXECUTION.

To record the adoption of the Plan as set forth herein, Exelixis, Inc. has caused its duly authorized officer to execute the same as of the Effective Date.
EXELIXIS, INC.
By: /s/ JENNIFER DRIMMER
Title: Vice President, Corporate Legal Affairs & Secretary

13.

EXHIBIT A
EXELIXIS, INC.

CHANGE IN CONTROL AND SEVERANCE BENEFIT PLAN
PARTICIPATION NOTICE
To:    
Date:    
Exelixis, Inc. (the “Company”) has adopted the Exelixis, Inc. Change in Control and Severance Benefit Plan (the “Plan”).  The Company is providing you with this Participation Notice to inform you that you have been designated as a Participant in the Plan. A copy of the Plan document is attached to this Participation Notice. The terms and conditions of your participation in the Plan are as set forth in the Plan and this Participation Notice, which together also constitute a summary plan description of the Plan.
For the purposes of the Plan you [_] are an Executive Participant [_] are not an Executive Participant.
Except as provided in the Plan, the Plan supersedes any and all severance or change in control benefits payable to you as set forth in any agreement, including offer letters, with the Company entered into prior to the date hereof.
Notwithstanding the terms of the Plan:
 [____________________________________________________________________
____________________________________________________________________]

Please return to the Company’s Corporate Secretary a copy of this Participation Notice signed by you and retain a copy of this Participation Notice, along with the Plan document, for your records.  
EXELIXIS, INC.

By:    
Its:    

14.
40547482 v17 

ACKNOWLEDGEMENT
The undersigned Participant hereby acknowledges receipt of the foregoing Participation Notice.  In the event the undersigned holds outstanding stock options or other stock awards as of the date of this Participation Notice, the undersigned hereby:*

		
	 ̈
	accepts all of the benefits of Section 4(b) of the Plan regardless of any potential adverse effects on any outstanding option or other stock award

		
	 ̈
	accepts the benefits of Section 4(b) of the Plan that have no adverse effect on outstanding options or other stock awards and rejects the benefits of Section 4(b) of the Plan as to those outstanding options and other stock awards that would have potential adverse effects

		
	 ̈
	other (please describe): ____________________________________________

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________

The undersigned acknowledges that the undersigned has been advised to obtain tax and financial advice regarding the consequences of this election including the effect, if any, on the status of the stock options for tax purposes under Section 422 of the Internal Revenue Code.

    
    
Print name

*    Please check one box; failure to check a box will be deemed the selection of the second alternative (i.e., accepting the benefits of Section 4(b) of the Plan that have no adverse effect on outstanding options or other stock awards and rejecting the benefits of Section 4(b) of the Plan as to those outstanding options and other stock awards that would have potential adverse effects).

15.

For Employees Age 40 or Older
Individual Termination

EXHIBIT B
RELEASE AGREEMENT
I have reviewed, I understand and I agree completely to the terms set forth in the Exelixis, Inc. Change in Control and Severance Benefit Plan (the “Plan”).
I understand that this Release, together with the Plan, constitutes the complete, final and exclusive embodiment of the entire agreement between the Company, affiliates of the Company and me with regard to the subject matter hereof.  I am not relying on any promise or representation by the Company or an affiliate of the Company that is not expressly stated therein.  Certain capitalized terms used in this Release are defined in the Plan.
I hereby acknowledge and reaffirm my continuing obligations under the Company’s Employee Proprietary Information and Inventions Agreement.
Except as otherwise set forth in this Release, I hereby generally and completely release the Company and its affiliates, and their parents, subsidiaries, successors, predecessors and affiliates, and its and their current and former partners, members, directors, officers, employees, stockholders, shareholders, agents, attorneys, predecessors, insurers, affiliates and assigns (collectively, the “Released Parties”), from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring at any time prior to or on the date I sign this Release (collectively, the “Released Claims”).  The Released Claims include but are not limited to: (a) all claims arising out of or in any way related to my employment with the Company and its affiliates, or their affiliates, or the termination of that employment; (b) all claims related to compensation or benefits from the Company and its affiliates, or their affiliates, including salary, bonuses, commissions, vacation, paid time off, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership, equity or profits interests in the Company and its affiliates, or their affiliates; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964, the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (the “ADEA”), the federal Employee Retirement Income Security Act of 1974, the California Labor Code, and the California Fair Employment and Housing Act.
I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA, and that the consideration given under the Plan for the waiver and release in this Release is in addition to anything of value to which I am already entitled.  I further acknowledge that I have been advised, as required by the ADEA, that:  (a) my waiver and release do not apply to any rights or claims that may arise after the date that I sign this Release; (b) I should consult with an attorney prior to signing this Release (although I may choose voluntarily not to do so); (c) I have twenty-one (21) days to consider this Release (although I may choose voluntarily to sign this Release earlier); (d) I have seven (7) days following the date I sign this Release to revoke it by providing written notice of my revocation to an officer of the Company; and (e) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth (8th) day after the date that I sign this Release provided that I do not revoke it.
In giving the releases set forth in this Release, which include claims which may be unknown to me at present, I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law or legal principle of similar effect in any jurisdiction with respect to my release of any claims hereunder, including but not limited to the release of unknown and unsuspected claims.

1.

For Employees Age 40 or Older
Individual Termination

Notwithstanding the foregoing, I understand that the following are not included in the Released Claims (the “Excluded Claims”): (a) any rights or claims for indemnification I may have pursuant to any written indemnification agreement with the Company or its affiliate to which I am a party or under applicable law; (b) any rights which cannot be waived as a matter of law; (c) any rights I have to file or pursue a claim for workers’ compensation or unemployment insurance; and (d) any claims for breach of the Plan arising after the date that I sign this Release.  In addition, nothing in this Release shall prevent me from filing, cooperating with or participating in any proceeding before any federal, state or other government agency, except that I acknowledge and agree and hereby waive my right to any monetary benefits in connection with any such claim, charge or proceeding before the Equal Employment Opportunity Commission, the Department of Labor, or any analogous federal, state or other government agency with regard to any claim released herein.  I hereby represent that, other than the Excluded Claims, I am not aware of any claims I have or might have against any of the Released Parties that are not included in the Released Claims.
I hereby represent that I have been paid all compensation owed and for all time worked; I have received all the leave and leave benefits and protections for which I am eligible pursuant to the federal Family and Medical Leave Act, the California Family Rights Act, any applicable law or Company policy; and I have not suffered any on-the-job injury or illness for which I have not already filed a workers’ compensation claim.
I acknowledge that to become effective, I must sign and return this Release to the Company so that it is received not later than twenty-one (21) days following the date it is provided to me, and I must not subsequently revoke the Release.
PARTICIPANT:
____________________________________
                              (Signature)
Printed Name:    
Date:    

2.

For Employees Age 40 or Older
 Group Termination

EXHIBIT C
RELEASE AGREEMENT
I have reviewed, I understand and I agree completely to the terms set forth in the Exelixis, Inc. Change in Control and Severance Benefit Plan (the “Plan”).
I understand that this Release, together with the Plan, constitutes the complete, final and exclusive embodiment of the entire agreement between the Company, affiliates of the Company and me with regard to the subject matter hereof.  I am not relying on any promise or representation by the Company or an affiliate of the Company that is not expressly stated therein.  Certain capitalized terms used in this Release are defined in the Plan.
I hereby acknowledge and reaffirm my continuing obligations under the Company’s Employee Proprietary Information and Inventions Agreement.
Except as otherwise set forth in this Release, I hereby generally and completely release the Company and its affiliates, and their parents, subsidiaries, successors, predecessors and affiliates, and their current and former partners, members, directors, officers, employees, stockholders, shareholders, agents, attorneys, predecessors, insurers, affiliates and assigns (collectively, the “Released Parties”), from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring at any time prior to or on the date I sign this Release (collectively, the “Released Claims”).  The Released Claims include but are not limited to: (a) all claims arising out of or in any way related to my employment with the Company and its affiliates, or their affiliates, or the termination of that employment; (b) all claims related to compensation or benefits from the Company and its affiliates, or their affiliates, including salary, bonuses, commissions, vacation, paid time off, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership, equity or profits interests in the Company and its affiliates, or their affiliates; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964, the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (the “ADEA”), the federal Employee Retirement Income Security Act of 1974, the California Labor Code, and the California Fair Employment and Housing Act.
I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA, and that the consideration given under the Plan for the waiver and release in this Release is in addition to anything of value to which I am already entitled.  I further acknowledge that I have been advised, as required by the ADEA, that:  (a) my waiver and release do not apply to any rights or claims that may arise after the date that I sign this Release; (b) I should consult with an attorney prior to signing this Release (although I may choose voluntarily not to do so); (c) I have forty-five (45) days to consider this Release (although I may choose voluntarily to sign this Release earlier); (d) I have seven (7) days following the date I sign this Release to revoke it by providing written notice of my revocation to an officer of the Company; and (e) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth (8th) day after the date that I sign this Release provided that I do not revoke it.  I hereby further acknowledge that the Company has provided me with ADEA disclosure information (under 29 U.S.C. § 626(f)(1)(H)). 
In giving the releases set forth in this Release, which include claims which may be unknown to me at present, I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law or legal principle of similar effect in any jurisdiction with respect to my release of any claims hereunder, including but not limited to the release of unknown and unsuspected claims.

