Exhibit 10.46


ORIGINATION
AGREEMENT


THIS ORIGINATION
AGREEMENT (this “Agreement”), dated as of August 2, 2004, is made by and
between Gramercy Capital Corp., a Maryland corporation (the “Parent”), and SL
Green Operating Partnership, L.P., a Maryland limited partnership (“SL Green
OP” and, with its parent SL Green Realty Corp. and subsidiaries and other
entities controlled by either of them, “SL Green”).


RECITALS


WHEREAS, the Company is
engaging GKK Manager, LLC (the “Manager”), a subsidiary of SL Green, to provide
management services to the Parent and GKK Capital LP (the “Operating
Partnership” and collectively with the Parent, the “Company”) pursuant to that
certain Management Agreement dated as of the date hereof (the “Management
Agreement”) by and among the Company and the Manager; and


WHEREAS, the Company and
SL Green wish to address certain elements of their relationship, including
rights to acquire fixed income investments and SL Green’s ownership in the
Company.


AGREEMENT


NOW THEREFORE, in
consideration of the mutual agreements herein set forth and intending to be
legally bound, the parties hereto agree as follows:


1.     Limits
on Origination by SL Green.


(a)           (i)
           SL Green will not originate,
acquire or participate in Fixed Income Investments in the United States, except
as set forth herein.  “Fixed Income
Investments” means debt obligations or interests in debt obligations bearing a
fixed-rate of return and collateralized by real property or interests in real
property; and


(ii)           SL Green will not
acquire, originate or participate in Preferred Equity Investments which bear a
fixed rate of return in the United States, unless the Company has determined
not to pursue a particular Preferred Equity Investment opportunity.  “Preferred Equity Investments” are investments
in preferred stock, preferred shares, preferred interests in partnerships or
limited liability companies or other securities which are, by their terms,
given a preference in returning capital in liquidation, upon bankruptcy or
otherwise.


(b)   Notwithstanding paragraph
(a), SL Green may:


(i)            retain
any Fixed Income Investments and/or Preferred Equity Investments it owns or has
committed to own on the date hereof;


(ii)           originate
Fixed Income Investments or acquire interests in Fixed Income Investments and/or
Preferred Equity Investments in connection with the sale of any real estate or
real estate-related assets or Fixed Income Investments and/or Preferred Equity
Investments SL Green currently owns or owns at any future time in part or
whole, directly or indirectly;


 





















 


(iii)          originate
or acquire Fixed Income Investments and/or Preferred Equity Investments that
provide a rate of return tied to the cash flow, appreciation or both of the
underlying real property or interests in real property;


(iv)          modify
or refinance any portion of the investments in item (i), (ii) or (iii) above
including, but not limited to, changes in principal, rate of return, maturity
or redemption date, lien priority, return priority and/or borrower; and


(v)           originate,
acquire or participate in any investment which is considered Distressed Debt as
of the date on which such investment is acquired.  “Distressed Debt” is a Fixed Income
Investment where (A) there is a payment default, (B) there is an acceleration,
bankruptcy or foreclosure, (C) a default is highly likely because the
loan-to-value ratio is over 100% or (D) the debt service on such debt exceeds
the available cash flow from the underlying property on both a current and
projected basis.


2.             Limits on Company Origination.  The Company will not:


(i)            acquire
real property in metropolitan New York and Washington, D.C. (except by
foreclosure or similar conveyance) resulting from a Fixed Income Investment;


(ii)           originate
or acquire investments described in Section 1(b)(iii) above or any investment
which is considered Distressed Debt as of the date on which such investment is
acquired, in each case located in metropolitan New York or Washington, D.C.; or


(iii)          originate
or acquire participations in any investments described in Sections 1(b) (ii) or
(iv) above.


3.     Purchase
Rights/Rights of First Offer.


(a)   Purchase
Rights — Properties.


(i)            When
the Company acquires a direct or indirect ownership interest in real property
in metropolitan New York or Washington, D.C. by foreclosure or similar
conveyance or transfer in lieu thereof (any such interest being an “Acquired
Property”), prior to the Company selling such Acquired Property SL Green may
purchase the Acquired Property at a price equal to the Company’s unpaid
principal balance of the Fixed Income Investment on the date the Company
foreclosed or acquired the Acquired Property, plus interest at the last stated
contract (non-default) rate and, to the extent payable by the borrower under
the initial documentation evidencing the Fixed Income Investment, legal costs
incurred by the Company directly related to the conveyance of the Acquired
Property and the fee, if any, due upon the repayment or prepayment of the Fixed
Income Investment which is commonly referred to as an “exit fee” (but not including
default interest, late charges, prepayment penalties (however denominated),
extension fees, “kicker” interest or other premiums of any kind) through the
date of SL Green’s purchase (“Par Value”).


