**Exhibit 10.5**

**COLLATERAL MANAGEMENT AGREEMENT**

This CollateralManagement Agreement, dated as of August 24, 2006 (this “Agreement”), isentered into by and between GRAMERCY REAL ESTATE CDO 2006-1, Ltd., an exemptedcompany incorporated with limited liability under the laws of the CaymanIslands (together with successors and assigns permitted hereunder, the “Issuer”), and GKKMANAGER LLC, a limited liability company organized under the laws of the Stateof Delaware (together with its successors and assigns, the “Collateral Manager”).  Capitalized terms used herein but nototherwise defined herein shall have the respective meanings ascribed thereto inthe indenture, dated as of August 24, 2006 (the “Indenture”), by and among the Issuer, GramercyReal Estate CDO 2006-1 LLC, as co-issuer (the “Co-Issuer”), Wells Fargo Bank, NationalAssociation, as trustee (in such capacity, the “Trustee”), paying agent, calculation agent,transfer agent, custodial securities intermediary, backup advancing agent andnotes registrar, and GKK Liquidity LLC, as advancing agent.

WHEREAS, the Issuerdesires to engage the Collateral Manager to provide the services describedherein and the Collateral Manager desires to provide such services;

NOW, THEREFORE, inconsideration of the mutual covenants and agreements set forth herein, theparties hereto hereby agree as follows:

# 1.             Management Services.  The Collateral Manager is hereby appointed asthe Issuer’s exclusive agent to provide the Issuer with certain services inrelation to the Assets specified herein and in the Indenture.  Accordingly, the Collateral Manager acceptssuch appointment and shall provide the Issuer with the following services (inaccordance with all applicable requirements of the Indenture, the CDO ServicingAgreement and this Agreement, including, without limitation, the CollateralManager Servicing Standard, as applicable):

## (a)           determining specific Collateral Debt Securities to bepurchased or Collateral Debt Securities to be sold and the timing of suchpurchases and sales, in each case, as permitted by the Indenture;

## (b)           determining specific Eligible Investments to be purchasedor sold and the timing of such purchases and sales, in each case, as permittedby the Indenture;

## (c)           effecting or directing the purchase of Collateral DebtSecurities and Eligible Investments, effecting or directing the sale ofCollateral Debt Securities and Eligible Investments, and directing theinvestment or reinvestment of proceeds therefrom, in each case as permitted bythe Indenture;

## (d)           negotiating with the issuers of Collateral Debt Securitiesas to proposed modifications or waivers of the documentation governing suchCollateral Debt Securities as permitted under the Indenture;

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## (e)           subject to the applicable provisions of the AssetServicing Agreement, taking action, or advising the Trustee with respect toactions to be taken, with respect to the Issuer’s exercise of any rights(including, without limitation, voting rights, tender rights and rights arisingin connection with the bankruptcy or insolvency of an issuer or the consensualor non-judicial restructuring of the debt or equity of an issuer) orremedies in connection with the Collateral Debt Securities and EligibleInvestments, as provided in the related Underlying Instruments, including inconnection with an Offer or a default, and participating in the committees orother groups formed by creditors of an issuer, or taking any other action withrespect to Collateral Debt Securities and Eligible Investments which theCollateral Manager determines in the reasonable exercise of the CollateralManager’s business judgment is in the best interests of the Noteholders inaccordance with, and as permitted by, the terms of the Indenture, any servicingagreement and this Agreement;

## (f)            consulting with the Rating Agencies at such times as maybe reasonably requested by the Rating Agencies and providing the RatingAgencies with any information reasonably requested in connection with theRating Agencies’ maintenance of their ratings of the Notes and their assigningcredit indicators to prospective Collateral Debt Securities, if applicable;

## (g)           determining whether specific Collateral Debt Securitiesare Credit Risk Securities, Defaulted Securities or Written Down Securities anddetermining whether such Collateral Debt Securities, and any other CollateralDebt Securities that are permitted or required to be sold pursuant to theIndenture, should be sold, and directing the Trustee to effect a disposition ofany such Collateral Debt Securities, subject to, and in accordance with theterms and conditions of the Indenture;

## (h)           (i) monitoring the Assets on an ongoing basis and(ii) providing or causing to be provided to the Issuer and/or the otherapplicable parties specified in the Indenture all reports, schedules andcertificates which relate to the Assets and which the Issuer is required toprepare and deliver under the Indenture, which are not prepared and deliveredby the Trustee, on behalf of the Issuer, under the Indenture, in the form andcontaining all information required thereby (including, in the case of theMonthly Reports and the Notes Valuation Reports, providing the information tothe Trustee as specified in Sections 10.9(c) and 10.9(e) of the Indenture insufficient time for the Trustee to prepare the Monthly Report and the NotesValuation Report) and, if applicable, in sufficient time for the Issuer toreview such required reports and schedules and to deliver them to the partiesentitled thereto under the Indenture;

## (i)            managing the Issuer’s Collateral Debt Securities andEligible Investments in accordance with the Indenture, including thelimitations relating to the Eligibility Criteria, the Coverage Tests, theCollateral Quality Tests, the Reinvestment Criteria and the other requirementsof the Indenture and this Agreement, and, subject to the Asset ServicingAgreement, taking any action that the Collateral Manager deems appropriate andconsistent with the Indenture, the Collateral Manager Servicing Standard andthe standard of care set forth herein with respect to any portion of the Assetsthat does not constitute Collateral Debt Securities or Eligible Investments asrequired or permitted by the Indenture;

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## (j)            monitoring all Hedge Agreements and determining whetherand when the Issuer should exercise any rights available under any HedgeAgreement, and causing the Issuer to enter into additional or replacement HedgeAgreements or terminating (in part or in whole) existing Hedge Agreements, ineach case, in accordance with the Indenture and the terms of such HedgeAgreements;

## (k)           providing notification promptly, in writing, to theTrustee and the Issuer upon receiving actual notice that a Collateral DebtSecurity is subject to an Offer or has become a Defaulted Security, a WrittenDown Security or a Credit Risk Security;

## (l)            providing notification promptly, in writing, to theTrustee and the Issuer upon becoming actually aware of a Default or an Event ofDefault under the Indenture;

## (m)          determining (subject to the Indenture) whether, in light ofthe composition of Collateral Debt Securities, general market conditions andother factors considered pertinent by the Collateral Manager, investments inadditional Collateral Debt Securities would, at any time during theReinvestment Period, either be impractical or not beneficial to the Holders ofthe Preferred Shares;

## (n)           if the Collateral Manager elects to amortize the Notespursuant to and in accordance with Section 9.7 of the Indenture, providingnotification, in writing, to the Trustee, the Issuer, the Co-Issuer and eachHedge Counterparty of (A) such election and (B) the amount of such proceedsthat will be used to so amortize the Notes;

## (o)           taking reasonable action on behalf of the Issuer to effectany Optional Redemption, any Tax Redemption, any Auction Call Redemption or anyClean-up Call in accordance with the Indenture;

## (p)           on the Stated Maturity of the Notes, or in connection withany Optional Redemption, any Tax Redemption, any Auction Call Redemption or anyClean-up Call, liquidating any remaining Hedge Agreements in accordance withthe terms thereof and the Indenture;

## (q)           monitoring the ratings of the Collateral Debt Securitiesand the Issuer’s compliance with the covenants by the Issuer in the Indenture;

## (r)            assisting the Issuer in (i) taking any action inorder to effect and/or maintain the listing of any of the Notes on the IrishStock Exchange or (ii) obtaining any waiver from the Irish Stock Exchange,or (iii) providing other information related to the Issuer that isreasonably available to the Collateral Manager, in each case, when specificallyrequested by the Irish Stock Exchange;

## (s)           complying with such other duties and responsibilities asmay be specifically required of the Collateral Manager by the Indenture or thisAgreement;

## (t)            complying in all material respects with the InvestmentAdvisers Act of 1940, as amended (the “Advisers Act”), with respect to the Issuer;

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## (u)           in order to render the Securities eligible for resalepursuant to Rule 144A under the Securities Act, while any of such Securitiesremain outstanding, making available, upon request, to any Holder orprospective purchaser of such Securities, additional information regarding theIssuer and the Assets if such information is reasonably available to theCollateral Manager and constitutes Rule 144A Information required to befurnished by the Issuer pursuant to Section 7.13 of the Indenture, unless theIssuer furnishes information to the United States Securities and ExchangeCommission (the “Commission”)pursuant to Section 13 or Section 15(d) of the Exchange Act;

## (v)           upon reasonable request, assisting the Trustee or theIssuer with respect to such actions to be taken after the Closing Date, as isnecessary to maintain the clearing and transfer of the Notes through DTC andEuroclear; and

## (w)          in accordance with the Collateral Manager ServicingStandard, enforcing the rights of the Issuer as holder of the Collateral DebtSecurities, including, without limitation, taking such action as is necessaryto enforce the Issuer’s rights with respect to remedies related to breaches ofrepresentations, warranties or covenants in the Underlying Instruments for thebenefit of the Issuer.

In furtherance of theforegoing, the Issuer hereby appoints the Collateral Manager the Issuer’s trueand lawful agent and attorney-in-fact, with full power of substitution and fullauthority in the Issuer’s name, place and stead and without any necessaryfurther approval of the Issuer, in connection with the performance of theCollateral Manager’s duties provided for in this Agreement, including thefollowing powers:  (i) in accordancewith the terms and conditions of the Indenture and this Agreement, to buy,sell, exchange, convert and otherwise trade Collateral Debt Securities andEligible Investments, and (ii) to execute (under hand, under seal or as adeed) and deliver all necessary and appropriate documents and instruments onbehalf of the Issuer to the extent necessary or appropriate to perform theservices referred to in (a) through (w) above of this Section 1 and underthe Indenture.  The foregoing power ofattorney is a continuing power, coupled with an interest, and shall remain infull force and effect until revoked by the Issuer in writing by virtue of thetermination of this Agreement pursuant to Section 12 hereof or anassignment of this Agreement pursuant to Section 17 hereof; providedthat any such revocation shall not affect any transaction initiated prior tosuch revocation.  Nevertheless, if sorequested by the Collateral Manager, a purchaser of a Collateral Debt Securityor Eligible Investment or a Hedge Counterparty, the Issuer shall ratify andconfirm any such sale or other disposition by executing and delivering to theCollateral Manager, such purchaser or such Hedge Counterparty all proper billsof sale, assignments, releases and other instruments as may be designated inany such request.

