EXECUTION COPY

 

AMENDMENT TO

 

RETENTION AGREEMENT

 

This Amendment to Retention Agreement (this “Amendment”) is made and entered
into as of June 12, 2012, by and between Michael G. Kavourias (“Employee”) and
Gramercy Capital Corp., a Maryland corporation (“Gramercy”).

 

WHEREAS, Gramercy and Employee are parties to a Retention Agreement dated August
31, 2011, but effective as of July 28, 2011 (the “Agreement”);

 

WHEREAS, the parties hereto desire to amend the Agreement to, among other
things, add compensation terms and amend the term of the Agreement; and

 

WHEREAS, capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:

 

1.          Section 1 of the Agreement is hereby amended by deleting such
Section in its entirely and substituting the following therefor:

 

“1.          Term. Except to the extent that any provision of this Agreement
would, by its terms, survive the termination of this Agreement, the term of this
Agreement shall commence on June 12, 2012 and shall continue through, and
terminate on December 31, 2012 (the “Term”). The duration of the Term may be
shortened or extended by the mutual agreement of the parties.”

 

2.          Section 2 of the Agreement is hereby amended by deleting such
Section in its entirely and substituting the following therefor:

 

“2.          Compensation and Benefits. In consideration of Employee’s services
to Gramercy, Gramercy shall compensate Employee as provided in this Agreement,
and Gramercy shall have the obligations as set forth herein.

 

(a)          Base Salary. Gramercy shall pay Employee an annual salary at the
rate of $385,000 per annum during the Term (“Base Salary”). Base Salary shall be
payable in periodic installments in accordance with the regular payroll
practices of Gramercy.

 

(b)          Signing Bonus. In addition to Base Salary, Gramercy shall pay
Employee a signing bonus of $100,000, which Gramercy shall pay on December 31,
2012.

 

 

 

 

(c)          Guaranteed Bonus. Subject to the express condition that a
Non-Permitted Termination Event (as hereinafter defined) does not occur prior to
the date on which the same becomes due and payable, Gramercy will pay to
Employee after December 31, 2012 and on or before January 31, 2013 in accordance
with Gramercy’s standard year-end bonus payment procedures a 2012 performance
bonus in an amount determined by Gramercy in its sole discretion but in no event
less than $750,000 (the “Guaranteed Bonus”), less applicable deductions and
withholding. For the avoidance of doubt, Employee will not be permitted to
receive any full or partial year bonus upon the occurrence of a Non-Permitted
Termination Event.

 

(d)          CDO Bonus. If a CDO Sale (as hereinafter defined) is consummated
with the assistance of Employee on or before December 31, 2012, Gramercy will
pay to Employee an additional $100,000 on the same date that Gramercy pays
Employee the Guaranteed Bonus, less applicable deductions and withholding.

 

(e)          Vesting Acceleration. The Company agrees that the period of
forfeiture with respect to all of the restricted shares of common stock of
Gramercy granted pursuant the Restricted Stock Award Agreement dated August 31,
2011, but effective as of July 28, 2011, by Gramercy to Employee (the “RSA
Agreement”) under the Company’s Amended and Restated 2004 Equity Incentive Plan
(i.e., 100,000 shares) shall end, and all of such restricted shares shall be
vested, as of the date hereof notwithstanding anything to the contrary contained
in the RSA Agreement.

 

(f)          Definitions. For the purposes of this Agreement, the following
terms shall have the meaning specified in this Section 2(f):

 

“Cause” shall mean Employee’s: (A) engaging in conduct which is a felony; (B)
material breach of any of his obligations under Section 3 of this Agreement; (C)
willful misconduct of a material nature or gross negligence with regard to
Gramercy or any of its affiliates; (D) material fraud with regard to Gramercy or
any of its affiliates; (E) willful or material violation of any reasonable
written rule, regulation or policy of Gramercy applicable to senior executives
unless such a violation is cured within 30 days after written notice of such
violation by Gramercy; or (F) failure to competently perform his duties which
failure is not cured within 30 days after receiving notice from Gramercy
specifically identifying the manner in which Employee has failed to perform (it
being understood that, for this purpose, the manner and level of Employee’s
performance shall not be determined based on the financial performance of
Gramercy (including without limitation the performance of the stock of
Gramercy)).

 

“CDO Sale” shall mean the sale, lease, exchange or other transfer by Gramercy
and its direct and indirect subsidiaries of (i) all (or all but one) of the
collateral management agreements and/or special servicing agreements (or
Gramercy’s rights thereunder) with respect to the assets owned by the indirect
subsidiaries of Gramercy that have issued CDO bonds that are outstanding as of
the date hereof (the “CDO Entities”) or (ii) all or substantially all of their
interests in (or the underlying assets of) all (or all but one) of the CDO
Entities.