(ii)           If
the Company seeks to sell an Acquired Property within one year following the
acquisition of such Acquired Property and receives a bona fide third party
offer to acquire the Acquired Property for cash that the Company desires to
accept, SL Green will have a first right to purchase the Acquired Property at
the lower of the Par Value or the third party’s offer price prior to the
Company accepting such offer.  The
Company will give prompt written 


 


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notice to SL Green of its election to sell an Acquired Property, and of
receipt of a bona fide third party offer (together with a copy of any written
third party offer).


(iii)          If
an Acquired Property is not sold within one year of the date of its acquisition
by the Company, SL Green has the right to purchase the Acquired Property at its
appraised value.  The appraised value
will be determined as follows:  the
Company will select an appraiser and SL Green will select an appraiser, who will
each appraise the Acquired Property. 
These two appraisers jointly will select a third appraiser, who will
then choose one of the two appraisals as the final appraised value.


(iv)          If
SL Green elects to exercise a purchase right set forth in (i) — (iii) above, SL
Green shall send written notice of such election to the Company, setting forth
the calculation of the proposed purchase price and the desired closing date,
which shall be between 15 and 45 days after such notice.  If an appraiser is required, such notice
shall also set forth the appraiser selected by SL Green.  Unless the Company objects to the purchase
price calculation, the sale to SL Green of the Acquired Property shall be
consummated on the proposed closing date or as soon thereafter as
feasible.  Upon consummation, the Company
shall deliver all leases, files and other documents related to such
property.  All sales shall be on an
as-is, where-is basis with no representations or warranties made by the
Company, except that the Company shall represent and warrant to the effect that
(i) it has requisite power and authority to transfer the Acquired Property
to SL Green and (ii) the interest conveyed by the Company in the Acquired
Property is free and clear of liens (other than liens in place at the time the
Company acquired such Acquired Property).


In the case of a sale
under (iii), the Company will promptly appoint an appraiser.  The two selected appraisers shall complete
their appraisals within 20 days and submit their appraisals to the third
appraiser selected jointly by them.  The
third appraiser shall select one of the appraisals within ten (10) days
thereafter, and the appraised value shall be the price at which SL Green shall
have the right to purchase the Acquired Property.  All appraisers shall have a minimum of ten
(10) years’ experience in appraising property similar to, and in the area of,
the Acquired Property, and shall be MAI certified.


(b)   Right of First Offer — Distressed Debt.  If at any time the Company plans to sell any
interest it owns in Distressed Debt (the “Offered Asset”), the Company shall
first give SL Green written notice of the terms and conditions, including the
price and any other material terms and conditions on which the Company is
willing to sell the Offered Asset.  SL
Green shall have the right, exercisable by written notice to the Company within
ten (10) Business Days after the date the notice was delivered to the Company,
to agree to purchase the Offered Asset upon the terms and conditions contained
in the Notice.  If SL Green exercises
such right, then the Company shall sell the Offered Asset to SL Green on such
terms and conditions, and subject to customary representations and
warranties.  In the event that SL Green
does not exercise its right as aforesaid, the Company shall have the right to
sell the Offered Asset to any other person within six (6) months thereafter at
not less than 99% of the offered price and otherwise on substantially the same
terms and conditions as were offered to SL Green.  If the Offered Asset is not sold in such time
frame or otherwise as aforesaid, then any plan by the Company to sell such
Offered Asset shall again be subject to this Section 3(b).  In the event that SL Green shall have
exercised its right to purchase the Offered Asset and SL Green defaults in the
purchase of the Offered Asset on the agreed terms, SL Green shall be deemed to
have waived its rights under this Section with respect to the Offered Asset,
and the Company shall thereafter have the right to sell the Offered Asset to
any other person without restrictions.


 


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4.     Reimbursement of
Formation Expenses.  The Company
shall pay SL Green $1,800,000 in cash on the date of closing of the Company’s
initial public offering (“IPO”), to reimburse SL Green for organization and
offering expenses advanced or incurred by SL Green on behalf of the Company.


5.     Stock Purchase by SL
Green.  SL Green agrees to purchase,
and the Company agrees to sell, such number of shares of the Company’s common
stock, $.001 par value (the “Shares”) in the Company’s IPO so that SL Green purchases
25% of the shares sold in the IPO, including any shares sold pursuant to the
underwriters’ over-allotment option.  The
purchases and sales of Shares under this Section 5 shall close simultaneously
with the sales of Shares to the underwriters in the IPO.  The purchase price per Share shall be in cash
and at the same price as the price to the public in the IPO.  The Company shall be obligated to sell the
Shares to SL Green, and SL Green shall be obligated to purchase such Shares, if
and to the extent Shares are sold in the IPO. 
In connection with the sale of Shares, the Company hereby makes to SL
Green the representations and warranties contained in the Underwriting
Agreement dated the date hereof among the Company and the underwriters.