1.

For Employees Age 40 or Older
 Group Termination

Notwithstanding the foregoing, I understand that the following are not included in the Released Claims (the “Excluded Claims”): (a) any rights or claims for indemnification I may have pursuant to any written indemnification agreement with the Company or its affiliate to which I am a party or under applicable law; (b) any rights which cannot be waived as a matter of law; (c) any rights I have to file or pursue a claim for workers’ compensation or unemployment insurance; and (d) any claims for breach of the Plan arising after the date that I sign this Release.  In addition, nothing in this Release shall prevent me from filing, cooperating with or participating in any proceeding before any federal, state or other government agency, except that I acknowledge and agree and hereby waive my right to any monetary benefits in connection with any such claim, charge or proceeding before the Equal Employment Opportunity Commission, the Department of Labor, or any analogous federal, state or other government agency with regard to any claim released herein.  I hereby represent that, other than the Excluded Claims, I am not aware of any claims I have or might have against any of the Released Parties that are not included in the Released Claims.
I hereby represent that I have been paid all compensation owed and for all time worked; I have received all the leave and leave benefits and protections for which I am eligible pursuant to the federal Family and Medical Leave Act, the California Family Rights Act, any applicable law or Company policy; and I have not suffered any on-the-job injury or illness for which I have not already filed a workers’ compensation claim.
I acknowledge that to become effective, I must sign and return this Release to the Company so that it is received not later than forty-five (45) days following the date it is provided to me, and I must not subsequently revoke the Release.
PARTICIPANT:
____________________________________
                              (Signature)
Printed Name:    
Date:    

2.

For Employees Under Age 40
Individual or Group Termination

EXHIBIT D
RELEASE AGREEMENT
I have reviewed, I understand and I agree completely to the terms set forth in the Exelixis, Inc. Change in Control and Severance Benefit Plan (the “Plan”).
I understand that this Release, together with the Plan, constitutes the complete, final and exclusive embodiment of the entire agreement between the Company, affiliates of the Company and me with regard to the subject matter hereof.  I am not relying on any promise or representation by the Company or an affiliate of the Company that is not expressly stated therein.  Certain capitalized terms used in this Release are defined in the Plan.
I hereby acknowledge and reaffirm my continuing obligations under the Company’s Employee Proprietary Information and Inventions Agreement.
Except as otherwise set forth in this Release, I hereby generally and completely release the Company and its affiliates, and their parents, subsidiaries, successors, predecessors and affiliates, and their current and former partners, members, directors, officers, employees, stockholders, shareholders, agents, attorneys, predecessors, insurers, affiliates and assigns (collectively, the “Released Parties”), from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring at any time prior to or on the date I sign this Release (collectively, the “Released Claims”).  The Released Claims include but are not limited to: (a) all claims arising out of or in any way related to my employment with the Company and its affiliates, or their affiliates, or the termination of that employment; (b) all claims related to compensation or benefits from the Company and its affiliates, or their affiliates, including salary, bonuses, commissions, vacation, paid time off, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership, equity or profits interests in the Company and its affiliates, or their affiliates; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964, the federal Americans with Disabilities Act of 1990, the federal Employee Retirement Income Security Act of 1974, the California Labor Code, and the California Fair Employment and Housing Act.
In giving the releases set forth in this Release, which include claims which may be unknown to me at present, I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law or legal principle of similar effect in any jurisdiction with respect to my release of any claims hereunder, including but not limited to the release of unknown and unsuspected claims.
Notwithstanding the foregoing, I understand that the following are not included in the Released Claims (the “Excluded Claims”): (a) any rights or claims for indemnification I may have pursuant to any written indemnification agreement with the Company or its affiliate to which I am a party or under applicable law; (b) any rights which cannot be waived as a matter of law; (c) any rights I have to file or pursue a claim for workers’ compensation or unemployment insurance; and (d) any claims for breach of the Plan arising after the date that I sign this Release.  In addition, nothing in this Release shall prevent me from filing, cooperating with or participating in any proceeding before any federal, state or other government agency, except that I acknowledge and agree and hereby waive my right to any monetary benefits in connection with any such claim, charge or proceeding before the Equal Employment Opportunity Commission, the Department of Labor, or any analogous federal, state or other government agency with regard to any claim released herein.  I hereby represent that, other than the Excluded Claims, I am not aware of any claims I have or might have against any of the Released Parties that are not included in the Released Claims.

1.

For Employees Under Age 40
Individual or Group Termination

I hereby represent that I have been paid all compensation owed and for all time worked; I have received all the leave and leave benefits and protections for which I am eligible pursuant to the federal Family and Medical Leave Act, the California Family Rights Act, any applicable law or Company policy; and I have not suffered any on-the-job injury or illness for which I have not already filed a workers’ compensation claim.
I acknowledge that to become effective, I must sign and return this Release to the Company so that it is received not later than fourteen (14) days following the date it is provided to me.
PARTICIPANT:
____________________________________
                              (Signature)
Printed Name:    
Date:    

2.Exhibit

Exhibit 10.3
Execution Copy
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This EMPLOYMENT AND NONCOMPETITION AGREEMENT (“Agreement”) is made as of the 12th day of June, 2012, between Nicholas Pell (“Executive”) and Gramercy Capital Corp., a Maryland corporation (the “Employer”), to be effective as of July 1, 2012 (the “Effective Date”).  
1.Term.  The term of this Agreement shall commence on the Effective Date and shall continue through, and terminate on, June 30, 2017 (the “Original Term”) unless earlier terminated as provided in Section 6 below.  The Original Term shall automatically be extended for a single one (1) year period on the same terms as are set forth herein for the Original Term (the “Renewal Term”), unless either party gives the other party at least three (3) months written notice of non-renewal prior to the expiration of the Original Term, which notice shall constitute a Notice of Termination pursuant to Section 6(d) terminating Executive’s employment without Cause (if given by the Employer) or without Good Reason (if given by Executive) as of the end of the Original Term.  The period of Executive’s employment hereunder consisting of the Original Term and the Renewal Term, if applicable, is herein referred to as the “Employment Period.”
2.Employment and Duties.
(a)Duties.  During the Employment Period, Executive shall be employed in the business of the Employer and its affiliates.  Executive shall serve as Managing Director of the Employer.  In his capacity as Managing Director, Executive’s duties and authority shall be those as would normally attach to Executive’s position as Managing Director, including such duties and responsibilities as are customary among persons employed in similar capacities for similar companies, but in all events such duties shall be commensurate with his position as Managing Director.  Executive’s duties and authority shall be as further set forth by the Employer.
(b)Best Efforts.  Executive agrees to his employment as described in this Section 2 and agrees to devote substantially all of his business time and efforts to the performance of his duties under this Agreement, except as otherwise approved by the Employer; provided, however, that nothing herein shall be interpreted to preclude Executive, so long as there is no material interference with his duties hereunder, from (i) participating as an officer or director of, or advisor to, any charitable or other tax exempt organization or otherwise engaging in charitable, fraternal or trade group activities; (ii) investing and managing his assets as an investor in other entities or business ventures; provided that he performs no management or similar role (or, in the case of investments other than those in entities or business ventures engaged in the Business (as defined in Section 8), he performs a management role comparable to the role that a significant limited partner would have, but performs no day-to-day management or similar role) with respect to such entities or ventures and such investment does not violate Section 8 hereof; and provided, further, that, in any case in which Executive knows that another party involved in the investment has a business relationship with the Employer, Executive shall give prior written notice thereof to the Employer; or (iii) serving as a member of the Board of Directors of a for-profit corporation with the approval of the Employer.  
(c)Travel.  In performing his duties hereunder, Executive shall be available for all reasonable travel as the needs of the Employer’s business may require.  Executive shall be based in, or within 50 miles of, Manhattan. 
3.Compensation and Benefits.  In consideration of Executive’s services hereunder, the Employer shall compensate Executive as provided in this Agreement, and the Employer shall have the obligations as set forth herein. 

