Exhibit 10.16


 


EMPLOYMENT AND NONCOMPETITION
AGREEMENT


 


This
EMPLOYMENT AND NONCOMPETITION AGREEMENT (“Agreement”) is made as of the 3rd day
of February, 2004 between Gregory F. Hughes (“Executive”) and SL Green Realty
Corp., a Maryland corporation with its principal place of business at 420
Lexington Avenue, New York, New York 10170 (the “Employer”).


 


1.             Term.  The
term of this Agreement shall commence on February 3, 2004 and shall
continue for a period of three years from the commencement date, unless earlier
terminated as provided in Section 6 below, shall terminate on the third
anniversary of the date of this Agreement (the “Original Term”);  provided,
however, that Sections 4 and 8 (and any enforcement or other procedural
provisions hereof affecting Sections 4 and 8) hereof shall survive the
termination of this Agreement as provided therein.  The Original Term may be extended for such period or periods, if
any, as may be mutually agreed to in writing by Executive and the Employer
(each a “Renewal Term”).  If either
party intends not to extend the Original Term, such party will give the other
party at least six months’ written notice of such intention.  If either party gives such notice with less
than six months remaining in the Original Term, the term of this Agreement
shall be extended until the date which is six months after the date on which
the notice is given.  The period of
Executive’s employment hereunder consisting of the Original Term and all
Renewal Terms (and any period of extension under the foregoing sentence), if
any, 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 the Employer as a
senior corporate executive and shall have the title of Chief Financial Officer
of the Employer.  Executive will report
to the Chief Executive Officer of the Employer.  Executive shall be principally responsible for the financial
systems and controls, public accounting and reporting and tax planning and
implementation for Employer and shall provide assistance to Employer’s Chief
Executive Officer in connection with such activities.  In no event shall Executive have any responsibility or duties with
respect to the operations and the capital markets activities of the Employer,
and, without limiting the generality of the foregoing, in no event shall any of
the Executive’s duties extend to or conflict with any of the duties of the
Chief Operating Officer of the Employer. 
Executive’s duties and authority shall be as further set forth in the
By-laws of the Employer and as otherwise established from time to time by the
Board of Directors of the Employer (the “Board”) and the Chief Executive
Officer of the Employer, but in all events such duties shall be commensurate
with his position as Chief Financial Officer of 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 Board; 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 a passive investor in other entities or business ventures; provided
that he performs no management or similar role (or, in the case of investments
other than real estate investments, 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 another party


 

















 


involved
in the investment has a material business relationship with the Employer,
Executive shall give prior written notice thereof to the Board; or (iii)
serving as a member of the Board of Directors of a for-profit corporation with
the approval of the Chief Executive Officer 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 25 miles of, Manhattan.


 


3.             Compensation and Benefits.  In consideration of Executive’s services
hereunder, the Employer shall compensate Executive as provided in this
Agreement.


 


(a)           Base Salary.  The Employer shall pay Executive an
aggregate minimum annual salary at the rate of $400,000 per annum during the
Employment Period (“Base Salary”).  Base
Salary shall be payable bi-weekly in accordance with the Employer’s normal
business practices and shall be reviewed by the Board or Compensation Committee
at least annually.


 


(b)           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 Board, in its sole discretion, may deem
appropriate to reward Executive for job performance; provided, however, that
Executive’s annual performance bonus shall not be less than $200,000.  In addition, Executive shall be eligible to
participate in any other bonus or incentive compensation plans in effect with
respect to senior executive officers of the Employer, as the Board, in its sole
discretion, may deem appropriate to reward Executive for job performance.  Executive shall be eligible to participate
in the SL Green Realty Corp. 2003 Long-Term Outperformance Compensation
Program, as amended December 2003 (the
“Outperformance Plan”), subject to the terms and conditions as set forth
in the Employer’s Outperformance Plan.  It is expressly understood that, with respect to
awards under the Outperformance Plan, the provisions of the Outperformance
Plan, as amended from time to time, and not the provisions of this Agreement,
shall govern in accordance with their terms, except with respect to the 12
months of vesting credit provided for under the third sentence of
Section 7(a)(iii).  If the term of
this Agreement is extended under the penultimate sentence of Section 1,
and Executive’s employment terminates as of the expiration of the term as so
extended, then (i) upon such termination of employment, Executive shall receive
(without duplication) an amount equal to (A) $200,000 multiplied by (B) a
fraction (x) the numerator of which is the number of days in the fiscal year of
termination during which Executive was employed and (y) the denominator of
which is 365, and (ii) no other bonus-related amounts shall be payable under
this Section 3(b) for the fiscal year of termination.