The Collateral Managerdoes not hereby guarantee that sufficient funds will be available on eachPayment Date to satisfy any such payment obligations.  The Collateral Manager shall perform itsobligations hereunder and under the Indenture with reasonable care and in goodfaith, using a degree of skill and attention no less than that which it(a) exercises with respect to comparable assets that it manages for itselfand (b) exercises with respect to comparable assets that it manages forothers, and in a manner consistent with the practices and procedures then ineffect followed by reasonable and prudent institutional managers of nationalstanding relating to assets of the nature and character of the Assets, exceptas expressly provided

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in this Agreement or in the Indenture.  In addition, the Collateral Manager shall usecommercially reasonable efforts to ensure that directions to the Trustee withrespect to the purchase of Eligible Investments are made by the CollateralManager only if, in the Collateral Manager’s commercially reasonable judgmentat the time of such direction, payment at settlement in respect of any suchpurchase could be made without any breach or violation of, or default under,the terms of the Indenture or this Agreement. The Collateral Manager shall comply with and perform all the duties andfunctions that have been specifically delegated to the Collateral Manager underthe Indenture.  The Collateral Managershall be bound to follow any amendment, supplement or modification to theIndenture of which it has received written notice at least ten (10) BusinessDays prior to the execution and delivery thereof by the parties thereto; provided,however, that, with respect to any amendment, supplement, modificationor waiver to the Indenture which may affect the Collateral Manager, theCollateral Manager shall not be bound thereby (and the Issuer agrees that itwill not permit any such amendment, supplement, modification or waiver tobecome effective) unless the Collateral Manager has been given prior writtennotice thereof and gives its written consent thereto (which consent shall notbe unreasonably withheld) to the Trustee and the Issuer prior to the effectivenessthereof.

The Collateral Managershall take all actions reasonably requested by the Trustee to facilitate theperfection of the Trustee’s security interest in the Assets pursuant to theIndenture.

Notwithstanding anythingcontained herein to the contrary, (i) any cash advance the Collateral Managermakes with respect to cure payments and actions taken in connection therewithand (ii) any voting, consent, consultation or control rights exercised by theCollateral Manager with respect to a Collateral Debt Security that is a B Note,Participation or junior interest in a Mezzanine Loan, in each case, shall besubject to the applicable provisions of the Asset Servicing Agreement.

# 2.             Delegation of Duties.  The Collateral Manager may delegate to thirdparties (including its Affiliates), which it shall select with reasonable care,and employ third parties to execute any or all of the duties assigned to theCollateral Manager hereunder; provided, however, that(i) the Collateral Manager shall not be relieved of any of its duties orobligations hereunder as a result of such delegation to or employment of thirdparties, (ii) the Collateral Manager shall be solely responsible for thefees and expenses payable to any such third party, except as set forth in Section 6hereof, and (iii) such delegation does not constitute an “assignment”under the Advisers Act.

# 3.             Purchase and Sale Transactions;Brokerage.

## (a)           The Collateral Manager shall seek to obtain the bestoverall terms for all orders placed with respect to the Assets, considering allreasonable circumstances, including, if applicable, the conditions or terms ofearly redemption of the Securities, it being understood that the CollateralManager has no obligation to obtain the lowest prices available.  Subject to the foregoing objective, theCollateral Manager may take into consideration all factors the CollateralManager reasonably determines to be relevant, including, without limitation,timing, general relevant trends and research and other brokerage services and supportequipment and services related thereto furnished to the Collateral Manager orits Affiliates by brokers and dealers in

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## compliance with Section 28(e) of theExchange Act or, if Section 28(e) of the Exchange Act is not applicable, inaccordance with the provisions set forth herein.  Such services may be used in connection withthe other advisory activities or investment operations of the CollateralManager and/or its Affiliates.  Inaddition, the Collateral Manager may take into account available prices, ratesof brokerage commissions and size and difficulty of the order, in addition toother relevant factors (such as, without limitation, execution capabilities,reliability (based on total trading rather than individual trading), integrity,financial condition in general, execution and operational capabilities ofcompeting brokers and/or dealers, and the value of the ongoing relationshipwith such brokers and/or dealers), without having to demonstrate that suchfactors are of a direct benefit to the Issuer in any specific transaction.  The Issuer acknowledges and agrees that (i)the determination by the Collateral Manager of any benefit to the Issuer issubjective and represents the Collateral Manager’s evaluation at the time thatthe Issuer will be benefited by relatively better purchase or sales prices,lower brokerage commissions and beneficial timing of transactions or acombination of any of these and/or other factors and (ii) the CollateralManager shall be fully protected with respect to any such determination to theextent the Collateral Manager acts in good faith, and in accordance with theCollateral Manager Servicing Standard and in accordance with the standard ofcare set forth in Section 1 hereof, and without gross negligence, willful misconductor reckless disregard of the obligations of the Issuer hereunder or under theterms of the Indenture.

The Collateral Managermay aggregate sales and purchase orders of securities placed with respect tothe Assets with similar orders being made simultaneously for other accountsmanaged by the Collateral Manager or with accounts of the Affiliates of theCollateral Manager if, in the Collateral Manager’s sole judgment, exercised ingood faith, such aggregation will not have an adverse effect on the Issuer.  When any such aggregate sales or purchaseorders occur, the objective of the Collateral Manager (and any of itsAffiliates involved in such transactions) shall be to allocate the executionsamong the accounts in a manner fair and equitable to all such accounts andgenerally to seek to allocate securities available for investment to all suchaccounts *pro rata* in proportion to the optimumamount sought by the Collateral Manager for each respective account.  In connection with the foregoing, theobjective of the Collateral Manager shall be to allocate investmentopportunities and the purchases or sales of instruments in a manner believed bythe Collateral Manager, in good faith, taking into account the CollateralManager’s Servicing Standard and in accordance with the standard of care setforth in Section 1 hereof, to be fair and equitable.

In connection with anypurchase of a portfolio of assets other than securities, the objective of theCollateral Manager shall be to allocate such assets (and the aggregate purchaseprice paid for such assets) among the Collateral Manager’s clients (includingthe Issuer) in a manner believed by the Collateral Manager to be fair andequitable.  The Issuer acknowledges andagrees that the Collateral Manager shall be fully protected with respect to anysuch allocation to the extent the Collateral Manager acts in good faith, takinginto account the Collateral Manager’s Servicing Standard and in accordance withthe standard of care set forth in Section 1 hereof, and without gross negligence,willful misconduct or reckless disregard of the obligations of the Issuerhereunder or under the terms of the Indenture.

All purchases and salesof Eligible Investments and Collateral Debt Securities by the CollateralManager on behalf of the Issuer shall be conducted in compliance with all

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applicable laws (including, without limitation,Section 206(3) of the Advisers Act) and the terms of the Indenture.  After (and excluding) the Closing Date, theCollateral Manager shall cause any purchase or sale of any Collateral DebtSecurity or Eligible Investment to be conducted on an arm’s-length basis or, ifapplicable, in compliance with Section 3(b) hereof.  The parties hereto acknowledge and agree thatall purchases (including, without limitation, purchases from Affiliates of theCollateral Manager) of Eligible Investments and Collateral Debt Securities bythe Collateral Manager on behalf of the Issuer on the Closing Date (including,without limitation, all such purchases from Affiliates of the CollateralManager) in a manner contemplated by the final Offering Memorandum, datedAugust 23, 2006 (the “Offering Memorandum”), related to the Classes ofNotes offered thereby (or any supplement thereto) are hereby approved.

## (b)           The Collateral Manager, subject to and in accordance withthe terms and conditions of the Indenture, may effect direct trades between theIssuer and the Collateral Manager or any of its Affiliates acting as principalor agent (any such transaction, a “Related Party Trade”); provided,however, that a Related Party Trade after (and excluding) the ClosingDate, other than Credit Risk/Defaulted Security Cash Purchases, sales ofproperty or securities in accordance with the Origination Agreement and salesof Assets pursuant to an auction in connection with an Auction Call Redemptionor in connection with a redemption of the Notes pursuant to Article 9 of theIndenture, may be effected only (i) upon disclosure to and with the priorconsent of an advisory committee containing at least one member independentfrom the Collateral Manager (whose affirmative vote will be required to grantsuch consent) acting as a surrogate for, and in the best interest of, theholders of the Securities that has been appointed from time to time as neededby the Issuer or by the Collateral Manager following the resignation of anymember (the “Advisory Committee”) and based on the Advisory Committee’sdetermination that such transaction is on terms substantially as favorable tothe Issuer as would be the case if a such transaction were effected withPersons not so affiliated with the Collateral Manager or any of its Affiliates,(ii) subject to a requirement that the purchase price in respect of anyCollateral Debt Security acquired by the Issuer from a Seller pursuant to sucha direct trade may not exceed the Principal Balance thereof, plus accrued andunpaid interest thereon (or, in the case of a Preferred Equity Security, allaccrued and unpaid dividends or other distributions not attributable to thereturn of capital by its governing documents) and (iii) if such purchase orsale, as the case may be, is in accordance with the terms of theIndenture.  The Advisory Committee, ifany, shall be formed subject to the Advisory Committee Guidelines attachedhereto as Exhibit A (the “Advisory Committee Guidelines”).  The Issuer consents and agrees that, if anytransaction relating to the Issuer, including any transaction effected betweenthe Issuer and the Collateral Manager or its Affiliates, shall be subject tothe disclosure and consent requirements of Section 206(3) of the Advisers Act,such requirements shall be satisfied with respect to the Issuer and all Holdersof the Securities if disclosure shall be given to, and consent obtained from,the Advisory Committee.  For avoidance ofdoubt, it is hereby understood and agreed by the parties hereto that nodisclosure to, or consent of, the Advisory Committee shall be required withrespect to Credit Risk/Defaulted Security Cash Purchases, sales of property orsecurities in accordance with the Origination Agreement and sales of Assetspursuant to an auction in connection with an Auction Call Redemption or inconnection with a redemption of the Notes pursuant to Article 9 of theIndenture.  Notwithstanding theforegoing, to the extent such provisions are determined not to satisfy therequirements of the Advisers Act, the Collateral Manager shall take suchactions in connection with any Related Party Trade as will satisfy therequirements of Section 206(3) of the Advisers Act.