(a)Base Salary.  The Employer shall pay Executive a minimum annual salary at the rate of $500,000 per annum during the Employment Period (“Base Salary”).  Base Salary shall be payable in periodic installments in accordance with the regular payroll practices of the Employer and shall be reviewed by the Employer at least annually.
(b)Signing Bonus; Incentive Compensation Bonuses.  In addition to Base Salary, during the Employment Period, Executive shall be eligible for and shall receive such discretionary annual bonuses as the Employer, in its sole discretion, may deem appropriate to reward Executive for job performance.  Any bonuses awarded for a fiscal year shall be paid after the end of such fiscal year and on or before the 15th day of the third month of the following fiscal year (e.g., a bonus for 2013 will be paid sometime between January 1, 2014 and March 15, 2014).  In lieu of a bonus for 2012, the Employer shall pay Executive a signing bonus of $100,000 (the “Signing Bonus”), of which $50,000 shall be payable as of the Effective Date and the remainder shall be payable in three equal installments on June 30, 2013, June 13, 2014 and June 13, 2015; provided that Executive remains employed by the Employer on each such date.  
(c)Initial Equity Awards.  On the Effective Date, the Employer shall grant 100,000 shares of restricted stock (the “Restricted Stock Award”) and 300,000 restricted stock units (the “Restricted Stock Unit Award”) to Executive under the Gramercy Capital Corp. 2012 Inducement Equity Incentive Plan upon the terms summarized on Exhibit A hereto and pursuant to definitive documentation consistent with the Employer’s general practices for documenting such equity awards. In addition, on the Effective Date, Executive shall also be entitled to receive an award pursuant to an outperformance plan (the “Outperformance Plan”) in accordance with definitive documentation which is consistent with the terms summarized on Exhibit B hereto.  Each of the Restricted Stock Award, the Restricted Stock Unit Award and the Outperformance Plan award is intended to constitute an employment inducement award pursuant to Section 303A.08 of the New York Stock Exchange Listed Company Manual, and Executive acknowledges that the granting of each of these awards is a material inducement to Executive agreeing to accept employment by the Employer.
(d)Other Equity Awards.  Executive shall be eligible to receive equity awards from the Employer to the extent the Employer maintains an equity award plan or similar program in which senior officers may participate; provided that the actual amount and terms of any such equity awards shall be determined by the Employer in its sole discretion.  
(e)Expenses.  Executive shall be reimbursed for all reasonable business related expenses incurred by Executive at the request of or on behalf of the Employer, provided that such expenses are incurred and accounted for in accordance with the policies and procedures established by the Employer.  Any expenses incurred during the Employment Period but not reimbursed by the Employer by the end of the Employment Period, shall remain the obligation of the Employer to so reimburse Executive. 
(f)Health and Welfare Benefit Plans.  During the Employment Period, Executive and Executive’s immediate family shall be entitled to participate in such health and welfare benefit plans as the Employer shall maintain from time to time for the benefit of senior executive officers of the Employer and their families, on the terms and subject to the conditions set forth in such plan.  Nothing in this Section shall limit the Employer’s right to change or modify or terminate any benefit plan or program as it sees fit from time to time in the normal course of business so long as it does so for all senior executives of the Employer.
(g)Vacations.  Executive shall be entitled to paid vacations in accordance with the then regular procedures of the Employer governing senior executive officers, except that Executive shall be credited with a minimum of 20 vacation days per calendar year, pro-rated for any partial year.  The Employer will pay Executive for unused accrued vacation upon termination of his employment.
(h)Other Benefits.  During the Employment Period, the Employer shall provide to Executive such other benefits, as generally made available to other senior executives of the Employer; provided 

that it is acknowledged that the Employer’s Chief Executive Officer may be provided with additional benefits not made available to Executive.
(i)Timing of Expense Reimbursement. All in-kind benefits provided and expenses eligible for reimbursement under this Agreement, if any, must be provided by the Employer or incurred by Executive during the time periods set forth in this Agreement.  All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred.  The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year.  Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.
4.Indemnification and Liability Insurance.  The Employer agrees to indemnify Executive to the full extent permitted by applicable law, as the same exists and may hereafter be amended, from and against any and all losses, damages, claims, liabilities and expenses asserted against, or incurred or suffered by, Executive (including the costs and expenses of legal counsel retained by the Employer to defend Executive and judgments, fines and amounts paid in settlement actually and reasonably incurred by or imposed on such indemnified party) with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”) in which Executive is made a party or threatened to be made a party or is otherwise involved, either with regard to his entering into this Agreement with the Employer or in his capacity as an officer or former officer of the Employer or any affiliate thereof for which he may serve in such capacity.  The Employer also agrees to secure promptly and maintain officers and directors liability insurance providing coverage for Executive.  The provisions of this Section 4 shall remain in effect after this Agreement is terminated irrespective of the reasons for termination.
5.Employer’s Policies.  Executive agrees to observe and comply with the reasonable written rules and regulations of the Employer regarding the performance of his duties and to carry out and perform orders, directions and policies communicated to him from time to time by the Employer, so long as same are otherwise consistent with this Agreement.
6.Termination.  Executive’s employment hereunder may be terminated under the following circumstances:
(a)Termination by the Employer.
(i)Death.  Executive’s employment hereunder shall terminate upon his death.
(ii)Disability.  If, as a result of Executive’s incapacity due to physical or mental illness or disability, Executive shall have been incapable of performing his duties hereunder even with a reasonable accommodation on a full-time basis for the entire period of four consecutive months or any 120 days in a 180-day period, and within 30 days after written Notice of Termination (as defined in Section 6(d)) is given he shall not have returned to the performance of Executive’s duties hereunder on a full-time basis, the Employer may terminate Executive’s employment hereunder.
(iii)Cause.  The Employer may terminate Executive’s employment hereunder for Cause.  For purposes of this Agreement, “Cause” shall mean Executive’s:  (A) engaging in conduct which is a felony; (B) material breach of any of his obligations under Sections 8(a) through 8(e) of this Agreement; (C) willful misconduct of a material nature or gross negligence with regard to the Employer or any of its affiliates; (D) material fraud with regard to the Employer or any of its affiliates; (E) willful or material violation of any reasonable written rule, regulation or policy of the Employer applicable to senior executives unless such a violation is cured within 30 days after written notice of such violation by the Employer; or (F) failure to competently perform his duties which failure is not cured within 30 days after receiving notice from the Employer specifically identifying the manner in which Executive has failed to perform (it being 

