Exhibit
10.2


 


EXECUTION
COPY


 


SERVICES AGREEMENT


 


THIS SERVICES
AGREEMENT, dated as of October 27, 2008 (this “Agreement”), by and
among GKK Capital LP, a Delaware limited partnership (“GKKOP”), Gramercy
Capital Corp., a Maryland corporation (“GKK” and, together with GKKOP,
the “Company”), SL Green Operating Partnership, L.P., a Delaware limited
partnership (“SLGOP”), and SL Green Realty Corp., a Maryland corporation
(“SL Green” and, together with SLGOP, “SLG”).  With respect to the obligations of the Company
as set forth herein, such obligations shall be joint and several as between GKK
and GKKOP.


 


WHEREAS, GKK,
GKKOP and GKK Manager LLC, a Delaware limited liability company (the “Manager”),
are parties to that certain Second Amended and Restated Management Agreement,
dated as of the date hereof (the “Amended Management Agreement”);


 


WHEREAS, SLG
has agreed to provide certain consulting services to the Company and to make
Marc Holliday, Andrew Mathias and David Schonbraun (each, a “Designated
Individual” and collectively, the “Designated Individuals”)
available in connection with the provision of such consulting services for a
period of time after the date hereof; and


 


WHEREAS, SLG and the Company each desire to make certain arrangements
for the provision of certain services (as more fully described below) in
connection with the future management and operations of the Company for the
periods and on the terms and conditions set forth herein;


 


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


 


1.                                            Term.


 


(a)                                  With
respect to each Designated Individual, to
the extent such Designated Individual remains employed by SLG, SLG shall
use commercially reasonable efforts to provide the consulting services described
in Section 2 hereof (the “Consulting Services”) with respect to
such Designated Individual, from the date hereof through the earliest to occur of (x) September 30,
2009, (y) the termination of the Designated Individual’s employment with
SLG for any reason, or (z)  a termination of the Amended Management
Agreement (the “Consulting Term”); provided, that
the Company, in its sole discretion, may terminate the Consulting Services with
respect to any one or all of the Designated Individuals at any time during the
Consulting Term upon 30 days’ prior written notice to SLG.


 


(b)                                 With
respect to the provision of the Other Services (as defined below), SLG shall
use commercially reasonable efforts to provide the Other Services described in Section 3
hereof,
from the date hereof through the earliest to occur of (x) the date which
is ninety (90) days after the date hereof or (y) a termination of the
Amended Management Agreement (the “Other Services Term”); provided that the parties agree that if
any Other Service has not been completed within the initial Other Services
Term, the Other Services Term shall be extended for one thirty-day period with
respect to the incomplete Other Service(s) only (the “Additional Other
Services Term”); provided further,
that the Company may terminate this Agreement in respect of any Other Service
provided to it pursuant to this Agreement (including the termination of all
Other Services) by giving written notice to SLG not less than thirty (30) days
before the applicable termination is to take effect.  SLG shall cease to provide the Other Services
being terminated pursuant to such notice upon the expiration of such 30-day
period; provided, however, that such termination
shall not relieve or reduce the Company’s obligation to pay the Other Services
Fee. Notwithstanding the foregoing, either SLG or the Company may terminate
this Agreement as it relates to


 

















 


any particular
Other Service (or, if applicable, all Other Services) prior to the end of the
Other Services Term in one or more of the following circumstances:


 


(1)                                  if
both SL Green and the GKK agree in writing; or


 


(2)                                  by
the non-defaulting party, if a party shall commit a material breach of this
Agreement with respect to the particular Other Service (or all Other Services),
and such material breach remains unremedied after thirty (30) days following
the date on which the party alleging the breach first provided the other party
with written notice of the details of such alleged breach.


