Exhibit 10.6


 


Execution
Version


 


SEVERANCE AGREEMENT


 


This SEVERANCE AGREEMENT (“Agreement”) is
made as of the 27th day of October, 2008, between Roger Cozzi (“Executive”) and
Gramercy Capital Corp., a Maryland corporation (“Gramercy”), to be effective as
of October 28, 2008 (the “Effective Date”).  This Agreement is being entered into in
connection with the Employment and Noncompetition Agreement, dated as of the
date hereof, by and between GKK Manager LLC (the “Manager”) and Executive (as
amended or superseded from time to time, the “Employment Agreement”).


 


1.                                       Term.  The term of this Agreement shall commence on
the Effective Date and shall continue through, and terminate on, December 31,
2011 (the “Original Term”) unless earlier terminated as provided in Section 6
below.  The Original Term shall
automatically be extended for successive one (1) year periods (each a “Renewal
Term”), unless either party gives the other party at least three (3) months
written notice of desire to negotiate terms and/or non-renewal prior to the
expiration of the then current term; provided that a notice of desire to
negotiate terms and/or non-renewal given by Executive or Gramercy under the
Employment Agreement shall be deemed to constitute a notice of desire to
negotiate terms and/or non-renewal under this Agreement. The period of
Executive’s employment hereunder consisting of the Original Term and all
Renewal Terms, if any, is herein referred to as the “Term.”


 


2.                                       Employment.  As of the
Effective Date, Gramercy has appointed Executive to serve as its Chief
Executive Officer and the Manager has entered into the Employment Agreement
with Executive whereby, among other things, the Manager has agreed to employ
Executive to serve as the Chief Executive Officer of Gramercy.  The Board of Directors of Gramercy (the “Board”)
shall nominate Executive for election to the Board at the next annual meeting
of stockholders of Gramercy at which a class of directors with a current
vacancy is to be elected, subject to Executive’s continued employment. In
consideration of Executive’s service as an officer of Gramercy, Gramercy shall
compensate Executive as provided in this Agreement.


 


3.                                       Equity Awards.  As determined by the Board or the
Compensation Committee of the Board (the “Compensation Committee”) and as
provided in this Agreement, Executive shall be eligible to participate in
Gramercy’s then current equity incentive plan (the “Plan”) during the
Term.  On the Effective Date, Executive
will be granted 260,000 shares of restricted common stock of Gramercy (“Common
Stock”), “incentive stock options,” as defined under Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”), to purchase 100,000
shares of Common Stock, non-qualified stock options to purchase 200,000 shares
of Common Stock and 500,000 LTIP Units in GKK Capital LP, a Delaware limited
partnership, in accordance with and subject to definitive documentation which
is consistent with the terms summarized on Exhibit A hereto and
which is otherwise consistent with Gramercy’s general practices for
documentation.


 


4.                                       Indemnification
and Liability Insurance.  Gramercy 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
Gramercy 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 Gramercy or in his capacity as
an officer or director, or former officer or director, of Gramercy or any
affiliate thereof for which he may serve in such capacity.  Gramercy also agrees to secure promptly and
maintain officers and directors liability insurance providing coverage for
Executive, with such terms and 


 





















 


limits
as are deemed appropriate by Gramercy, to the extent that coverage can be
obtained on reasonable efforts at a comparable rate; provided that Executive
shall be covered in such a manner as to provide Executive the same rights and
benefits as are accorded to the most favorably insured of Gramercy’s
officers.  The provisions of this Section 4
shall remain in effect after this Agreement is terminated irrespective of the
reasons for termination.


 


5.                                       Gramercy’s
Policies.  Executive
agrees to observe and comply with the reasonable written rules and
regulations of Gramercy regarding the performance of his duties and to carry
out and perform orders, directions and policies communicated to him from time
to time by Gramercy, so long as same are otherwise consistent with this
Agreement.