understood that, for this purpose, the manner and level of Executive’s performance shall not be determined based on the financial performance of the Employer (including without limitation the performance of the stock of the Employer)).
(iv)Without Cause.  Executive’s employment hereunder may be terminated by the Employer at any time without Cause (as defined in Section 6(a)(iii) above), subject only to the severance provisions specifically set forth in Section 7.  If the Employer terminates Executive’s employment hereunder as of the end of the Original Term by giving a notice of non-renewal to Executive pursuant to Section 1, such termination shall be deemed to be termination without Cause.
(b)Termination by Executive.
(i)Disability.  Executive may terminate his employment hereunder for Disability within the meaning of Section 6(a)(ii) above.
(ii)With Good Reason.  Executive’s employment hereunder may be terminated by Executive with Good Reason by written notice to the Employer providing at least ten (10) days notice prior to such termination.  For purposes of this Agreement, termination with “Good Reason” shall mean the occurrence of one of the following events within sixty (60) days prior to such termination:
(A)a material change or, if a Change-in-Control has occurred, any change in Executive’s duties, responsibilities, status or positions with the Employer caused by the Employer that does not represent a promotion from or maintaining of Executive’s duties, responsibilities, status or positions, except in connection with the termination of Executive’s employment for Cause, disability, retirement or death; 
(B)a failure by the Employer to pay compensation when due in accordance with the provisions of Section 3, which failure has not been cured within 10 business days after the notice of the failure (specifying the same) has been given by Executive to the Employer;
(C)a material breach or, if a Change-in-Control has occurred, any breach by the Employer of any provision of this Agreement, which breach has not been cured within 30 days after notice of noncompliance (specifying the nature of the noncompliance) has been given by Executive to the Employer;
(D)the Employer requiring Executive to be based in an office more than 50 miles outside of Manhattan;
(E)a reduction by the Employer in Executive’s Base Salary to less than the minimum Base Salary set forth in Section 3(a);
(F)a material reduction in Executive’s benefits under any benefit plan (other than an equity award program) compared to those currently received (other than in connection with and proportionate to the reduction of the benefits received by all or most senior executives or undertaken in order to maintain such plan in compliance with any federal, state or local law or regulation governing benefits plans, including, but not limited to, the Employee Retirement Income Security Act of 1974); or
(G)the failure by the Employer to obtain from any successor to the Employer an agreement to be bound by this Agreement pursuant to Section 15 hereof, which has not been cured within 30 days after the notice of the failure (specifying the same) has been given by Executive to the Employer.

(iii)Without Good Reason.  Executive shall have the right to terminate his employment hereunder without Good Reason, subject to the terms and conditions of this Agreement.  If Executive terminates his employment hereunder as of the end of the Original Term by giving a notice of non-renewal to the Employer pursuant to Section 1, such termination shall be deemed to be termination without Good Reason.
(c)Definitions.  The following terms shall be defined as set forth below.
(i)A “Change-in-Control” shall be deemed to have occurred if:
(A)any “person,” including a “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), but excluding the Employer, any entity controlling, controlled by or under common control with the Employer, any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Employer or any such entity, and Executive and any “group” (as such term is used in Section 13(d)(3) of the Exchange Act) of which Executive is a member), is or becomes the “beneficial owner” (as defined in Rule 13(d)(3) under the Exchange Act), directly or indirectly, of securities of the Employer representing 25% or more of either (1) the combined voting power of the Employer’s then outstanding securities or (2) the then outstanding common stock (or other similar equity interest, in the case of a company other than a corporation) of the Employer (in either such case other than as a result of an acquisition of securities directly from the Employer); or
(B)there shall occur any consolidation or merger of the Employer that would result in the voting securities of the Employer outstanding immediately prior to such merger or consolidation representing (either by remaining outstanding or by being converted into voting securities of the surviving entity) less than 50% of the total voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation or ceasing to have the power to elect at least a majority of the board of directors or other governing body of such surviving entity; or
(C)there shall occur (1) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Employer, other than a sale or disposition by the Employer of all or substantially all of the Employer’s assets to an entity at least 50% of the combined voting power of the voting securities of which are owned by “persons” (as defined above) in substantially the same proportion as their ownership of the Employer, as applicable, immediately prior to such sale, or (2) the approval by shareholders of the Employer of any plan or proposal for the liquidation or dissolution of the Employer; or
(D)the members of the Board (the “Directors”) at the beginning of any consecutive 24-calendar-month period (the “Incumbent Directors”) cease for any reason other than due to death to constitute at least a majority of the members of the Board; provided that any Director whose election, or nomination for election by the Employer’s shareholders was approved or ratified by a vote of at least a majority of the Incumbent Directors shall be deemed to be an Incumbent Director.
Notwithstanding the foregoing, a Change-in-Control shall not be deemed to have occurred upon the sale, lease, exchange or other transfer by the Employer or its direct and indirect subsidiaries of (1) all of their collateral management agreements (or their rights thereunder) with respect to the assets owned by the indirect subsidiaries of the Employer that have issued CDO bonds that are outstanding as of the date hereof (the “CDO Entities”), (2) all or substantially all of their interests in (or the underlying assets 

of) the CDO Entities, and/or (3) all or substantially all of the assets of the Employer and its direct and indirect subsidiaries relating to the CDO Entities or the Employer’s mortgage business generally.
(d)Notice of Termination; Termination Date.  Any termination of Executive’s employment by the Employer or by Executive (other than on account of death) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 11 of this Agreement.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and, as applicable, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.  Except in the case of a written notice of non-renewal pursuant to Section 1, Executive’s employment shall terminate as of the effective date set forth in the Notice of Termination, which date shall not be more than thirty (30) days after the date of the Notice of Termination.  The date on which Executive’s employment terminates is referred to herein as the “Termination Date.”
(e)Resignation Upon Termination.  In the event that Executive’s employment with the Employer is terminated, Executive (i) shall, within five business days of receipt of a written request for resignation, resign as a director of the Employer, and shall resign all other positions (including, without limitation, as officer, employee, director and member of any committee) with the Employer and its subsidiaries, and (ii) shall provide such written confirmation thereof as may be reasonably required by the Employer.
7.Compensation Upon Termination; Change-in-Control.
(a)Termination By the Employer Without Cause or By Executive With Good Reason.  If, during the Employment Period, (i) Executive is terminated by the Employer without Cause pursuant to Section 6(a)(iv) above, or (ii) Executive shall terminate his employment hereunder with Good Reason pursuant to Section (6)(b)(ii) above, then the Employment Period shall terminate as of the Termination Date, Executive shall be entitled to receive his earned and accrued but unpaid Base Salary on or before the time required by law (but in no event more than 30 days after the Termination Date), and Executive shall also be entitled to the following payments and benefits, subject to Executive’s execution of a mutual release agreement in form and substance satisfactory to the Employer, whereby, in general, each party releases the other from all claims such party may have against the other (other than (A) claims against the Employer relating to the Employer’s obligations under this Agreement, the Outperformance Plan award agreement, and certain other specified agreements arising in connection with or after Executive’s termination, including, without limitation, the Employer’s obligations hereunder to provide severance payments and benefits and accelerated vesting of equity awards and (B) claims against Executive relating to or arising out of any act of fraud, intentional misappropriation of funds, embezzlement or any other action with regard to the Employer or any of its affiliated companies that constitutes a felony under any federal or state statute committed or perpetrated by Executive during the course of Executive’s employment with the Employer or its affiliates, or any other claims that may not be released by the Employer under applicable law) (the “Release”), and the effectiveness and irrevocability thereof on or within 30 days after the Termination Date:
(i)Executive shall receive any unpaid installments of the Signing Bonus on the first regular payroll payment date occurring more than 30 days after the Termination Date.
(ii)Executive shall receive an aggregate amount equal to the sum of (A) Executive’s average annual Base Salary in effect during the twenty-four (24) months immediately prior to the Termination Date (the “Prior Salary”), and (B) the highest annual cash bonus paid to Executive during the three fiscal years prior to the Termination Date (including any portion of the annual cash bonus paid in the form of equity awards, as determined at the time of grant by the Compensation Committee of the Board, in its sole discretion, and reflected in the minutes or consents of the Compensation Committee of the Board relating to the approval of such equity awards, but excluding any annual or other equity awards made other than as payment of a cash 