 


(c)           Stock Options.  As determined by the Board, in its sole
discretion, Executive shall be eligible to participate in the Employer’s then
current Stock Option and Incentive Plan (the “Plan”), which authorizes the
grant of stock options and stock awards of the Employer’s common stock (“Common
Stock”).  Subject to the provisions of
the Plan (including the procedures therein relating to grants), Executive will
be granted options thereunder for 100,000 shares of the Employer’s Common
Stock, effective as of the commencement of employment hereunder, 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 the
Employer’s general practices for documentation contemplated by the Plan.


 


(d)           Other Equity Awards.  Subject to the provisions of the Plan
(including the procedures therein relating to grants), Executive will be
granted 22,500 restricted shares of


 


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Common Stock, effective
as of the commencement of employment hereunder, in accordance with and subject
to definitive documentation which is consistent with the terms summarized on
Exhibit B hereto and which is otherwise consistent with the Employer’s general
practices for documentation contemplated by the Plan.  In addition, the Employer shall pay Executive an additional cash
amount, intended to serve generally as a tax gross-up, upon each date on which
the restricted shares vest and become taxable, equal to 40% of the value of the
shares included in Executive’s taxable income on such date.


 


(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.


 


(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 (other
than life insurance and other death benefits and other than long-term
disability coverage).


 


4.             Indemnification and Liability Insurance.  The Employer agrees to indemnify Executive
to the 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, either with regard to his entering into this Agreement with
the Employer or in his capacity as an officer or director, or former officer or
director, of the Employer or any affiliate thereof for which he may serve in
such capacity.  The Employer also agrees
to secure 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 rules
and regulations of the Employer as adopted by the Board from time to time
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 Board, so
long as same are otherwise consistent with this Agreement.


 


6.             Termination. 
Executive’s employment hereunder may be terminated under the following
circumstances:


 


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(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 his 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:  (i) Executive’s engaging in conduct which is a felony; (ii)
Executive’s engaging in conduct constituting a material breach of fiduciary
duty, gross negligence or willful and material misconduct, material fraud or
willful and material misrepresentation; (iii) Executive’s material breach of
any of his obligations under Section 8(a) through 8(e) of this Agreement;
or (iv) Executive’s failure to competently perform his duties  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
(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 with or without Cause (as defined in
Section 6(a)(iii) above), by a majority vote of all of the members of the
Board upon written notice to Executive, subject only to the severance provisions
specifically set forth in Section 7.


 


(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 effective immediately by written
notice to the Board.  For purposes of
this Agreement, with “Good Reason” shall mean: (i) a failure by the Employer to
pay compensation in accordance with the provisions of Section 3, which
failure has not been cured within 14 days after the notice of the failure
(specifying the same) has been given by Executive to the Employer; or (ii) a
material breach by the Employer of any other provision of this Agreement which
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.  On and after the occurrence of a
Change-in-Control (as defined in Section 6(c) below), “Good Reason” shall
also include, in addition to the foregoing:


 


(A)          a change in duties, responsibilities,
status or positions with the Employer that does not represent a promotion from
or maintaining of Executive’s duties, responsibilities, status or positions as
in effect immediately prior to the Change-in-Control, or any removal of
Executive from or any failure to reappoint


 


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or reelect Executive to
such positions, except in connection with the termination of Executive’s
employment for Cause, disability, retirement or death;


 


(B)           a reduction by the Employer in
Executive’s Base Salary or bonus compensation as in effect immediately prior to
the Change-in-Control;


 