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## 4.             Representations and Warranties of the Issuer.  The Issuer represents and warrants to theCollateral Manager that:

## (a)           the Issuer (i) has been duly incorporated andregistered as an exempted company and is validly existing under the laws of theCayman Islands, (ii) has full power and authority to own the Issuer’sassets and the securities proposed to be owned by the Issuer and included amongthe Assets and to transact the business for which the Issuer was organized, and(iii) is duly qualified under the laws of each jurisdiction where theIssuer’s ownership or lease of property or the conduct of the Issuer’s businessrequires or the performance of the Issuer’s obligations under this Agreementand the Indenture would require such qualification, except for failures to beso qualified that would not in the aggregate have a material adverse effect onthe business, operations, assets or financial condition of the Issuer or theability of the Issuer to perform its obligations under, or on the validity orenforceability of, this Agreement and the Indenture; the Issuer has full powerand authority to execute, deliver and perform the Issuer’s obligationshereunder and thereunder; this Agreement and the Indenture have been dulyauthorized, executed and delivered by the Issuer and constitute legal, validand binding agreements enforceable against the Issuer in accordance with theirterms except that the enforceability thereof may be subject to(a) bankruptcy, insolvency, reorganization, moratorium, receivership,conservatorship or other similar laws now or hereafter in effect relating tocreditors’ rights and (b) general principles of equity (regardless ofwhether such enforcement is considered in a proceeding in equity or at law);

## (b)           no consent, approval, authorization or order of ordeclaration or filing with any government, governmental instrumentality orcourt or other Person is required for the performance by the Issuer of itsduties hereunder or under the Indenture, except those that may be requiredunder state securities or “blue sky” laws or the applicable laws of anyjurisdiction outside of the United States, and such as have been duly made orobtained;

## (c)           neither the execution, delivery and performance of thisAgreement or the Indenture nor the performance by the Issuer of its dutieshereunder or under the Indenture (i) conflicts with or will violate orresult in a default under the Issuer’s Governing Documents or any materialcontract or agreement to which the Issuer is a party or by which it or itsassets may be bound, or any law, decree, order, rule, or regulation applicableto the Issuer of any court or regulatory, administrative or governmentalagency, body or authority or arbitrator having jurisdiction over the Issuer orits properties, or (other than as contemplated or permitted by the Indenture)will result in a lien on any of the property of the Issuer and (ii) wouldhave a material adverse effect upon the ability of the Issuer to perform itsduties under this Agreement or the Indenture;

## (d)           the Issuer and its Affiliates are not in violation of anyfederal, state or Cayman Islands laws or regulations, and there is no charge,investigation, action, suit or proceeding before or by any court or regulatoryagency pending or, to the best knowledge of the Issuer, threatened that, in anycase, would have a material adverse effect upon the ability of the Issuer toperform its duties under this Agreement or the Indenture;

## (e)           the Issuer is not an “investment company” under theInvestment Company Act; and

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## (f)            the assets of the Issuer do not and will not at any timeconstitute the assets of any plan subject to the fiduciary responsibilityprovisions of ERISA or of any plan within the meaning ofSection 4975(e)(1) of the Code.

# 5.             Representations and Warrantiesof the Collateral Manager.  TheCollateral Manager represents and warrants to the Issuer that:

## (a)           the Collateral Manager (i) hasbeen duly organized, is validly existing and is in good standing under the lawsof the State of Delaware, (ii) has full power and authority to own theCollateral Manager’s assets and to transact the business in which it iscurrently engaged and (iii) is duly qualified and in good standing underthe laws of each jurisdiction where the Collateral Manager’s ownership or leaseof property or the conduct of the Collateral Manager’s business requires, orthe performance of this Agreement and the Indenture would require, suchqualification, except for failures to be so qualified that would not in theaggregate have a material adverse effect on the business, operations, assets orfinancial condition of the Collateral Manager or the ability of the CollateralManager to perform its obligations under, or on the validity or enforceabilityof, this Agreement and the provisions of the Indenture applicable to the CollateralManager; the Collateral Manager has full power and authority to execute,deliver and perform this Agreement and the Collateral Manager’s obligationshereunder and the provisions of the Indenture applicable to the CollateralManager; this Agreement has been duly authorized, executed and delivered by theCollateral Manager and constitutes a legal, valid and binding agreement of theCollateral Manager, enforceable against it in accordance with the terms hereof,except that the enforceability hereof may be subject to (a) bankruptcy,insolvency, reorganization, moratorium or other similar laws now or hereafterin effect relating to creditors’ rights and (b) general principles ofequity (regardless of whether such enforcement is considered in a proceeding inequity or at law);

## (b)           neither the Collateral Manager nor any of its Affiliatesis in violation of any federal or state securities law or regulationpromulgated thereunder that would have a material adverse effect upon theability of the Collateral Manager to perform its duties under this Agreement orthe Indenture, and there is no charge, investigation, action, suit orproceeding before or by any court or regulatory agency pending or, to the bestknowledge of the Collateral Manager, threatened which could reasonably beexpected to have a material adverse effect upon the ability of the CollateralManager to perform its duties under this Agreement or the Indenture;

## (c)           neither the execution and delivery of this Agreement northe performance by the Collateral Manager of its duties hereunder or under theIndenture conflicts with or will violate or result in a breach or violation ofany of the terms or provisions of, or constitutes a default under:  (i) the limited liability companyagreement of the Collateral Manager, (ii) the terms of any indenture,contract, operating agreement, lease, mortgage, deed of trust, note agreementor other evidence of indebtedness or other agreement, obligation, condition,covenant or instrument to which the Collateral Manager is a party or by whichthe Collateral Manager is bound, (iii) any law, decree, order, rule orregulation applicable to the Collateral Manager of any court or regulatory,administrative or governmental agency, body or authority or arbitrator having jurisdictionover the Collateral Manager or its properties, and which would have, in thecase of any of (i), (ii) or (iii) of this subsection (c), eitherindividually or in the aggregate, a material adverse effect on the business,operations, assets or financial condition of the Collateral

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## Manager or the ability of the CollateralManager to perform its obligations under this Agreement or the Indenture;

## (d)           no consent, approval, authorization or order of ordeclaration or filing with any government, governmental instrumentality orcourt or other Person is required for the performance by the Collateral Managerof its duties hereunder and under the Indenture, except such as have been dulymade or obtained;

## (e)           the Sections entitled “Summary—The Collateral Manager” and“The Collateral Manager” in the Offering Memorandum, as of the date thereof(including as of the date of any supplement thereto) and as of the ClosingDate, do not contain any untrue statement of a material fact and do not omit tostate any material fact necessary in order to make the statements therein, inlight of the circumstances under which they were made, not misleading; and

## (f)            the Collateral Manager is not required to register as aninvestment adviser under the Advisers Act.

# 6.             Expenses.  Both parties hereto acknowledge and agreethat a portion of the gross proceeds received from the issuance and sale of theSecurities will be used to pay certain organizational and structuring fees andexpenses of the Co-Issuers, including the legal fees and expenses of counsel tothe Collateral Manager.  The CollateralManager shall pay all expenses and costs incurred by it in the course ofperforming its obligations under this Agreement; provided, however,that the Collateral Manager shall not be liable for, and (subject to thePriority of Payments set forth in the Indenture and to the extent funds areavailable therefor) the Issuer shall be responsible for the payment of,reasonable expenses and costs (including, without limitation, reasonable travelexpenses) of (i) independent accountants, consultants and other advisersretained by the Issuer or by the Collateral Manager on behalf of the Issuer inconnection with the services provided by the Collateral Manager hereunder, (ii)legal advisers retained by the Issuer or by the Collateral Manager on behalf ofthe Issuer in connection with the services provided by the Collateral Managerhereunder and (iii) the Collateral Manager (A) to the extent of reasonableexpenses disbursed or allocated in valuing the Assets, disbursed or allocatedsoftware and technology expenditures relating to the monitoring andadministration of the Assets and any other reasonable expenses incurred by theCollateral Manager in connection with matters arising in the performance by theCollateral Manager of its duties under this Agreement and (B) for an allocableshare of the cost of certain credit databases used by the Collateral Manager inproviding services to the Issuer under this Agreement.

