**Exhibit 10.12**

**GRAMERCY CAPITALCORP.**

**1,000,000 SHARES**ATM EQUITY OFFERINGSMSALES AGREEMENT

**May 10, 2006**

Merrill Lynch &Co.c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated4 World Financial CenterNew York, New York 10080\

Ladies and Gentlemen:

GRAMERCY CAPITAL CORP., a Maryland corporation (the “**Company**”), GKK Capital LP, aDelaware limited partnership (the “**Operating Partnership**”),and GKK Manager, LLC, a Delaware limited liability company and the manager ofthe Company and the Operating Partnership (together with its affiliates, the “**Manager**”) confirms their respectiveagreements (this “**Agreement**”)with Merrill Lynch & Co. (“**ML&Co**”),as follows:

# 1. Issuance and Saleof Shares. The Company agrees that, from time to time during the term ofthis Agreement, on the terms and subject to the conditions set forth herein, itmay issue and sell through ML&Co, acting as agent and/or principal, (a) upto 1,000,000 shares (the****“**Shares**”) of the Company’s commonstock, par value $0.001 per share (the “**Common Stock**”).Notwithstanding anything to the contrary contained herein, and provided thatML&Co complies with the Placement Notice (as defined herein), the partieshereto agree that compliance with the limitation set forth in this Section 1on the number and aggregate market value of Shares issued and sold under thisAgreement shall be the sole responsibility of the Company, and ML&Co shallhave no obligation in connection with such compliance. The issuance and sale ofShares through ML&Co will be effected pursuant to the RegistrationStatement (as defined below) filed by the Company and declared effective by theSecurities and Exchange Commission (the “**Commission**”),although nothing in this Agreement shall be construed as requiring the Companyto use the Registration Statement to issue Common Stock.

# The Company filed on August 31,2005, in accordance with the provisions of the Securities Act of 1933, asamended, and the rules and regulations thereunder (collectively, the “**Securities Act**”), with theCommission a registration statement on Form S-3 (File No. 333-1280130),including a base prospectus, relating to certain securities, including theShares to be issued from time to time by the Company, and which incorporates byreference documents that the Company has filed or will file in accordance withthe provisions of the Securities Exchange Act of 1934, as amended, and the rules andregulations thereunder (collectively, the “**Exchange Act**”).The Company has prepared a prospectus supplement specifically relating to theShares (the “**Prospectus Supplement**”) to thebase prospectus included as part of such registration

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# statement. The Company has furnished to ML&Co, foruse by ML&Co, copies of the prospectus included as part of suchregistration statement, as supplemented by the Prospectus Supplement, relatingto the Shares. Except where the context otherwise requires, such registrationstatement, as amended when it became effective, including all documents filedas part thereof or incorporated by reference therein, and including anyinformation contained in a Prospectus (as defined below) subsequently filedwith the Commission pursuant to Rule 424(b) under the Securities Actand also including any other registration statement filed pursuant to Rule 462(b) underthe Securities Act, collectively, are herein called the “**RegistrationStatement**,” and the base prospectus, including all documentsincorporated therein by reference, included in the Registration Statement, asit may be supplemented by the Prospectus Supplement, in the form in which such prospectus and/or ProspectusSupplement have most recently been filed by the Company with theCommission pursuant to Rule 424(b) under the Securities Act, togetherwith any “issuer free writing prospectus,” as defined in Rule 433 of the 1933Act Regulations (“**Rule 433**”),relating to the Shares that (i) is required to be filed with theCommission by the Company or (ii) is exempt from filing pursuant to Rule 433(d)(5)(i),in each case in the form filed or required to be filed with the Commission or,if not required to be filed, in the form retained in the Company’s recordspursuant to Rule 433(g), is herein called the “**Prospectus**.”Any reference herein to the Registration Statement, the Prospectus or anyamendment or supplement thereto shall be deemed to refer to and include thedocuments incorporated by reference therein, and any reference herein to theterms “amend,” “amendment” or “supplement” with respect to the RegistrationStatement or the Prospectus shall be deemed to refer to and include the filingafter the execution hereof of any document with the Commission deemed to beincorporated by reference therein. For purposes of this Agreement, allreferences to the Registration Statement, the Prospectus or to any amendment orsupplement thereto shall be deemed to include any copy filed with theCommission pursuant to its Electronic Data Gathering Analysis and RetrievalSystem (“**EDGAR**”).

# 2. Placements. Eachtime that the Company wishes to issue and sell Shares hereunder (each, a “**Placement**”), it will notifyML&Co by email notice (or other method mutually agreed to in writing by theParties) containing the parameters in accordance with which it desires theShares to be sold, which shall at a minimum include the number of Shares (the “**Placement Shares**”) to be issued,the time period during which sales are requested to be made, any limitation onthe number of Shares that may be sold in any one day and any minimum pricebelow which sales may not be made (a “**Placement Notice**”),a form of which containing such minimum sales parameters necessary is attachedhereto as **Schedule 1**. The PlacementNotice shall originate from any of the individuals from the Company set forthon **Schedule 3**(with a copy to each ofthe other individuals from the Company listed on such schedule), and shall beaddressed to each of the individuals from ML&Co set forth on **Schedule 3**, as such **Schedule 3** may be amended from timeto time. The Placement Notice shall be effective upon receipt by ML&Counless and until (i) in accordance with the notice requirements set forthin Section 4, ML&Co declines to accept the terms containedtherein for any reason, in its sole discretion, (ii) the entire amount ofthe Placement Shares have been sold, (iii) in accordance with the noticerequirements set forth in Section 4, the Company suspends orterminates the Placement Notice, (iv) the Company issues a subsequentPlacement Notice with parameters superseding those on the earlier datedPlacement Notice, or (iv) the Agreement has been terminated under theprovisions of Section 10.  The amount of any discount, commission orother compensation to be paid by the Company to ML&Co in connection withthe sale of the Placement Shares shall be

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# calculated in accordance with the terms set forth in **Schedule 2.**It is expresslyacknowledged and agreed that neither the Company nor ML&Co will have anyobligation whatsoever with respect to a Placement or any Placement Sharesunless and until the Company delivers a Placement Notice to ML&Co andML&Co does not decline such Placement Notice pursuant to the terms setforth above, and then only upon the terms specified therein and herein. In theevent of a conflict between the terms of this Agreement and the terms of aPlacement Notice, the terms of the Placement Notice will control.

# 3. Sale of PlacementShares by ML&Co. Subject to the terms and conditions herein set forth,upon the Company’s issuance of a Placement Notice, and unless the sale of thePlacement Shares described therein has been declined, suspended, or otherwiseterminated in accordance with the terms of this Agreement, ML&Co, for theperiod specified in the Placement Notice, will use its commercially reasonableefforts consistent with its normal trading and sales practices to sell suchPlacement Shares up to the amount specified, and otherwise in accordance withthe terms of such Placement Notice. ML&Co will provide written confirmationto the Company no later than the opening of the Trading Day (as defined below)immediately following the Trading Day on which it has made sales of PlacementShares hereunder setting forth the number of Placement Shares sold on such day,the compensation payable by the Company to ML&Co pursuant to Section 2with respect to such sales, and the Net Proceeds (as defined below) payable tothe Company, with an itemization of the deductions made by ML&Co (as setforth in Section 5(a)) from the gross proceeds that it receives from suchsales. After consultation to the Company and subject to the terms of thePlacement Notice, ML&Co may sell Placement Shares by any method permittedby law deemed to be an “at the market” offering as defined in Rule 415 ofthe Securities Act, including without limitation sales made directly on the NewYork Stock Exchange(the “**Exchange**”), on any other existingtrading market for the Common Stock or to or through a market maker. Afterconsultation with the Company and subject to the terms of the Placement Notice,ML&Co may also sell Placement Shares in privately negotiated transactions. TheCompany acknowledges and agrees that (i) there can be no assurance thatML&Co will be successful in selling Placement Shares, and (ii) ML&Cowill incur no liability or obligation to the Company or any other person orentity if it does not sell Placement Shares for any reason other than a failureby ML&Co to use its commercially reasonable efforts consistent with itsnormal trading and sales practices to sell such Placement Shares as requiredunder this Section 3. For the purposes hereof, “**Trading Day**” means any day on whichCommon Stock is purchased and sold on the principal market on which the CommonStock is listed or quoted.

# 4. Suspension of Sales.The Company or ML&Co may, upon notice to the other party in writing(including by email correspondence to each of the individuals of the otherParty set forth on **Schedule 3,**ifreceipt of such correspondence is actually acknowledged by any of theindividuals to whom the notice is sent, other than via auto-reply) or bytelephone (confirmed immediately by verifiable facsimile transmission or emailcorrespondence to each of the individuals of the other Party set forth on **Schedule 3**), suspend any sale ofPlacement Shares; *provided, however*,that such suspension shall not affect or impair either party’s obligations withrespect to any Placement Shares sold hereunder prior to the receipt of suchnotice. Except as set forth in Section 11 herein, each of theParties agrees that no such notice under this Section 4 shall beeffective against the other unless it is made to one of the individuals namedon **Schedule 3** hereto, as such Schedulemay be amended from time to time.

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# 5. Settlement.

## (a) Settlementof Placement Shares. Unless otherwise specified in the applicable PlacementNotice, settlement for sales of Placement Shares will occur on the third (3rd) Trading Day (or such earlierday as is industry practice for regular-way trading) following the date onwhich such sales are made (each, a “**SettlementDate**”). The amount of proceeds to be delivered to the Company ona Settlement Date against receipt of the Placement Shares sold (the “**Net Proceeds**”) will be equal to theaggregate sales price received by ML&Co at which such Placement Shares weresold, after deduction for (i) ML&Co’s commission, discount or othercompensation for such sales payable by the Company pursuant to Section 2hereof, (ii) any other amounts due and payable by the Company to ML&Cohereunder pursuant to Section 7(g) (Expenses) hereof, and (iii) anytransaction fees imposed by any governmental or self-regulatory organization inrespect of such sales.

## (b) Deliveryof Placement Shares. On or before each Settlement Date, the Company will,or will cause its transfer agent to, electronically transfer the PlacementShares being sold by crediting ML&Co’s or its designee’s account at The DepositoryTrust Company through its Deposit and Withdrawal at Custodian System or by suchother means of delivery as may be mutually agreed upon by the parties heretowhich in all cases shall be freely tradeable, transferable, registered sharesin good deliverable form. On each Settlement Date, ML&Co will deliver therelated Net Proceeds in same day funds to an account designated by the Companyon, or prior to, the Settlement Date. The Company agrees that if the Companydefaults in its obligation to deliver Placement Shares on a Settlement Date,the Company agrees that in addition to and in no way limiting the rights andobligations set forth in Section 9(a) (Indemnification andContribution) hereto, it will (i) hold ML&Co harmless against anyloss, claim, damage, or expense (including reasonable out-of-pocket fees andexpenses of external counsel), as incurred, arising out of or in connectionwith such default by the Company and (ii) pay to ML&Co any commission,discount, or other compensation to which it would otherwise have been entitledabsent such default.

# 6. Representations andWarranties.

## (a) TheCompany and the Operating Partnership each severally represents and warrantsto, and agrees with, ML&Co that as of the date of this Agreement, as ofeach Representation Date (as defined in Section 7(m) below) onwhich a certificate is required to be delivered pursuant to Section 7(m) ofthis Agreement and as of each Applicable Time, as the case may be:

### (1)           Registration Statement andProspectus. The Company meets the requirements for use of Form S-3under the Securities Act. The Registration Statement has been filed with theCommission and has been declared effective under the Securities Act. TheRegistration Statement or Prospectus has named ML&Co as an underwriter,acting as principal and/or agent that the Company might engage in the sectionentitled “Plan of Distribution.”  TheCompany has not received, and has no notice of, any order of

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### the Commissionpreventing or suspending the use of the Registration Statement, or threateningor instituting proceedings for that purpose. Copies of the RegistrationStatement, the Prospectus, and any such amendments or supplements and alldocuments incorporated by reference therein that were filed with the Commissionon or prior to the date of this Agreement have been delivered, or madeavailable through EDGAR, to ML&Co and their counsel. The Company has notdistributed and will not distribute any offering material in connection withthe offering or sale of the Placement Shares other than the RegistrationStatement or the Prospectus. The Common Stock is currently listed on theExchange under the trading symbol “GKK.”

### (2)           No Misstatement or Omission. TheRegistration Statement, at each deemed effective date with respect to ML&Copursuant to Rule 430B(f)(2) of the Securities Act will comply in allmaterial respects with the requirements of the Securities Act and did not, orwill not, contain an untrue statement of a material fact or omit to state amaterial fact required to be stated therein or necessary to make the statementstherein not misleading. The Prospectus and any amendment or supplement thereto,on the date thereof and at each Applicable Time and each Settlement Date, didnot or will not include an untrue statement of a material fact or omit to statea material fact necessary to make the statements therein, in light of thecircumstances under which they were made, not misleading. The foregoing shallnot apply to statements in, or omissions from, any such document made in relianceupon, and in conformity with, information furnished to the Company by ML&Cospecifically for use in the preparation thereof.

### (3)           Company Authorization of Agreement.This Agreement and the transactions contemplated herein have been duly andvalidly authorized by the Company and this Agreement has been duly and validlyexecuted and delivered by the Company.

### (4)           Operating PartnershipAuthorization of Agreement. This Agreement and the transactionscontemplated herein have been duly and validly authorized by the OperatingPartnership and this Agreement has been duly and validly executed and deliveredby the Operating Partnership.

