**Exhibit10.13**

 

**EMPLOYMENTAND NONCOMPETITION AGREEMENT**

 

ThisEMPLOYMENT AND NONCOMPETITION AGREEMENT (“Agreement”) is made as of the           day of July, 2004 between Robert R. Foley (“Executive”) and GKK Manager LLC(the “Employer”).

 

# 1.     Term.  The term ofthis Agreement shall commence on July [ ], 2004 and, unless earlierterminated as provided in Section 6 below, shall terminate on the fourthanniversary of the date of this Agreement (the “Original Term”);**provided, however, that Sections 4, 7 and 8 (and anyenforcement or other procedural provisions hereof affecting Sections 4, 7 and8) hereof shall survive the termination of this Agreement as providedtherein.  The Original Term may beextended for such period or periods, if any, as may be mutually agreed to inwriting by Executive and the Employer (each a “Renewal Term”).  If either party intends not to extend theOriginal Term, such party shall give the other party at least three months’written notice of such intention.  Ifeither party gives such notice with less than three months remaining in theOriginal Term, the term of this Agreement shall be extended until the datewhich is three months after the date on which the notice is given.  The period of Executive’s employmenthereunder consisting of the Original Term and all Renewal Terms (and any periodof extension under the foregoing sentence), if any, is herein referred to asthe “Employment Period.”

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# 2.     Employment and Duties.

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## (a)   Duties.  During the Employment Period, Executive shallbe employed in the business of the Employer and its affiliates.  Executive shall serve the Employer as asenior executive and shall have the title of Managing Director of theEmployer.  In such capacity, Executive, in conjunction with othersenior officers and managers of the Employer, shall be responsible for, amongother things: sourcing investments; sourcing credit facilities; underwriting,credit and risk management; asset and portfolio management; and generaladministrative functions.  In addition, Executive shall serve as Chief FinancialOfficer of Gramercy Capital Corp. (the “Corporation).  Executive shall have the general powers andduties of management usually vested in the chief financial officer of acomparable company in the same industry, including but not limited to: managingliquidity;  arranging financing; raisingequity capital for the business; oversight of accounting and internal control;financial, risk and management reporting; investor relatations; and generaladministrative functions. Executive will report to the managing member of the Employer (the “ManagingMember”) with respect to functions as Managing Director and to the Presidentand Chief Executive Officer of the Corporation (the “CEO”) with respect tofunctions as Chief Financial Officer.  Executive’s duties and authority shall be asfurther set forth by the Employer.

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## (b)   Best Efforts.  Executiveagrees to his employment as described in this Section 2 and agrees to devotesubstantially all of his business time and efforts to the performance of hisduties under this Agreement, except as otherwise approved by the ManagingMember and the CEO; provided, however, that nothing herein shall be interpretedto preclude Executive, so long as there is no material interference with hisduties hereunder, from (i) participating as an officer or director of, oradvisor to, any charitable or other tax-exempt organization or otherwiseengaging in charitable, fraternal or trade group activities; (ii) investing and managing his assets as a passiveinvestor in other entities or business ventures; provided that he performs nomanagement or similar role (or, in the case of investments other than realestate investments, he performs a management role comparable to the role that asignificant limited partner

 

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## would have, but performs no day-to-day management or similar role) withrespect to such entities or ventures and such investment does not violateSection 8 hereof; and provided, further, that, in any case in which anotherparty involved in the investment has a material business relationship with theEmployer, Executiveshall give notice prior written notice to the Managing Member and the CEO; or(iii) serving as a member of the Board of Directors of a for-profit corporationwith the approval of the CEO and the Managing Member.

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## (c)   Travel.  In performinghis duties hereunder, Executive shall be available for all reasonable travel asthe needs of the Employer’s business may require.

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# 3.     Compensation and Benefits. In consideration of Executive’s services hereunder, the Employer shallcompensate Executive as provided in this Agreement, and the Corporation shallhave the obligations as set forth herein.

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## (a)   Base Salary.  The Employershall pay Executive an aggregate minimum annual salary at the rate of $350,000per annum during the Employment Period (“Base Salary”).  Base Salary shall be payable bi-weekly inaccordance with the Employer’s normal business practices and shall be reviewedby the Managing Member at least annually (for purposes of possible, upward, butnot downward, adjustment).