 


6.                                       Compensation
Upon Termination.


 


(a)                                  Termination By the Manager Without Cause
or By Executive With Good Reason.  If (i) Executive’s
employment with the Manager is terminated by the Manager without Cause
(pursuant to, and as defined in, the Employment Agreement) or (ii) Executive
shall terminate his employment with Manager with Good Reason (pursuant to, and
as defined in, the Employment Agreement), then Executive shall resign all
positions with Gramercy and its subsidiaries and affiliates.  In addition, subject to Executive’s execution
of a release agreement in form and substance satisfactory to Gramercy, whereby,
in general, Executive releases Gramercy from all claims Executive may have
against Gramercy (other than claims to provide the severance payments and
benefits provided for in this Agreement and certain other specified agreements)
(the “Release Agreement”), and the effectiveness thereof on or within 30 days
after the date on which Executive’s employment with the Manager terminates (the
“Termination Date,” and the date of such effectiveness being referred to herein
as the “Release Effectiveness Date”), Executive shall be credited with twelve
(12) months after termination under any provisions governing restricted stock,
options or other equity-based awards granted to Executive by Gramercy relating
to the vesting or initial exercisability thereof; provided that any unvested or
unexercisable restricted stock, options or other equity based awards that were
granted as payment of a cash bonus, as determined at the time of grant by
Gramercy, in its sole discretion, shall become fully vested and exercisable on
the date of Executive’s termination.  For
purposes of determining the effect of such twelve (12) months of credit with
respect to any performance-based vesting criteria, (A) if such termination
occurs less than six months after the beginning of a performance period, then
performance-based vesting shall be based on performance during the prior
performance period and (B) if such termination occurs more than six months
after the beginning of a performance period, then performance-based vesting shall
be based on performance during such interim period through the most recently
completed fiscal quarter.  Furthermore,
upon such termination, any then vested unexercised stock options granted to
Executive by Gramercy shall remain exercisable until the second January 1
to follow the Termination Date or, if earlier, the expiration of the initial
applicable term stated at the time of the grant.  Notwithstanding the foregoing, the provisions
of this Section 6(a) shall not apply to LTIP Units granted pursuant to
Section 3 hereof, which shall be governed by the terms of the LTIP Unit
Award Agreement entered into by Executive, Gramercy and GKK Capital LP as of
the date hereof.


 


Other
than as may be provided under Section 4 or as expressly provided in this Section 6(a),
Gramercy shall have no further obligations hereunder following such
termination.


 


(b)                                 Termination By
the Manager For Cause or By Executive Without Good Reason.  If (i) Executive’s employment with the
Manager is terminated by the Manager for Cause (pursuant to, and as defined in,
the Employment Agreement), or (ii) Executive voluntarily 


 


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terminates
his employment with the Manager hereunder without Good Reason (pursuant to, and
as defined in, the Employment Agreement), then Executive shall resign all
positions with Gramercy and its subsidiaries and affiliates and Executive shall
not be entitled to 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 6(b),
Gramercy shall have no further obligations hereunder following such
termination.


 


(c)                                  Termination by Reason of Death. 
If Executive’s employment with the Manager terminates due to his death,
Executive’s estate (or a beneficiary designated by Executive in writing prior
to his death) shall be credited with twelve (12) months after termination under
any provisions governing restricted stock, options or other equity-based awards
granted to Executive by Gramercy relating to the vesting or initial
exercisability thereof; provided that any unvested or unexercisable restricted
stock, options or other equity-based awards that were granted as payment of a
cash bonus, as determined at the time of grant by Gramercy, in its sole
discretion, shall become fully vested and exercisable on the date of Executive’s
death.  For purposes of determining
the effect of such twelve (12) months of credit with respect to any
performance-based vesting criteria, (A) if such termination occurs less
than six months after the beginning of a performance period, then
performance-based vesting shall be based on performance during the prior
performance period and (B) if such termination occurs more than six months
after the beginning of a performance period, then performance-based vesting
shall be based on performance during such interim period through the most
recently completed fiscal quarter.  Furthermore, upon such death, any then
vested unexercised stock options granted to Executive by Gramercy shall remain
vested and exercisable until the earlier of (A) the date on which the term
of such stock options otherwise would have expired, or (B) the second January 1
after the date of Executive’s termination due to his death.  Notwithstanding the
foregoing, the provisions of this Section 6(c) shall not apply to
LTIP Units granted pursuant to Section 3 hereof, which shall be governed by the terms of the LTIP
Unit Award Agreement entered into by Executive, Gramercy and GKK Capital LP as
of the date hereof.