(C)           the failure by the Employer to
continue in effect any of the benefit plans including, but not limited to
ongoing stock option and equity awards, in which Executive is participating at
the time of the Change-in-Control of the Employer (unless Executive is
permitted to participate in any substitute benefit plan with substantially the
same terms and to the same extent and with the same rights as Executive had
with respect to the benefit plan that is discontinued) other than as a result
of the normal expiration of any such benefit plan in accordance with its terms
as in effect at the time of the Change-in-Control, or the taking of any action,
or the failure to act, by the Employer which would adversely affect Executive’s
continued participation in any of such benefit plans on at least as favorable a
basis to Executive as was the case on the date of the Change-in-Control or
which would materially reduce Executive’s benefits in the future under any of
such benefit plans or deprive Executive of any material benefits enjoyed by
Executive at the time of the Change-in-Control; provided, however, that any
such action or inaction on the part of the Employer, including any
modification, cancellation or termination of any benefits plan, 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
Employment Retirement Income Security Act of 1974, shall not constitute Good
Reason for the purposes of this Agreement;


 


(D)          the Employer’s requiring Executive to
be based in an office located more than 25 miles from Manhattan, except for
required travel relating to the Employer’s business to an extent substantially
consistent with the business travel obligations which Executive undertook on
behalf of the Employer prior to the Change-in-Control; and


 


(E)           the failure by the Employer to obtain
from any successor to the Employer an agreement to be bound by this Agreement
pursuant to Section 16 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.


 


(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, together with all
“affiliates” and “associates” (as such terms are defined in Rule 12b-2 under
the Securities Exchange Act of 1934 (the “Exchange Act”)) of such Person, shall
become the “beneficial owner” (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Employer or SL
Green Operating Partnership, L.P.


 


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(the “OP”) representing
25% or more of either (1) the combined voting power of the Employer’s
and/or OP’s then outstanding securities having the right to vote in an election
of the Board (“Voting Securities”) or (2) the then outstanding shares of
all classes of stock of the Employer or OP (in either such case other than as a
result of the acquisition of securities directly from the Employer or OP); or


 


(B)           the members of the Board at the
beginning of any consecutive 24-calendar-month period commencing on or after
the date hereof (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 stockholders, was approved by a vote of at least a majority of the
members of the Board then still in office who were members of the Board at the
beginning of such 24-calendar-month period, shall be deemed to be an Incumbent
Director; or


 


(C)           the stockholders of the Employer
shall approve (1) any consolidation or merger of the Employer or any subsidiary
where the stockholders of the Employer, immediately prior to the consolidation
or merger, would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, shares representing in the aggregate at least 50%
of the voting shares of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any), (2)
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, if the shareholders of the
Employer and unitholders of the OP taken as a whole and considered as one class
immediately before such transaction own, immediately after consummation of such
transaction, equity securities and partnership units possessing less than 50%
percent of the surviving or acquiring company and partnership taken as a whole
or (3) any plan or proposal for the liquidation or dissolution of the Employer.


 


Notwithstanding
the foregoing, a “Change-in-Control” shall not be deemed to have occurred for
purposes of the foregoing clause (A) solely as the result of an acquisition of
securities by the Employer which, by reducing the number of shares of stock or
other Voting Securities outstanding, increases (x) the proportionate number of
shares of stock of the Employer beneficially owned by any Person to 25% or more
of the shares of stock then outstanding or (y) the proportionate voting power
represented by the Voting Securities beneficially owned by any Person to 25% or
more of the combined voting power of all then outstanding Voting Securities;
provided, however, that if any Person referred to in clause (x) or (y) of this
sentence shall thereafter become the beneficial owner of any additional stock
of the Employer or other Voting Securities (other than pursuant to a share
split, stock dividend, or similar transaction), then a “Change-in-Control”
shall be deemed to have occurred for purposes of the foregoing clause (A).


 


(ii)           “Person” shall have the meaning used
in Sections 13(d) and 14(d) of the Exchange Act; provided however, that the
term “Person” shall not include (A) Stephen L. Green, (B) Executive or (C) the
Employer, any of its subsidiaries, or any trustee, fiduciary or other person or
entity holding securities under any employee benefit plan of the Employer or
any of its subsidiaries.  In addition,
no Change-in-Control shall be


 


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deemed to have occurred
under clause (i)(A) above by virtue of a “group” (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) becoming a beneficial owner as described
in such clause, if any individual or entity described in clause (A), (B) or (C)
of the foregoing sentence is a member of such group.


 


(d)           Notice of Termination.  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 12 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 fact and circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated.