6.     SL Green’s Right to
Purchase Additional Shares/Units.  In
the event the Company shall desire to sell any Shares or cause common units of
limited partnership interest in the Partnership to be issued after the date
hereof, SL Green shall have the right (but not the obligation) to purchase up
to 25% of any such Shares or units.  The
Company shall give SL Green at least five days’ written notice of any proposed
sale, and SL Green shall confirm in writing its intention to purchase, and the
number of Shares or units SL Green will purchase, not more than three days
after such notice is received.  If SL
Green shall fail to confirm its intent to purchase as required in the previous
sentence, its right to purchase Shares or units in that sale or issuance, as
applicable (but not any future sale or issuance) shall be waived.  Any purchase by SL Green under this Section 6
shall be in cash at the same price per Share or unit, and with such
representations and other terms and conditions as is offered to other
purchasers, and SL Green’s purchase shall close simultaneously with sales to
other purchasers.


7.     REIT Status.  The Parent shall file an election to be a
real estate investment trust (a “REIT”) under Section 856 of the Internal
Revenue Code of 1986, as amended (the “Code”) with its federal income tax
return for the taxable year ending December 31, 2004 and shall use its best
efforts to operate as a REIT during such taxable year and during all subsequent
taxable years.


8.     Protective TRS Election.  The Parent shall make an annual protective
election jointly with SL Green Realty Corp. (“SLG REIT”) for the Parent to be a
“taxable REIT subsidiary,” as defined in Section 856(l)(1) of the Code, of SLG
REIT by executing an Internal Revenue Service Form 8875 (or any successor
form), which election shall state that it is to be effective only if the Parent
does not qualify as a REIT for any period covered by such election.  The Parent has delivered such executed form
to SL Green with respect to 2004 prior to June 28, 2004 and shall deliver such
executed form to SLG REIT with respect to subsequent years no later than
January 21 of each such year for execution and filing by SLG REIT.


9.     Legal Opinion.  Not
later than January 21 of each year, beginning in 2005, the Parent, at its cost,
shall cause its tax counsel, which shall be Clifford Chance US LLP or such
other law firm of national reputation as is reasonably acceptable to SLG REIT,
to issue an opinion to SLG REIT to the effect that, for the period commencing
January 1 and ending on December 31 in the preceding year, the Parent has
qualified as a REIT and the Parent’s method of operating will enable the Parent
to continue to qualify as a REIT.  Such
opinion shall be in form and substance reasonably satisfactory to SL Green, may
rely on customary assumptions and representations from the Parent as to its
organization, ownership and method of operating, and shall provide that counsel
to SLG REIT may rely on such opinion for purposes of such counsel’s opinion as
to the status of SLG REIT as a REIT.  The
Parent, at its cost, also shall cause 


 


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such tax counsel,
from time to time, to issue such an opinion to SLG REIT within ten (10)
business days of its receipt of a request therefor from SLG REIT.


10.   Term.  This Agreement shall remain in full force and
effect throughout the term of the Management Agreement as extended in
accordance therewith, and terminate (a) simultaneously with the expiration
or earlier termination of the Management Agreement or (b) on 30 days’
notice by SL Green to the Company in the event that neither SL Green nor any of
its affiliates shall be the managing member of the Manager.  In the event of a termination pursuant to
Section 10(b) hereof or termination of the Management Agreement pursuant to
Section 13(c) of the Management Agreement, then the terms and conditions of
Section 1 shall survive such termination for a period of one year with respect
only to any potential investment described in Section 1 as to which, at the
time of termination, Manager has commenced due diligence.  Further, the terms and conditions of Sections
7, 8, and 9 hereof shall survive the termination of this Agreement and the
Management Agreement for as long as SL Green continues to own at least 10% of
the common stock of the Parent.


11.   Notices.  All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and mailed,
faxed or delivered by hand or courier service:


(a)   If to the Company, to:


Gramercy Capital Corp.


420 Lexington Avenue


New York, New York 10170


Attention: Office of General Counsel


(b)   If to SL Green, to:


SL Green Operating
Partnership, L.P.


420 Lexington Avenue


New York, New York 10170


Attention: General Counsel


12.   Entire Agreement.  Except for the applicable provisions of the
Management Agreement, this Agreement shall constitute the entire agreement
among the parties relating to the subject matter hereof and shall supersede all
other prior or contemporary agreements, understandings, negotiations and discussions
whether oral or written.


13.   Amendment and
Modification.  Neither this Agreement
nor any of the terms or provisions hereof may be changed, supplemented, waived
or modified except by a written instrument executed by the parties hereto (or
in the case of a waiver, by the party granting such waiver).


14.   Counterparts.  This Agreement may be executed in two or more
counterparts, each of which may be signed by any of the parties hereto, each of
which shall be deemed an original and all of which together shall constitute
one and the same instrument.


15.   Governing Law.  This Agreement and all questions relating to
its validity, interpretation, performance and enforcement shall be governed by,
construed, interpreted and enforced in accordance with the laws of the State of
New York.


 


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16.   Invalid Provisions.  If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable, this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of hereof and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom.


 


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IN WITNESS WHEREOF, the
parties to hereto have duly executed this Agreement as of the day and year
first written above.


 




	
  GRAMERCY CAPITAL CORP.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  
	
  SL GREEN OPERATING PARTNERSHIP, L.P.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  






 


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