 


Other than as may be provided under Section 4 or as expressly
provided in this Section 6(c), Gramercy shall have no further obligations
hereunder following such termination.


 


(d)                                 Termination by Reason of Disability. 
In the event that Executive’s employment with the Manager terminates due
to his disability (pursuant to, and as defined in, the Employment Agreement),
Executive shall be entitled to the payments and benefits, described in this Section 6(d),
subject to Executive’s execution of the Release Agreement and the effectiveness
thereof on or within 30 days after the date on which Executive’s employment
with the Manager terminates.  Executive
shall be entitled to the following payments and benefits, subject to Executive’s
execution of the Release Agreement and the effectiveness thereof on or within
30 days after the Termination Date. 
Executive shall be credited with twelve (12) months after termination under
any provisions governing restricted stock, options or other equity-based awards
granted to Executive by Gramercy relating to the vesting or initial
exercisability thereof; provided that any unvested or unexercisable restricted
stock, options or other equity-based awards that were granted as payment of a
cash bonus, as determined at the time of grant by Gramercy, in its sole
discretion, shall become fully vested and exercisable on the Release
Effectiveness Date.  For purposes of
determining the effect of such twelve (12) months of credit with respect to any
performance-based vesting criteria, (A) if such termination occurs less
than six months after the beginning of a performance period, then
performance-based vesting shall be based on performance during the prior
performance period and (B) if such termination occurs more than six months
after the 


 


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beginning of a
performance period, then performance-based vesting shall be based on
performance during such interim period through the most recently completed
fiscal quarter.  Any then vested
unexercised stock options granted to Executive by Gramercy shall remain vested
and exercisable until the earlier of (A) the date on which the term of
such stock options otherwise would have expired, or (B) the second January 1
after the Termination Date. 
Notwithstanding the foregoing, the provisions of this Section 6(d) shall
not apply to LTIP Units granted pursuant to Section 3 hereof, which shall
be governed by the terms of the LTIP Unit Award Agreement entered into by
Executive, Gramercy and GKK Capital LP as of the date hereof.


 


Other
than as may be provided under Section 4 or as expressly provided in this Section 6(d),
Gramercy shall have no further obligations hereunder following such
termination.


 


7.                                       Arbitration.  Any controversy or claim arising out of or
relating to this Agreement or the breach of this Agreement that is not resolved
by Executive and Gramercy (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 Gramercy (or its affiliates, where applicable) and
Executive and judgment may be entered on the arbitrator(s)’ award in any court
having jurisdiction.


 


8.                                       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:


 


Roger
Cozzi, at the address shown on the execution page hereof.


 


and:


 


Hoguet
Newman Regal & Kenney, LLP


10
East 40th Street


New
York, New York 10016


Attention:  Laura B. Hoguet


 


(b)                                 if to Gramercy:


 


Gramercy Capital Corp.


420 Lexington Avenue


New York, New York 10170


Attn: Corporate Secretary


 


with copies to:


 


Gramercy  Manager LLC


420 Lexington Avenue


New York, New York 10170


 


and:


 


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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.


 


9.                                       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.


 


10.                                 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.


 


11.                                 Withholding.  Gramercy shall be entitled to withhold from
any payments or deemed payments any amount of tax withholding it determines to
be required by law.


 


12.                                 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
Gramercy 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.


 


13.                                 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.


 


14.                                 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.


 


15.                                 Choice of Venue.  Subject to the provisions of Section 7,
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.


 


16.                                 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 the Code, the Manager determines
that Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of
the Code of either the Manager or Gramercy, 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 


 


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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)                                  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)                                 Gramercy 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.


 


17.                                 Entire
Agreement.  This
Agreement, together with the Employment 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.


 


18.                                 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.


 


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left blank]


 


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IN WITNESS WHEREOF, this Agreement is entered into
as of the date and year first written above, and is being executed on October 27,
2008.


 


 


	
   

  	
  GRAMERCY
  CAPITAL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Marc Holliday

  
	
   

  	
   

  	
  Name:
  

  	
  Marc
  Holliday

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/
  Roger Cozzi

  
	
   

  	
  Name:
  Roger Cozzi

  



 


[Signature Page to
Severance Agreement]