# 7.             Fees.  As compensation for the performance of its obligationsas Collateral Manager hereunder and under the Indenture, the Collateral Managerwill be entitled to receive (i) a fee, payable quarterly in arrears oneach Payment Date in accordance with the Priority of Payments, equal to 0.15% *per annum* of the Net Outstanding PortfolioBalance (the “Senior CollateralManagement Fee”) and (ii) an additional fee, payablequarterly in arrears on each Payment Date in accordance with the Priority ofPayments, equal to 0.25% *per annum*of the Net Outstanding Portfolio Balance (the “Subordinate Collateral Management Fee” and,together with the Senior Collateral Management Fee, the “Collateral Management Fee”).  Each Collateral Management Fee will becalculated for each Interest Accrual Period assuming a 360-day year

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# with twelve (12)thirty-day months.  The CollateralManagement Fee will be calculated based on the Net Outstanding PortfolioBalance as of the first day of the applicable Interest Accrual Period.  If on any Payment Date there are insufficientfunds to pay such fees (and/or any other amounts due and payable to theCollateral Manager) in full, in accordance with the Priority of Payments, theamount not so paid shall be deferred and such amounts shall be payable on suchlater Payment Date on which funds are available therefor as provided in thePriority of Payments set forth in the Indenture.  Any accrued and unpaid Senior CollateralManagement Fee that is deferred due to the operation of the Priority ofPayments shall accrue interest at a *perannum*rate equal to LIBOR in effect for the applicable InterestAccrual Period computed on an actual 360-day basis.  Any accrued and unpaid Subordinate CollateralManagement Fee that is deferred due to the operation of the Priority of Paymentsshall accrue interest at a *per annum*rate equal to LIBOR in effect for the applicable Interest Accrual Period on anactual 360-day basis.  Notwithstandingany other provision hereof, the aggregate amount of all accrued but unpaidSubordinate Collateral Management Fee payable on the final Payment Date or, ifearlier, following the winding up of the Issuer shall be equal to the lesser of(a) the nominal amount thereof and (b) the amount available for payment underthe Priority of Payments. The Collateral Manager hereby agrees not to cause thefiling of a petition in bankruptcy against the Issuer for the nonpayment to theCollateral Manager of any amounts due it hereunder except in accordance withSection 18 hereof and, subject to the provisions of Section 12, tocontinue to serve as Collateral Manager. If this Agreement is terminated pursuant to Section 12 hereof orotherwise, the accrued fees payable to the Collateral Manager shall be proratedfor any partial periods between the Payment Dates during which this Agreementwas in effect and shall be due and payable on the first Payment Date followingthe date of such termination, together with all expenses payable to theCollateral Manager in accordance with Section 6 hereof, and subject to theprovisions of the Indenture and the Priority of Payments.

# 8.             Non-Exclusivity.  Nothing herein shall prevent the CollateralManager or any of its Affiliates or any of their officers or directors fromengaging in any other businesses or providing investment management, advisoryor any other types of services to any Persons, including the Issuer, theTrustee and the Noteholders, to the fullest extent permitted by applicable law;provided, however, that the Collateral Manager may not take anyof the foregoing actions which the Collateral Manager knows or reasonablyshould know would require the Issuer or the pool of Assets to register as an “investmentcompany” under the Investment Company Act.

# 9.             Conflicts of Interest.

## (a)           After (but excluding) the Closing Date and the sales byAffiliates of the Collateral Manager of Collateral Debt Securities to theIssuer on the Closing Date (and except in the case of Credit Risk/DefaultedSecurity Cash Purchases, sales of property or securities in accordance with theOrigination Agreement and sales of Assets pursuant to an auction in connectionwith an Auction Call Redemption or in connection with a redemption of the Notespursuant to Article 9 of the Indenture), the Collateral Manager will not causethe Issuer to enter into any transaction with the Collateral Manager or any ofits Affiliates as principal, unless the applicable terms and conditions setforth in Section 1 and Section 3(b) are complied with.

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## (b)           The Collateral Manager shall perform its obligationshereunder in accordance with the requirements of the Advisers Act and theIndenture. The Issuer acknowledges that (i) the Collateral Manager and/orits Affiliates will acquire on the Closing Date 100% of each of the Class JNotes, the Class K Notes and the Preferred Shares, (ii) Affiliates of theCollateral Manager will sell Collateral Debt Securities to the Issuer on orprior to the Closing Date, and (iii) the Collateral Manager, itsAffiliates and funds or accounts for which the Collateral Manager or itsAffiliates acts as investment adviser may at times own Notes of one or moreadditional Classes.  After the ClosingDate, the Collateral Manager agrees to provide the Trustee with written noticeupon the acquisition or transfer (after, but excluding, the Closing Date) ofany Securities held by the Collateral Manager, any of its Affiliates or anyfund managed or controlled by the Collateral Manager or any Affiliate thereof.

(c)           Nothing herein shall prevent theCollateral Manager or any of its Affiliates or officers and directors of theCollateral Manager from engaging in other businesses (including financing,purchasing, owning, holding, originating or disposing of any assets orinvestments), or from rendering services of any kind to the Issuer and itsAffiliates, the Trustee, the Holders or any other Person or entity, whether ornot any of the foregoing may be competitive with the business of the Issuer orthe Co-Issuer so long as the Collateral Manager complies with the standard ofcare set forth in Section 1 hereof. Without prejudice to the generality of the foregoing, directors,officers, members, partners, employees and agents of the Collateral Manager,Affiliates of the Collateral Manager, and the Collateral Manager may so long asthe Collateral Manager complies with the standard of care set forth in Section1 hereof, subject to the terms and conditions of the Indenture, among otherthings:

### (i)            serve as directors(whether supervisory or managing), officers, employees, partners, members,managers, agents, nominees or signatories for the Issuer or any Affiliatethereof, or for any obligor in respect of any of the Collateral Debt Securitiesor Eligible Investments, or any of their respective Affiliates, except to theextent prohibited by their respective Underlying Instruments, as from time totime amended; provided that (x) in the reasonable judgment of theCollateral Manager, such activity will not have a material adverse effect onthe ability of the Issuer or the Trustee to enforce its respective rights withrespect to any Assets and (y) nothing in this paragraph shall be deemed tolimit the duties of the Collateral Manager set forth in Section 1 hereof;

### (ii)           perform, andreceive fees for the performance of, services of whatever nature rendered to anobligor in respect of any of the Collateral Debt Securities or EligibleInvestments, including acting as master servicer, sub-servicer or specialservicer with respect to any CMBS Securities or with respect to any commercialmortgage loan constituting or underlying any Collateral Debt Security; providedthat, in the reasonable judgment of the Collateral Manager, such activity willnot have a material adverse effect on the ability of the Issuer or the Trusteeto enforce its respective rights with respect to any of the Assets; provided,further, with respect to such services, the Collateral Manager is notacting as an agent for the Issuer;

### (iii)          be retained toprovide services unrelated to this Agreement to the Issuer or its Affiliatesand be paid therefor;

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### (iv)          be a secured orunsecured creditor of, or hold an equity interest in, the Issuer, itsAffiliates or any obligor of any Collateral Debt Security or EligibleInvestment; provided, however, that the Collateral Manager maynot be such a creditor or hold any of such interests if, in the opinion ofcounsel to the Issuer, the existence of such interest would requireregistration of the Issuer or the Assts as an “investment company” under theInvestment Company Act or violate any provisions of federal or applicable statelaw or any law, rule or regulation of any governmental body or agency havingjurisdiction over the Issuer;

### (v)           own equity in or ownor make loans to any issuer of REIT Debt Securities including any issuer ofREIT Debt Securities obligated on any of the Collateral Debt Securities, solong as that doing so will not cause any such Collateral Debt Security to failto comply with the Eligibility Criteria;

### (vi)          make, hold or sellan investment in an issuer’s securities that may be *pari passu*,senior or junior in ranking to a Collateral Debt Security;

### (vii)         except as otherwiseprovided in this Section 9, sell any Collateral Debt Security or EligibleInvestment to, or purchase any Collateral Debt Security from, the Issuer whileacting in the capacity of principal or agent; and

### (viii)        subject to itsobligations in Section 1 hereof to protect the Holders, serve as a memberof any “creditors’ board” with respect to any Defaulted Security, EligibleInvestment or with respect to any commercial mortgage loan underlying orconstituting any Collateral Debt Security or the respective borrower for anysuch commercial mortgage loan.

It is understood that theCollateral Manager and any of its Affiliates may engage in any other business,whether or not any of the foregoing may be competitive with the business of theIssuer or the Co-Issuer (including financing, purchasing, owning, holding,originating or disposing of any assets or investments), and furnish investmentmanagement and advisory services to others, including Persons that may haveinvestment policies similar to those followed by the Collateral Manager withrespect to the Assets and that may own instruments of the same class, or of thesame type, as the Collateral Debt Securities or other instruments of theissuers of Collateral Debt Securities and may manage portfolios similar to theAssets.  The Collateral Manager and itsAffiliates shall be free, in their sole discretion, to make recommendations toothers, or effect transactions on behalf of themselves or for others, which maybe the same as or different from those the Collateral Manager causes the Issuerto effect with respect to the Assets.

The Collateral Managerand its Affiliates may, and may cause or advise their respective clients to,invest in assets, investments or instruments that would be appropriate for theIssuer or the Co-Issuer or as security for the Notes and shall have no duty orobligation to offer any such asset, investment or instrument to the Issuer orthe Co-Issuer.  Such investments may bedifferent from those made to or on behalf of the Issuer.  The Collateral Manager, its Affiliates andtheir respective clients may have ongoing relationships with Persons whoseinstruments are pledged to secure the Notes and may own instruments issued by,or loans to, issuers of the Collateral Debt Securities or to any borrower orAffiliate of any borrower on any

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commercial mortgage loans underlying or constitutingthe Collateral Debt Securities or the Eligible Investments.  The Collateral Manager and its Affiliates maycause or advise their respective clients to invest in instruments that aresenior to, or have interests different from or adverse to, the instruments thatare pledged to secure the Notes.

Nothing contained in thisAgreement shall prevent the Collateral Manager or any of its Affiliates fromthemselves buying or selling, or from recommending to or directing any otheraccount to buy or sell, at any time, securities of the same kind or class, orsecurities of a different kind or class of the same issuer, as those directedby the Collateral Manager to be purchased or sold hereunder.  It is understood that, to the extentpermitted by applicable law, the Collateral Manager, its Affiliates, and anymember, manager, officer, director, stockholder or employee of the CollateralManager or any such Affiliate or any member of their families or a Personadvised by the Collateral Manager may have an interest in a particulartransaction or in securities of the same kind or class, or securities of adifferent kind or class of the same issuer, as those purchased or sold by theCollateral Manager hereunder.  Subject toapplicable law, the requirements of the Indenture and this Agreement, when theCollateral Manager is considering purchases or sales for the Issuer and one ormore of such other accounts at the same time, the Collateral Manager shallallocate available investments or opportunities for sales in its discretion andmake investment recommendations and decisions that may be the same as ordifferent from those made with respect to the Issuer’s investments, inaccordance with applicable law and the Collateral Manager Servicing Standard,to the extent applicable.