 


 2.                                         Consulting
Services.


 


(a)                                  During
the Consulting Term, SLG, through the Designated Individuals, shall provide the
Consulting Services and devote such
business time, attention and efforts to GKK as the board of directors of
GKK (the “Board”) shall reasonably request; provided,
however, that such Consulting Services
shall relate to the services previously provided by each of the Designated
Individuals as officers of GKK; and provided further,
that GKK acknowledges and agrees that the Designated Individuals’ primary
responsibilities and business attention shall be devoted to SLG.  The Company shall provide SLG and the
Designated Individuals with reasonable advance notice of the need for
Consulting Services.  SLG shall use
commercially reasonable efforts to ensure that the Consulting Services
performed by SLG pursuant to this Agreement, either directly or through the
Designated Individuals, is performed with a professional level of skill and
will conform in all material respects to the terms and conditions set forth
herein.


 


(b)                                 During
the Consulting Term, SLG shall provide the Consulting Services in the capacity
as an
independent contractor.  Nothing in this
Agreement shall be construed as constituting a joint venture or partnership
between the parties hereto or as giving one party to this Agreement control
over the managerial practices, financial administration or personnel practices,
policies or procedures of the other party. 
As between the Company and SLG, SLG shall have full and exclusive
liability for the payment of compensation, workers’ compensation and employer’s
liability insurance premiums with respect to the Designated Individuals and for
the payment of all taxes, contributions and other payments for unemployment
compensation now or hereinafter imposed upon employers by the government of the
United States of America or by any individual state or local authority with
respect to the Designated Individuals. 
The Company will not provide to SLG or the Designated Individuals, and,
as between the Company and SLG, SLG shall be solely responsible for, any
liability and other insurance or health insurance and benefits, Social Security
and other payroll taxes, unemployment taxes, employee benefits or coverage
under any employee benefit plans.  SLG
also acknowledges and agrees that SLG is solely responsible for any and all
compensation of the Designated Individuals.


 


 3.                                         Other
Services.


 


(a)                                  The
parties agree that, upon the terms and subject to the conditions set forth in
this Agreement and Schedule A hereto, SLG shall, or shall cause one or
more of its subsidiaries or Affiliates to, provide to the Company and/or its
subsidiaries and Affiliates those services described on Schedule A
(the “Other Services”).  Each
Other Service shall only be provided in the manner specified for such Other
Service on Schedule A.  The
scope of the Other Services required to be performed hereunder shall not,
unless the parties mutually agree in writing, materially exceed the scope of
the Other Services described in Schedule A.  For the purposes of this Agreement, “Affiliate”
means, with respect to any Person, any other Person that directly, or
indirectly through one or more of its intermediaries, controls or is controlled
by or is under common control with the Person specified.  The term “control” (including the


 


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terms “controlling,”
“controlled by” and “under common control with”) means possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.  The term “Person”
means any natural person, corporation, general partnership, limited
partnership, limited or unlimited liability company, proprietorship, joint
venture, other business organization, trust, union, association or governmental
authority.


 


(b)                                 SLG
shall provide, or shall cause to be provided, the Other Services in a manner
generally consistent in all material respects with the manner and level of care
and expertise with which such Other Services were provided to the Company by
SLG or one of its Affiliates prior to the date hereof.  SLG shall provide, or shall cause to be
provided, the Other Services using employees who are duly qualified or skilled
or otherwise have the requisite expertise in the areas required to provide the
Other Services generally in accordance with past practice.  For the avoidance of doubt, nothing herein
shall require SLG to hire any additional employees or maintain the employment
of any specific employee.


 


(c)                                  The
Company acknowledges that certain Other Services to be provided by SLG are
dependent upon data to be provided by the Company to SLG and the Company agrees
to promptly provide such data to the extent necessary and agrees that SLG shall
not be in breach of this Agreement for the failure to provide a Other Service
dependent upon data that has not been provided by the Company following a
request for such data from SLG.


 


(d)                                 Each
party shall reasonably cooperate and provide in good faith such mutual
assistance as is reasonably necessary in connection with the Other Services,
including for SLG to provide the Other Services in the manner required by this
Agreement (including Schedule A). 
This cooperation shall include, but not be limited to, (i) the
timely provision of all materials and information reasonably required by SLG in
connection with the performance of the Other Services and (ii) during
regular business hours (or outside of regular business hours in connection with
the provision of Other Services performed during such time) upon reasonable
prior notice, access to the premises, data, personnel reasonably designated by
the other party as involved in receiving or overseeing the Other Services, as
the case may be, records, resources and other information as reasonably requested
to facilitate such party’s performance of this Agreement.