### (5)           Authorization of ManagementAgreement and Origination Agreement. The amended and restated managementagreement (the “**Management Agreement**”),effective as of April 19, 2006, among the Company, the OperatingPartnership and the Manager has been duly authorized, executed and delivered byeach of the Company and the Operating Partnership and constitutes a valid andbinding agreement of each of the Company and the Operating Partnershipenforceable in accordance with its terms, except to the extent that enforcementthereof may be limited by bankruptcy, insolvency, reorganization or other lawsaffecting enforcement of creditors’ rights or by general equitable principles. Theamended and restated origination agreement (the “**Origination Agreement**”), effective as of April 19,2006, among the Company, the Operating Partnership and SL Green OperatingPartnership, L.P. has been duly authorized, executed and delivered by each ofthe Company and the Operating Partnership and constitutes a valid and bindingagreement of each of the Company and the Operating Partnership enforceable inaccordance with its terms, except to the extent that enforcement thereof

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### may be limitedby bankruptcy, insolvency, reorganization or other laws affecting enforcementof creditors’ rights or by general equitable principles.

### (6)           Financial Statements. Thefinancial statements of the Company and its subsidiaries, together with therelated schedules (if any) and notes (the “**CompanyFinancial Statements**”), and any financial statements required byRule 3-14 of Regulation S-X (the “**Acquisition Financial Statements**”), included in theRegistration Statement and the Prospectus present fairly the financial positionof the Company and its consolidated subsidiaries at the dates indicated, orwith respect to the Acquisition Financial Statements, the respective propertyor tenant; and all such financial statements have been prepared in conformitywith GAAP applied on a consistent basis (except as otherwise noted herein)throughout the periods involved and comply with all applicable accountingrequirements under the Securities Act. The supporting schedules, if any,included in the Registration Statement present fairly, in accordance with GAAP,the information required to be stated therein. There are no financialstatements or schedules required to be included in the Prospectus which are notso included. The unaudited pro forma financial information (including therelated notes) included in the Prospectus and any preliminary Prospectuscomplies as to form in all material respects with the applicable accountingrequirements of the Securities Act, and management of the Company believes thatthe assumptions underlying the pro forma adjustments are reasonable. Such proforma adjustments have been properly applied to the historical amounts in thecompilation of the information and such information fairly presents withrespect to the Company and its consolidated subsidiaries, the financialposition, results of operations and other information purported to be showntherein at the respective dates and for the respective periods specified. Nopro forma financial information is required to be included in the Prospectuswhich is not so included.

### (7)           No Material Adverse Change inBusiness. Since the respective dates as of which information is given inthe Registration Statement and the Prospectus (in each case exclusive of anyamendments or supplements thereto subsequent to the date of this Agreement),except as otherwise stated therein, (A) there has been no material adversechange or any development involving a prospective material adverse change inthe operations, condition (financial or otherwise), or in the earnings,business affairs or business prospects of the Company and its subsidiaries,including, without limitation, the Operating Partnership, considered as oneenterprise, whether or not arising in the ordinary course of business (a “**Material Adverse Effect**”), and (B) sincethe date of the latest balance sheet presented in the Registration Statementand Prospectus, neither the Company nor any of its subsidiaries has incurred orundertaken any liabilities or obligations, direct or contingent, which arematerial to the Company and its subsidiaries considered as one enterprise,except for liabilities or obligations which are described in the RegistrationStatement and the Prospectus.

### (8)           Good Standing of the Company andthe Operating Partnership. The Company has been duly organized and isvalidly existing as a corporation in good standing under the laws of the Stateof Maryland and has power and authority to own, lease and operate itsproperties and to conduct its business as described in the Prospectus and toenter into and perform its obligations under this Agreement; and the Operating

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### Partnershiphas been duly formed and is validly existing as a limited partnership in goodstanding under the laws of the State of Delaware and has authority to own, leaseand operate its properties and to conduct its business as described in theProspectus. Each of the Company and the Operating Partnership is duly qualifiedas a foreign corporation to transact business and is in good standing in theState of New York and in each other jurisdiction in which such qualification isrequired, whether by reason of the ownership or leasing of property or theconduct of business, except (solely in the case of jurisdictions other than theState of New York) where the failure so to qualify or to be in good standingwould not result in a Material Adverse Effect.

### (9)           The Partnership Agreement. TheThird Amended and Restated Agreement of Limited Partnership of the OperatingPartnership (the “**Partnership Agreement**”)has been duly and validly authorized, executed and delivered by the Company andis a valid and binding agreement, enforceable against the Company in accordancewith its terms, except to the extent that enforcement thereof may be limited bybankruptcy, insolvency, reorganization or other laws affecting enforcement ofcreditors’ rights or by general equitable principles. The Partnership Agreementhas been duly executed and delivered by the other parties thereto and, to theCompany’s knowledge, is a valid and binding agreement enforceable against suchparties in accordance with its terms, except to the extent that enforcementthereof may be limited by bankruptcy, insolvency, reorganization or other lawsaffecting enforcement of creditors’ rights or by general equitable principles.

### (10)         Good Standing of Subsidiaries. Eachsubsidiary of the Company listed on **Exhibit A**hereto has been duly organized and is validly existing as a corporation,limited or general partnership or limited liability company, as the case maybe, in good standing under the laws of the jurisdiction of its organization,has power and authority to conduct its business as described in the Prospectusand is duly qualified as a foreign corporation, limited or general partnershipor limited liability company, as the case may be, to transact business and isin good standing in each jurisdiction in which such qualification is required,whether by reason of the ownership or leasing of property or the conduct ofbusiness, except where the failure so to qualify or to be in good standingwould not result in a Material Adverse Effect; except as otherwise disclosed inthe Registration Statement and the Prospectus, all of the issued andoutstanding stock of each such subsidiary that is a corporation, all of theissued and outstanding partnership interests of each such subsidiary that is alimited or general partnership and all of the issued and outstanding limitedliability company interests, membership interests or other similar interests ofeach such subsidiary that is a limited liability company have been dulyauthorized and validly issued, and, in the case of each subsidiary that is acorporation, are fully paid and nonassessable and are owned by the Company orthe Operating Partnership, directly or indirectly, free and clear of any lien;and none of the outstanding shares of stock, partnership interests or limitedliability company interests, membership interests or other similar interests ofany such subsidiary was issued in violation of any preemptive rights, rights offirst refusal or other similar rights of any securityholder of such subsidiaryor any other person. The only subsidiaries of the Company are the subsidiarieslisted on **Exhibit A** heretoand **Exhibit A** accurately setsforth whether each such subsidiary is a corporation, limited or generalpartnership or limited liability company and the

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### jurisdictionof organization of each such subsidiary and, in the case of any subsidiarywhich is a partnership or limited liability company, its general partners andmanaging members, respectively. Any subsidiaries of the Company which are “significantsubsidiaries” as defined by Rule 1-02 of Regulation S-X are listedon Exhibit A hereto under the caption “Significant Subsidiaries.”

### (11)         Capitalization. The authorized,issued and outstanding stock of the Company is as set forth under the caption “Capitalization”in the Prospectus. The issued and outstanding shares of stock of the Companyhave been duly authorized and are validly issued, fully paid and nonassessable;and none of the outstanding shares of stock of the Company was issued inviolation of any preemptive rights, rights of first refusal or other similarrights of any securityholder of the Company or any other person. Theauthorized, issued and outstanding units of partnership interest in theOperating Partnership, including the Class B Limited Partner interests(the “**OP Units**”), have beenduly authorized and validly issued; and all of such OP Units have been sold incompliance with applicable laws (including, without limitation, federal andstate securities laws).

### (12)         Authorization of Securities. ThePlacement Shares have been duly authorized for issuance and sale to ML&Copursuant to this Agreement and, when issued and delivered by the Companypursuant to this Agreement against payment of the consideration set forthherein, will be validly issued, fully paid and nonassessable; no holder of thePlacement Shares is or will be subject to personal liability by reason of beingsuch a holder; and the issuance of the Placement Shares is not subject to anypreemptive right, right of first refusal or other similar right of anysecurityholder of the Company or any other person, except for the rights of SLGreen Realty Corp. (“**SL Green**”)pursuant to the Origination Agreement, as described in the Prospectus.

### (13)         Absence of Defaults and Conflicts.Neither the Company, the Operating Partnership nor any of their respectivesubsidiaries is in violation of its Organizational Documents or in default inthe performance or observance of any obligation, agreement, covenant orcondition contained in any Company Document, except for such defaults thatwould not result in a Material Adverse Effect. The execution, delivery andperformance of this Agreement and the consummation of the transactions contemplatedherein and in the Registration Statement and the Prospectus (including theissuance and sale of the Securities and the use of the proceeds from the saleof the Securities as described in the Prospectus under the caption “Use ofProceeds”) and compliance by each of the Company and the Operating Partnershipwith its obligations under this Agreement do not and will not, whether with orwithout the giving of notice or passage of time or both, conflict with orconstitute a breach of, or default under, or result in the creation orimposition of any Lien upon any property or assets of the Company, theOperating Partnership or any of their respective subsidiaries pursuant to anyCompany Documents, nor will such action result in any violation of the provisionsof the Organizational Documents of the Company, the Operating Partnership orany of their respective subsidiaries or any applicable law, statute, rule,regulation, judgment, order, writ or decree of any government, governmentinstrumentality or court, domestic or foreign,

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### havingjurisdiction over the Company or any of its subsidiaries or any of theirrespective assets, properties or operations.

### (14)         Absence of Proceedings. There isno action, suit, proceeding, inquiry or investigation before or brought by anycourt or governmental agency or body, domestic or foreign, now pending, againstor affecting the Company, the Operating Partnership or any of their respectivesubsidiaries or which has as a subject thereof, any officer or director of theCompany in their capacity as such or as would otherwise be required to bedisclosed in the Prospectus. To the knowledge of the Company or the OperatingPartnership, there is no action, suit, proceeding, inquiry or investigationbefore or brought by any court or governmental agency or body, domestic orforeign, threatened, against or affecting the Company, the OperatingPartnership or any of their respective subsidiaries except as would not have aMaterial Adverse Effect or which has as a subject thereof, any officer ordirector of the Company in their capacity as such or as would otherwise berequired to be disclosed in the Prospectus.

### (15)         Independent Public Accountant. Ernst &Young LLP (**“E&Y”**), whocertified the financial statements and supporting schedules included in theRegistration Statement and the Prospectus, are independent public accountantsas required by the Securities Act and the Exchange Act.

### (16)         Accuracy of Descriptions andExhibits. The information in the Prospectus under the captions “Descriptionof Common Stock,” “Certain Provisions of Maryland Law and of Our Charter andBylaws,” “The Operating Partnership Agreement” and “Material U.S. FederalIncome Tax Considerations” is correct in all material respects; alldescriptions in the Registration Statement and the Prospectus of any CompanyDocuments are accurate in all material respects; and there are no franchises,contracts, indentures, mortgages, deeds of trust, loan or credit agreements,bonds, notes, debentures, evidences of indebtedness, leases or otherinstruments or agreements required to be described or referred to in theRegistration Statement or the Prospectus or to be filed as exhibits to theRegistration Statement which have not been so described and filed as required. Thestatistical and market-related data included in the Prospectus are based on orderived from sources which the Company and the Operating Partnership believe tobe reliable and accurate.

### (17)         Possession of Intellectual Property.The Company, the Operating Partnership and their respective subsidiaries own orpossess or have the right to use on reasonable terms all patents, patentrights, patent applications, licenses, inventions, copyrights, know-how(including trade secrets and other unpatented and/or unpatentable proprietaryor confidential information, systems or procedures), trademarks, service marks,trade names, service names and other intellectual property (collectively, “**Intellectual Property**”) necessary tocarry on their respective businesses as described in the Prospectus and asproposed to be conducted; and neither the Company, the

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### OperatingPartnership nor any of their respective subsidiaries has received any notice oris otherwise aware of any infringement of or conflict with asserted rights ofothers with respect to any Intellectual Property or of any facts orcircumstances which would render any Intellectual Property invalid orinadequate to protect the interest of the Company, the Operating Partnership orany of their respective subsidiaries therein, and which infringement orconflict (if the subject of any unfavorable decision, ruling or finding) orinvalidity or inadequacy, individually or in the aggregate, would result in aMaterial Adverse Effect.

### (18)         Absence of Further Requirements.(A) No filing with, or authorization, approval, consent, license, order,registration, qualification or decree of, any court or governmental authorityor agency, domestic or foreign, (B) no authorization, approval, vote orother consent of any stockholder or creditor of the Company or the OperatingPartnership, (C) no waiver or consent under any Company Document, and (D) noauthorization, approval, vote or other consent of any other person or entity,is necessary or required for the performance by the Company or the OperatingPartnership of their respective obligations under this Agreement, for theoffering, issuance, sale or delivery of the Securities hereunder, or for theconsummation of any of the other transactions contemplated by this Agreement,in each case on the terms contemplated by the Prospectus, except such as havebeen already obtained under the 1933 Act or the 1933 Act Regulations or such asmay be required under state securities laws.

### (19)         Possession of Licenses and Permits.The Company, the Operating Partnership and their respective subsidiariespossess such permits, licenses, approvals, consents and other authorizationsissued by the appropriate federal, state, local or foreign regulatory agenciesor bodies (collectively, “**GovernmentalLicenses**”) as are necessary to conduct the business now operatedby them; the Company and its subsidiaries are in compliance with the terms andconditions of all such Governmental Licenses, except where the failure so tocomply would not, individually or in the aggregate, have a Material AdverseEffect; all of the Governmental Licenses are valid and in full force andeffect, except when the invalidity of such Governmental Licenses or the failureof such Governmental Licenses to be in full force and effect would not have aMaterial Adverse Effect; and neither the Company, the Operating Partnership norany of their respective subsidiaries has received any notice of proceedingsrelating to the revocation or modification of any such Governmental Licenseswhich, individually or in the aggregate, if the subject of an unfavorabledecision, ruling or finding, would result in a Material Adverse Effect.