Subject to the Indentureand the provisions of this Agreement, the Collateral Manager shall not beobligated to pursue any specific investment strategy or opportunity that mayarise with respect to the Assets.

The Issuer herebyacknowledges and consents to the various potential and actual conflicts ofinterests that may exist with respect to the Collateral Manager as describedabove; provided, however, that nothing contained in thisSection 9 shall be construed as altering the duties of the CollateralManager set forth in this Agreement or in the Indenture.

# 10.           Records; Confidentiality.  The Collateral Manager shall maintainappropriate books of account and records relating to services performedhereunder, and such books of account and records shall be accessible forinspection by an authorized representative of the Issuer, the Trustee and theIndependent accountants appointed by the Issuer pursuant to the Indenture at amutually agreed-upon time during normal business hours and upon reasonableprior notice; provided that the Collateral Manager shall not beobligated to provide access to any non-public information if the CollateralManager in good faith determines that the disclosure of such information wouldviolate any applicable law, regulation or contractual arrangement.  The Collateral Manager shall follow itscustomary procedures to keep confidential all information obtained in connectionwith the services rendered hereunder and shall not disclose any suchinformation except (i) with the prior written consent of the Issuer (whichconsent shall not be unreasonably withheld), (ii) such information as theRating Agencies shall reasonably request in connection with their rating orevaluation of the Notes and/or the Collateral Manager, as applicable,(iii) as required by law, regulation, court order or the rules,regulations, or request of any regulatory or self-regulating organization, bodyor official (including any securities exchange on which the Notes may be listedfrom time to time) having jurisdiction over the

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# Collateral Manager or asotherwise required by law or judicial process, (iv) such information asshall have been publicly disclosed other than in violation of this Agreement,(v) to its members, officers, directors, and employees, and to itsattorneys, accountants and other professional advisers in conjunction with thetransactions described herein, (vi) such information as may be necessaryor desirable in order for the Collateral Manager to prepare, publish anddistribute to any Person any information relating to the investment performanceof the Assets, (vii) in connection with the enforcement of the CollateralManager’s rights hereunder or in any dispute or proceeding related hereto,(viii) to the Trustee, (ix) to the extent required pursuant to anyHedge Agreement of the Issuer and (x) to Holders and potential purchasersof any of the Securities.

Subject to compliancewith the requirements of any law, rule or regulation applicable to theCollateral Manager, nothing contained herein shall prevent the CollateralManager from discussing its activities hereunder in a general way in the normalcourse of its business, including, without limitation, general discussions withother Persons regarding its ability to act as a collateral manager and its pastperformance in such capacity.  Inaddition, subject to compliance with the requirements of any law, rule orregulation applicable to the Collateral Manager, with respect to informationthat the Collateral Manager obtains or develops regarding the Collateral DebtSecurities or Eligible Investments (including, without limitation, informationregarding ratings, yield, creditworthiness, financial condition and prospectsof any issuer thereof) in connection with the performance of its serviceshereunder, nothing in this Section 10 shall prevent the Collateral Manager orits Affiliates, in the conduct of their respective businesses, from using suchinformation or disclosing such information to others so long as such other usedoes not, in its reasonable judgment, disadvantage the Issuer.  Notwithstanding anything to the contrarycontained in this Agreement, all Persons may disclose to any and all Persons,without limitation of any kind, the U.S. federal, state and local tax treatmentof the Securities and the Co-Issuers, any fact that may be relevant tounderstanding the U.S. federal, state and local tax treatment of the Securitiesand the Issuers, and all materials of any kind (including opinions or other taxanalyses) relating to such U.S. federal, state and local tax treatment and thatmay be relevant to understanding such tax treatment.

# 11.           Term.  This Agreement shall become effective on theClosing Date and shall continue in full force and effect until the first tooccur of the following:  (a) thepayment in full of the Notes and the termination of the Indenture in accordancewith its terms, (b) the liquidation of the Assets and the finaldistribution of the proceeds of such liquidation to the Holders and the Issueror (c) the termination of this Agreement pursuant to Section 12hereof.

# 12.           Termination.  (a)  The Collateral Manager may beremoved upon at least thirty (30) days prior written notice if (A) Holders ofat least 75% by Aggregate Outstanding Amount of each Class of Notes (voting asa separate Class) and (B) Holders of at least 75% of the Preferred Shares givewritten notice to the Collateral Manager, the Issuer, each Hedge Counterpartyand the Trustee of such removal (including in any such calculation anySecurities held by the Collateral Manager, any of its Affiliates or by any fundmanaged or controlled by the Collateral Manager or any Affiliate thereof); providedthat if the Collateral Manager is removed pursuant to this clause (a), anysuccessor Collateral Manager will not be permitted to be a Holder of or anAffiliate of any Holder of Securities. Notice of any such removal shall be delivered by

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# the Trustee, on behalf ofthe Issuer, to the Holders of each Class of Notes, the Holders of the PreferredShares, each Rating Agency and each Hedge Counterparty.

## (b)           This Agreement may be terminated, and the CollateralManager may be removed, by the Issuer or the Trustee for cause, upon thirty(30) days prior written notice by the Issuer, at the direction of (A) so longas the Class A-1 Notes are the Controlling Class, the Holders of at least amajority of the outstanding principal amount of the Class A-1 Notes and (B) atany other time (i) the Holders of at least a majority by Aggregate OutstandingAmount of each Class of Notes (excluding any Notes owned by the CollateralManager or any of its Affiliates or any fund managed or controlled by theCollateral Manager or any Affiliate thereof, each voting as a separate Class)and (ii) the Holders of at least a Majority of the Preferred Shares (excludingany Preferred Shares owned by the Collateral Manager or any of its Affiliatesor any fund managed or controlled by the Collateral Manager or any Affiliatethereof); provided, however, upon the occurrence of an eventdescribed in clause (iii) of this Section 12(b), termination of the CollateralManager will be automatic and without advance notice required from the Issuer,the Trustee or any other Person.  Noticeof any such removal for cause shall be delivered by the Trustee, on behalf ofthe Issuer, to each Rating Agency, each Hedge Counterparty and the Holders ofthe Notes and the Preferred Shares.  Inno event will the Trustee be required to determine whether or not cause existsfor the removal of the Collateral Manager. As used in this Section 12, “cause” means any of the following events:

### (i)            the CollateralManager (A) willfully breaches, or takes any action that it knows violates, anyprovision of this Agreement or any term of the Indenture applicable to theCollateral Manager (not including a willful breach or knowing violation thatresults from a good faith dispute regarding alternative courses of action orinterpretation of instructions), which breach or action has (or could reasonablybe expected to have) a material adverse effect on the Noteholders and (B) failsto cure such breach within thirty (30) days after the first to occur of(1) notice of such failure is given to the Collateral Manager or(2) the Collateral Manager having actual knowledge of such breach orviolation;

### (ii)           the CollateralManager breaches in any material respect any provision of this Agreement or anymaterial terms of the Indenture applicable to the Collateral Manager and failsto cure such breach within ninety (90) days after the first to occur of(A) notice of such failure is given to the Collateral Manager or(B) the Collateral Manager having actual knowledge of such breach;

### (iii)          the CollateralManager (A) ceases to be able to, or admits in writing the CollateralManager’s inability to, pay the Collateral Manager’s debts when and as theybecome due, (B) files, or consents by answer or otherwise to the filingagainst the Collateral Manager of, a petition for relief or reorganization orarrangement or any other petition in bankruptcy, for liquidation or takesadvantage of any bankruptcy, insolvency, reorganization, moratorium or othersimilar law of any jurisdiction, (C) makes an assignment for the benefitof the Collateral Manager’s creditors, (D) consents to the appointment ofa custodian, receiver, trustee or other officer with similar powers withrespect to the Collateral Manager or with respect to any substantial part ofthe Collateral Manager’s property or (E) is adjudicated as insolvent or tobe liquidated;

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### (iv)          the occurrence of anact by the Collateral Manager or any of its Affiliates that constitutes fraudor criminal activity in the performance of its obligations under this Agreementor the indictment of the Collateral Manager or any of its respective officersor directors for a criminal offense involving an investment orinvestment-related business, fraud, false statements or omissions, wrongfultaking of property, bribery, forgery, counterfeiting or extortion;

### (v)           the failure of anyrepresentation, warranty, certificate or statement of the Collateral Manager inor pursuant to this Agreement or the Indenture to be correct in any materialrespect and (x) such failure has (or could reasonably be expected to have)a material adverse effect on the Noteholders, the Issuer or the Co-Issuer and(y) if such failure can be cured, no correction is made for forty-five(45) days after the Collateral Manager becomes aware of such failure orreceives notice thereof in writing from the Trustee;

### (vi)          the occurrence andcontinuation of any of the Events of Default described in Sections 5.1(a)or 5.1(b) of the Indenture;

### (vii)         so long as the ClassA-1 Notes are the Controlling Class, the Class A/B Par Value is less than101.87% on any Measurement Date; or

### (viii)        the CollateralManager consolidates or amalgamates with, or merges with or into, or transfersall or substantially all its assets to, another Person and either (A) atthe time of such consolidation, amalgamation, merger or transfer, theresulting, surviving or transferee Person fails to or cannot assume all theobligations of the Collateral Manager under this Agreement or (B) theresulting, surviving or transferee Person lacks the legal capacity to performthe obligations of the Collateral Manager hereunder and under the Indenture.

The Collateral Managershall notify the Trustee, the Rating Agencies and the Issuer in writingpromptly upon becoming aware of any event that constitutes cause under thisSection 12(b).