 


(e)                                  In
the event of either party being rendered unable, wholly or in part, by force
majeure (as defined below) to carry out its obligations under this Section 3
(other than any obligation to make payment of any amount when due and payable
hereunder), it is agreed that on such party giving notice and reasonably full
particulars of such force majeure in writing to the other party within a
reasonable time after the occurrence of the cause relied on, then the
obligations of the party giving such notice, so far as they are affected by
such force majeure, shall be suspended during the continuance of any inability
so caused, but for no longer period, and such cause shall so far as reasonably
possible be remedied with all reasonable dispatch.  The term “force majeure,” as employed
herein, shall mean acts of God, fire, storm, flood, earthquake, acts of the
public enemy, war, terrorism, rebellion, insurrection, riot, invasion, strike
or lockout and any other similar circumstances.


 


(f)                                    SLG
shall be deemed to be an independent contractor to the Company in connection
with its provision of the Other Services. 
Nothing contained in this Agreement shall create or be deemed to create
the relationship of employer and employee, and neither party to this Agreement
shall, by reason hereof, be deemed to be a partner or a joint venturer of the
other party hereto in the conduct of its respective businesses and/or the
conduct of the activities contemplated by this Agreement.


 


4.                                            Compensation
and Other Benefits.  (a) In full
consideration for SLG’s obligations pursuant to Section 2 herein, during
the Consulting Term, the Company shall pay SLGOP a monthly fee


 


3

















 


of $200,000, payable
at the Company’s election in either (i) cash (in immediately available
funds) or (ii) if permissible under applicable law and New York Stock
Exchange requirements (or the requirements of any other exchange on which the
shares of GKK common stock are listed at the time of payment), shares of GKK
common stock having a value equal to $200,000 (based on the average of the
closing prices of the common stock of GKK for each of the ten (10) trading
days prior to the date of payment) (the “Consulting Fee”).  The Company’s obligation to pay the
Consulting Fee shall terminate upon the termination of this Agreement (in whole
and not in part), upon the termination of all of the Designated Individuals’
employment with SLG or upon the termination of the Consulting Term with respect
to all of the Designated Individuals as provided in Section 1(a) hereof.


 


(b)                                 In
the event the Company elects to pay the Consulting Fee in the form of the
common stock of GKK pursuant to Section 4(a)(ii) above, the Company
shall, prior to issuing such stock (i) enter into an ownership waiver with
respect to such issuance, which ownership waiver shall be substantially similar
to the ownership waivers previously granted by GKK to SLGOP; provided, however, that the Company’s
obligation pursuant to this Section 4(b)(i) shall be subject to SLGOP’s
ability to provide a representation letter regarding its ownership of GKK
common stock that is substantially similar to such letters previously provided
by SLGOP; and (ii) amend and restate the existing registration rights
agreement to include the shares of GKK common stock issued in connection with
payment of the Consulting Fee.


 


(c)                                  In
full consideration of the provision of the Other Services pursuant to Section 3
herein and notwithstanding the fact that similar services may be provided by
the Manager to the Company pursuant to the Amended Management Agreement, during
the Other Services Term and during the Additional Other Services Term, if any,
the Company shall pay SLGOP a monthly fee of $100,000 in cash (in immediately
available funds) (the “Other Services Fee”).


 


(d)                                 The Consulting Fee and the Other Services Fee
shall be paid on the first day of each calendar month; provided,
that the first payment shall be due on the date hereof and shall be pro-rated
for any partial calendar month.  Upon termination of this Agreement (or any
portion hereof), any amounts owed by the Company pursuant to this Agreement
shall be paid in full within fifteen (15) days of receipt of an invoice.