### (20)         Absence of Registration Rights. Exceptas disclosed in the Prospectus, there are no persons with registration rightsor other similar rights to have any securities (debt or equity) (A) registeredpursuant to the Registration Statement or included in the offering contemplatedby this Agreement or (B) otherwise registered by the Company under the1933 Act. There are no persons with tag-along rights or other similar rights tohave any securities (debt or equity) included in the offering contemplated bythis Agreement or sold in connection with the sale of Securities by the Companypursuant to this Agreement.

### (21)         Joint Ventures. All of the jointventures in which the Company or any subsidiary owns any interest (the “**Joint Ventures**”) are listed in **Exhibit B** hereto.

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### (22)         1934 Act Registration; New YorkStock Exchange. The Common Stock has been registered pursuant to Section 12(b) ofthe 1934 Act. The outstanding shares of Common Stock and the Securities beingsold hereunder will have been approved for listing, subject only to officialnotice of issuance, on the NYSE.

### (23)         NASD Matters. All of theinformation (including, but not limited to, information regarding affiliations,security ownership and trading activity) provided to ML&Co or to counselfor ML&Co by the Company, its officers and directors and the holders of anysecurities (debt or equity) or options to acquire any securities of the Companyin connection with letters, filings or other supplemental information providedto NASD Regulation Inc. pursuant to NASD Conduct Rule 2710 or 2720 istrue, complete and correct.

### (24)         Insurance. The Company, theOperating Partnership and each of their respective subsidiaries are insured byinsurers of recognized financial responsibility against such losses and risksand in such amounts as are prudent and customary in the businesses in whichthey are engaged; all policies of insurance and any fidelity or surety bonds insuringthe Company, the Operating Partnership or any of their respective subsidiariesor their respective businesses, assets, employees, officers and directors arein full force and effect; the Company, the Operating Partnership and theirrespective subsidiaries are in compliance with the terms of such policies andinstruments in all material respects; there are no claims by the Company, theOperating Partnership or any of their respective subsidiaries under any suchpolicy or instrument as to which any insurance company is denying liability ordefending under a reservation of rights clause; neither the Company, theOperating Partnership nor any such subsidiary has been refused any insurancecoverage sought or applied for; and neither the Company, the OperatingPartnership nor any such subsidiary has any reason to believe that it will notbe able to renew its existing insurance coverage as and when such coverageexpires or to obtain similar coverage from similar insurers as may be necessaryto continue its business at a cost that would not have a Material AdverseEffect.

### (25)         Disclosure Controls and Procedures.The Company and the Operating Partnership have established and maintaindisclosure controls and procedures (as such term is defined in Rule 13a-15(e) underthe Exchange Act) that (i) are designed to ensure that materialinformation required to be disclosed by the Company in the reports that itfiles or submits under the Exchange Act is accumulated and communicated to theCompany’s management, including the Company’s principal executive officer andprincipal financial officer, particularly during the preparation of the reportsthat it files or submits under the Exchange Act; and (ii) are effective toensure that information required to be disclosed by the Company in the reportsthat it files or submits under the Exchange Act is recorded, processed,summarized and reported within the time periods specified in the Commission’s rules andforms.

### (26)         Accounting Controls. The Companyand its subsidiaries maintain a system of internal control over financialreporting sufficient to provide reasonable assurance that financial reportingis reliable and financial statements for external purposes are prepared inaccordance with GAAP and includes policies and procedures

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### that (i) pertainto the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the Company; (ii) providereasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with GAAP, and to maintainasset accountability; (iii) access to assets is permitted only inaccordance with management’s general or specific authorization; and (iv) therecorded accountability for assets is compared with the existing assets atreasonable intervals and appropriate action is taken with respect to anydifferences.

### (27)         Absence of Manipulation. Each ofthe Company and the Operating Partnership has not taken and will not take,directly or indirectly, any action designed to or that would constitute or thatmight reasonably be expected to cause or result in the stabilization ormanipulation of the price of any security to facilitate the sale or resale ofthe Shares.

### (28)         ERISA. Except as set forth inthe Company’s financial statements, each of the Company and the OperatingPartnership does not have any material liabilities under the EmployeeRetirement Income Security Act of 1974, as amended, or Section 4975 of theInternal Revenue Code of 1986, as amended from time to time

### (29)         REIT Status. Commencing with itstaxable year ended December 31, 2004, the Company has been organized andoperated in conformity with the requirements for qualification and taxation asa real estate investment trust (“**REIT**”)under the Internal Revenue Code of 1986, as amended, and the regulations andpublished interpretations thereunder (collectively, the “**Code**”), and the Company’s current andproposed method of operations as described in the Prospectus will enable it tocontinue to meet the requirements for qualification and taxation as a REITunder the Code.

### (30)         Tax Returns. All tax returnsrequired to be filed as of the date hereof by the Company and each of issubsidiaries have been timely filed (or valid extensions to such filings havebeen obtained), all such tax returns are true, correct and complete in allmaterial respects, and all material taxes and other assessments of a similarnature (whether imposed directly or through withholding) including anyinterest, additions to tax or penalties applicable thereto due or claimed to bedue from such entities have been paid, other than those being contested in goodfaith and for which adequate reserves have been provided.

### (31)         Related Party Transactions. Thereare no business relationships or related-party transactions involving theCompany, the Operating Partnership or the Manager required to be described inthe Prospectus which have not been so described as required.

### (32)         No Unlawful Contributions or OtherPayments. Neither the Company, the Operating Partnership nor any subsidiarynor, to the best of the Company’s knowledge, any employee or agent of theCompany, the Operating Partnership or any subsidiary, has made any contributionor other payment to any official of, or candidate for, any federal, state orforeign office in violation of any law or of the character required to bedisclosed in the Prospectus.

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### (33)         Investment Company Act. TheCompany is not, and upon the issuance and sale of the Placement Shares, asherein contemplated and the application of the net proceeds therefrom asdescribed in the Prospectus, will not be, an “investment company” or an entity “controlled”by an “investment company,” as such terms are defined in the Investment CompanyAct of 1940, as amended (the “**InvestmentCompany Act**”).

### (34)         Brokers and Finders. Neither theCompany, the Operating Partnership nor any subsidiary has incurred anyliability for a fee, commission or other compensation on account of theemployment of a broker or finder in connection with the transactionscontemplated by this Agreement other than as contemplated hereby.

### (35)         No Prohibition on Subsidiaries fromPaying Dividends or Making Other Distributions. No subsidiary is currentlyprohibited, directly or indirectly, from paying any dividends to the Company,from making any other distribution on such subsidiary’s capital stock or otherequity interests, from repaying to the Company any loans or advances to suchsubsidiary from the Company or from transferring any of such subsidiary’sproperty or assets to the Company or any other Subsidiary.

### (36)         Title to Real and Personal Property.The Company and its subsidiaries, including the Operating Partnership, have (orin the case of a Joint Venture, such limited partnership, limited liabilitycompany or other joint venture entity has) good and marketable title in feesimple to, or a valid leasehold interest in, any real property currently leasedor owned or controlled by them, or to be leased or owned or to be controlled bythem (collectively, the “Real Property”) and good and marketable titleto any and all personal property owned by the Company or any of its Subsidiariesthat is material to the business of the Company or the Operating Partnership,in each case free and clear of all liens, encumbrances and defects, except asdescribed in the Prospectus or such as would not reasonably be expected toresult in a Material Adverse Effect; and any real property, buildings andequipment held under lease by the Company and its subsidiaries are held by themunder valid, subsisting and enforceable leases (the “Leases”) with suchexceptions as are disclosed in the Prospectus or such as would not reasonablybe expected to result in a Material Adverse Effect; (ii) neither theCompany nor any of its Subsidiaries has received notice of any claim that hasbeen or may be asserted by anyone adverse to the rights of the Company or anysubsidiary with respect to any such Real Properties, personal property orLeases or affecting or questioning the rights of the Company to the continuedownership, lease, possession or occupancy of such Real Properties, personalproperty or Leases, except for such claims that would not, individually or inthe aggregate, reasonably be expected to have a Material Adverse Effect; (iii) noperson or entity, including, without limitation, any tenant under the leases,if any, for the Real Properties has an option or right of first refusal or anyother right to purchase any of such Real Properties, except as disclosed in theProspectus; (iv) all of the Leases are in full force and effect, exceptwhere the failure to be in full force or effect would not, individually or inthe aggregate, reasonably be expected to have a Material Adverse Effect, andneither the Company nor any of its subsidiaries is in default in the payment ofany amounts due under any such Leases or in any other default thereunder andneither the Company nor any of its subsidiaries knows or an event which, withthe passage of time or the giving of notice or both, would constitute a defaultunder any such 

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### Lease, exceptsuch defaults that would not, individually or in the aggregate, reasonably beexpected to have a Material Adverse Effect; and (v) there is no pendingor, to the knowledge of the Company or its subsidiaries, threatenedcondemnation, zoning change, or other proceeding or action that would in anymanner affect the size of, use of, improvements on, construction on or accessto any Real Property, except such proceedings or actions that, eitherindividually or in the aggregate, would not reasonably be expected to have aMaterial Adverse Effect.

### (37)         Title Insurance. The Company andits subsidiaries or as applicable, a Joint Venture, has either (i) anowner’s or leasehold title insurance policy, from a title insurance companylicensed to issue such policy, on any Real Property, that insures the fee orleasehold interest, as the case may be, which policies include onlycommercially reasonable exceptions, and with coverages in amounts at leastequal to amounts that the Company believes are generally commerciallyreasonable in the markets where the Real Properties are located or (ii) withrespect to mortgage loans extended by the Company and its subsidiaries, theCompany or its subsidiary has one or more lender’s title insurance policiesinsuring the lien of the mortgages encumbering the real property underlyingsuch loans with coverages, in the aggregate, equal to at least the maximumaggregate principal amount of such loan.

### (38)         Compliance with Environmental Laws.Except to an extent that would not, individually or in the aggregate,reasonably be expected to result in a Material Adverse Effect or as otherwisedisclosed in the Prospectus: (i) neither the Company nor any of itssubsidiaries nor, to the knowledge of the Company, any other owners of the RealProperty at any time, or to the knowledge of the Company, any other party hasat any time, handled, stored, treated, transported, manufactured, spilled,leaked, or discharged, dumped, transferred or otherwise disposed of or dealtwith, Hazardous Materials (as hereinafter defined) on, to or from any RealProperty, other than by any such action taken in material compliance with allapplicable Environmental Statutes (as hereinafter defined) or by the Company,any of its subsidiaries or any other party in connection with the ordinary useof residential, retail or commercial properties owned by the Company or anysubsidiary; (ii) the Company and its subsidiaries do not intend to use theReal Property or any subsequently acquired properties for the purpose ofhandling, storing, treating, transporting, manufacturing, spilling, leaking,discharging, dumping, transferring or otherwise disposing of or dealing withHazardous Materials other than by any such action taken in material compliancewith all applicable Environmental Statues or by the Company, any of itssubsidiaries or, to the knowledge of the Company, any other party in connectionwith the ordinary use of residential, retail or commercial properties owned bythe Company or any subsidiary; (iii) the Company and the OperatingPartnership do not know of any seepage, leak, discharge, release, emission,spill, or dumping of Hazardous Materials from the Real Property into waters onor adjacent to the Real Property or from the Real Property onto any realproperty owned or occupied by any other party, or onto lands from whichHazardous Materials might seep, flow or drain into such waters other than inmaterial compliance with Environmental Statutes; (iv) neither the Companynor any of its subsidiaries has received any notice of, or has knowledge of,any occurrence or circumstance which, with notice or passage of time or both,would give rise to a claim under or pursuant to any U.S. federal, state orlocal environmental statute

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### or regulationor under common law, pertaining to Hazardous Materials on or originating fromany of the Real Property or arising out of the conduct of the Company or any ofits subsidiaries, including without limitation a claim under or pursuant to anyEnvironmental Statute (as hereinafter defined); and (v) neither the RealProperty is included nor, to the Company’s or the Operating Partnership’s knowledge,is proposed for inclusion on the National Priorities List issued pursuant toCERCLA (as hereinafter defined) by United States Environmental ProtectionAgency (the “EPA”) or, to the Company’s or to the Operating Partnership’sknowledge, proposed for inclusion on any similar list or inventory issuedpursuant to any other Environmental Statute or issued by any other governmentalauthority.

### As usedherein, “**Hazardous Materials**”shall include, without limitation, any flammable explosives, radioactive materials,hazardous materials, hazardous wastes, toxic substances, or related materials,asbestos or any hazardous material as defined by any U.S. federal, state orlocal environmental law, ordinance, rule or regulation including withoutlimitation the Comprehensive Environmental Response, Compensation, andLiability Act of 1980, as amended, 42 U.S.C. Sections 9601-9675 (“**CERCLA**”), the Hazardous MaterialsTransportation Act, as amended, 49 U.S.C. Sections 1801-1819, theResource Conservation and Recovery Act, as amended, 42 U.S.C. Sections 6901-6992K,the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.Sections 11001-11050, the Toxic Substances Control Act, 15 U.S.C.Sections 2601-2671, the Federal Insecticide, Fungicide and Rodenticide Act,7 U.S.C. Sections 136-136y, the Clean Air Act, 42 U.S.C. Sections 7401-7642,the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. Sections1251-1387, the Safe Drinking Water Act, 42 U.S.C. Sections 300f-330j-26,and the Occupational Safety and Health Act, 29 U.S.C. Sections 651-678,as any of the above statutes may be amended from time to time, and in theregulations promulgated pursuant to each of the foregoing (individually, an “**Environmental Statute**”) or by anygovernmental authority.