## (c)           The Collateral Manager may resign, upon thirty (30) daysprior written notice to the Issuer, the Co-Issuer, the Trustee, each RatingAgency and each Hedge Counterparty; provided, however, that(i) no such termination or resignation shall be effective until the dateas of which a successor collateral manager shall have agreed in writing toassume all of the Collateral Manager’s duties and obligations pursuant to thisAgreement and (ii) the Issuer shall use its best efforts to appoint asuccessor collateral manager to assume such duties and obligations.  Notwithstanding the notice required above,the Collateral Manager shall have the right to resign without prior notice if,due to a change in any applicable law or regulation or interpretation thereof,the performance by the Collateral Manager of its duties under the CollateralManagement Agreement would (i) adversely affect (A) Gramercy Capital Corp.’sstatus as a REIT, (B) Gramercy Investment Trust’s status as a REIT, (C) SLGreen Realty Corp.’s status as a REIT or (D) the Issuer’s status as a qualifiedREIT subsidiary (within the meaning of Section 856(i)(2) of the Code) or (ii)constitute a violation of any applicable law or regulation.

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## (d)           No removal, termination or resignation of the CollateralManager or termination of this Agreement shall be effective unless (x) asuccessor collateral manager (a “ReplacementManager”) has been appointed by the Issuer and has agreed inwriting to assume all of the Collateral Manager’s duties and obligationspursuant to this Agreement and (y) written notification shall have beenprovided in accordance with Sections 12(a), (b) or (c), as applicable.  The appointment of any Replacement Managershall be subject to satisfaction of the Rating Agency Condition and each suchReplacement Manager (i) shall have demonstrated an ability toprofessionally and competently perform duties similar to those imposed upon theCollateral Manager, (ii) is legally qualified and has the capacity to actas collateral manager, (iii) by its appointment will not cause the Issuer,the Co-Issuer or the pool of Assets to, or result in the Issuer, the Co-Issueror the pool of Assets becoming, an “investment company” under the InvestmentCompany Act, (iv) has accepted its appointment in writing and (v) byits appointment will not cause the Issuer, the Co-Issuer or the pool of Assetsto become subject to income or withholding tax that would not have been imposedbut for such appointment.

## (e)           Upon any resignation or removal of the Collateral Managerwhile any of the Notes are Outstanding, (A) so long as the Class A-1 Notes arethe Controlling Class, the Holders of at least a majority of the outstandingprincipal amount of the Class A-1 Notes and (B) at any other time, the Holdersof at least a Majority of the Preferred Shares shall have the right to instructthe Issuer to appoint an institution identified by such Holders as ReplacementManager; provided that (i) the Issuer provides to the Noteholders noticeof such appointment and a majority by Aggregate Outstanding Amount of eachClass of Notes (excluding any Notes owned by the Collateral Manager or any ofits Affiliates or any fund managed or controlled by the Collateral Manager orany Affiliate thereof, each voting as a separate Class) does not object to suchappointment within thirty (30) days, (ii) the Rating Agency Condition has beensatisfied with respect to such appointment and (iii) the requirements set forthin Section 12(d)(i) through (v) above have been satisfied.  If the Holders of the Class A-1 Notes or thePreferred Shares, as the case may be, identify two (2) institutions forappointment as described in Section 12(d)(i) or Section 12(d)(ii) above andboth are objected to as described in this clause (B)(i) above, a majority ofthe outstanding principal amount or notional amount, as the case may be, ofsuch Holders shall have the right to appoint any institution not previouslyidentified by such holders as Replacement Manager (subject to compliance withthe conditions described in Section 12(d)(i) and Section 12(d)(ii) above).

## (f)            In the event that the Collateral Manager resigns pursuantto Section 12(c) or is terminated pursuant to Sections 12(a) or (b)hereof and the Issuer has not appointed a successor prior to the day followingthe termination (or resignation) date specified in such notice, the CollateralManager will be entitled to propose a successor and will so appoint suchproposed entity as successor thirty (30) days thereafter, unless a majority ofany Class of Notes objects to such appointment with such thirty (30) day periodin which case the Controlling Class of Notes (excluding any Notes owned by theCollateral Manager or any of its Affiliates or any fund managed or controlledby the Collateral Manager or any Affiliate thereof, each voting as a separateClass) will be entitled to propose a successor and will appoint such proposedentity as successor thirty (30) days thereafter unless a majority by AggregateOutstanding Amount of any other Class of Notes (excluding any Notes owned bythe Collateral Manager or any of its Affiliates or any fund managed orcontrolled by the Collateral Manager or any Affiliate thereof, each voting as aseparate Class) objects to such appointment within such thirty (30) day period,

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## in each case subject to the requirements setforth in Section 12(d) above. In the event a proposed successor Collateral Manager is not appointedpursuant to the foregoing procedures, the resigning or removed CollateralManager may petition any court of competent jurisdiction for the appointment ofa successor collateral manager, which appointment will not require the consentof, or be subject to the disapproval of, the Issuer, any Noteholder or anyHolder of the Preferred Shares.

Notwithstanding anyprovision contained in this Agreement, the Indenture or otherwise, so long asthe Collateral Manager continues to perform its obligations hereunder, theCollateral Management Fee shall continue to accrue for the benefit of theCollateral Manager until termination of this Agreement under thisSection 12 shall become effective as set forth herein.  In addition, the Collateral Manager shall,subject to Section 6, be entitled to reimbursement of out-of-pocketexpenses incurred in cooperating with the Replacement Manager, including inconnection with the delivery of any documents or property.  In the event that the Collateral Manager isremoved or resigns and a Replacement Manager is appointed, such formerCollateral Manager nonetheless shall be entitled to receive payment of allunpaid Collateral Management Fees, including the Senior Collateral ManagementFee and the Subordinated Collateral Management Fee, accrued through theeffective date of the removal or resignation, to the extent that funds areavailable for that purpose in accordance with the Priority of Payments, andsuch payments shall rank in the Priority of Payments *pari passu*with the Collateral Management Fees due to the Replacement Manager.  In addition, following the removal orresignation of the Collateral Manager hereunder, the removed or resigningCollateral Manager shall be granted access to the books of account and recordsof the Issuer and the Trustee to the extent such removed or resigningCollateral Manager deems necessary to confirm the proper payment of any amountsowing to such removed or resigning Collateral Manager hereunder.

## (g)           Upon the effective date of termination of this Agreement,the Collateral Manager shall as soon as practicable:

### (i)            deliver to theIssuer (or as the Issuer may reasonably request) all property and documents ofthe Trustee or the Issuer or otherwise relating to the Assets then in thecustody of the Collateral Manager (although the Collateral Manager may keepcopies of such documents for its records); and

### (ii)           deliver to theTrustee an accounting with respect to the books and records delivered to theIssuer or the Replacement Manager appointed pursuant to this Section 12hereof.

The Collateral Managershall reasonably assist and cooperate with the Trustee and the Issuer (asreasonably requested by the Trustee or the Issuer) in the assumption of theCollateral Manager’s duties by any Replacement Manager as provided for in thisAgreement, as applicable. Notwithstanding such termination, the Collateral Manager shall remainliable to the extent set forth herein (but subject to Section 13 hereof)for the Collateral Manager’s acts or omissions hereunder arising prior to itstermination as Collateral Manager hereunder and for any expenses, losses,damages, liabilities, demands, charges and claims (including reasonableattorneys’ fees) in respect of or arising out of a breach of therepresentations and warranties

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made by it in Section 5 hereof or from anyfailure of the Collateral Manager to comply with the provisions of thisSection 12(g).

## (h)           The Collateral Manager agrees that, notwithstanding anytermination, the Collateral Manager shall reasonably cooperate in anyProceeding arising in connection with this Agreement, the Indenture or any ofthe Assets (excluding any such Proceeding in which claims are asserted againstthe Collateral Manager or any Affiliate of the Collateral Manager) so long asthe Collateral Manager shall have been offered (in its judgment) reasonablesecurity, indemnity or other provision against the cost, expenses andliabilities that might be incurred in connection therewith, but, in any event,shall not be required to make any admission or to take any action against theCollateral Manager’s own interests or the interests of other funds and accountsadvised by the Collateral Manager.

## (i)            If this Agreement is terminated pursuant toSection 12(a), (b) or (c) hereof, such termination shall be without anyfurther liability or obligation of the Issuer or the Collateral Manager to theother, except as provided in Sections 6, 7, 12 and 13 and the lastsentence of Section 10 hereof.

## (j)            Upon expiration of the applicable notice period withrespect to termination specified in Section 12(d) hereof, all authorityand power of the Collateral Manager under this Agreement and the Indenture,whether with respect to the Assets or otherwise, shall automatically andwithout further action by any person or entity pass to and be vested in theReplacement Manager.

# 13.           Liability of Collateral Manager.  (a)  The Collateral Manager assumesno responsibility under this Agreement other than to render the services calledfor from the Collateral Manager hereunder and under the Indenture in the mannerprescribed herein and therein.  TheCollateral Manager and its Affiliates, and each of their respective partners,shareholders, members, managers, officers, directors, employees, agents,accountants and attorneys shall have no liability to the Noteholders, theHolders of the Preferred Shares, the Trustee, the Issuer, the Co-Issuer, anyHedge Counterparty, the Initial Purchaser, or any of their respectiveAffiliates, partners, shareholders, officers, directors, employees, agents,accountants and attorneys, or any other Person, for any error of judgment,mistake of law, or for any claim, loss, liability, damage, settlement, costs,or other expenses (including reasonable attorneys’ fees and court costs) of anynature whatsoever (collectively “Liabilities”)that arise out of or in connection with any act or omissions of the CollateralManager in the performance of its duties under this Agreement or the Indentureor for any decrease in the value of the Collateral Debt Securities or EligibleInvestments, except (i) by reason of acts or omissions constituting bad faith,willful misconduct or gross negligence in the performance of, or recklessdisregard of, the duties of the Collateral Manager hereunder and under theterms of the Indenture and (ii) with respect to the information concerning theCollateral Manager under the headings “Summary—The Collateral Manager” and “TheCollateral Manager” in the Offering Memorandum containing any untrue statementof material fact or omitting to state a material fact necessary in order tomake the statements therein, in light of the circumstances under which theywere made, not misleading.  The Issueragrees that the Collateral Manager shall not be liable for any consequential,special, exemplary or punitive damages hereunder.  The acts, failure to act or

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# breaches described inthis clause (a) are collectively referred to for purposes of thisSection 13 as “Collateral Manager Breaches.”