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## (b)   Incentive Compensation/Bonuses. In addition to Base Salary, during the Employment Period, Executiveshall be eligible for and shall receive from the Employer such discretionaryannual bonuses as the Managing Member, in its sole discretion, may deemappropriate to reward Executive for job performance; provided, however, thatExecutive’s annual performance bonus shall not be less than $250,000 (the “MinimumBonus”).  In addition, Executive shall beeligible to participate in any other bonus or incentive compensation plans ineffect with respect to senior executive officers of the Employer.  If theterm of this Agreement is extended under the penultimate sentence of Section 1,and Executive’s employment terminates as of the expiration of the term as soextended, then (i) upon such termination of employment, Executive shall receive(without duplication) an amount equal to (A) $250,000 multiplied by (B) afraction (x) the numerator of which is the number of days in the fiscal year oftermination during which Executive was employed and (y) the denominator ofwhich is 365, and (ii) no other bonus-related amounts shall be payable underthis Section 3(b) for the fiscal year of termination.

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## (c)   Equity-Based Awards. In the discretion of the Board or the Compensation Committee thereof,Executive shall be eligible to participate in any current or future equity incentive plan that has been or maybe established by the Corporation for senior executive officers.  It is acknowledged that Executive has beenpreviously granted 10,000 shares of restricted stock under that certainGramercy Capital Corp. 2004 Equity Incentive Plan Restricted Stock AwardAgreement between the Corporation and Executive, and 140,000 options under thatcertain Gramercy Capital Corp. 2004 Equity Incentive Plan Option AwardAgreement between the Corporation and Executive, both dated           , 2004, copies of each are attached hereto asExhibits A and B, respectively.

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## (d)   Expenses.  Executive shall be reimbursed for all reasonablebusiness related expenses incurred by Executive at the request of or on behalf of the Employer or theCorporation, provided that such expenses are incurred and accounted for inaccordance with the policies and procedures established by the Employer or theCorporation.  Any expenses incurredduring the Employment Period but not reimbursed by the Employer or theCorporation by the end of the Employment Period, shall remain the obligation ofthe Employer or the Corporation, as applicable to so reimburse Executive.

 

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## (e)   Health and Welfare Benefit Plans. During the Employment Period, Executive and Executive’s immediate familyshall be entitled to participate in such health and welfare benefit plans asthe Employer shall maintain from time to time for the benefit of seniorexecutive officers of the Employer and their families, on the terms and subjectto the conditions set forth in such plan. Nothing in this Section shall limit the Employer’s right to change ormodify or terminate any benefit plan or program as it sees fit from time totime in the normal course of business so long as it does so for all seniorexecutives of the Employer.

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## (f)    Vacations.  Executiveshall be entitled to paid vacations in accordance with the then regularprocedures of the Employer governing senior executive officers.

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## (g)   Other Benefits.  During theEmployment Period, the Employer shall provide to Executive such other benefits,as generally made available to other senior executives of the Employer.

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# 4.     Indemnification and Liability Insurance. The Employer and Corporation together and severally agree to indemnifyExecutive to the full extent permitted by applicable law, as the same existsand may hereafter be amended, from and against any and all losses, damages,claims, liabilities and expenses asserted against, or incurred or suffered by,Executive (including the costs and expenses of legal counsel retained by theEmployer or the Corporation to defend Executive and judgments, fines andamounts paid in settlement actually and reasonably incurred by or imposed onsuch indemnified party) with respect to any action, suit or proceeding, whethercivil, criminal administrative or investigative (a “Proceeding”) in whichExecutive is made a party or threatened to be made a party or is otherwiseinvolved, either with regard to his entering into this Agreement with theEmployer or in his capacity as an officer or director, or former officer ordirector, of the Employer, the Corporation or any affiliate thereof for whichhe may serve in such capacity.  TheEmployer and the Corporation also agree to secure promptly and maintainofficers and directors liability insurance providing coverage for Executive,the coverage shall be reasonably comparable to the coverage maintained by SLGreen Realty Corp., for such time as SL Green Realty Corp. controls theEmployer, to the extent that coverage can be obtained on reasonable efforts ata comparable rate.  The provisions ofthis Section 4 shall remain in effect after this Agreement is terminatedirrespective of the reasons for termination.

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# 5.     Employer’s Policies.  Executiveagrees to observe and comply with the reasonable rules and regulations of theEmployer and the Corporation from time to time regarding the performance of hisduties and to carry out and perform orders, directions and policiescommunicated to him from time to time by the Employer and the Corporation, solong as same are otherwise consistent with this Agreement.

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# 6.     Termination.  Executive’semployment hereunder may be terminated under the following circumstances:

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## (a)   Termination by the Employer.