### (39)         Compliance with ADA. The Companyand its subsidiaries and each Real Property are currently in compliance withall presently applicable provisions of the Americans with Disabilities Act, asamended, except for any such non-compliance that would not, individually or inaggregate, reasonably be expected to have a Material Adverse Effect.

### (40)         Sarbanes-Oxley Act. The Companyand each of the Company’s directors and officers, in their capacities as such,are in full compliance with all applicable provisions of the Sarbanes-Oxley Actand the rules and regulations promulgated in connection therewith,including Section 402 related to loans and Sections 302 and 906 related tocertifications.

### (41)         S-3 Eligibility. Theconditions for the use by the Company of a registration statement on Form S-3have been satisfied and the Company is entitled to use such form for thetransactions contemplated herein.

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## (b) Representationsand Warranties by the Manager. The Manager represents and warrants toML&Co, and agrees with, ML&Co that as of the date of this Agreement andas of eachCationDate (as defined in Section 7(m) below) on which a certificateis required to be delivered pursuant to Section 7(m) of thisAgreement, as the case may be:

### (1)           Accurate Disclosure. Theinformation regarding the Manager in the Prospectus is true and correct in allmaterial respects.

### (2)           Good Standing of the Manager. TheManager has been duly formed and is validly existing as a limited liabilitycompany in good standing under the laws of the State of Delaware and has powerand authority to own, lease and operate its properties and to conduct itsbusiness as described in the Prospectus and to enter into and perform itsobligations under this Agreement, the Management Agreement, the amended and restatedasset servicing agreement between the Manager and SLG Management Services LLCeffective as of April 19, 2006 (the “**AssetServicing Agreement**”) and the amended and restated outsourceagreement between the Manager and SL Green Operating Partnership, L.P.effective as of April 19, 2006 (the “**OutsourceAgreement**”); and the Manager is duly qualified as a foreignlimited liability company to transact business and is in good standing in eachother jurisdiction in which such qualification is required, whether by reasonof the ownership or leasing of property or the conduct of business, exceptwhere the failure so to qualify or to be in good standing would not result in aMaterial Adverse Effect.

### (3)           Authorization of ManagementAgreement, Asset Servicing Agreement and Outsource Agreement. Each of thisAgreement, the Management Agreement, the Asset Servicing Agreement and theOutsource Agreement (collectively, the “**ManagerAgreements**”) has been duly authorized, executed and delivered bythe Manager and constitutes a valid and binding agreement of the Managerenforceable in accordance with its terms, except to the extent that enforcementthereof may be limited by bankruptcy, insolvency, reorganization or other lawsaffecting enforcement of creditors’ rights or by general equitable principles.

### (4)           Absence of Defaults and Conflicts.The Manager is not in violation of its Organizational Documents or in defaultin the performance or observance of any obligation, agreement, covenant orcondition contained in any Company Document, Manager Agreement or otherwise,except for such defaults that would not result in a Material Adverse Effect. Theexecution, delivery and performance of this Agreement and the consummation ofthe transactions contemplated herein and in the Manager Agreements andcompliance by the Manager with its obligations under this Agreement do not andwill not, whether with or without the giving of notice or passage of time orboth, conflict with or constitute a breach of, or default under, or result inthe creation or imposition of any Lien upon any property or assets of theManager, nor will such action result in any violation of the provisions of theOrganizational Documents of the Manager or any applicable law, statute, rule,regulation, judgment, order, writ or decree of any government, governmentinstrumentality or court, domestic or foreign, having 

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### jurisdictionover the Manager or any of its subsidiaries or any of their respective assets,properties or operations.

### (5)           Absence of Proceedings. Thereis no action, suit, proceeding, inquiry or investigation before or brought byany court or governmental agency or body, domestic or foreign, now pending, or,to the knowledge of the Manager, threatened, against or affecting the Manager.

### (6)           Absence of Further Requirements.(A) No filing with, or authorization, approval, consent, license, order,registration, qualification or decree of, any court or governmental authorityor agency, domestic or foreign, (B) no authorization, approval, vote orother consent of any stockholder or creditor of the Manager, (C) no waiveror consent under any Company Document, and (D) no authorization, approval,vote or other consent of any other person or entity, is necessary or requiredfor the performance by the Manager of its obligations under this Agreement orthe Manager Agreements and the transactions contemplated thereby, in each caseon the terms contemplated by the Prospectus, except such as have been alreadyobtained.

### (7)           Possession of Licenses and Permits.The Manager possesses such Governmental Licenses issued by the appropriatefederal, state, local or foreign regulatory agencies or bodies necessary toconduct its business as described in the Prospectus; the Manager is in materialcompliance with the terms and conditions of all such Governmental Licenses,except where the failure so to comply would not, individually or in theaggregate, have a Material Adverse Effect; all of the Governmental Licenses arevalid and in full force and effect, except when the invalidity of such GovernmentalLicenses or the failure of such Governmental Licenses to be in full force andeffect would not have a Material Adverse Effect; and the Manager has notreceived any notice of proceedings relating to the revocation or modificationof any such Governmental Licenses which, individually or in the aggregate, ifthe subject of an unfavorable decision, ruling or finding, would result in aMaterial Adverse Effect.

### (8)           Investment Advisers Act. TheManager is not prohibited by the Investment Advisers Act of 1940, as amended(the “**Advisers Act**”), orthe rules and regulations thereunder, from performing under the ManagementAgreement as contemplated by the Management Agreement and as described in theProspectus.

# 7. Covenants of theCompany. Each of the Company and the Operating Partnership, severally,covenants and agrees with ML&Co as follows:

## (a) RegistrationStatement Amendments. After the date of this Agreement and during anyperiod in which a Prospectus relating to any Placement Shares is required to bedelivered by ML&Co under the Securities Act (including in circumstanceswhere such requirement may be satisfied pursuant to Rule 172 under theSecurities Act), (i) the Company will notify ML&Co promptly of thetime when any subsequent amendment to the Registration Statement, other thandocuments incorporated by reference, has been filed with the Commission and/orhas become effective or any subsequent supplement to the Prospectus has beenfiled and of any

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## request by the Commission for any amendmentor supplement to the Registration Statement or Prospectus or for additionalinformation, (ii) the Company will prepare and file with the Commission,promptly upon ML&Co’s request, any amendments or supplements to theRegistration Statement, Prospectus or free writing prospectus that, in theopinion of external counsel for ML&Co, is necessary in order that theRegistration Statement or Prospectus will not include any untrue statement of amaterial fact or omit to state a material fact necessary in order to make thestatements therein not misleading (with respect to the Prospectus only, in thelight of the circumstances existing at the time it is delivered to apurchaser), or if it shall be necessary, in the opinion of such counsel, at anysuch time to amend the Registration Statement or amend, supplement theProspectus or deliver any free writing prospectus in order to comply with therequirements of the Securities Act in connection with the distribution of thePlacement Shares by ML&Co (*provided,however*, that the failure of ML&Co to make such request shallnot relieve the Company of any obligation or liability hereunder, or affectML&Co’s right to rely on the representations and warranties made by theCompany in this Agreement); (iii) the Company will not file any amendmentor supplement to the Registration Statement or Prospectus or prepare any freewriting prospectus relating to the Placement Shares unless a copy thereof hasbeen submitted to ML&Co within a reasonable period of time before thefiling and ML&Co has not reasonably objected thereto (*provided, however*, that the failure ofML&Co to make such objection shall not relieve the Company of anyobligation or liability hereunder, or affect ML&Co’s right to rely on therepresentations and warranties made by the Company in this Agreement) and theCompany will furnish to ML&Co at the time of filing thereof a copy of anydocument that upon filing is deemed to be incorporated by reference into theRegistration Statement or Prospectus, except for those documents available viaEDGAR; and (iv) the Company will promptly effect the filing or cause eachamendment or supplement to the Prospectus to be filed with the Commission asrequired pursuant to the applicable paragraph of Rule 424(b) of theSecurities Act or, in the case of any document to be incorporated therein byreference, to be filed with the Commission as required pursuant to the ExchangeAct, within the time period prescribed (the determination to file or not fileany amendment or supplement with the Commission under this Section 7(a),based on the Company’s reasonable opinion or reasonable objections, shall bemade exclusively by the Company).

## (b) Noticeof Commission Stop Orders. The Company will advise ML&Co, promptlyafter it receives notice or obtains knowledge thereof, of the issuance by theCommission of any stop order suspending the effectiveness of the RegistrationStatement, of the suspension of the qualification of the Placement Shares foroffering or sale in any jurisdiction, or of the initiation or threatening ofany proceeding for any such purpose; and it will make every reasonable effortto prevent the issuance of any stop order or to obtain its withdrawal if such astop order should be issued.

## (c) Deliveryof Prospectus; Subsequent Changes. During any period in which a Prospectusrelating to the Placement Shares is required to be delivered by ML&Co underthe Securities Act with respect to the offer and sale of the Placement

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## Shares, (including in circumstances wheresuch requirement may be satisfied pursuant to Rule 172 under theSecurities Act), the Company will comply with all requirements imposed upon itby the Securities Act, as from time to time in force, and to file on or beforetheir respective due dates all reports and any definitive proxy or informationstatements required to be filed by the Company with the Commission under theExchange Act. If during such period any event occurs as a result of which theProspectus as then amended or supplemented would include an untrue statement ofa material fact or omit to state a material fact necessary to make thestatements therein, in the light of the circumstances then existing, notmisleading, or if during such period it is necessary to amend or supplement theRegistration Statement or Prospectus to comply with the Securities Act, theCompany will promptly notify ML&Co to suspend the offering of PlacementShares during such period and the Company will promptly amend or supplement theRegistration Statement or Prospectus (at the expense of the Company) so as tocorrect such statement or omission or effect such compliance.

## (d) Listingof Placement Shares. During any period in which the Prospectus relating tothe Placement Shares is required to be delivered by ML&Co under theSecurities Act with respect to the offer and sale of the Placement Shares(including in circumstances where such requirement may be satisfied pursuant toRule 172 under the Securities Act), the Company will use its reasonablebest efforts to effect the listing on the Exchange and to qualify the PlacementShares for sale under the securities laws of such jurisdictions as ML&Coreasonably designates and to continue such qualifications in effect so long asrequired for the distribution of the Placement Shares; *provided, however,* that the Company shallnot be required in connection therewith to qualify as a foreign corporation ordealer in securities or file a general consent to service of process in anyjurisdiction.

## (e) Deliveryof Registration Statement and Prospectus. The Company will furnish toML&Co and its counsel (at the expense of the Company) copies of theRegistration Statement, the Prospectus (including all documents incorporated byreference therein and any free writing prospectus) and all amendments andsupplements to the Registration Statement or Prospectus that are filed with theCommission during any period in which a Prospectus relating to the PlacementShares is required to be delivered under the Securities Act (including alldocuments filed with the Commission during such period that are deemed to beincorporated by reference therein), in each case as soon as reasonablypracticable and in such quantities as ML&Co may from time to timereasonably request and, at ML&Co’s request, will also furnish copies of theProspectus to each exchange or market on which sales of the Placement Sharesmay be made; *provided, however,*that the Company shall not be required to furnish any document (other than theProspectus) to ML&Co to the extent such document is available on EDGAR.

## (f) EarningsStatement. The Company will make generally available to its securityholders as soon as practicable, an earnings statement that satisfies theprovisions of Section 11(a) and Rule 158 of the Securities Act.

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## (g) Expenses.The Company, whether or not the transactions contemplated hereunder areconsummated or this Agreement is terminated, in accordance with the provisionsof Section 11 hereunder, will pay the following all expenses incident tothe performance of its obligations hereunder, including, but not limited to,expenses relating to (i) the preparation, printing and filing of theRegistration Statement and each amendment and supplement thereto, of eachProspectus and of each amendment and supplement thereto, (ii) thepreparation, issuance and delivery of the Placement Shares, (iii) thequalification of the Placement Shares under securities laws in accordance withthe provisions of Section 7(d) of this Agreement, includingfiling fees and any reasonable fees or disbursements of counsel for ML&Coin connection therewith, not to exceed $5,000 (iv) the printing anddelivery to ML&Co of copies of the Prospectus and any amendments orsupplements thereto, and of this Agreement, (v) the fees and expensesincurred in connection with the listing of the Placement Shares for trading onthe Exchange, (vi) filing fees and expenses, if any, of the NASD CorporateFinancing Department.

## (h) Useof Proceeds. The Company will use the Net Proceeds as described in theProspectus in the section entitled “Use of Proceeds.”

## (i) Restrictionon Sale of Securities. Each of the Company and the Operating Partnershipwill not, if there is a Placement Notice pending, without providing ML&Conotice as promptly as reasonably possible before taking any of the actionslisted below, offer, sell, agree to offer or sell, solicit offers to purchase,grant any call option or purchase any put option with respect to, pledge,borrow or otherwise dispose of, or establish or increase a “put equivalentposition” or liquidate or decrease a “call equivalent position” within themeaning of Section 16 of the Securities Act, or otherwise enter into anyswap, derivative or other transaction or arrangement that transfers to another,in whole or in part, any of the economic consequences of ownership, whether ornot such transaction is to be settled by delivery of such securities, othersecurities, cash or other consideration with respect to, the Company’s CommonStock, OP Units or other stock of the Company or any other equity securitiesconvertible into, or exercisable or exchangeable for, shares of the Company’sCommon Stock, or other stock, or publicly announce an intention to effect anysuch transaction, during the term of this Agreement provided, however no noticeis required (A) the Company issues and sells the Shares pursuant to thisAgreement, (B) the Company issues and sells Common Stock and options topurchase Common Stock pursuant to any employee or director stock option orstock purchase plans in effect on the date of this Agreement (so long as eachsuch plan and issuance is described in the Prospectus), (C) the OperatingPartnership issues OP Units in consideration for acquisitions of assets and (D) theCompany may issue Common Stock upon the conversion of its outstandingsecurities, upon exchange of OP Units, or upon exercise of warrants, options orother rights in effect or outstanding.