 


7.             Compensation Upon Termination.


 


(a)           Termination By Employer Without
Cause or By Executive With Good Reason. 
If (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 effective date set
forth in the written notice of such termination (the “Termination Date”) and
Executive shall be entitled to the following payment and benefits:


 


(i)            Executive shall receive any earned
and accrued but unpaid Base Salary on the Termination Date, and any earned and
accrued but unpaid incentive compensation and bonuses payable at such times as
would have applied without regard to such termination.


 


(ii)           The Employer shall continue to pay
Executive’s Base Salary (at the rate in effect on the date of his termination)
and annual performance bonus (based on the amount paid for the immediately
preceding year or, if the termination takes place prior to a bonus having been
previously so paid, the sum of $200,000) for the remaining term of the
Employment Period after the date of Executive’s termination, on the same periodic
payment dates as payment would have been made to Executive had the Employment
Period not been terminated for the remaining term of the Employment Period
after the date of Executive’s termination; provided, however, that if such
termination occurs upon or following a Change-in-Control, the Employer shall
continue to pay Executive’s Base Salary (at the rate in effect on the date of
his termination) and annual performance bonus (based on the highest amount paid
for the three preceding years or, if the termination takes place prior to a
bonus having been previously so paid, the sum of $200,000) for the greater of
18 months or the remaining term of the Employment Period after the date of
Executive’s termination, on such periodic payment dates.


 


(iii)          Executive
shall continue to receive all benefits described in Section 3(f) existing
on the date of termination for the remaining term of the Employment Period,
subject to the terms and conditions upon which such benefits may be offered to
continuing senior executives from time to time.  For purposes of the application of such benefits, Executive shall
be treated as if he had remained in the employ of the Employer with a Base
Salary at the rate in effect on the date of termination.  For purposes of vesting under the Employer’s
Outperformance Plan, without limiting any other rights that Executive may have
under the Employer’s Outperformance Plan, Executive shall be treated as if he
had remained in the employ of the Employer for 12 months after the date


 


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of
termination.  Notwithstanding the
foregoing, (A) nothing in this Section 7(a)(iii) shall restrict the
ability of the Employer to amend or terminate the plans and programs governing
the benefits described in Section 3(f) from time to time in its sole
discretion, and (B) the Employer shall in no event be required to provide any
benefits otherwise required by this Section 7(a)(iii) after such time as
Executive becomes entitled to receive benefits of the same type from another
employer or recipient of Executive’s services (such entitlement being
determined without regard to any individual waivers or other similar
arrangements).


 


(iv)          Any unvested shares of restricted
stock (i.e., shares then still subject to restrictions under the applicable
award agreement) granted to Executive by the Employer shall become vested
(i.e., free from such restrictions) and, as applicable, Executive shall be
entitled to receive the amount described in the last sentence of
Section 3(d) (for the avoidance of doubt, the foregoing provisions of this
sentence shall not refer to grants under the Employer’s Outperformance Plan,
which shall apply in accordance with its terms as in effect from time to time),
and any unexerciseable or unvested stock options granted to Executive by the
Employer shall become vested and exercisable on the date of Executive’s
termination.  Any unexercised stock
options granted to Executive by the Employer shall remain exercisable until the
second January 2 to follow the Termination Date or, if earlier, the
expiration of the initial applicable term stated at the time of the grant.


 


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 (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)(ii)
above, then the Employment Period shall terminate as of the effective date set
forth in the written notice of such termination (the “Termination Date”) and
Executive shall be entitled to receive his earned and accrued but unpaid Base
Salary at the rate then in effect until the Termination Date. In addition, in
such event, Executive shall be entitled (i) to receive any earned and
accrued but unpaid incentive compensation or bonuses, payable at such times as
would have applied without regard to such termination, except that, notwithstanding the foregoing, no amounts shall be payable
under this clause (i) in the case of a termination by the Employer for Cause
under clause (i) or (ii) of Section 6(a)(iii) (for the avoidance of doubt,
the foregoing provisions of this clause (i) shall not refer to grants under the
Employer’s Outperformance Plan, which shall apply in accordance with its terms
as in effect from time to time), (ii) to exercise any options which
have vested as of the termination of Executive’s employment and are exercisable
to the extent provided by and otherwise in accordance with the terms of the
applicable option grant agreement or plan, and (iii) to retain any
restricted shares of the Employer’s stock which have vested as of the
termination of Executive’s employment. 
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 Executive’s employment terminates due
to his death, the Employer shall pay Executive’s Base Salary plus any
applicable pro rata portion of the annual performance bonus described in
Section 3(b) above for a period of six months from the date of his death,
or such longer period as the Board may determine, to Executive’s estate or to a
beneficiary designated by Executive in writing prior to his death.  In the case of such a termination, (i)
Executive shall be credited with six months after termination under any