bonus) or, if the Termination Date occurs prior to the date Executive’s annual performance bonus for 2013 has been determined, the amount of $50,000 (with the applicable amount being referred to herein as the “Prior Bonus”), which amount shall be payable in twelve (12) equal monthly installments beginning on the first regular payroll payment date occurring more than 30 days after the Termination Date.  
(iii)If the Termination Date is during 2013 or any later year, the Employer shall pay Executive a prorated annual performance bonus (the “Prorated Annual Bonus”) equal to (x) the Prior Bonus multiplied by (y) a fraction, the numerator of which is the number of days in the fiscal year in which Executive’s employment terminates through the Termination Date (and the number of days in the prior fiscal year (other than 2012), in the event that Executive’s annual cash bonus for such year had not been determined as of the Termination Date) and the denominator of which is 365, provided that the Prorated Annual Bonus shall be less the amount of any annual performance bonus, or advance thereof, previously paid for the period associated with the Prorated Annual Bonus.  Such payment shall be made on the first regular payroll payment date occurring more than 30 days after the Termination Date.
(iv)If Executive was participating in the Employer's group health plan immediately prior to the Termination Date, then the Employer shall pay to Executive a monthly cash payment for a period of twelve (12) months after the Termination Date equal to the amount of monthly employer contribution that the Employer would have made to provide health insurance to Executive if Executive had remained employed by the Employer.  Notwithstanding the foregoing, the Employer shall in no event be required to make the payments otherwise required by this Section 7(a)(iv) after such time as Executive becomes entitled to receive health insurance benefits from another employer or recipient of Executive’s services (such entitlement being determined without regard to any individual waivers or other similar arrangements).
(v)On the date that is 30 days after the Termination Date, (A) all unvested equity awards granted by the Employer (other than the Outperformance Plan award, the Restricted Stock Unit Award and any future equity award that is subject to performance-based vesting requirements other than continued employment) that would have vested had Executive remained as an employee of the Employer through the date that is twelve (12) months after the Termination Date will vest; provided that if the Termination Date occurs in connection with or within eighteen (18) months following a Change-in-Control, then all such equity awards shall fully vest, (B) in the event Executive is terminated prior to any Change-in-Control and the Restricted Stock Unit Award has not yet fully vested, a number of unvested restricted stock units subject to such award equal to one-fifth of the total number of restricted stock units initially subject to such award will vest, and (C) in the event Executive is terminated on or after a Change-in-Control, the unvested equity awards granted by the Employer pursuant to the Restricted Stock Unit Award will be treated in the same manner as other equity awards pursuant to clause (A) above after giving effect to the measurement of the performance-based hurdles under the Restricted Stock Unit Award as of the Change-in-Control.  Additionally, in the event that any unvested equity awards (or portion thereof) made by the Employer to Executive would, in the absence of this Agreement, terminate or be forfeited as a result of a termination of employment, then such equity awards shall only terminate or be forfeited upon the later of (A) the date upon which it is determined that such equity awards will not vest pursuant to this Section 7(a)(v) or (B) the date otherwise provided for in such equity awards; provided that the period during which a stock option or similar equity award may be exercised shall not be extended beyond the maximum period (assuming Executive continued as an employee of the Employer) provided for in such equity award and no additional vesting shall occur solely as a result of the operation of this sentence. The Outperformance Plan award and any future equity award that is subject to performance-based vesting requirements other than continued employment will be treated in accordance with their terms.

(vi)In the event such termination occurs in connection with or within eighteen (18) months after a Change-in-Control, then Executive will be entitled to the payments and benefits provided under the foregoing Section 7(a)(i)-(v), except that the aggregate amount payable to Executive pursuant to Section 7(a)(ii) shall be multiplied by one and one-half (1.5).
Other than as may be provided under Section 4 or as expressly provided in this Section 7(a), the Employer shall have no further obligations hereunder following such termination.
(b)Termination By the Employer For Cause or By Executive Without Good Reason.  If, during the Employment Period, (i) Executive is terminated by the Employer for Cause pursuant to Section 6(a)(iii) above, or (ii) Executive voluntarily terminates his employment hereunder without Good Reason pursuant to Section 6(b)(iii) above, then the Employment Period shall terminate as of the Termination Date and Executive shall be entitled to receive his earned and accrued but unpaid Base Salary on or before the time required by law (but in no event more than 30 days after the Termination Date), but, for avoidance of doubt, shall not be entitled to any annual cash bonus for the year in which the termination occurs, severance payment, continuation of benefits or acceleration of vesting or extension of exercise period of any equity awards, except as otherwise provided in the documentation applicable to such equity awards.  Other than as may be provided under Section 4 or as expressly provided in this Section 7(b), the Employer shall have no further obligations hereunder following such termination.
(c)Termination by Reason of Death.  If, during the Employment Period, Executive’s employment terminates due to his death, Executive’s estate (or a beneficiary designated by Executive in writing prior to his death) shall be entitled to the following payments and benefits:
(i)On or before the time required by law (but in no event more than 30 days after the Termination Date), Executive’s estate (or a beneficiary designated by Executive in writing prior to his death) shall receive from the Employer an amount equal to any earned and accrued but unpaid Base Salary.
(ii)On the first regular payroll payment date after the Termination Date occurs, Executive’s estate (or a beneficiary designated by Executive in writing prior to his death) shall receive from the Employer an amount equal to (A) any unpaid installments of the Signing Bonus and (B) if the Termination Date is during 2013 or any later year, the Prorated Annual Bonus, less the amount of any annual performance bonus, or advance thereof, previously paid for the period associated with the Prorated Annual Bonus.
(iii)On the Termination Date, (A) all unvested equity awards granted by the Employer (other than the Outperformance Plan award, the Restricted Stock Unit Award and any future equity award that is subject to performance-based vesting requirements other than continued employment) that would have vested had Executive remained as an employee of the Employer through the date that is twelve (12) months after the Termination Date will vest, (B) in the event the Termination Date occurs prior to any Change-in-Control and the Restricted Stock Unit Award has not yet fully vested, a number of unvested restricted stock units subject to such award equal to one-fifth of the total number of restricted stock units initially subject to such award will vest, and (C) in the event the Termination Date occurs following a Change-in-Control, the unvested equity awards granted by the Employer pursuant to the Restricted Stock Unit Award will be treated in the same manner as other equity awards pursuant to clause (A) above after giving effect to the measurement of the performance-based hurdles under the Restricted Stock Unit Award as of the Change-in-Control.  The Outperformance Plan award and any future equity award that is subject to performance-based vesting requirements other than continued employment will be treated in accordance with their terms.
Other than as may be provided under Section 4 or as expressly provided in this Section 7(c), the Employer shall have no further obligations hereunder following such termination.

(d)Termination by Reason of Disability.  In the event that, during the Employment Period, Executive’s employment terminates due to his disability as defined in Section 6(a)(ii) above, Executive shall be entitled to receive his earned and accrued but unpaid Base Salary on or before the time required by law (but in no event more than 30 days after the Termination Date) and Executive shall be entitled to the following payments and benefits, subject to Executive’s execution of the Release and the effectiveness and irrevocability thereof on or within 30 days after the Termination Date:
(i)Executive shall receive any unpaid installments of the Signing Bonus on the first regular payroll payment date occurring more than 30 days after the Termination Date.  
(ii)Executive shall receive an aggregate amount equal to one times the sum of the Prior Salary plus the Prior Bonus, which amount shall be payable in twelve (12) equal monthly installments beginning on the first regular payroll payment date occurring more than 30 days after the Termination Date.
(iii)If the Termination Date is during 2013 or any later year, the Employer shall pay Executive the Prorated Annual Bonus on the first regular payroll payment date occurring more than 30 days after the Termination Date, provided that the Prorated Annual Bonus shall be less the amount of any annual performance bonus, or advance thereof, previously paid for the period associated with the Prorated Annual Bonus. 
(iv)On the date that is 30 days after the Termination Date, (A) all unvested equity awards granted by the Employer (other than the Outperformance Plan award, the Restricted Stock Unit Award and any future equity award that is subject to performance-based vesting requirements other than continued employment) that would have vested had Executive remained as an employee of the Employer through the date that is twelve (12) months after the Termination Date will vest, (B) in the event the Termination Date occurs prior to any Change-in-Control and the Restricted Stock Unit Award has not yet fully vested, a number of unvested restricted stock units subject to such award equal to one-fifth of the total number of restricted stock units initially subject to such award will vest, and (C) in the event the Termination Date occurs following a Change-in-Control, the unvested equity awards granted by the Employer pursuant to the Restricted Stock Unit Award will be treated in the same manner as other equity awards pursuant to clause (A) above after giving effect to the measurement of the performance-based hurdles under the Restricted Stock Unit Award as of the Change-in-Control.  Additionally, in the event that any unvested equity awards (or portion thereof) made by the Employer to Executive would, in the absence of this Agreement, terminate or be forfeited as a result of a termination of employment, then such equity awards shall only terminate or be forfeited upon the later of (A) the date upon which it is determined that such equity awards will not vest pursuant to this Section 7(d)(iv) or (B) the date otherwise provided for in such equity awards; provided that the period during which a stock option or similar equity award may be exercised shall not be extended beyond the maximum period (assuming Executive continued as an employee of the Employer) provided for in such equity award and no additional vesting shall occur solely as a result of the operation of this sentence. The Outperformance Plan award and any future equity award that is subject to performance-based vesting requirements other than continued employment will be treated in accordance with their terms.
(v)If Executive was participating in the Employer's group health plan immediately prior to the Termination Date, then the Employer shall pay to Executive a monthly cash payment for a period of twelve (12) months after the Termination Date equal to the amount of monthly employer contribution that the Employer would have made to provide health insurance to Executive if Executive had remained employed by the Employer.  Notwithstanding the foregoing, the Employer shall in no event be required to make the payments otherwise required by this Section 7(d)(v) after such time as Executive becomes entitled to receive health insurance benefits from another employer or recipient of Executive’s services (such entitlement being determined without regard to any individual waivers or other similar arrangements).