## (j) Changeof Circumstances. The Company will, at any time during a fiscal quarter inwhich the Company intends to tender a Placement Notice or sell Placement Sharesduring the term of this Agreement, as supplemented from time to

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## time, advise ML&Co promptly after itshall have received notice or obtained knowledge thereof, of any material events respecting its activities,affairs or condition, financial or otherwise, and the Company will forthwithsupply such information to ML&Co as shall be necessary in the opinion ofcounsel to the Company for the Company to prepare any necessary amendment orsupplement to the Prospectus so that, as so amended or supplemented, the Prospectuswill not contain an untrue statement of a material fact or omit to state amaterial fact necessary in order to make the statements therein, in the lightof the circumstances existing at the time it is delivered to a purchaser, notmisleading.

## (k) DueDiligence Cooperation. The Company will cooperate with any reasonable duediligence review conducted by ML&Co or its agents in connection with thetransactions contemplated hereby, including, without limitation, providinginformation and making available documents and senior corporate officers,during regular business hours and at the Company’s principal offices, asML&Co may reasonably request.

## (l) RequiredFilings Relating to Placement of Placement Shares. The Company agrees thaton such dates as the Securities Act shall require, the Company will (i) filea prospectus supplement with the Commission under the applicable paragraph of Rule 424(b) underthe Securities Act (each and every filing under Rule 424(b), a “**Filing Date**”), which prospectussupplement will set forth, within the relevant period, the amount of PlacementShares sold through ML&Co, the Net Proceeds to the Company and thecompensation payable by the Company to ML&Co with respect to such PlacementShares, (ii) deliver such number of copies of each such prospectussupplement to each exchange or market on which such sales were effected as maybe required by the rules or regulations of such exchange or market, and (iii) makeany other filings required by the Securities Act required with the placement ofthe Shares.

## (m) RepresentationDates; Certificate. During the term of this Agreement, on or prior to thedate that the first Shares are sold pursuant to the terms of this Agreement andeach time the Company (i) files the Prospectus relating to the PlacementShares or amends or supplements the Registration Statement or the Prospectusrelating to the Placement Shares (other than a prospectus supplement filed inaccordance with Section 7(l) of this Agreement) by means of apost-effective amendment, sticker, or supplement but not by means ofincorporation of document(s) by reference to the Registration Statement orthe Prospectus relating to the Placement Shares; (ii) files an annualreport on Form 10-K under the Exchange Act (**“Form 10-K”**); (iii) filesits quarterly reports on Form 10-Q under the Exchange Act (**“Form 10-Q”**); or (iv) filesa report on Form 8-K containing audited financial statements of theCompany (other than an earnings release, to “furnish” information pursuant toItems 2.02 or 7.01 of Form 8-K or to provide disclosure pursuant toItem 8.01 of Form 8-K relating to the reclassifications of certainproperties as discontinued operations in accordance with Statement of FinancialAccounting Standards No. 144) under the Exchange Act (each date of filingof one or more of the documents referred to in clauses (i) through (iv) shallbe a

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## **“RepresentationDate”**); the Company shall furnish ML&Co with acertificate, in the form attached hereto as Exhibit 7(m). Therequirement to provide a certificate under this Section 7(m) shallbe waived for any Representation Date occurring at a time at which no PlacementNotice is pending, which waiver shall continue until the earlier to occur ofthe date the Company delivers a Placement Notice hereunder (which for suchcalendar quarter shall be considered a Representation Date) and the nextoccurring Representation Date; *provided*,*however*, that such waiver shallnot apply for any Representation Date on which the Company files its annualreport on Form 10-K. Notwithstanding the foregoing, if the Companysubsequently decides to sell Placement Shares following a Representation Datewhen the Company relied on such waiver and did not provide ML&Co with acertificate under this Section 7(m), then before the Companydelivers the Placement Notice or ML&Co sells any Placement Shares, theCompany shall provide ML&Co with a certificate, in the form attached heretoas Exhibit 7(m), dated the date of the Placement Notice.

## (n) LegalOpinion. On or prior to the date that the first Shares are sold pursuant tothe terms of this Agreement, and within three (3) Trading Days of eachRepresentation Date with respect to which the Company is obligated to deliver acertificate in the form attached hereto as Exhibit 7(m) forwhich no waiver is applicable, the Company shall cause to be furnished toML&Co written opinions of Clifford Chance US LLP (“Company Counsel”)and Wilkie Farr & Gallagher LLP (“**Special40 Act Counsel**”), or other counsel satisfactory to ML&Co, inform and substance satisfactory to ML&Co and its counsel, dated the date ofthis Agreement or the Representation Date, as the case may be, substantiallysimilar to the form attached hereto as Exhibit 7(n)(1)(a) and Exhibit 7(n)(1)(b),respectively, modified, as necessary, to relate to the Registration Statementand the Prospectus as then amended or supplemented; *provided*, *however*,that in lieu of such opinions for subsequent Representation Dates, counsel mayfurnish ML&Co with a letter (a “**RelianceLetter**”) to the effect that ML&Co may rely on a prioropinion delivered under this Section 7(n) to the same extentas if it were dated the date of such letter (except that statements in suchprior opinion shall be deemed to relate to the Registration Statement and theProspectus as amended or supplemented at such Representation Date).

## (o) ComfortLetter. On or prior to the date that the first Shares are sold pursuant tothe terms of this Agreement and thereafter within three (3) Trading Daysof each Representation Date occurring during any period in which the Prospectusrelating to the Placement Shares is required to be delivered by ML&Co(including in circumstances where such requirement may be satisfied pursuant toRule 172 under the Act) and each Representation Date with respect to whichthe Company is obligated to deliver a certificate in the form attached heretoas Exhibit 8(m) for which no waiver is applicable, the Companyshall cause its independent accountants to furnish ML&Co letters (the **“Comfort Letters”**), dated the dateof the Comfort Letter is delivered, in form and substance satisfactory toML&Co, (i) confirming that they are an independent public accountingfirm  within the meaning of theSecurities Act and the PCAOB, (ii) stating, as of such date, theconclusions and findings of such firm with respect to the financial informationand other matters

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## ordinarily covered by accountants’ “comfortletters” to underwriters in connection with registered public offerings (thefirst such letter, the **“Initial ComfortLetter”**) and (iii) updating the Initial Comfort Letter withany information that would have been included in the Initial Comfort Letter hadit been given on such date and modified as necessary to relate to theRegistration Statement and the Prospectus, as amended and supplemented to thedate of such letter.

## (p) NoPrice Stabilization or Manipulation. During the pendency of any PlacementNotice hereunder, the Company will not, and will use its best efforts to causeits officers, directors and affiliates not to, (i) take, directly or indirectlyany action designed to stabilize or manipulate the price of any security of theCompany, or which may cause or result in, or which might in the futurereasonably be expected to cause or result in, the stabilization or manipulationof the price of any security of the Company, to facilitate the sale or resaleof any of the Shares, (ii) sell, bid for, purchase or pay anyone anycompensation for soliciting purchases of the Shares other than ML&Co, or (iii) payor agree to pay to any person (other than ML&Co) any compensation forsoliciting any order to purchase any other securities of the Company.

## (q) REITTreatment. The Company will use its commercially reasonable efforts tocontinue to meet the requirements for qualification and taxation as a REIT underthe Code for subsequent tax years that include any portion of the term of thisAgreement.

## (r) CompanyNot an “Investment Company.”  The Company is familiar with theInvestment Company Act of 1940, as amended, and the rules and regulationsthereunder, and will in the future conduct its and the Operating Partnership’saffairs, in such a manner and will use its commercially reasonable best effortsto ensure that the Company and the Operating Partnership will not be an “investmentcompany” within the meaning of the Investment Company Act of 1940 and the rules andregulations thereunder.

## (s) ML&CoPurchases. The Company acknowledges and agrees that ML&Co has informedthe Company that ML&Co may, to the extent permitted under the Securities Act and the Exchange Act,purchase and sell shares of CommonStock for its own account while this Agreement is in effect, *provided,**that*(i) no such purchase or sales shall take place while a Placement Notice isin effect (except to the extent ML&Co may engage in sales of PlacementShares purchased or deemed purchased from the Company as a “riskless principal”or in a similar capacity) and (ii) the Company shall not be deemed to haveauthorized or consented to any such purchases or sales by ML&Co.

## (t) NoOffer to Sell. Other than a free writing prospectus (as defined in Rule 405under the Act) approved in advance by the Company and ML&Co in its capacityas principal or agent hereunder, neither ML&Co nor the Company (includingits agents and representatives, other than ML&Co in its capacity as such)will make, use, prepare, authorize, approve or refer to any writtencommunication

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## (as defined in Rule 405 under the Act),required to be filed with the Commission, that constitutes an offer to sell orsolicitation of an offer to buy Shares hereunder.

# 8. Conditions toML&Co’s Obligations. The obligations of ML&Co hereunder withrespect to a Placement will be subject to the completion by ML&Co of a duediligence review satisfactory to ML&Co in its reasonable judgment, and tothe continuing satisfaction (or waiver by ML&Co in its sole discretion) ofthe following additional conditions:

## (a) RegistrationStatement Effective. The Registration Statement shall have become effectiveand shall be available for the (i) resale of all Placement Shares issuedto ML&Co and not yet sold by ML&Co and (ii) the sale of allPlacement Shares contemplated to be issued by any Placement Notice.

## (b) NoMaterial Notices. None of the following events shall have occurred and becontinuing:  (i) receipt by theCompany of any request for additional information from the Commission or anyother federal or state governmental authority during the period ofeffectiveness of the Registration Statement, the response to which wouldrequire any post-effective amendments or supplements to the RegistrationStatement or the Prospectus; (ii) the issuance by the Commission or anyother federal or state governmental authority of any stop order suspending theeffectiveness of the Registration Statement or the initiation of any proceedingsfor that purpose; (iii) receipt by the Company of any notification withrespect to the suspension of the qualification or exemption from qualificationof any of the Placement Shares for sale in any jurisdiction or the initiationor threatening of any proceeding for such purpose; (iv) the occurrence ofany event that makes any material statement made in the Registration Statementor the Prospectus or any material document incorporated or deemed to beincorporated therein by reference untrue in any material respect or thatrequires the making of any changes in the Registration Statement, relatedProspectus or documents so that, in the case of the Registration Statement, itwill not contain any materially untrue statement of a material fact or omit tostate any material fact required to be stated therein or necessary to make thestatements therein not misleading and, that in the case of the Prospectus, itwill not contain any materially untrue statement of a material fact or omit tostate any material fact required to be stated therein or necessary to make thestatements therein, in the light of the circumstances under which they weremade, not misleading.

## (c) Representationsand Warranties. All the representations and warranties of the Company,the Operating Partnership, and the Manager contained in this Agreement shall betrue and correct on each Representation Date, with the same force and effect asif made on and as of such Representation Date, and the Company, the OperatingPartnership, and the Manager shall have complied with all agreements and allconditions on its part to be performed or satisfied hereunder at or prior tosuch Representation Date.

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## (d) LegalOpinion. ML&Co shall have received the opinions of Company Counselrequired to be delivered pursuant Section 7(n) on or beforethe date on which such delivery of such opinion is required pursuant to Section 7(n).

## (e) ComfortLetter. ML&Co shall have received the Comfort Letter required to bedelivered pursuant Section 7(o) on or before the date on whichsuch delivery of such opinion is required pursuant to Section 7(o).

## (f) RepresentationCertificate. ML&Co shall have received the certificate required to bedelivered pursuant to Section 7(m) on or before the date onwhich delivery of such certificate is required pursuant to Section 7(m).

## (g) NoSuspension. Trading in the Shares shall not have been suspended on theExchange.

## (h) OtherMaterials. On each date on which the Company is required to deliver acertificate pursuant to Section 8(m), the Company shall havefurnished to ML&Co such appropriate further information, certificates anddocuments as ML&Co may reasonably request. All such opinions, certificates,letters and other documents will be in compliance with the provisions hereof.The Company will furnish ML&Co with such conformed copies of such opinions,certificates, letters and other documents as ML&Co shall reasonablyrequest.

## (i) No Objection. Prior to the date of this Agreement, NASD Regulation Inc. shall haveconfirmed in writing that it has no objection with respect to the fairness andreasonableness of the underwriting terms and arrangements.

## (j) NoTermination Event. There shall not haveoccurred any event that would permit ML&Co to terminate this Agreementpursuant to Section 11(a).