## (b)           The Collateral Manager shall indemnify, defend and holdharmless the Issuer and each of its partners, shareholders, members, managers,officers, directors, employees, agents, accountants and attorneys (each, an “Issuer Indemnified Party”)from and against any claims that may be made against an Issuer IndemnifiedParty by third parties and any damages, losses, claims, liabilities, costs orexpenses (including all reasonable legal and other expenses) which are incurredas a direct consequence of the Collateral Manager Breaches, except forliability to which such Issuer Indemnified Party would be subject by reason ofwillful misconduct, bad faith, gross negligence in the performance of, orreckless disregard of the obligations of the Issuer hereunder and under theterms of the Indenture.

## (c)           The Issuer shall reimburse, indemnify and hold harmlessthe Collateral Manager, its members, managers, directors, officers,stockholders, partners, agents and employees and any Affiliate of theCollateral Manager and its directors, officers, stockholders, partners,members, agents, employees, accountants and attorneys (the Collateral Managerand such other persons collectively, the “Collateral Manager Indemnified Parties”) from anyand all Liabilities, as are incurred in investigating, preparing, pursuing ordefending any claim, action, proceeding or investigation (whether or not suchCollateral Manager Indemnified Party is a party) caused by, or arising out ofor in connection with this Agreement, the Indenture and the transactionscontemplated hereby and thereby, including the issuance of the Notes, or anyacts or omissions of any Collateral Manager Indemnified Parties except thosethat are the result of Collateral Manager Breaches.  Any amounts payable by the Issuer under thisSection 13(c) shall be payable only subject to the Priority of Paymentsset forth in the Indenture and to the extent Assets are available therefor.

## (d)           With respect to any claim made or threatened against anIssuer Indemnified Party or a Collateral Manager Indemnified Party (each an “Indemnified Party”),or compulsory process or request or other notice of any loss, claim, damage orliability served upon an Indemnified Party, for which such Indemnified Party isor may be entitled to indemnification under this Section 13, suchIndemnified Party shall (or, with respect to Indemnified Parties that aredirectors, managers, officers, stockholders, members, managers, agents oremployees of the Issuer or the Collateral Manager, the Issuer or the CollateralManager, as the case may be, shall cause such Indemnified Party to):

### (i)            give written noticeto the indemnifying party of such claim within ten (10) Business Days aftersuch Indemnified Party’s receipt of actual notice that such claim is made orthreatened, which notice to the indemnifying party shall specify in reasonabledetail the nature of the claim and the amount (or an estimate of the amount) ofthe claim; provided, however, that the failure of any IndemnifiedParty to provide such notice to the indemnifying party shall not relieve theindemnifying party of its obligations under this Section 13 unless therights or defenses available to the Indemnified Party are materially prejudicedor otherwise forfeited by reason of such failure;

### (ii)           at the indemnifyingparty’s expense, provide the indemnifying party such information andcooperation with respect to such claim as the indemnifying party may

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### reasonablyrequire, including making appropriate personnel available to the indemnifyingparty at such reasonable times as the indemnifying party may request;

### (iii)          at the indemnifyingparty’s expense, cooperate and take all such steps as the indemnifying partymay reasonably request to preserve and protect any defense to such claim;

### (iv)          in the event suit isbrought with respect to such claim, upon reasonable prior notice, afford to theindemnifying party the right, which the indemnifying party may exercise in itssole discretion and at its expense, to participate in the investigation,defense and settlement of such claim;

### (v)           neither incur anymaterial expense to defend against nor release or settle any such claim or makeany admission with respect thereto (other than routine or incontestableadmissions or factual admissions the failure to make of which would expose suchIndemnified Party to unindemnified liability) nor permit a default or consentto the entry of any judgment in respect thereof, in each case without the priorwritten consent of the indemnifying party; and

### (vi)          upon reasonableprior notice, afford to the indemnifying party the right, in such party’s solediscretion and at such party’s sole expense, to assume the defense of suchclaim, including the right to designate counsel reasonably acceptable to theIndemnified Party and to control all negotiations, litigation, arbitration,settlements, compromises and appeals of such claim; provided that, ifthe indemnifying party assumes the defense of such claim, it shall not beliable for any fees and expenses of counsel for any Indemnified Party incurredthereafter in connection with such claim except that, if such Indemnified Partyreasonably determines that counsel designated by the indemnifying party has aconflict of interest, such indemnifying party shall pay the reasonable fees anddisbursements of one counsel (in addition to any local counsel) separate fromsuch indemnifying party’s own counsel for all Indemnified Parties in connectionwith any one action or separate but similar or related actions in the samejurisdiction arising out of the same general allegations or circumstances; and provided,further, that the indemnifying party shall not have the right, withoutthe Indemnified Party’s written consent, to settle any such claim if, in a casewhere the Issuer is the indemnifying party, the Issuer does not make available(in accordance with the Priority of Payments), in a segregated accountavailable only for this purpose, the full amount required to pay any amountsdue from the Indemnified Party under such settlement or, in any case, suchsettlement (A) arises from or is part of any criminal action, suit orproceeding, (B) contains a stipulation to, confession of judgment withrespect to, or admission or acknowledgement of, any liability or wrongdoing onthe part of the Indemnified Party, (C) relates to any federal, state or localtax matters or (D) provides for injunctive relief, or other relief otherthan damages, which is binding on the Indemnified Party.

## (e)           In the event that any Indemnified Party waives its rightto indemnification hereunder, the indemnifying party shall not be entitled toappoint counsel to represent such

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## Indemnified Party nor shall the indemnifyingparty reimburse such Indemnified Party for any costs of counsel to suchIndemnified Party.

## (f)            Nothing herein shall in any way constitute a waiver orlimitation of any rights that the Issuer or the Collateral Manager may haveunder any United States federal or state securities laws.

# 14.           Obligations of Collateral Manager.  (a) The Collateral Manager to the extentrequired under the Indenture, and on behalf of the Issuer, shall:  (i) engage the services of anIndependent certified accountant to prepare any United States federal, state orlocal income tax or information returns and any non-United States incometax or information returns that the Issuer may from time to time be required tofile under applicable law (each a “Tax Return”), (ii) deliver, at least thirty(30) days before any applicable due date upon which penalties and interestwould accrue, each Tax Return, properly completed, to the Company Administratorfor signature by an Authorized Officer of the Issuer and (iii) file ordeliver such Tax Return on behalf of the Issuer within any applicable timelimit with any authority or Person as required under applicable law.

## (b)           Unless otherwise required by any provision of theIndenture or this Agreement or by applicable law, the Collateral Manager shallnot take any action which it knows, or acting with gross negligence, would (a)materially adversely affect the Issuer for purposes of United States federal orstate law or any other law known to the Collateral Manager to be applicable tothe Issuer, (b) not be permitted under the Issuer’s Memorandum and Articles ofAssociation or the Co-Issuer’s limited liability company agreement, (c) requireregistration of the Issuer, the Co-Issuer or the Assets as an “investmentcompany” under the Investment Company Act or (d) cause the Issuer to violatethe terms of the Indenture, including any representation or certification to begiven by the Issuer thereunder or pursuant thereto, it being understood that inconnection with the foregoing the Collateral Manager will not be required tomake any independent investigation of any facts or laws not otherwise known toit in connection with its obligations under this Agreement and the Indenture orthe conduct of its business generally. The Collateral Manager will perform its duties under this Agreement andthe Indenture in a manner reasonably intended not to subject the Issuer to U.S.federal or state income taxation, it being understood that, notwithstandinganything to the contrary set forth herein or in the Indenture, the CollateralManager shall be deemed to have complied with the requirements of the Indentureand any certifications, certificates or other related documents requiredpursuant to the Indenture in connection with not subjecting the Issuer to U.S.federal or state income taxation, if it satisfies the requirements set forth inthis sentence and will not be liable to the Trustee, the Holders of the Notes,the Co-Issuers, the Co-Issuers’ creditors or any other Person as a result ofthe Issuer engaging, or a determination that the Issuer has engaged, in a U.S.trade or business for U.S. federal income tax purposes if it has complied withthis section.  The Collateral Manager shalluse all commercially reasonable efforts to ensure that no action is taken byit, and shall not intentionally or with reckless disregard take any action,which the Collateral Manager knows or reasonably should know would have amaterially adverse United States federal or state income tax effect on theIssuer.

## (c)           Notwithstandinganything to the contrary herein, but subject to the standard set forth inSection 1 hereof, the Collateral Manager or any of its Affiliates may take

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## any action that is not specifically prohibited by the Indenture, thisAgreement or applicable law that the Collateral Manager or any Affiliate of theCollateral Managers deems to be in its (or in its portfolio’s) best interestregardless of its impact on the Collateral Debt Securities.

# 15.           No Partnership or Joint Venture.  The Issuer and the Collateral Manager are notpartners or joint venturers with each other, and nothing herein shall beconstrued to make them such partners or joint venturers or impose any liabilityas such on either of them.  TheCollateral Manager’s relation to the Issuer shall be that of an independentcontractor and not a general agent. Except as expressly provided in this Agreement and in the Indenture, theCollateral Manager shall not have authority to act for or represent the Issuerin any way and shall not otherwise be deemed to be the Issuer’s agent.