 


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provisions governing
restricted stock or options relating to the vesting or initial exercisability
thereof, (ii) if such six months of credit would fall within a vesting period,
a pro rata portion of the unvested shares of restricted stock granted to
Executive that otherwise would have become vested upon the conclusion of such
vesting period shall become vested on the date of Executive’s termination due
to his death, and a pro rata portion of the unexercisable stock options granted
to Executive that otherwise would have become exercisable upon the conclusion
of such vesting period shall become exercisable on the date of Executive’s
termination due to such death, and (iii) as applicable, Executive shall be
entitled to receive the cash amount described in the last sentence of
Section 3(d) with respect to the restricted shares referenced in such
Section 3(d) (for the avoidance of doubt, the foregoing clauses (i), (ii)
and (iii) shall not refer to grants under the Employer’s Outperformance Plan,
which shall apply in accordance with its terms as in effect from time to
time).  Furthermore, upon such death,
any vested unexercised stock options granted to Executive 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.  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
Executive’s employment terminates due to his disability as defined in
Section 6(a)(ii) above, Executive shall be entitled to be paid his Base
Salary plus any applicable pro rata portion of the annual performance bonus
described in Section 3(b) above for a period of six months from the date
of such termination, or for such longer period as such benefits are then
provided with respect to other senior executives of the Employer.  In the case of such a termination, (i)
Executive shall be credited with six months after termination under any
provisions governing restricted stock or options relating to the vesting or
initial exercisability thereof, (ii) if such six months of credit would fall
within a vesting period, a pro rata portion of the unvested shares of
restricted stock granted to Executive that otherwise would have become vested
upon the conclusion of such vesting period shall become vested on the date of
Executive’s termination due to his disability, and a pro rata portion of the
unvested or unexercisable stock options granted to Executive that otherwise
would have become vested or exercisable upon the conclusion of such vesting
period shall become vested and exercisable on the date of Executive’s
termination due to such disability, and (iii) as applicable, Executive shall be
entitled to receive the cash amount described in the last sentence of
Section 3(d) with respect to the restricted shares referenced in such
Section 3(d) (for the avoidance of doubt, the foregoing clauses (i), (ii)
and (iii) shall not refer to grants under the Employer’s Outperformance Plan,
which shall apply in accordance with its terms as in effect from time to
time).  Furthermore, upon such
disability, any vested unexercised stock options granted to Executive 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
disability.  Other than 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 his 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 businesses of the Employer are the acquisition, development,
management, leasing or financing of any office real estate property, including
without limitation the origination of first-mortgage and mezzanine debt or
preferred equity financing for


 


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real estate projects throughout the United States
(collectively, 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 good will 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 term of this Agreement (including
any renewals), 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 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 Employment Period, and
for the one-year period following the termination of Executive by either party
for any reason including the expiration of the term of this Agreement,
Executive will not, anywhere in the United
States, without the prior written consent of the Board which shall
include the unanimous consent of the Directors other than any other officer 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, subject, however, to Section 8(c) below; and


 


(ii)           during the Employment Period, and
during (x) the two-year period following the termination of Executive by either
party for any reason (including the expiration of the term of the Agreement) in
the case of clause (A) below, or (y) the one-year period following such
termination in the case of clause (B) below, Executive will not, without the
prior written consent of the Board which shall include the unanimous consent of
the Directors who are not officers 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), (A) 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


 


10

















 


other person or entity,
or (B) engage in any activity intentionally to interfere with, disrupt or
damage the Business of the Employer, or its relationships with any client,
supplier or other 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) during the six-month period prior to Executive’s last
day of employment.