Other than as may be provided under Section 4 or as expressly provided in this Section 7(d), the Employer shall have no further obligations hereunder following such termination.
8.Confidentiality; Prohibited Activities.  Executive and the Employer recognize that due to the nature of Executive’s employment and relationship with the Employer, Executive has access to and develops confidential business information, proprietary information, and trade secrets relating to the business and operations of the Employer.  Executive acknowledges that (i) such information is valuable to the business of the Employer, (ii) disclosure to, or use for the benefit of, any person or entity other than the Employer, would cause irreparable damage to the Employer, (iii) the principal business of the Employer as of the date hereof is the acquisition, development, asset management and servicing of net lease properties (the business of the Employer as of the date hereof and from time to time hereafter, is referred to as the “Business”), (iv) the Employer is one of the limited number of persons who have developed a business such as the Business, and (v) the Business is national in scope.  Executive further acknowledges that his duties for the Employer include the duty to develop and maintain client, customer, employee, and other business relationships on behalf of the Employer; and that access to and development of those close business relationships for the Employer render his services special, unique and extraordinary.  In recognition that the goodwill and business relationships described herein are valuable to the Employer, and that loss of or damage to those relationships would destroy or diminish the value of the Employer, and in consideration of the compensation (including severance) arrangements hereunder, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged by Executive, Executive agrees as follows:
(a)Confidentiality.  During the Employment Period and at all times thereafter, Executive shall maintain the confidentiality of all confidential or proprietary information of the Employer (“Confidential Information”), and, except in furtherance of the business of the Employer or as specifically required by law or by court order, he shall not directly or indirectly disclose any such information to any person or entity; nor shall he use Confidential Information for any purpose except for the benefit of the Employer.  For purposes of this Agreement, “Confidential Information” includes, without limitation:  client or customer lists, identities, contacts, business and financial information (excluding those of Executive prior to employment with the Employer); investment strategies; pricing information or policies, fees or commission arrangements of the Employer; marketing plans, projections, presentations or strategies of the Employer; financial and budget information of the Employer; new personnel acquisition plans; and all other business related information which has not been publicly disclosed by the Employer.  This restriction shall apply regardless of whether such Confidential Information is in written, graphic, recorded, photographic, data or any machine readable form or is orally conveyed to, or memorized by, Executive.  
(b)Prohibited Activities.  Because Executive’s services to the Employer are essential and because Executive has access to the Employer’s Confidential Information, Executive covenants and agrees that:
(i)During the period when Executive is employed by the Employer and for the twelve (12) month period thereafter (or, if Executive does not commence employment pursuant to this Agreement, during the twelve (12) month period commencing on the Effective Date), Executive will not, anywhere in the United States, without the prior written consent of the Employer, directly or indirectly (individually, or through or on behalf of another entity as owner, partner, agent, employee, consultant, or in any other capacity), engage, participate or assist, as an owner, partner, employee, consultant, director, officer, trustee or agent, in any element of the Business, provided, however, that (A) such twelve (12) month period shall only be six (6) months if Executive’s employment is terminated by the Employer or any successor thereto without Cause or by Executive for Good Reason, and (B) such twelve (12) month period shall only be six (6) months if Executive’s employment is terminated upon or after the expiration of the Renewal Term; with this subparagraph (i) being subject, however, to Section 8(c) below; and
(ii)Executive will not, without the prior written consent of the Employer, directly or indirectly (individually, or through or on behalf of another entity as owner, partner, agent, 

employee, consultant, or in any other capacity), during the period when Executive is employed by the Employer and (A) during the two (2) year period following the termination of Executive’s employment for any reason (including upon or after the expiration of the term of the Agreement) solicit, encourage, or engage in any activity to induce any employee of the Employer to terminate employment with the Employer, or to become employed by, or to enter into a business relationship with, any other person or entity, or (B) during the one (1) year period following such termination, engage in any activity intentionally to interfere with, disrupt or damage the relationship of the Employer with any existing borrower, tenant, client or, supplier, or disrupt or damage any other existing business relationship of the Employer.  For purposes of this subsection, the term “employee” means any individual who is an employee of or consultant to the Employer (or any affiliate of either) during the six (6) month period prior to Executive’s last day of employment.  
(c)Other Investments/Activities.  Notwithstanding anything contained herein to the contrary, Executive is not prohibited by this Section 8 from making investments (i) solely for investment purposes and without participating in the business in which the investments are made, in any entity, if (x) Executive’s aggregate investment in each such entity constitutes less than one percent of the equity ownership of such entity, (y) the investment in the entity is in securities traded on any national securities exchange, and (z) Executive is not a controlling person of, or a member of a group which controls, such entity; or (ii) if (A) except with the prior written consent of the Employer, Executive has less than a 10% interest in the investment in question, (B) except with the prior written consent of the Employer, Executive does not have the role of a general partner or managing member, or any similar role, (C) the investment is not an appropriate investment opportunity for the Employer, and (D) the investment activity is not directly competitive with the businesses of the Employer.
(d)Employer Property.  Executive acknowledges that all originals and copies of materials, records and documents generated by him or coming into his possession during his employment by the Employer are the sole property of the Employer (the “Employer Property”).  During his employment, and at all times thereafter, Executive shall not remove, or cause to be removed, from the premises of the Employer, copies of any record, file, memorandum, document, computer related information or equipment, or any other item relating to the business of the Employer, except in furtherance of his duties under this Agreement.  When Executive terminates his employment with the Employer, or upon request of the Employer at any time, Executive shall promptly deliver to the Employer all originals and copies of the Employer Property in his possession or control and shall not retain any originals or copies in any form, except that Executive may retain a copy of his Rolodex or other similar contact list.  The Employer Property excludes any personal property of Executive.
(e)No Disparagement.  For one (1) year following termination of Executive’s employment for any reason, Executive shall not intentionally disclose or cause to be disclosed any negative, adverse or derogatory comments or information about (i) the Employer and its affiliates or subsidiaries; (ii) any product or service provided by the Employer its affiliates or subsidiaries; or (iii) the Employer’s and its affiliates’ or subsidiaries’ prospects for the future.  For one (1) year following termination of Executive’s employment for any reason, the Employer shall not disclose or cause to be disclosed any negative, adverse or derogatory comments or information about Executive.  Nothing in this Section shall prohibit either the Employer or Executive from testifying truthfully in any legal or administrative proceeding.
(f)Remedies.  Executive declares that the foregoing limitations in Sections 8(a) through 8(e) above are reasonable and necessary for the adequate protection of the business and the goodwill of the Employer.  If any restriction contained in this Section 8 shall be deemed to be invalid, illegal or unenforceable by reason of the extent, duration or scope thereof, or otherwise, then the court making such determination shall have the right to reduce such extent, duration, scope, or other provisions hereof to make the restriction consistent with applicable law, and in its reduced form such restriction shall then be enforceable in the manner contemplated hereby.  In the event that Executive breaches any of the promises contained in this Section 8, Executive acknowledges that the Employer’s remedy at law for damages will be inadequate and that the Employer will be entitled to specific performance, a temporary restraining order or preliminary injunction to prevent Executive’s prospective or continuing breach and 