# 9. Indemnificationand Contribution.

## (a) Indemnification by the Company and the OperatingPartnership. Each of the Company and the Operating Partnership, jointly andseverally, agrees to indemnify and hold harmless ML&Co and each person, ifany, who controls ML&Co within the meaning of Section 15 of the 1933Act or Section 20 of the 1934 Act as follows:

## (i)  against any and all loss, liability, claim, damage andexpense whatsoever, as incurred, arising in whole or in part out of any untruestatement or alleged untrue statement of a material fact contained in theRegistration Statement or the Prospectus, or in any supplement thereto oramendment thereof, or arising out of or are based upon the omission or allegedomission to state therein a material fact required to be stated therein ornecessary to make the statements therein not misleading;

## (ii)  against any and all loss, liability, claim, damage andexpense whatsoever, as incurred, to the extent of the aggregate amount paid insettlement of any litigation, or any investigation or proceeding by anygovernmental agency or body, commenced or threatened, or of any claimwhatsoever based upon any of (i) above; 

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## provided that(subject to Section 9(d) below) any such settlement is effected withthe written consent of the Company; and

## (iii)  against any and all expense whatsoever, as incurred(including the fees and disbursements of counsel chosen by the Company), reasonablyincurred in investigating, preparing or defending against any litigation, orany investigation or proceeding by any governmental agency or body, commencedor threatened, or any claim whatsoever based upon any of (i) above, to theextent that any such expense is not paid under (i) or (ii) above,

provided,however, that this indemnity agreement shall not apply to any loss, liability,claim, damage or expense to the extent arising out of any untrue statement oromission or alleged untrue statement or omission made in reliance upon and inconformity with written information furnished to the Company by ML&Coexpressly for use in the Registration Statement (or any amendment thereto), orin any preliminary prospectus or the Prospectus (or any amendment or supplementthereto), which information is set forth in Section 7(a)(2) hereof.The indemnity agreement set forth in this Section 9(a) shallbe in addition to any liabilities that the Company may otherwise have.

## (b) Indemnification by ML&Co. ML&Co severally agreesto indemnify and hold harmless the Company, its directors, each of its officerswho signed the Registration Statement and the Operating Partnership and eachperson, if any, who controls the Company and the Operating Partnership withinthe meaning of Section 15 of the Securities Act or Section 20 of theExchange Act against any and all loss, liability, claim, damage and expensedescribed in the indemnity contained in subsection (a) of this Section 10,as incurred, but only with respect to untrue statements or omissions, oralleged untrue statements or omissions, made in the Registration Statement (orany amendment thereto), or the Prospectus (or any amendment or supplementthereto) in reliance upon and in conformity with written information furnishedto the Company by ML&Co expressly for use in the Registration Statement (orany amendment thereto) or the Prospectus (or any amendment or supplementthereto), which information is described in Section 7(a)(2) hereof.The indemnity agreement set forth in this Section 10(b) shallbe in addition to any liabilities that ML&Co may otherwise have.

## (c) Actions against Parties; Notification. Promptly after receipt by an indemnified partyunder subsection (a) or (b) above of notice of the commencement ofany action, such indemnified party shall, if a claim in respect thereof is tobe made against an indemnifying party under such subsection, notify theindemnifying party in writing of the commencement thereof; but the omission soto notify such indemnifying party shall not relieve the indemnifying party fromany liability which it may have to any indemnified party under such subsectionexcept to the extent it has been materially prejudiced by such failure. In caseany such action shall be brought against any indemnified party and it shallnotify the indemnifying party of the commencement thereof, the indemnifyingparty shall be entitled to participate therein and, to the extent that it shallwish, jointly with any other indemnifying party similarly notified, to assume thedefense thereof, with counsel reasonably satisfactory to such indemnified party(who

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## shall not,except with the consent of the indemnified party, be counsel to theindemnifying party), and, after notice from the indemnifying party to suchindemnified party of its election so to assume the defense thereof, theindemnifying party shall not be liable to such indemnified party under suchsubsection for any legal or other expenses, in each case subsequently incurredby such indemnified party, in connection with the defense thereof other thanreasonable costs of investigation. No indemnifying party shall, without thewritten consent of the indemnified party, effect the settlement or compromiseof, or consent to the entry of any judgment with respect to, any pending orthreatened action or claim in respect of which indemnification or contributionmay be sought hereunder (whether or not the indemnified party is an actual orpotential party to such action or claim) unless such settlement, compromise orjudgment (i) includes an unconditional release of the indemnified partyfrom all liability arising out of such action or claim and (ii) does notinclude any statement as to, or an admission of, fault, culpability or afailure to act, by or on behalf of any indemnified party.

## (d) Settlement Without Consent if Failure toReimburse. If at any time anindemnified party shall have requested an indemnifying party to reimburse theindemnified party for fees and expenses of counsel, such indemnifying partyagrees that it shall be liable for any settlement of the nature contemplated bySection 9(a)(ii) effected without its written consent if (i) suchsettlement is entered into more than 45 days after delivery to suchindemnifying party of the aforesaid request, (ii) such indemnifying partyshall have received notice of the terms of such settlement at least 30 daysprior to such settlement being entered into and (iii) such indemnifyingparty shall not have reimbursed such indemnified party in accordance with suchrequest prior to the date of such settlement.

## (e) Contribution. If the indemnification provided for inthis Section 9 is for any reason unavailable to or insufficient tohold harmless an indemnified party in respect of any losses, liabilities,claims, damages or expenses referred to therein, then each indemnifying partyshall contribute to the aggregate amount of such losses, liabilities, claims,damages and expenses incurred by such indemnified party, as incurred, (i) insuch proportion as is appropriate to reflect the relative benefits received bythe Company and the Operating Partnership on the one hand and ML&Co on theother hand from the offering of the Shares pursuant to this Agreement or (ii) ifthe allocation provided by clause (i) is not permitted by applicable law,in such proportion as is appropriate to reflect not only the relative benefitsreferred to in clause (i) above but also the relative fault of the Companyand the Operating Partnership on the one hand and of ML&Co on the otherhand in connection with the inaccuracies, statements or omissions whichresulted in such losses, liabilities, claims, damages or expenses, as well asany other relevant equitable considerations. The relative benefits received bythe Company and the Operating Partnership on the one hand and ML&Co on theother hand in connection with the offering of the Shares pursuant to thisAgreement shall be deemed to be in the same respective proportions as the totalnet proceeds from the offering of the Shares pursuant to this Agreement (beforededucting expenses) received by the Company and the Operating Partnership andthe total underwriting discount received by ML&Co, in each case as setforth on the cover of the Prospectus, bear to the aggregate public offeringprice of the Shares as set forth on such cover. The relative fault of theCompany and the 

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## OperatingPartnership on the one hand and ML&Co on the other hand shall be determinedby reference to, among other things, whether any such untrue or alleged untruestatement of a material fact or omission or alleged omission to state amaterial fact relates to information supplied by the Company, the OperatingPartnership, or by ML&Co and the parties’ relative intent, knowledge,access to information and opportunity to correct or prevent such statement oromission. The Company, the Operating Partnership and ML&Co agree that itwould not be just and equitable if contribution pursuant to this Section 9(e) weredetermined by pro rata allocation or by any other method of allocation whichdoes not take account of the equitable considerations referred to above in thisSection 9(e). The aggregate amount of losses, liabilities, claims,damages and expenses incurred by an indemnified party and referred to above inthis Section 9(e) shall be deemed to include any legal orother expenses reasonably incurred by such indemnified party in investigating,preparing or defending against any litigation, or any investigation orproceeding by any governmental agency or body, commenced or threatened, or anyclaim whatsoever based upon any such untrue or alleged untrue statement oromission or alleged omission. Notwithstanding the provisions of this Section 9(e),ML&Co shall not be required to contribute any amount in excess of theamount by which the total price at which the Shares underwritten by it anddistributed to the public were offered to the public exceeds the amount of anydamages which ML&Co has otherwise been required to pay by reason of anysuch untrue or alleged untrue statement or omission or alleged omission.

## No person guilty of fraudulent misrepresentation (within the meaning ofSection 11(f) of the Securities Act) shall be entitled tocontribution from any person who was not guilty of such fraudulentmisrepresentation.

## For purposes of this Section 10(e), each person, if any, whocontrols ML&Co within the meaning of Section 15 of the Securities Actor Section 20 of the Exchange Act shall have the same rights tocontribution as ML&Co, and each director of the Company, each officer ofthe Company who signed the Registration Statement, the Operating Partnership,and each person, if any, who controls the Company and the Operating Partnershipwithin the meaning of Section 15 of the Securities Act or Section 20of the Exchange Act shall have the same rights to contribution as the Companyand the Operating Partnership.

# 10. Representationsand Agreements to Survive Delivery. The indemnity and contributionagreements contained in Section 9 of this Agreement and allrepresentations and warranties of the Company herein or in certificatesdelivered pursuant hereto shall survive, as of their respective dates,regardless of (i) any investigation made by or on behalf of ML&Co, anycontrolling persons, or the Company (or any of their respective officers,directors or controlling persons), (ii) delivery and acceptance of thePlacement Shares and payment therefor or (iii) any termination of thisAgreement.

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# 11. Termination.

## (a) ML&Coshall have the right by giving notice as hereinafter specified at any time toterminate this Agreement if (i) any Material Adverse Effect, or anydevelopment that has actually occurred and that is reasonably expected to causea Material Adverse Effect has occurred that, in the reasonable judgment ofML&Co, may materially impair the ability of ML&Co to sell the PlacementShares hereunder, (ii) the Company shall have failed, refused or beenunable at or prior to any Settlement Date to perform any agreement on its partto be performed hereunder; *provided,however,* in the case of any failure of the Company to deliver (orcause another person to deliver) any certification, opinion, or letter requiredunder Sections7(m), 7(n), or 7(o), ML&Co’sright to terminate shall not arise unless such failure to deliver (or cause tobe delivered) continues for more than thirty (30) days from the date suchdelivery was required; or (iii) any other condition of ML&Co’sobligations hereunder is not fulfilled, or (iv), any suspension or materiallimitation of trading in the Placement Shares or in securities generally on theExchange shall have occurred. Any such termination shall be without liabilityof any party to any other party except that the provisions of Section 7(g) (Expenses),Section 9 (Indemnification), Section 10 (Survival ofRepresentations), Section 15 (Applicable Law; Consent toJurisdiction) and Section 16 (Waiver of Jury Trial) hereof shallremain in full force and effect notwithstanding such termination. If ML&Coelects to terminate this Agreement as provided in this Section 11(a),ML&Co shall provide the required notice as specified in Section 11(Notices).

## (b) TheCompany shall have the right, by giving ten (10) days notice ashereinafter specified to terminate this Agreement in its sole discretion **at any time after the date of this Agreement**.Any such termination shall be without liability of any party to any other partyexcept that the provisions of Section 7(g), Section 9, Section 10,Section 15 and Section 16 hereof shall remain in fullforce and effect notwithstanding such termination.

## (c) ML&Coshall have the right, by giving ten (10) days notice as hereinafterspecified to terminate this Agreement in its sole discretion**at any time after the date of this Agreement**.Any such termination shall be without liability of any party to any other partyexcept that the provisions of Section 7(g), Section 9, Section 10,Section 15 and Section 16 hereof shall remain in fullforce and effect notwithstanding such termination.

## (d) Unlessearlier terminated pursuant to this Section 11, this Agreement shallautomatically terminate upon the issuance and sale of all of the PlacementShares through ML&Co on the terms and subject to the conditions set forthherein; *provided* thatthe provisions of Section 7(g), Section 10, Section 10, Section 16and Section 17 hereof shall remain in full force and effectnotwithstanding such termination.

## (e) ThisAgreement shall remain in full force and effect unless terminated pursuant to Sections10(a), (b), (c), or (d) above or otherwise by mutualagreement of the parties; *provided, however,*that any such termination by mutual agreement

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## shall in all cases be deemed to provide that Section 7(g),Section 9, Section 10, Section 15 and Section 16shall remain in full force and effect.

## (f) Anytermination of this Agreement shall be effective on the date specified in suchnotice of termination; *provided, however,*that such termination shall not be effective until the close of business on thedate of receipt of such notice by ML&Co or the Company, as the case may be.If such termination shall occur prior to the Settlement Date for any sale ofPlacement Shares, such Placement Shares shall settle in accordance with theprovisions of this Agreement.

## (g) Notices.All notices or other communications requiredor permitted to be given by any party to any other party pursuant to the termsof this Agreement shall be in writing, unless otherwise specified, andif sent to ML&Co, shall be delivered to ML&Co at Merrill Lynch, Pierce,Fenner & Smith Incorporated, 4 World Financial Center, New York, NewYork 10080, fax no. (212) 738-1069, Attention: Brian Lehman, with copiesto each of Charles Plohn and Terrence O’Brien, at the same address, fax no.(212) 449-0355, and Fried, Frank, Harris, Shriver & JacobsonLLP, One New York Plaza, New York, NY 10004, fax no. (212) 859-4000, Attention: Valerie Ford Jacob, Esq.;or if sent to the Company, shall be delivered to Gramercy Capital Corp., MarcHolliday, President and Chief Executive Officer, 420 Lexington Avenue, NewYork, New York 10170, (212) 297-1000, with a copy to  Clifford Chance US LLP, 31 West 52nd Street,New York, New York 10019, (212) 878-8000, attention: Larry P. Medvinsky, Esq., Esq.Each party to this Agreement may change such address for notices by sending tothe parties to this Agreement written notice of a new address for such purpose.Each such notice or other communicationshall be deemed given (i) when delivered personally or by verifiablefacsimile transmission (with an original to follow) on or before 4:30 p.m.,New York City time, on a Business Day or, if such day is not a Business Day, onthe next succeeding Business Day, (ii) on the next Business Day aftertimely delivery to a nationally-recognized overnight courier and (iii) onthe Business****Day actually receivedif deposited in the U.S. mail (certified or registered mail, return receiptrequested, postage prepaid). For purposes of this Agreement, “**Business Day**” shall mean any day onwhich the Exchange and commercial banks in the City of New York are open forbusiness.

# 12. Successors andAssigns. This Agreement shall inure to the benefit of and be binding uponthe Company and ML&Co and their respective successors and the affiliates,controlling persons, officers and directors referred to in Section 9hereof. References to any of the parties contained in this Agreement shall bedeemed to include the successors and permitted assigns of such party. Nothing in this Agreement, express or implied, isintended to confer upon any party other than the parties hereto or theirrespective successors and permitted assigns any rights, remedies, obligationsor liabilities under or by reason of this Agreement, except as expresslyprovided in this Agreement. Neither party may assign its rights or obligationsunder this Agreement without the prior written consent of the other party.