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## (i)            Death.  Executive’semployment hereunder shall terminate upon his death.

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## (ii)           Disability.  If, as aresult of Executive’s incapacity due to physical or mental illness ordisability, Executive shall have been incapable of performing his dutieshereunder even with a reasonable accommodation on a full-time basis for theentire period of four consecutive months or any 120 days in a 180-day period,and within 30

 

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## days after written Notice of Termination (as definedin Section 6(d)) is given he shall not have returned to the performance of hisduties hereunder on a full-time basis, the Employer may terminate Executive’semployment hereunder.

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## (iii)          Cause.  The Employermay terminate Executive’s employment hereunder for Cause.  For purposes of this Agreement, “Cause” shallmean:  (i) Executive’s engaging inconduct which is a felony; (ii) Executive’s engaging in conduct constituting amaterial breach of fiduciary duty, gross negligence or willful and materialmisconduct, material fraud or willful and material misrepresentation; (iii)Executive’s material breach of any of his obligations under Section 8(a)through 8(e) of this Agreement; or (iv) Executive’s failure to competentlyperform his duties after receiving notice from the Employer specificallyidentifying the manner in which Executive has failed to perform (it being understood that, for this purpose, themanner and level of Executive’s performance shall not be determined based onthe financial performace of the Employer or the Corporation (including, withoutlimitation, the performance of the stock of the Corporation)).

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## (iv)          Without Cause. Executive’s employment hereunder may be terminated by the Employer atany time with or without Cause (as defined in Section 6(a)(iii) above), by theManaging Member (or, in the case of the Corporation, by a majority vote of allof the members of the Board) upon written notice to Executive, subject only tothe severance provisions specifically set forth in Section 7.

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## (b)   Termination by Executive.

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## (i)            Disability.  Executive mayterminate his employment hereunder for Disability within the meaning of Section6(a)(ii) above.

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## (ii)           With Good Reason. Executive’s employment hereunder may be terminated by Executive withGood Reason effective immediately by written notice to the Employer.  For purposes of this Agreement, with “GoodReason” shall mean, without Executive’s prior written consent, (i) a failure bythe Employer to pay compensation in accordance with the provisions of Section3, which failure has not been cured within 14 days after the notice of thefailure (specifying the same) has been given by Executive to the Employer; (ii)a material breach by the Employer of any other provision of this Agreementwhich has not been cured within 30 days after notice of noncompliance(specifying the nature of the noncompliance) has been given by Executive to theEmployer, (iii) the Employer requires Executive to relocate his principaloffice more than 60 miles outside of Manhattan other than in connection with achange of the Employer’s principal office to the same new location; or (iv) theEmployer enters into an employment agreement with any person pursuant to whichsuch person will receive an annual base salary or guaranteed bonus in excess ofthe highest salary and guaranteed bonus payable to Executive, and the enteringinto of such employment agreement is in contravention of Section 6.4.11 of theLLC Agreement (as defined in Section 6(c) below).  On and after the occurrence of aChange-in-Control (as defined in Section 6(c) below), “Good Reason” shall alsoinclude, in addition to the foregoing:

 

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(A)          a change in duties, responsibilities,status or positions with the Employer that does not represent a promotion fromor maintaining of Executive’s duties, responsibilities, status or positions asin effect immediately prior to the Change-in-Control, or any removal ofExecutive from or any failure to reappoint or reelect Executive to suchpositions, except in connection with the termination of Executive’s employmentfor Cause, disability, retirement or death;

 

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

 

(C)           the failure by the Employer to continuein effect any of the benefit plans including, but not limited to ongoing stockoption and equity awards, in which Executive is participating at the time ofthe Change-in-Control of the Employer (unless Executive is permitted toparticipate in any substitute benefit plan with substantially the same termsand to the same extent and with the same rights as Executive had with respectto the benefit plan that is discontinued) other than as a result of the normalexpiration of any such benefit plan in accordance with its terms as in effectat the time of the Change-in-Control, or the taking of any action, or thefailure to act, by the Employer which would adversely affect Executive’scontinued participation in any of such benefit plans on at least as favorable abasis to Executive as was the case on the date of the Change-in-Control orwhich would materially reduce Executive’s benefits in the future under any ofsuch benefit plans or deprive Executive of any material benefits enjoyed byExecutive at the time of the Change-in-Control; provided, however, that anysuch action or inaction on the part of the Employer, including anymodification, cancellation or termination of any benefits plan, undertaken inorder to maintain such plan in compliance with any federal, state or local lawor regulation governing benefits plans, including, but not limited to, theEmployment Retirement Income Security Act of 1974, as amended, shall notconstitute Good Reason for the purposes of this Agreement;

 

(D)          the failure by the Employer to obtainfrom any successor to the Employer an agreement to be bound by this Agreementpursuant to Section 17 hereof, which has not been cured within 30 days afterthe notice of the failure (specifying the same) has been given by Executive tothe Employer.