 


5.                                            Indemnification.  (a) GKK and GKKOP, jointly and
severally, agree to indemnify SL Green, SLGOP, the Designated Individuals and
their respective members, stockholders, partners, managers, directors,
officers, employees and agents with respect to all expenses, losses, damages (including
consequential and punitive damages), liabilities, demands, charges and claims
arising from acts or omissions of SL Green, SLGOP, or the Designated
Individuals performed in good faith in accordance with and pursuant to this
Agreement and not resulting from the willful misconduct, gross negligence or
fraud of the Designated Individuals (with respect to the Consulting Services)
or SLG (with respect to the Other Services). SL Green and SLGOP, jointly and
severally, agree to indemnify the Company and its directors and officers with
respect to all expenses, losses, actual damages, liabilities, demands, charges
and claims arising from acts or omissions of SL Green, SLGOP or the Designated
Individuals constituting willful misconduct, gross negligence or fraud of their
respective duties under this Agreement. The provisions of this Section 5
shall survive the expiration or earlier termination of this Agreement.


 


(b)                                 It is expressly agreed that during the
Consulting Term (i) the Company shall have no responsibility, liability or
obligation for, in respect of or otherwise in connection with the classification of SL Green or SLGOP
as an independent contractor, including with respect to any penalties, fines,
fees or taxes resulting from the under withholding of any employment-related
taxes, and (ii) SL Green and SLGOP hereby indemnify and holds the Company
harmless from any losses, claims, damages or liabilities, including reasonable
legal fees and expenses, that the Company may suffer or incur pursuant to


 


4

















 


or in connection with the classification of SL Green or SLGOP as an
independent contractor including any failure of SL Green or SLGOP to be
classified for any purpose as an independent contractor.


 


6.                                            Confidentiality. SLG shall keep confidential any nonpublic
information obtained in connection with the services rendered under this
Agreement and shall not disclose any such information (or use the same except
in furtherance of its duties under this Agreement), except:  (i) with the prior written consent of
Board; (ii) to legal counsel, accountants and other professional advisors;
(iii) to their employees, agents, counsel, accountants, financial
managers, consultants, appraisers, financing sources and others in the ordinary
course of the Company’s business; (iv) to governmental officials having
jurisdiction over the Company; (v) in connection with any governmental or
regulatory filings of GKK or disclosure or presentations to GKK’s investors; or
(vi) as required by law or any legal process to which SLG or the
Designated Individuals or any person to whom disclosure is permitted hereunder
is a party. The foregoing shall not apply to information which has previously
become publicly available through the actions of a person other than SLG or the
Designated Individual. This Section 6 shall survive the expiration or
earlier termination of this Agreement for a period of one year.


 


7.                                            Non-Waiver
of Rights.  The failure to enforce at
any time the provisions of this Agreement or to require at any time performance
by any other party of any of the provisions hereof shall in no way be construed
to be a waiver of such provisions or to affect either the validity of this
Agreement or any part hereof, or the right of any party to enforce each and
every provision in accordance with its terms.


 


8.                                            Notices.  Unless otherwise provided herein, all
notices, requests, demands, claims and other communications provided for under
the terms of this Agreement shall be in writing.  Any notice, request, demand, claim or other
communication hereunder shall be sent by (i) personal delivery (including
receipted courier service) or overnight delivery service, (ii) facsimile
during normal business hours, with confirmation of receipt, to the number
indicated, (iii) reputable commercial overnight delivery service courier
or (iv) registered or certified mail, return receipt requested, postage
prepaid and addressed to the intended recipient as set forth below:


 


If to GKK or
GKKOP:


 


Gramercy
Capital Corp.


420 Lexington
Avenue


New York,
NY  10170


Attention:  Robert R. Foley


Facsimile:  (212) 297-1090


 


With copies
(which shall not constitute notice) to:


 


Clifford
Chance US LLP


31 West 52nd
Street


New York,
NY  10019


Attention:  Larry P. Medvinsky and Karl A. Roessner


Facsimile:  (212) 878-8375


 


Hogan &
Hartson LLP


875 Third
Avenue


New York,
NY  10022


Attention:  David W. Bonser and David P. Slotkin


Facsimile:  (202) 637-5910


 


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If to the SL
Green or SLGOP:


 


SL Green
Realty Corp.