to maintain the status quo.  The existence of this right to injunctive relief, or other equitable relief, or the Employer’s exercise of any of these rights, shall not limit any other rights or remedies the Employer may have in law or in equity, including, without limitation, the right to arbitration contained in Section 9 hereof and the right to compensatory and monetary damages.  Executive hereby agrees to waive his right to a jury trial with respect to any action commenced to enforce the terms of this Agreement.  Executive shall have remedies comparable to those of the Employer as set forth above in this Section 8(f) if the Employer breaches Section 8(e).
(g)Transition.  Regardless of the reason for his departure from the Employer, Executive agrees that at the Employer’s sole costs and expense, for a period of not more than 30 days after termination of Executive, he shall take all steps reasonably requested by the Employer to effect a successful transition of client and customer relationships to the person or persons designated by the Employer, subject to Executive’s obligations to his new employer.  
(h)Cooperation with Respect to Litigation.  During the Employment Period and at all times thereafter, Executive agrees to give prompt written notice to the Employer of any claim relating to the Employer and to cooperate fully, in good faith and to the best of his ability with the Employer in connection with any and all pending, potential or future claims, investigations or actions which directly or indirectly relate to any action, event or activity about which Executive may have knowledge in connection with or as a result of his employment by the Employer hereunder.  Such cooperation will include all assistance that the Employer, its counsel or its representatives may reasonably request, including reviewing documents, meeting with counsel, providing factual information and material, and appearing or testifying as a witness; provided, however, that the Employer will reimburse Executive for all reasonable expenses, including travel, lodging and meals, incurred by him in fulfilling his obligations under this Section 8(h) and, except as may be required by law or by court order, should Executive then be employed by an entity other than the Employer, such cooperation will not materially interfere with Executive’s then current employment.
(i)Survival.  The provisions of this Section 8 and any other provisions relating to the enforcement thereof shall survive (i) the termination or expiration of this Agreement, and (ii) termination of Executive’s employment.  
9.Arbitration.  Any controversy or claim arising out of or relating to this Agreement or the breach of this Agreement (other than a controversy or claim arising under Section 8, to the extent necessary for the Employer (or its affiliates, where applicable) to avail itself of the rights and remedies referred to in Section 8(f)) that is not resolved by Executive and the Employer (or its affiliates, where applicable) shall be submitted to arbitration in New York, New York in accordance with New York law and the procedures of the American Arbitration Association.  The determination of the arbitrator(s) shall be conclusive and binding on the Employer (or its affiliates, where applicable) and Executive and judgment may be entered on the arbitrator(s)’ award in any court having jurisdiction.
10.Conflicting Agreements.  Executive hereby represents and warrants that the execution of this Agreement and the performance of his obligations hereunder will not breach or be in conflict with any other agreement to which he is a party or is bound, and that he is not now subject to any covenants against competition or similar covenants which would affect the performance of his obligations hereunder.
11.Notices.  All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand and or sent by prepaid telex, cable or other electronic devices or sent, postage prepaid, by registered or certified mail or telecopy or overnight courier service and shall be deemed given when so delivered by hand, telexed, cabled or telecopied, or if mailed, three days after mailing (one business day in the case of express mail or overnight courier service), as follows:

(a)if to Executive:
Nicholas Pell, at the address shown on the execution page hereof.
and:
Kasowitz, Benson, Torres & Friedman LLP
1633 Broadway
New York, New York 10019
Attn: Eric J. Wallach

(b)if to the Employer:
Gramercy Capital Corp.
420 Lexington Avenue
New York, New York 10170
Attn: Corporate Secretary
and:
Goodwin Procter LLP
Exchange Place
Boston, Massachusetts  02109
Attention:  Daniel Adams
or such other address as either party may from time to time specify by written notice to the other party hereto.
12.Amendments.  No amendment, modification or waiver in respect of this Agreement shall be effective unless it shall be in writing and signed by the party against whom such amendment, modification or waiver is sought.
13.Severability.  If any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any person or circumstances shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the remaining portion hereof) or the application of such provision to any other persons or circumstances.
14.Withholding.  The Employer shall be entitled to withhold from any payments or deemed payments any amount of tax withholding it determines to be required by law.
15.Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Employer may be merged or which may succeed to its assets or business, provided, however, that the obligations 

of Executive are personal and shall not be assigned by him.  This Agreement shall inure to the benefit of and be enforceable by Executive’s personal and legal representatives, executors, administrators, assigns, heirs, distributees, devisees and legatees.  
16.Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other party.
17.Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.
18.Choice of Venue.  Subject to the provisions of Section 9, Executive agrees to submit to the jurisdiction of the United States District Court for the Southern District of New York or the Supreme Court of the State of New York, New York County, for the purpose of any action to enforce any of the terms of this Agreement.
19.Limitation of Severance Payments
(a)Anything in this Agreement to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by the Employer to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent with Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and the applicable regulations thereunder (the “Severance Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, the following provisions shall apply:
(i)If the Severance Payments, reduced by the sum of (1) the Excise Tax and (2) the total of the Federal, state, and local income and employment taxes payable by the Executive on the amount of the Severance Payments which are in excess of the Threshold Amount, are greater than or equal to the Threshold Amount, the Executive shall be entitled to the full benefits payable under this Agreement.
(ii)If the Threshold Amount is less than (x) the Severance Payments, but greater than (y) the Severance Payments reduced by the sum of (1) the Excise Tax and (2) the total of the Federal, state, and local income and employment taxes on the amount of the Severance Payments which are in excess of the Threshold Amount, then the Severance Payments shall be reduced (but not below zero) to the extent necessary so that the sum of all Severance Payments shall not exceed the Threshold Amount.  In such event, the Severance Payments shall be reduced in the following order:  (1) cash payments not subject to Section 409A of the Code; (2) cash payments subject to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cash forms of benefits.  To the extent any payment is to be made over time (e.g., in installments, etc.), then the payments shall be reduced in reverse chronological order.
(b)For the purposes of this Section 19, “Threshold Amount” shall mean three times the Executive’s “base amount” within the meaning of Section 280G(b)(3) of the Code and the regulations promulgated thereunder less one dollar ($1.00); and “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, and any interest or penalties incurred by the Executive with respect to such excise tax.
(c)The determination as to which of the alternative provisions of Section 19(a) shall apply to Executive shall be made by a nationally recognized accounting firm selected by the Employer (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Employer and Executive within 15 business days of the Termination Date, if applicable, or at such earlier time as is reasonably requested by the Employer or Executive.  For purposes of determining which of the alternative provisions of Section 19(a) shall apply, the Executive shall be deemed to pay federal income taxes at 

the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of Executive’s residence on the Termination Date, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.  Any determination by the Accounting Firm shall be binding upon the Employer and Executive.
20.Section 409A.  
(a)Anything in this Agreement to the contrary notwithstanding, if at the time of Executive’s separation from service within the meaning of Section 409A of Code, the Employer determines that Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that Executive becomes entitled to under this Agreement would be considered deferred compensation subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after Executive’s separation from service, or (B) Executive’s death.  If any such delayed cash payment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but for the application of this provision, and the balance of the installments shall be payable in accordance with their original schedule.  Any such delayed cash payment shall earn interest at a simple annual rate equal to 5% per annum, from the date such payment would have been made if not for the operation of this Section until the payment is actually made.
(b)The parties intend that this Agreement will be administered in accordance with Section 409A of the Code.  To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of the Code.  The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.
(c)To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Executive’s termination of employment, then such payments or benefits shall be payable only upon the Executive’s “separation from service.”  The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h).
(d)The Employer makes no representation or warranty and shall have no liability to Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.
21.Other Existing Agreements. Other than (i) that certain Employment Agreement dated June 8, 2011 between Executive and Fixed Income Discount Advisory Company and (ii) that certain Restricted Stock Award Agreement dated June 8, 2011 between Executive and Fixed Income Discount Advisory Company, which Executive has disclosed to the Employer, Executive represents to the Employer 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.
22.Entire Agreement.  This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter.  The parties hereto shall not be liable or bound to any other party 

in any manner by any representations, warranties or covenants relating to such subject matter except as specifically set forth herein.
23.Paragraph Headings.  Section headings used in this Agreement are included for convenience of reference only and will not affect the meaning of any provision of this Agreement.
[Remainder of page intentionally left blank]

    

IN WITNESS WHEREOF, this Agreement is entered into as of the date and year first written above, and is being executed on this 12th day of June, 2012.
GRAMERCY CAPITAL CORP.