 

(iii)          Without Good Reason. Executive shall have the right to terminate his employment hereunderwithout Good Reason, subject to the terms and conditions of this Agreement.

 

## (c)   Definitions. The following terms shall be defined as set forth below.

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### (i)            “Change-in-Control” shall mean thehappening of any of the following:

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(A)          any “person,” including a “group” (assuch terms are used in Sections 13(d) and 14(d) of the Exchange Act, butexcluding the Employer or the Corporation, any entity controlling, controlledby or under common control with the Employer or the Corporation, any trustee,fiduciary or other person or entity

 

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holding securities under any employee benefit plan ortrust of the Employer or the Corporation or any such entity, and Executive andany “group” (as such term is used in Section 13(d)(3) of the Exchange Act) ofwhich Executive is a member), is or becomes the “beneficial owner” (as definedin Rule 13(d)(3) under the Exchange Act), directly or indirectly, of securitiesof the Employer or the Corporation representing 25% or more of either (A) thecombined voting power of the Employer’s or the Corporation’s then outstandingsecurities or (B) the then outstanding common stock (or other similar equityinterest, in the case of  a company otherthan a corporation) of the Employer or the Corporation (in either such caseother than as a result of an acquisition of securities directly from theEmployer or the Corporation); provided, however, that, in no event shall aChange-in-Control be deemed to have occurred upon an initial public offering ofthe common stock (or such other equity interest) of the Employer or theCorporation under the Securities Act; or

 

(B)           any consolidation or merger of theEmployer or the Corporation where the shareholders of the Employer or theCorporation, as applicable, immediately prior to the consolidation or merger,would not, immediately after the consolidation or merger, beneficially own (assuch term is defined in Rule 13d-3 under the Exchange Act), directly orindirectly, shares representing in the aggregate 50% or more of the combinedvoting power of the securities of the corporation issuing cash or securities inthe consolidation or merger (or of its ultimate parent corporation, if any); or

 

(C)           there shall occur (A) any sale, lease,exchange or other transfer (in one transaction or a series of transactionscontemplated or arranged by any party as a single plan) of all or substantiallyall of the assets of the Employer or the Corporation, other than a sale ordisposition by the Employer or the Corporation of all or substantially all ofthe Employer’s or the Corporation’s assets to an entity, at least 50% of thecombined voting power of the voting securities of which are owned by “persons”(as defined above) in substantially the same proportion as their ownership ofthe Employer or the Corporation, as applicable, immediately prior to such saleor (B) the approval by shareholders of the Employer or the Corporation, asapplicable, of any plan or proposal for the liquidation or dissolution of theEmployer or the Corporation, as applicable; or

 

(D)          the members of the Board (the “Directors”)at the beginning of any consecutive 24-calendar-month period (the “IncumbentDirectors”) cease for any reason other than due to death to constitute at leasta majority of the members of the Board; provided that any Director whoseelection, or nomination for election by the Corporation’s shareholders wasapproved or ratified by a vote of at least a majority of the members of theBoard then still in office who were members of the Board at the beginning ofsuch 24-calendar-month period shall be deemed to be an Incumbent Director.

 

Notwithstanding theforegoing, (i) a Change-in-Control with respect to the Employer or theCorporation shall not be deemed to have occurred if SL Green Realty Corp.controls the Employer or the Corporation, respectively, at the applicable time (provided, that, at such time, in the case of theEmployer, SL Green

 

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RealtyCorp. beneficially owns at least 15% of the outstanding voting or total equityinterests of the Employer, and in the case of the Corporation, SL Green RealtyCorp. beneficially owns at least 10% of the voting or total outstanding equityinterests of the Corporation (it being expressly understood that the existenceof the foregoing 15% and 10% levels of ownership do not establish a presumptionof control by SL Green Realty Corp. for these purposes)) and aChange-in-Control with respect to the Employer shall not be deemed to haveoccurred if the Corporation controls the Employer, at the applicable time; and(ii) in no event shall a Change-in-Controlbe deemed to have occurred upon an initial public offering of the common stockof the Corporation under the Securities Act of 1933, as amended.