420 Lexington
Avenue


New York,
NY  10170


Attention:  Andrew S. Levine


Facsimile:  (212) 216-1785


 


With a copy
(which shall not constitute notice) to:


 


Fried, Frank,
Harris, Shriver & Jacobson LLP


One New York
Plaza


New York,
NY  10004


Attention:  Jeffrey Bagner and Steven Scheinfeld


Facsimile:  (212) 859-4000


 


9.                                            Binding
Effect/Assignment.  This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective heirs, executors, personal representatives, estates, successors
(including, without limitation, by way of merger) and assigns.  Notwithstanding the provisions of the
immediately preceding sentence, the parties hereto shall not assign all or any
portion of this Agreement without the prior written consent of the other
parties to this Agreement.  The Company may assign any of its rights or
delegate any of its obligations hereunder to any of its Affiliates; provided, however, in
the event of such an assignment by the Company to an Affiliate, the Company
shall remain liable for any payments or obligations under this Agreement.


 


10.                                      Entire
Agreement.  This Agreement sets forth
the entire understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements, written or oral, between
them as to such subject matter.


 


11.                                      Severability.  If
any provision of this Agreement is held to be illegal, invalid or unenforceable
under any present or future Law, and if the rights or obligations of any party
hereto under this Agreement will not be materially and adversely affected
thereby, (a) such provision will be fully severable, (b) this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.


 


12.                                      Governing
Law.  THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICT
OF LAWS.


 


13.                                      Modifications
and Waivers.  No provision of this
Agreement may be modified, altered or amended except by an instrument in
writing executed by the parties hereto. 
No waiver by any party hereto of any breach by any other party hereto of
any provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions at the time or at any prior
or subsequent time.


 


14.                                      Headings.  The headings contained herein are solely for
the purposes of reference, are not part of this Agreement, and shall not in any
way affect the meaning or interpretation of this Agreement.


 


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15.                                      Counterparts.  This Agreement may be signed in any number of
identical counterparts, each of which shall be an original (including
signatures delivered via facsimile or electronic mail) with the same effect as
if the signatures thereto and hereto were upon the same instrument.  The parties hereto may deliver this Agreement
and the other documents required to consummate the transaction contemplated
herein by facsimile or electronic mail and each party shall be permitted to
rely upon the signatures so transmitted to the same extent and effect as if
they were original signatures.  This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by each other party hereto.


 


16.                                      No
Third Party Beneficiaries.  This
Agreement is solely for the benefit of each party hereto and their respective
successors and permitted assigns and this Agreement shall not be deemed to
confer upon or give to any other third party any remedy, claim, reimbursement,
cause of action or other right.


 


17.                                      Interpretation.  The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.


 


18.                                      Waiver
of Jury Trial.  EACH OF THE PARTIES
HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY SCHEDULE HERETO, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENT (WHETHER VERBAL OR WRITTEN)
RELATING TO THE FOREGOING, AND WHETHER ARISING IN TORT, CONTRACT, STATUTE OR
OTHERWISE.  THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT.


 


[signature page follows]


 


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


 


 


	
   

  	
  GKK CAPITAL L.P.

  
	
   

  	
   

  
	
   

  	
  By: Gramercy Capital Corp., its general
  partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert R. Foley

  
	
   

  	
   

  	
  Name: 

  	
  Robert R. Foley

  
	
   

  	
   

  	
  Title: 

  	
  Chief Operating Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GRAMERCY CAPITAL CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert R. Foley

  
	
   

  	
   

  	
  Name: 

  	
  Robert R. Foley

  
	
   

  	
   

  	
  Title: 

  	
  Chief Operating Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SL GREEN REALTY CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrew S. Levine

  
	
   

  	
   

  	
  Name: 

  	
  Andrew S. Levine

  
	
   

  	
   

  	
  Title: 

  	
  Chief Legal Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SL GREEN OPERATING PARTNERSHIP, L.P.

  
	
   

  	
   

  
	
   

  	
  By: SL GREEN REALTY CORP., its general
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrew S. Levine

  
	
   

  	
   

  	
  Name: 

  	
  Andrew S. Levine

  
	
   

  	
   

  	
  Title: 

  	
  Chief Legal Officer

  



 


[Signature
Page to Service Agreement]