	
				
	 
	By:
	/s/  
	Jon W. Clark

	 
	 
	Name: Jon W. Clark

	 
	 
	Title:  Chief Financial Officer and Treasurer

EXECUTIVE:

	
				
	 
	By:
	/s/  
	Nicholas Pell

	 
	 
	Name: Nicholas Pell

[Signature Page to Employment and Noncompetition Agreement]

EXHIBIT A

RESTRICTED STOCK AND RESTRICTED STOCK UNIT AWARDS
Definitions
As used in this Exhibit A:
“Committee” means the Compensation Committee of the Employer’s Board of Directors.
“Common Stock” means the Employer’s Common Stock, par value $.001 per share, either currently existing or authorized hereafter.
“Common Stock Price” means, as of a particular date, the average of the Fair Market Values of one share of the Common Stock for the thirty (30) trading days ending on, and including, such date (or, if such date is not a trading day, the most recent trading day immediately preceding such date); provided that appropriate adjustment will be made if any of such trading days is the ex-dividend date for a dividend or other distribution on the Common Stock and provided, further, that if such date is the date upon which a Transactional Change-in-Control occurs, the Common Stock Price as of such date shall be equal to the fair market value in cash, as determined by the Committee, of the total consideration paid or payable in the transaction resulting in the Transactional Change-in-Control for one share of Common Stock.
“Fair Market Value” per share of Common Stock as of a particular date means (i) if shares of Common Stock are then listed on a national stock exchange, the closing sales price per share on the exchange for such date, as determined by the Committee, (ii) if shares of Common Stock are not then listed on a national stock exchange but are then traded on an over-the-counter market, the average of the closing bid and asked prices for the shares of Common Stock in such over-the-counter market for such date, as determined by the Committee, or (iii) if shares of Common Stock are not then listed on a national stock exchange or traded on an over-the-counter market, such value as the Committee in its discretion may in good faith determine; provided that, where the shares of Common Stock are so listed or traded, the Committee may make such discretionary determinations where the shares of Common Stock have not been traded for 10 trading days.  
“Measurement Stock Price” means, as of a particular date, the highest Common Stock Price where each of the days included in the 30-day period used to calculate such Common Stock Price is within the period of one hundred and twenty (120) days immediately preceding such date; provided, however, that if such date is the date upon which a Transactional Change-in-Control occurs, the Measurement Stock Price shall be equal to the Common Stock Price on such date.
“Transactional Change-in-Control” means (a) a Change-in-Control described in clause (a) of the definition thereof where the “person” or “group” makes a tender offer for Common Stock, or (b) a Change-in-Control described in clauses (b) or (c)(1) of the definition thereof.

Restricted Stock Awards (Time-Based Vesting)
		
	1. 
	Plan:  Gramercy Capital Corp. 2012 Inducement Equity Incentive Plan (the “Plan”)

		
	2. 
	Grant Date:  July 1, 2012

		
	3. 
	Total Number of Shares:  100,000

		
	4. 
	Dividends: Dividends shall be paid to Executive in cash at each dividend payment date.

		
	5. 
	Vesting:  Subject to acceleration as set forth in the Agreement, the shares shall vest, if and as employment continues, at the times (each, a “Vesting Date”) and in the amounts set forth below:

	
		
	Vesting Date
	Number of Shares

	June 30, 2013
	20,000

	June 30, 2014
	20,000

	June 30, 2015
	20,000

	June 30, 2016
	20,000

	June 30, 2017
	20,000

  
Restricted Stock Units (Performance-Based Vesting)
		
	6. 
	Plan:  The Plan

		
	7. 
	Grant Date:  July 1, 2012

		
	8. 
	Total Number of Units:  300,000

		
	9. 
	Dividends:  Dividend equivalents will accrue on the restricted stock units from the grant date and be paid, with respect to each dividend equivalent, if and when it vests.

		
	10. 
	Settlement:  Restricted stock units will be settled upon vesting.

		
	11. 
	Form of Payment of Units:  Shares of Common Stock

		
	12. 
	Vesting:  Subject to acceleration as set forth in the Agreement, the following is the vesting schedule and stock price targets (the “Stock Price Targets”) for the restricted stock units: 

	
			
	Vesting Date
	Number of Units
	Stock Price Target

	June 30, 2013
	60,000
	$3.00

	June 30, 2014
	60,000
	$3.50

	June 30, 2015
	60,000
	$4.00

	June 30, 2016
	60,000
	$4.50

	June 30, 2017
	60,000
	$5.00

The Stock Price Targets will be reduced by the per share amount of all dividends declared between July 1, 2012 and the Vesting Date.

As of each Vesting Date, the number of restricted stock units set forth beside such Vesting Date shall vest if (i) Executive remains continuously employed through such date and (ii) either of the following performance hurdles is achieved:  (A) the Employer achieves funds from operations (“FFO”) per diluted share for the most recent prior fiscal year at an amount to be agreed upon by Executive and the Employer within 30 days of the Grant Date, or (B) the Employer’s Measurement Stock Price equals or exceeds the Stock Price Target for such Vesting Date. If the performance hurdles are not met as of any Vesting Date, the units scheduled to vest on such date will vest as of any future Vesting Date if (i) Executive remains continuously employed through such date and (ii) either of the following performance hurdles is achieved: (A) the FFO per diluted share hurdles have been met on a cumulative basis from 2012 through the most recent fiscal year prior to such future vesting date or (B) the Employer’s Measurement Stock Price equals or exceeds the Stock Price Target for such Vesting Date.
In the event of a Change-in-Control, the performance hurdles shall be deemed to be achieved with respect to a number of restricted stock units equal to (i) the greater of (A) a number of restricted stock units equal to the Change-in-Control Amount listed below based on the attainment of the corresponding Measurement Stock Price as of the date of the Change-in-Control, and (B) if the FFO hurdles have been met on a cumulative basis through the most recent quarter prior to the consummation of the Change-in-Control, then a number of restricted stock units equal to 300,000 multiplied by a fraction, the numerator of which is the number of fiscal quarters that have elapsed from the Grant Date to and including the most recently completed fiscal quarter, and the denominator of which is 20, less (ii) the number of restricted stock units that have vested prior to the Change-in-Control.  All unvested restricted stock units with respect to which performance hurdles are not deemed to be achieved as of the Change-in-Control will be forfeited as of such date.  Following a Change-in-Control, performance hurdles will cease to apply to restricted stock units with respect to which performance hurdles are deemed to be achieved, and such restricted stock units will vest in equal installments on each of the remaining Vesting Dates subject to continued employment through each of such Vesting Dates.  Following a Change-in-Control, remaining restricted stock units are treated solely as time-based equity awards for the purpose of potential acceleration in connection with termination of Executive.
	
		
	Change-in-Control Amount
	Measurement Stock Price

	0
	$0.00 - $2.99

	60,000
	$3.00 - $3.49

	120,000
	$3.50 - $3.99

	180,000
	$4.00 - $4.49

	240,000
	$4.50 - $4.99

	300,000
	$5.00 +

    

EXHIBIT B

OUTPERFORMANCE PLAN AWARD

Executive shall be entitled to receive an award under the Outperformance Plan pursuant to which Executive may earn up to $4,000,000 of LTIP Units in GKK Capital LP.  The terms of the Outperformance Plan shall be substantially as set forth in the form of award agreement attached hereto as Exhibit C.

EXHIBIT C

OUTPERFORMANCE PLAN AWARD AGREEMENT

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