# 16.           Notices.  Any notice from a party under this Agreementshall be in writing and sent by answer-back facsimile or addressed anddelivered or sent by certified mail, postage prepaid, return receipt requestedor sent by overnight courier service guaranteeing next day delivery to theother party at such address as such other party may designate for the receiptof such notice.  Until further notice tothe other party, it is agreed that the address of the Issuer for this purposeshall be:

Gramercy Real Estate CDO2006-1, Ltd.c/o Maples Finance LimitedP.O. Box 1093GTQueensgate HouseSouth Church StreetGeorge TownGrand Cayman, Cayman IslandsAttention:  The DirectorsFax:  +1 345 945 7099Telephone:  +1 345 945 7100

with two copies to the Collateral Manager (asaddressed below).

the address of theCollateral Manager for this purpose shall be:

GKK Manager LLCc/o SL Green Realty Corp.420 Lexington Avenue19th FloorNew York, New York 10170Telephone:  212-594-2700Fax:  212-216-1785Attention:  Marc HollidayAttention:  Andrew Levine

# 17.           Succession; Assignment.  (a) This Agreement shall inure to the benefit of and be binding upon thesuccessors to the parties hereto. No assignment of this Agreement shall be madewithout the consent of the other party except as set forth below and withoutsatisfaction of the Rating Agency Condition (except as permitted under clauses(b) and (c) below), provided

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# that the Issuer maycollaterally assign its interest in this Agreement to the Trustee under theIndenture.

## (b)           Upon satisfaction of the Rating Agency Condition, thisAgreement may be assigned by the Collateral Manager to an Affiliate thereofthat has substantially the same personnel, or personnel with comparableexpertise, as the Collateral Manager and that is capable of performing theobligations of the Collateral Manager under this Agreement; providedthat satisfaction of the Rating Agency Condition shall not be required inconnection with any assignment involving an internalization of the CollateralManager or any assignment to a successor upon merger or acquisition.  Notwithstanding the foregoing, the CollateralManager shall provide S&P with prompt notice of any assignment involving aninternalization of the Collateral Manager.

## (c)           This Agreement may be assigned by the Collateral Managerto any Person other than an Affiliate only upon satisfaction of the RatingAgency Condition and approval by a Majority of the Controlling Class.

## (d)           Upon the execution and delivery of such a counterpart bythe assignee, the Collateral Manager shall be released from further obligationspursuant to this Agreement, except with respect to the Collateral Manager’sobligations arising under Section 13 of this Agreement prior to such assignmentand except with respect to the Collateral Manager’s obligations under the lastsentence of Section 10 and Sections 7 and 12 hereof

# 18.           No Bankruptcy Petition/LimitedRecourse.  The Collateral Managercovenants and agrees that, prior to the date that is one year and one day (or,if longer, the applicable preference period then in effect) after the paymentin full of all Notes issued by the Issuer under the Indenture, the CollateralManager will not institute against, or join any other Person in institutingagainst, the Issuer or the Co-Issuer any bankruptcy, reorganization,arrangement, insolvency or liquidation proceedings or other proceedings underany bankruptcy, insolvency, reorganization or similar law of any jurisdiction; provided,however, that nothing in this Section 18 shall preclude, or be deemed tostop, the Collateral Manager from taking any action prior to the expiration ofthe aforementioned one year and one day period (or, if longer, the applicablepreference period then in effect) in (x) any case or proceedingvoluntarily filed or commenced by the Issuer or the Co-Issuer, as the case maybe or (y) any involuntary insolvency proceeding filed or commenced againstthe Issuer or the Co-Issuer, as the case may be, by a Person other than theCollateral Manager.  The CollateralManager hereby acknowledges and agrees that the Issuer’s obligations hereunderwill be solely the corporate obligations of the Issuer, and the CollateralManager will not have recourse to any of the directors, officers, employees,shareholders or affiliates of the Issuer, or any members of the AdvisoryCommittee, with respect to any claims, losses, damages, liabilities,indemnities or other obligations in connection with any transactioncontemplated hereby.  Notwithstanding anyprovision hereof, all obligations of the Issuer and any claims arising fromthis Agreement or any transactions contemplated by this Agreement shall belimited solely to the Collateral Debt Securities and the other Assets andpayable in accordance with the Priority of Payments.  If payments on any such claims from theAssets are insufficient, no other assets shall be available for payment of thedeficiency and, following liquidation of all the Assets, any claims of theCollateral Manager arising from this Agreement and the obligations of theIssuer to pay such deficiencies shall be

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# extinguished.  The Issuer hereby acknowledges and agreesthat the Collateral Manager’s obligations hereunder shall be solely the limitedliability company obligations of the Collateral Manager, and the Issuer shallnot have any recourse to any of the members, managers, directors, officers,employees, shareholders or Affiliates of the Collateral Manager with respect toany claims, losses, damages, liabilities, indemnities or other obligations inconnection with any transactions contemplated hereby.  The provisions of this Section 18 shallsurvive the termination of this Agreement for any reason whatsoever.

# 19.           Miscellaneous.  (a)  This Agreement shall begoverned by and construed in accordance with the internal laws of the State ofNew York without regard to the conflict of laws principles thereof other thanSections 5-1401 and 5-1402 of the General Obligations Law of the State of New York.  With respect to any suit, action orproceedings relating to this Agreement (“Proceedings”), each party irrevocably(i) submits to the nonexclusive jurisdiction of the courts of the State ofNew York and the United States District Court located in the Borough ofManhattan in New York City and (ii) waives any objection that such partymay have at any time to the laying of venue of any Proceedings brought in anysuch court, waives any claim that such Proceedings have been brought in aninconvenient forum and further waives the right to object, with respect to suchProceedings, that such court does not have any jurisdiction over suchparty.  Nothing in this Agreementprecludes either party from bringing Proceedings in any other jurisdiction, norshall the bringing of Proceedings in any one or more jurisdictions preclude thebringing of Proceedings in any other jurisdiction.  The Collateral Manager irrevocably consentsto the service of any and all process in any action or proceeding by themailing or delivery of copies of such process to the Collateral Manager at theoffice of the Collateral Manager, c/o SL Green Realty Corp., 420 LexingtonAvenue, 19th Floor, New York, New York 10170, Attention:  Andrew Levine, or such other address as theCollateral Manager may advise the Issuer in writing.  The Issuer irrevocably consents to theservice of any and all process in any action or proceeding by the mailing ordelivery of copies of such process to CT Corporation System, 111 8th Avenue, 13th Floor, New York,New York 10011 (and any successor entity), as its authorized agent to receiveand forward on its behalf service of any and all process which may be served inany such suit, action or proceeding in any such court and agrees that serviceof process upon CT Corporation System shall be deemed in every respecteffective service of process upon it in any such suit, action or proceeding andshall be taken and held to be valid personal service upon it.  Each party hereto agrees that a finaljudgment in any such action or proceeding shall be conclusive and may beenforced in other jurisdictions by suit on the judgment or in any other mannerprovided by law.

EACH PARTY HERETO HEREBYIRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHTTO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THISAGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

## (b)           The captions in this Agreement are included forconvenience only and in no way define or limit any of the provisions hereof orotherwise affect their construction or effect.

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## (c)           In the event any provision of this Agreement shall be heldinvalid or unenforceable by any court of competent jurisdiction, such holdingshall not invalidate or render unenforceable any other provision hereof.

## (d)           This Agreement (including Exhibit A attachedhereto) may not be amended or modified or any provision thereof waived(i) except by an instrument in writing signed by both of the partieshereto or, in the case of a waiver, by the party waiving compliance and (ii) ineach case, in compliance with Section 15.1(f) of the Indenture, includingwith respect to satisfaction of the Rating Agency Condition.  This Agreement (including Exhibit Aattached hereto) may be modified without the prior written consent of the Trustee,any Hedge Counterparty or the holders of Notes to correct any inconsistency orcure any ambiguity or mistake.  Any otheramendment of this Agreement (including Exhibit A attached hereto) shall requirethe prior written consent of the Trustee and each Hedge Counterparty, whichconsent shall not be unreasonably withheld and is subject to the satisfactionof the Rating Agency Condition.

## (e)           This Agreement constitutes the entire understanding andagreement between the parties hereto and supersedes all other prior andcontemporaneous understandings and agreements, whether written or oral, betweenthe parties hereto concerning this subject matter (other than the Indenture).

## (f)            The Collateral Manager hereby agrees and consents to theterms of Section 15.1(f) of the Indenture applicable to the CollateralManager and shall perform any provisions of the Indenture made applicable tothe Collateral Manager by the Indenture as required by Section 15.1(f) ofthe Indenture.

## (g)           This Agreement may be executed in any number ofcounterparts, each of which so executed shall be deemed an original, but allsuch counterparts shall together constitute one and the same instrument.

## (h)           The words “include,” “includes” and “including” shall bedeemed to be followed by the phrase “but not limited to.”

## (i)            Subject to the last sentence of the penultimate paragraphof Section 1 hereof, in the event of a conflict between the terms of thisAgreement and the Indenture, including with respect to the obligations of theCollateral Manager hereunder and thereunder, the terms of this Agreement shallbe controlling.

## (j)            No failure or delay on the part of any party hereto toexercise any right or remedy under this Agreement shall operate as a waiverthereof, and no waiver shall be effective unless it is in writing and signed bythe party granting such waiver.

## (k)           This Agreement is made solely for the benefit of theIssuer, the Collateral Manager and the Trustee, on behalf of the Noteholders,the Holders of Preferred Shares and each Hedge Counterparty, their successorsand assigns, and no other person shall have any right, benefit or interestunder or because of this Agreement.

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## (l)            The Collateral Manager hereby irrevocably waives anyrights it may have to set off against the Assets.

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## IN WITNESS WHEREOF, the partieshereto have caused this Agreement to be executed (as a deed in the case of theIssuer) by their respective authorized representatives as of the day and yearfirst above written.

 
|        | Executed as a Deed                                 |
|--------|----------------------------------------------------|
|   |                                               |   |
|   |                                               |   |
|   | GRAMERCY REAL  ESTATE CDO 2006-1,  LTD., as Issuer |
|   |                                               |
|   |                                               |
|   | By:                                                |   |
|   |                                               | Name: |
|   |                                               | Title: |
|   |                                               |   |
|   |                                               |   |
|   | Witness:                                           |
|   |                                               |   |
|   |                                               |
|   |                                               |   |
|   | GKK MANAGER LLC,  as Collateral Manager            |
|   |                                               |
|   |                                               |
|   | By:                                                |   |
|   |                                               | Name: |
|   |                                               | Title: |

 

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