 

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“Non-Permitted Termination Event” shall occur if either (i) Employee terminates
his employment with Gramercy or (ii) Gramercy terminates Employee’s employment
for Cause.”

 

3.          Section 3(a) of the Agreement is hereby amended by deleting such
Section in its entirely and substituting the following therefor:

 

“3.          Non-Compete and Non-Solicitation Covenants; Remedies.

 

(a)          Non-Compete Covenants. Employee and Gramercy recognize that due to
the nature of Employee’s employment and relationship with Gramercy, Employee has
access to and develops confidential business information, proprietary
information, and trade secrets relating to the business and operations of
Gramercy. Employee acknowledges that (i) such information is valuable to the
business of Gramercy, (ii) disclosure to, or use for the benefit of, any person
or entity other than Gramercy, would cause irreparable damage to Gramercy, (iii)
the principal business of Gramercy as of the date hereof is (A) acquisition of
net lease investments and the acquisition, development, asset management and
servicing of commercial real estate property, and (B) the origination,
acquisition and disposition of real estate related loans and securities, and
financing such investments, including without limitation the origination of
first-mortgage and mezzanine debt or preferred equity financing for real estate
projects throughout the United States (collectively, the “Business”), (iv)
Gramercy is one of the limited number of persons who have developed such a
business, and (v) Gramercy’s Business is national in scope. Employee further
acknowledges that his duties for Gramercy include the duty to develop and
maintain client, customer, employee, and other business relationships on behalf
of Gramercy, and that access to and development of those close business
relationships for Gramercy render his services special, unique and
extraordinary. In recognition that the goodwill and business relationships
described herein are valuable to Gramercy, and that loss of or damage to those
relationships would destroy or diminish the value of Gramercy, and in
consideration of the compensation arrangements hereunder, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Employee, Employee covenants and agrees that during the Term,
Employee will not, without the prior written consent of Gramercy, 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. For the avoidance of
doubt, the provisions set forth in this Section 3(a) shall have no force and
effect after December 31, 2012.

 

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(b)          Non-Solicitation Covenants. Employee will not, without the prior
written consent of Gramercy, 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 Employee is employed by Gramercy
and during the two (2) year period following the termination of Employee’s
employment, for any reason (including upon or after the expiration of the Term)
solicit, encourage, or engage in any activity to induce any employee of Gramercy
to terminate employment with Gramercy, or to become employed by, or to enter
into a business relationship with, any other person or entity. For purposes of
this subsection, the term “employee” means any individual who is an employee of
or consultant to Gramercy (or any affiliate of either).

 

(c)          Remedies. Employee declares that the foregoing limitations in
Sections 3(a) and 3(b) above are reasonable and necessary for the adequate
protection of the business and goodwill of Gramercy. If any restriction
contained in this Section 3 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
Employee breaches any of the promises contained in this Section 3, Employee
acknowledges that Gramercy’s remedy at law for damages will be inadequate and
that Gramercy will be entitled to specific performance, a temporary restraining
order or preliminary injunction to prevent Employee’s prospective or continuing
breach and to maintain the status quo. The existence of this right to injunctive
relief, or other equitable relief, or Gramercy’s exercise of any of these
rights, shall not limit any other rights or remedies Gramercy may have in law or
in equity, including, without limitation, the right to arbitration contained in
Section 4 hereof and the right to compensatory and monetary damages. Employee
hereby agrees to waive his right to a jury trial without respect to any action
commenced to enforce the terms of this Agreement.

 

(d)          Survival. Except as expressly provided herein, the provisions of
this Section 3 shall survive the Term and the termination of Employee’s
employment and other provisions relating to the enforcement thereof.”

 

4.          Section 4 of the Agreement is hereby amended by deleting the
reference to Section 3(b) of the Agreement and replacing it with a reference to
Section 3(c) of the Agreement.

 

5.          All other provisions of the Agreement shall remain in full force and
effect according to their respective terms, and nothing contained herein shall
be deemed a waiver of any right or abrogation of any obligation otherwise
existing under the Agreement except to the extent specifically provided for
herein.

 

6.          This Amendment 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.

 

7.          This Amendment 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.

 

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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be executed as
of the date first set forth above.

 

  GRAMERCY CAPITAL CORP.          By: /s/ Jon W. Clark .     Name:  Jon W. Clark
    Title:  Chief Financial Officer and Treasurer           EMPLOYEE         /s/
Michael G. Kavourias .   Michael G. Kavourias

 

Signature Page to Amendment to Retention Agreement]