 


(c)           Other Investments.  Notwithstanding anything contained herein to
the contrary, Executive is not prohibited by this Section 8 from making
investments, (i) expressly disclosed to the Employer in writing before the date
hereof; (ii) solely for investment purposes and without participating in the
business in which the investments are made, in any entity that engages,
directly or indirectly, in the acquisition, development, construction,
operation, management, financing or leasing of office real estate properties,
regardless of where they are located, 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 or the National Association of Securities Dealers,
Inc. Automated Quotation System, and (z) Executive is not a controlling person
of, or a member of a group which controls, such entity; or (iii) if (A) except with the prior written consent of
the Employer, he has less than a 25% interest in the investment in question,
(B) except with the prior written consent of the Employer, he 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 (“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 Employer Property in his possession or
control and shall not retain any originals or copies in any form.


 


(e)           No Disparagement.  For one 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 parent, affiliates or
subsidiaries, if any; (ii) any product or service provided by the Employer and
its parent, affiliates or subsidiaries, if any; or (iii) the Employer’s and its
parent’s, affiliates’ or subsidiaries’ prospects for the future.  For one 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(f) 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


 


11

















 


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 shall
survive termination of Executive’s employment any other provisions relating to
the enforcement thereof.


 


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.


 


12

















 


11.           No Duplication of Payments.  Executive shall not be entitled to receive
duplicate payments under any of the provisions of this Agreement.


 


12.           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:


 


Gregory F. Hughes, at the
address shown on the execution page hereof.


 


(b)           if to the Employer:


 


SL Green Realty
Corp.

420 Lexington Avenue

New York, New York 10170


Attn:  General Counsel


 


With a copy to:


 


Clifford
Chance US LLP


200
Park Avenue


New
York, New York  10166


Attention:  Robert E. King, Jr.


 


or such other address as
either party may from time to time specify by written notice to the other party
hereto.


 


13.           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.


 


14.           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.


 


15.           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.


 


16.           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.


 


13

















 


17.           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.


 


18.           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.


 


19.           Choice of Venue.  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.


 


20.           Parachutes.  Notwithstanding any other provision of this
Agreement, if all or any portion of the payments and benefits provided under
this Agreement (including without limitation any accelerated vesting), or any
other payments and benefits which Executive receives or is entitled to receive
from the Employer or an affiliate, or any combination of the foregoing, would
constitute an excess “parachute payment” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”)
(whether or not under an existing plan, arrangement or other agreement) (each
such parachute payment, a “Parachute Payment”), and would result in the
imposition on Executive of an excise tax under Section 4999 of the Code or
any successor thereto, then, in addition to any other benefits to which Executive
is entitled under this Agreement, Executive shall be paid by the Employer an
amount in cash equal to the sum of the excise taxes payable by Executive by
reason of receiving Parachute Payments plus the amount necessary to put
Executive in the same after-tax position (taking into account any and all
applicable federal, state and local excise, income or other taxes at the
highest possible applicable rates on such Parachute Payments (including without
limitation any payments under this Section 20)) as if no excise taxes had
been imposed with respect to Parachute Payments (the “Parachute
Gross-up”).  The amount of any payment
under this Section 20 shall be computed by a certified public accounting
firm of national reputation reasonably selected by the Employer.  Executive and the Employer will provide the
accounting firms with all information which any accounting firm reasonably
deems necessary in computing the Parachute Gross-up to be made available to
Executive.  In the event that the
Internal Revenue Service or a court, as applicable, finally and in a decision
that has become unappealable, determines that a greater or lesser amount of tax
is due, then the Employer shall within five business days thereafter shall pay
the additional amounts, or Executive within five business days after receiving
a refund shall pay over the amount refunded to the Employer, respectively;
provided that (i) Executive shall not initiate any proceeding or other contests
regarding these matters, other than at the direction of the Employer, and shall
provide notice to the Employer of any proceeding or other contest regarding
these matters initiated by the Internal Revenue Service, and (ii) the Employer
shall be entitled to direct and control all such proceeding and other contests,
if it commits to and does pay all costs (including without limitation legal and
other professional fees) associated therewith.


 


21.           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.


 


22.           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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23.           Board Approval.  Employer represents that the Board has
approved the economic terms of this Agreement.


 


IN WITNESS WHEREOF, this
Agreement is entered into as of the date and year first written above, and is being
executed on March 10, 2004.


 


 


	
   

  	
  SL GREEN REALTY CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Gregory F. Hughes

  
	
   

  
	
  [to be deleted from all
  public filings:]

  
	
   

  
	
   

  
	
   

  
					



 


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