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# 13.  Adjustments for Stock Splits. The partiesacknowledge and agree that all share-related numbers contained in thisAgreement shall be adjusted to take into account any stock split, stockdividend or similar event effected with respect to the Shares.

# 14. Entire Agreement;Amendment; Severability. This Agreement (including all schedules andexhibits attached hereto and Placement Notices issued pursuant hereto)constitutes the entire agreement and supersedes all other prior andcontemporaneous agreements and undertakings, both written and oral, among theparties hereto with regard to the subject matter hereof. Neither this Agreement nor any term hereof may be amended exceptpursuant to a written instrument executed by the Company and ML&Co. In theevent that any one or more of the provisions contained herein, or theapplication thereof in any circumstance, is held invalid, illegal orunenforceable as written by a court of competent jurisdiction, then such provision shall be given fullforce and effect to the fullest possible extent that it is valid, legal and enforceable, and theremainder of the terms and provisions herein shall be construed as if such invalid, illegal or unenforceable term orprovision was not contained herein, but only to the extent that giving effectto such provision and the remainder of the terms and provisions hereof shall bein accordance with the intent of the parties as reflected in this Agreement.

# 15. Applicable Law;Consent to Jurisdiction. This Agreement shall be governed by, and construedin accordance with, the internal laws of the State of New York without regardto the principles of conflicts of laws. Eachparty hereby irrevocably submits to the non-exclusive jurisdiction of the stateand federal courts sitting in the City of New York, borough of Manhattan, forthe adjudication of any dispute hereunder or in connection with any transactioncontemplated hereby, and hereby irrevocably waives, and agrees not to assert inany suit, action or proceeding, any claim that it is not personally subject tothe jurisdiction of any such court, that such suit, action or proceeding isbrought in an inconvenient forum or that the venue of such suit, action orproceeding is improper. Each party hereby irrevocably waives personal serviceof process and consents to process being served in any such suit, action orproceeding by mailing a copy thereof (certified or registered mail, returnreceipt requested) to such party at the address in effect for notices to itunder this Agreement and agrees that such service shall constitute good andsufficient service of process and notice thereof. Nothing contained hereinshall be deemed to limit in any way any right to serve process in any mannerpermitted by law.

# 16. Waiver of Jury Trial. The Company and ML&Co each herebyirrevocably waives any right it may have to a trial by jury in respect of anyclaim based upon or arising out of this agreement or any transactioncontemplated hereby.

# 17. Absence ofFiduciary Relationship. The Company, the Operating Partnership and the Manageracknowledge and agree that:

## (a) the ML & Co. has beenretained solely to act as ML & Co. in connection with the sale of theShares that no fiduciary, advisory or agency relationship between the Company,the Operating Partnership or the Manager and the ML & Co. has beencreated in respect of any of the transactions contemplated by this Agreement,irrespective of whether the ML & Co. has advised or is advising theCompany, the Operating Partnership or the Manager on other matters;

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## (b) the price of the Shares set forth inthis Agreement was established by the Company and the ML & Co.following discussions and arms-length negotiations with the ML & Co.and the Company, and the Company, the Operating Partnership and the Manager arecapable of evaluating and understanding and understand and accept the terms,risks and conditions of the transactions contemplated by this Agreement;

## (c) they have been advised that the ML &Co. and its affiliates are engaged in a broad range of transactions which mayinvolve interests that differ from those of the Company, the OperatingPartnership or the Manager and that the ML & Co. have no obligation todisclose such interests and transactions to the Company, the OperatingPartnership or the Manager by virtue of any fiduciary, advisory or agencyrelationship; and

## (d) they waive, to the fullest extentpermitted by law, any claims they may have against the ML & Co., forbreach of fiduciary duty or alleged breach of fiduciary duty and agree that theML & Co. shall have no liability (whether direct or indirect) to theCompany, the Operating Partnership or the Manager in respect of such afiduciary claim or to any person asserting a fiduciary duty claim on behalf ofor in right of the Company, including stockholders, employees or creditors ofthe Company, the Operating Partnership or the Manager.

# 18. Counterparts. ThisAgreement may be executed in two or more counterparts, each of which shall bedeemed an original, but all of which together shall constitute one and the sameinstrument. Delivery of an executed Agreement by one party to the other may bemade by facsimile transmission.

# 19. Definitions. Asused in this Agreement, the following terms have the respective meanings setforth below:

## (a) “ApplicableTime” means the time of each sale of any Shares or any securities pursuantto this Agreement.

## (b) “CompanyDocuments” means any contracts, indentures, mortgages, deeds of trust, loanor credit agreements, bonds, notes, debentures, evidences of indebtedness, leasesor other instruments or agreements to which the Company, the OperatingPartnership, the Manager or any of their respective subsidiaries is a party orby which the Company, the Operating Partnership, the Manager or any of theirrespective subsidiaries is bound or to which any of the property or assets ofthe Company, the Operating Partnership, the Manager or any of their respectivesubsidiaries is subject.

## (c) “GAAP”means United States generally accepted accounting principles.

## (d) “OrganizationalDocuments” means (a) in the case of a corporation, its charter andby-laws; (b) in the case of a limited or general partnership, its

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## partnership certificate, certificate offormation or similar organizational document and its partnership agreement; (c) inthe case of a limited liability company, its articles of organization,certificate of formation or similar organizational documents and its operatingagreement, limited liability company agreement, membership agreement or othersimilar agreement; (d) in the case of a trust, its certificate of trust,certificate of formation or similar organizational document and its trustagreement or other similar agreement; and (e) in the case of any otherentity, the organizational and governing documents of such entity.

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If the foregoing correctly sets forth theunderstanding between the Company and ML&Co, please so indicate in thespace provided below for that purpose, whereupon this letter shall constitute abinding agreement between the Company and ML&Co. 
|        | Very truly yours,                |
|--------|----------------------------------|
|   |                             |
|   | GRAMERCY CAPITAL CORP.           |
|   |                             |   |
|   |                             |   |
|   | By:                              |   |
|   | Name:                            |   |
|   | Title:                           |   |
|   |                             |   |
|   |                             |   |
|   | GKK CAPITAL LP                   |
|   |                             |   |
|   | By:                              | Gramercy Capital Corp., its General Partner |
|   |                             |   |
|   | By:                              |   |
|   | Name:                            |   |
|   | Title:                           |   |
|   |                             |   |
|   |                             |   |
|   | GKK MANAGER LLC                  |
|   |                             |   |
|   | By:                              |   |
|   | Name:                            |   |
|   | Title:                           |   |
|   |                             |   |
|   |                             |   |
|   | **ACCEPTED as of the date**      |
|   | **First-above written:**         |
|   |                             |   |
|   | **MERRILL LYNCH & CO.** |
|   | **By:**                          | **MERRILL LYNCH, PIERCE, FENNER & SMITH  INCORPORATED** |
|   |                             |   |
|   | By:                              |   |
|   |                             | Authorized Signatory |
|   |                             |   |

 

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**SCHEDULE 1**

**FORM OFPLACEMENT NOTICE**
| From:    | [                                         ] |   |
|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Cc:      | [                                         ] |   |
| To:      | [                                         ] |   |
| Subject: | ATM Equity Offering—Placement Notice                                                                                                                                                                                                                |   |

 

Gentlemen:

Pursuantto the terms and subject to the conditions contained in the ATM Equity OfferingSM** **Sales Agreement between Gramercy Capital Corp.. (the “Company”),and Merrill Lynch & Co. (“ML&Co”) dated [May  ], 2006(the “Agreement”), I hereby request on behalf of the Company thatML&Co sell up to              shares of the Company’s common stock, par value $0.001 per share, at a minimummarket price of $          per share.

[ADDITIONAL SALES PARAMETERSMAY BE ADDED, SUCH AS THE TIME PERIOD IN WHICH SALES ARE REQUESTED TO BEMADE, SPECIFIC DATES THE SHARES MAY NOT BE SOLD ON, THE MANNER IN WHICHSALES ARE TO BE MADE BY ML&CO, AND/OR THE CAPACITY IN WHICH ML&CO MAY ACTIN SELLING SHARES (AS PRINCIPAL, AGENT, OR BOTH)]

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**SCHEDULE 2**

**Compensation**

ML&Co shall be paidcompensation equal to two and one-half percent (2.5%) of the gross proceedsfrom the sale of the Shares pursuant to the terms of this Agreement.

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**SCHEDULE 3**

**MERRILL LYNCH & CO.**

BrianLehman

CharlesPlohn

TerrenceO’Brien

KevinTyler

**GRAMERCY CAPITAL CORP.**

Robert Foley

Gregory Hughes

Marc Holliday

 

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**EXHIBIT ASUBSIDIARIES OF THE COMPANY**

| **Name**                            | ** ** | **Jurisdiction of Organization** | ** ** | **Type Of Entity**                 |
|-------------------------------------|------------|----------------------------------|------------|------------------------------------|
| GKK Trading Corp.                   |       | Delaware                         |       | Corporation                        |
| Gramercy 110 LLC                    |       | Delaware                         |       | Limited Liability Company          |
| Gramercy Warehouse Funding I LLC    |       | Delaware                         |       | Limited Liability Company          |
| Gramercy Warehouse Funding II LLC   |       | Delaware                         |       | Limited Liability Company          |
| Gramercy Capital Trust I            |       | Delaware                         |       | Statutory Trust                    |
| Gramercy Capital Trust II           |       | Delaware                         |       | Statutory Trust                    |
| Gramercy Capital Trust III          |       | Delaware                         |       | Statutory Trust                    |
| Gramercy Real Estate CDO 2005-1 Ltd |       | Cayman Islands                   |       | Exempted Limited Liability Company |
| Gramercy Real Estate CDO 2005-1 LLC |       | Delaware                         |       | Limited Liability Company          |
| GKK Madison Investment LLC          |       | Delaware                         |       | Limited Liability Company          |
| Gramercy Investment QRS Corp.       |       | Delaware                         |       | Corporation                        |
| Gramercy Investment Trading Corp.   |       | Delaware                         |       | Corporation                        |
| Gramercy Investment Trust           |       | Maryland                         |       | Trust                              |
| GKK Trading Warehouse I LLC         |       | Delaware                         |       | Limited Liability Company          |
| GKK Trading Warehouse II LLC        |       | Delaware                         |       | Limited Liability Company          |
| Gramercy Rockaway 80 PE LLC         |       | Delaware                         |       | Limited Liability Company          |
| GKK Liquidity LLC                   |       | Delaware                         |       | Limited Liability Company          |
| GKK 55 Corporate LLC                |       | Delaware                         |       | Limited Liability Company          |
| GKK 84 William Street LLC           |       | Delaware                         |       | Limited Liability Company          |
| GKK Pasadena Investment LLC         |       | Delaware                         |       | Limited Liability Company          |
| GKK Pasadena Owner LLC              |       | Delaware                         |       | Limited Liability Company          |
| GKK Pasadena Tenant LLC             |       | Delaware                         |       | Limited Liability Company          |
| Gramercy 200 Franklin LLC           |       | Delaware                         |       | Limited Liability Company          |

 

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|                         |   |     |   |                                                             |
|------------------------------|--------|----------|--------|------------------------------------------------------------------|
| **SIGNIFICANT SUBSIDIARIES** |   |     |   |                                                             |
| GKK Capital LP               |   | Delaware |   | Limited  Partnership (general partner is Gramercy Capital Corp.) |
| GKK Trading Corp.            |   | Delaware |   | Corporation                                                      |

 

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**EXHIBIT BJOINT VENTURES OF THE COMPANY**

| **Name**                          | ** ** | **Jurisdiction of  Organization** | ** ** | **Type Of Entity**        | ** ** | **Percentage  Ownership** |
|-----------------------------------|------------|-----------------------------------|------------|---------------------------|------------|---------------------------|
| 1 Madison Office  Fee LLC         |       | Delaware                          |       | Limited Liability Company |       | 45%                       |
| 200 Franklin  Trust               |       | Delaware                          |       | Statutory Trust           |       | 70.3%                     |
| GKK Pasadena Fee  Holdings LLC    |       | Delaware                          |       | Limited Liability Company |       | 50%                       |
| GKK Pasadena  Tenant Holdings LLC |       | Delaware                          |       | Limited Liability Company |       | 63.57%                    |

 

 

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**Exhibit 7(n)**

**MATTERSTO BE COVERED BY INITIAL OPINION OF**

**FORM OF OPINION OF CLIFFORDCHANCE US LLP**

1.             TheCompany has been duly incorporated and is validly existing as a corporation ingood standing under the laws of the State of Maryland. The Company has thecorporate power and authority to conduct its business and own its properties asdescribed in the Prospectus and to enter into and perform its obligations underthis Agreement. The Operating Partnership has been duly organized and isvalidly existing as a limited partnership in good standing under the laws ofthe State of Delaware. The Operating Partnership has the partnership power andauthority to own its properties as described in the Prospectus and to enterinto and perform its obligations under this Agreement. The Manager has beenduly formed and is validly existing in good standing under the laws of theState of Delaware, and the Manager has the power and authority to own itsproperties and to conduct its business as described in the Prospectus and toenter into and perform its obligations under this Agreement.

2.             Asof [           ], theauthorized, issued and outstanding stock of the Company is as set forth in themost recent Form 10-K or Form 10-Q and such shares of theCompany’s issued and outstanding stock (the “Outstanding Shares”) have beenduly authorized and validly issued and are fully paid and nonassessable andnone of the Outstanding Shares was issued in violation of preemptive rightsarising under the laws of the State of Maryland or the Organizational Documentsof the Company. All of the issued and outstanding OP Units have been issued inaccordance with the requirements of the Partnership Agreement; none of the OPUnits has been issued or is owned or held in violation of any preemptive rightarising by operation of law or under this Agreement; to such counsel’sknowledge, the outstanding OP Units have been offered, sold and issued by theOperating Partnership in compliance with all federal and state securities laws.

3.             Theexecution, delivery and performance by the Company of this Agreement, includingthe Company’s issuance of the Shares and sale of such Shares to theUnderwriter, has been duly authorized by all necessary corporate action on thepart of the Company. The execution, delivery and performance by the OperatingPartnership of this Agreement has been duly authorized by all necessarypartnership action on the part of the Operating Partnership. The execution,delivery and performance by the Manager of this Agreement has been duly authorizedby all necessary limited liability company action on the part of the Manager. ThisAgreement has been duly executed and delivered by each of the Company, theOperating Partnership and the Manager.

4.             TheShares have been duly authorized and, when issued and delivered by the Companypursuant to this Agreement, the Shares will be validly issued, fully paid andnonassessable.

5.             Theissuance of the Shares is not subject to preemptive rights arising under theGeneral Corporation Law of the State of Maryland or the OrganizationalDocuments of the Company.

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6.             Theexecution, delivery and performance of this Agreement by the Company, theOperating Partnership and the Manager and the consummation of the transactionscontemplated herein will not (i) result in any violation of the provisionsof the Organizational Documents of the Company, the Operating Partnership orthe Manager, (ii) constitute a violation of or a breach or default underthe terms of any Company Documents or (iii) violate or conflict with, orresult in any contravention of, any law, administrative regulation oradministrative or court decree applicable to the Company, the OperatingPartnership or the Manager or any of their subsidiaries except in the case of (ii) and(iii), such violations as would not have a Material Adverse Effect.

7.             Theform of certificate representing the Common Stock complies (i) with theapplicable statutory requirements of the laws of the State of Maryland, (ii) therequirements of the Organizational Documents of the Company and (iii) therequirements of the NYSE.

8.             Wehave reviewed the information (i) in the Prospectus under the captions “RiskFactors — Risks Related to Our Organization and Structure,” “Risk Factors —Risks Related to Our Taxation As a REIT,” “Description of Common Stock,” “Descriptionof Preferred Stock,” “Description of Depositary Shares,” “Description ofWarrants,” “Description of “Certain Provisions of Maryland Law and of OurCharter and Bylaws,” “The Operating Partnership Agreement” and “Material U.S.Federal Income Tax Considerations,” and (ii) in Part II of theRegistration Statement in Item 15 and, in each case, to the extent that suchinformation constitutes matters of law, summaries of legal matters ordocuments, summaries of certain provisions of the Organizational Documents ofthe Company, the Operating Partnership or the Manager or legal conclusions,such information is correct in all material respects. The authorized stock ofthe Company conforms in all material respects to the description thereof in theProspectus under the captions “Description of Common Stock” and “Description ofPreferred Stock.”

9.             Eachof the Company, the Operating Partnership and their subsidiaries are dulyqualified as a foreign corporation, limited partnership or limited liabilitycompany, as the case may be, to transact business and is in good standing ineach jurisdiction in which such qualification is required, whether by reason ofthe ownership or leasing of property or the conduct of business, except forsuch jurisdictions where the failure to so qualify or to be in good standingwould not, individually or in the aggregate, result in a Material AdverseChange.

10.           Tothe knowledge of such counsel, none of the Company, the Operating Partnership,the Manager nor any subsidiary is in default under any of its OrganizationalDocuments.

11.           Otherthan SL Green as described in the Prospectus, to the knowledge of such counsel,no shareholder of the Company or unitholder of the Operating Partnership or anyother person has any preemptive right, right of first refusal or other similarright to subscribe for or purchase securities of the Company, the OperatingPartnership or any subsidiary.

12.           Tothe knowledge of such counsel, there are no legal or governmental proceedingspending or threatened to which the Company, the Operating Partnership, theManager or any of their subsidiaries is a party or to which any property of theCompany or any of its subsidiaries is subject that are required to be disclosedin the Prospectus that are not so disclosed.

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13.           Noconsent, approval, authorization or other order of, or registration or filingwith, any United States federal, Maryland, Delaware or New York state court orother governmental or regulatory authority or agency, is required for theCompany’s, the Operating Partnership’s or the Manager’s execution, delivery andperformance of this Agreement and consummation of the transactions contemplatedthereby and by the Prospectus, except such as have already been obtained underthe Securities Act and applicable state securities or blue sky laws and fromthe NASD.

14.           Commencingwith its taxable year ended December 31, 2004, the Company has beenorganized and operated in conformity with the requirements for qualificationand taxation as a REIT under the Code, and the Company’s current and proposedmethod of operation, as described in the Prospectus and as set forth in acertificate of representations from the Company, will enable it to continue tomeet the requirements for qualification and taxation as a REIT under the Code.

15.           TheRegistration Statement has been declared effective by the Commission under theSecurities Act. To the knowledge of such counsel, no stop order suspending theeffectiveness of the Registration Statement has been issued under the 1933 Actand no proceedings for such purpose have been instituted or are pending or arecontemplated or threatened by the Commission. Any required filing of theProspectus and any supplement thereto pursuant to Rule 424(b) underthe 1933 Act has been made in the manner and within the time period required bysuch Rule 424(b).

In addition, such opinion shall also contain astatement that such counsel has participated in conferences with officers andother representatives of the Company, representatives of the independentaccountants at which the contents of the Registration Statement and theProspectus and related matters were discussed, and although it does not passupon, or assume any responsibility for, the accuracy, completeness or fairness ofthe statements contained in the Registration Statement or the Prospectus andhave made no independent check or verification thereof (except to the extentreferred to in paragraph eight of its opinion to the ML&Co dated the datehereof), on the basis of the foregoing, (i) the Registration Statement(including the Incorporated Documents), at each deemed effective date withrespect to ML&Co pursuant to Rule 430B(f)(2), and the Prospectus, asof its date and as of the date hereof, complied and complies as to form in allmaterial respects with the requirements of the 1933 Act and the 1933 ActRegulations (except that in each case such counsel may state that it does notexpress any view as to the financial statements, schedules and other financialor statistical information derived from such financial statements and schedulesincluded or incorporated by reference therein) and (ii) no facts have cometo such counsel’s attention that have caused it to believe that theRegistration Statement, at each deemed effective date with respect to ML&Copursuant to Rule 430B(f)(2), contained an untrue statement of a materialfact or omitted to state any material fact required to be stated therein ornecessary to make the statements therein not misleading or that the Prospectus,as of its date and as of the date hereof, contained or contains an untruestatement of a material fact or omitted or omits to state a material factnecessary in order to make the statements therein, in light of thecircumstances under which they were made, not misleading (except that in eachcase such counsel may state that it does not express any view as to thefinancial statements, schedules and other financial or statistical informationderived from such financial statements or schedules included or incorporated byreference therein).

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**FORM OF OPINION OF WILKIEFARR & GALLAGHER**

1.             The Company is not, and after giving effect to theoffering and sale of the Shares and the application of the proceeds thereof asdescribed under the caption “Use of Proceeds” in the Prospectus will not be, an“investment company,” as such term is defined in the Investment Company Act of1940, as amended.

2.             We have reviewed the information in the Prospectus underthe caption “Risk Factors — Risks Related to Our Business — We have a limitedoperating history and may not operate successfully,” “Risk Factors — RisksRelated to Our Business — Maintenance of our Investment Company Act exemptionimposes limits on our operations” and “Risk Factors — Risks Related to OurBusiness — Rapid changes in the values of our MBS and other real estate relatedinvestments may make it more difficult for us to maintain our qualification asa REIT or exemption from the Investment Company Act” and, in each case, to theextent that such information constitutes matters of law, summaries of legalmatters or documents, summaries of certain provisions of the OrganizationalDocuments of the Company, the Operating Partnership or the Manager or legalconclusions, such information is correct in all material respects.

 

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**Exhibit 7(n)(2)**

**Mattersto be covered by subsequent Company Counsel Opinions**

(i)            The Registration Statement hasbecome effective under the Securities Act and, to the knowledge of suchcounsel, no stop order suspending the effectiveness of the Registration Statementhas been issued and no proceeding for that purpose is pending or threatened bythe Commission.

(ii)           The Registration Statement, at eachdeemed effective date with respect to ML&Co and/or the Shares pursuant to Rule 430B(f)(2) andthe Prospectus, as of the date of the Prospectus Supplement (in each case,other than (i) the financial statements, including the notes and schedulesthereto, (ii) any other financial data and (iii) statistical datathat is found in or derived from the internal accounting records of theCompany, the Operating Partnership or their respective subsidiaries, in eachcase as set forth or incorporated by reference therein, as to which no opinionneed be rendered), complied as to form in all material respects with therequirements of the Securities Act and the Exchange Act.

 (c)          Commencing with its taxable year endedDecember 31, 2004, the Company has been organized and operated inconformity with the requirements for qualification and taxation as a REIT underthe Code, and the Company’s current and proposed method of operation, asdescribed in the Prospectus and as set forth in a certificate ofrepresentations from the Company, will enable it to continue to meet therequirements for qualification and taxation as a REIT under the Code.

In addition, such opinion shall also contain astatement that such counsel has participated in conferences with officers andother representatives of the Company, representatives of the independentaccountants at which the contents of the Registration Statement* and theProspectus and related matters were discussed, and although it does not passupon, or assume any responsibility for, the accuracy, completeness or fairnessof the statements contained in the Registration Statement or the Prospectus andhave made no independent check or verification thereof (except to the extentreferred to in paragraph eight of its opinion to the ML&Co dated the datehereof), on the basis of the foregoing, (i) the Registration Statement(including the Incorporated Documents), at each deemed effective date withrespect to ML&Co pursuant to Rule 430B(f)(2), and the Prospectus, asof its date, as of each Applicable Time and as of the date hereof, complied andcomplies as to form in all material respects with the requirements of the 1933Act and the 1933 Act Regulations (except that in each case such counsel maystate that it does not express any view as to the financial statements,schedules and other financial or statistical information derived from suchfinancial statements and schedules included or incorporated by referencetherein) and (ii) no facts have come to such counsel’s attention that havecaused it to believe that the Registration Statement, at each deemed effectivedate with respect to ML&Co pursuant to Rule 430B(f)(2), contained anuntrue statement of a material fact or omitted to state any material factrequired to be stated therein or necessary to make the statements therein notmisleading or that the Prospectus, as of its date, as of each Applicable 

 

 

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Time and as of the date hereof, contained or containsan untrue statement of a material fact or omitted or omits to state a materialfact necessary in order to make the statements therein, in light of thecircumstances under which they were made, not misleading (except that in eachcase such counsel may state that it does not express any view as to thefinancial statements, schedules and other financial or statistical informationderived from such financial statements or schedules included or incorporated byreference therein).

*  Note: “RegistrationStatement” and “Prospectus” will be defined to include documents incorporatedby reference therein (“**Incorporated Documents**”).

 

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**Exhibit 8(m) **

**OFFICERCERTIFICATE**

The undersigned, the dulyqualified and elected _______________________, of **GRAMERCYCAPITAL CORP.**(“**Company**”),a Marylandcorporation, does hereby certify in such capacity and on behalf of the Company,pursuant to Section 7(m) of the Sales Agreement dated May [   ], 2006 (the “**SalesAgreement**”) between the Company and Merrill Lynch &Co., that to the best of the knowledge of the undersigned.

(i)            Therepresentations and warranties of the Company, the Operating Partnership, andthe Manager in Section 6 of the Sales Agreement (A) to theextent such representations and warranties are subject to qualifications andexceptions contained therein relating to materiality or Material AdverseEffect, are true and correct on and as of the date hereof, except for thoserepresentations and warranties that speak solely as of a specific date andwhich were true and correct as of such date, with the same force and effect asif expressly made on and as of the date hereof and (B) to the extent suchrepresentations and warranties are not subject to any qualifications orexceptions, are true and correct in all material respects as of the date hereofas if made on and as of the date hereof except for those representations andwarranties that speak solely as of a specific date and which were true andcorrect as of such date, with the same force and effect as if expressly made onand as of the date hereof; and

(ii)           TheCompany, the Operating Partnership, and the Manager has complied with allagreements and satisfied all conditions on its part to be performed orsatisfied pursuant to the Sales Agreement at or prior to the date hereof.
|        |   |                   |
|--------|--------|------------------------|
|   |   | GRAMERCY CAPITAL CORP. |
|   |   |                   |   |   |
|   |   | By:                    |   |   |
|   |   |                   |   |   |
|   |   | Name:                  |   |   |
|   |   |                   |   |   |
|   |   | Title:                 |   |   |
|   |   |                   |   |   |
|   |   | GKK CAPITAL LP         |
|   |   |                   |   |   |
|   |   | By:                    |   | Gramercy Capital Corp., its General Partner |
|   |   |                   |   |   |
|   |   | By:                    |   |   |
|   |   |                   |   |   |
|   |   | Name:                  |   |   |
|   |   |                   |   |   |
|   |   | Title:                 |   |   |
|   |   |                   |   |   |

 

 

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|        |   |            |   |   |
|--------|--------|-----------------|--------|--------|
|   |   | GKK MANAGER LLC |
|   |   |            |   |   |
|   |   | By:             |   |   |
|   |   |            |   |   |
|   |   | Name:           |   |   |
|   |   |            |   |   |
|   |   | Title:          |   |   |
|   |   |            |   |   |
| Date:  |   |            |   |   |
|   |   |            |   |   |

 

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