 

### (ii)           “LLC Agreement” means the Limited Liability Company OperatingAgreement of GKK Manager LLC, dated as of July           , 2004, among Employer, Managing Member, Executive andthe other parties specified therein.

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### (iii)          “Vesting Agreement”means the Membership Interest Vesting and Repurchase Agreement, dated as ofJuly           , 2004, among Employer, Managing Member and Executive.

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## (d)           Notice of Termination. Any termination of Executive’s employment by the Employer (or theCorporation) or by Executive (other than on account of death) shall becommunicated by written Notice of Termination to the other party hereto inaccordance with Section 13 of this Agreement. For purposes of this Agreement, a “Notice of Termination” shall mean anotice which shall indicate the specific termination provision in thisAgreement relied upon and, as applicable, shall set forth in reasonable detailthe fact and circumstances claimed to provide a basis for termination ofExecutive’s employment under the provision so indicated.

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(e)           Resignation Upon Termination.  In the event that Executive’s employment with theEmployer is terminated, Executive (i) shall, within five business days ofreceipt of a written request for resignation, resign as an officer of theCorporation, and shall resign all other positions (including, withoutlimitation, as officer, employee, director and member of any committee) withthe Employer and the Corporation and their subsidiaries and affiliates, and(ii) shall provide such written confirmation thereof as may be reasonablyrequired by the Employer or the Corporation. In the event that Executive’s service with the Corporation is terminatedother than as contemplated by the foregoing sentence, Executive (i) shall,within five business days of receipt of a written request for resignation,resign all other positions (including, without limitation, as officer,employee, director and member of any committee) with the Corporation and itssubsidiaries, and (ii) shall provide such written confirmation thereof as maybe reasonably required by the Corporation.

 

# 7.     Compensation Upon Termination.

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## (a)   Termination By Employer Without Cause or By ExecutiveWith Good Reason.  If (i) Executive is terminated withoutCause pursuant to Section 6(a)(iv) above, or (ii) Executive shall terminate hisemployment hereunder with Good Reason pursuant to Section (6)(b)(ii) above,then, if Executive has fully complied with Section 6(e) above, the EmploymentPeriod shall terminate as of the effective date set forth in the written noticeof such termination (the “Termination Date”) and Executive shall be entitled tothe following payment and benefits:

 

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

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## (ii)           The Employer shall continue to payExecutive’s Base Salary (at the rate in effect on the date of his termination)and the Minimum Bonus for a period of two years commencing on the date of suchtermination, on the same periodic payment dates as payment would have been madeto Executive had the Employment Period not been terminated.

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## (iii)          Any issued but unvested equity awards(i.e., shares then still subject to restrictions under the applicable awardagreement) granted to Executive by the Employer or the Corporation that wouldotherwise become vested and exercisable during the two-year period followingthe date of Executive’s termination shall become vested (i.e., free from suchrestrictions), and any unexerciseable or unvested stock options granted toExecutive by the Employer or the Corporation that would otherwise become vestedand exercisable during the two-year period following the date of Executive’stermination shall become vested and exercisable on the date of Executive’stermination.  Any unexercised stockoptions granted to Executive by the Employer or the Corporation that have becomevested and exercisable shall remain exercisable for six months following theTermination Date or, if earlier, the expiration of the initial applicable termstated at the time of the grant.

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Otherthan as may be provided under Section 4 or as expressly provided in thisSection 7(a), the Employer shall have no further obligations hereunderfollowing such termination.

 

## (b)   Termination By the Employer For Cause or By ExecutiveWithout Good Reason.  If (i) Executive is terminated for Causepursuant to Section 6(a)(iii) above, or (ii) Executive voluntarilyterminates his employment hereunder without Good Reason pursuant to Section6(b)(ii) above, then the Employment Period shall terminate as of theTermination Date and Executive shall be entitled to receive his earned andaccrued but unpaid Base Salary at the rate then in effect until the TerminationDate.  In addition, in such event,Executive shall be entitled to exercise any options which have vested as of thetermination of Executive’s employment, but only for a period of three monthsafter the Termination Date (but in no event after the expiration of the initialapplicable term stated at the time of grant) and otherwise in accordance withthe terms of the applicable option grant agreement or plan.  Notwithstandingthe foregoing, and without limiting such other forfeitures as may be providedunder the documentation controlling the applicable grants or otheracquisitions, (i) in the case of a termination for Cause under clause (i), (ii)or (iii) of the second sentence of Section 6(a)(iii), all vested options shallexpire on the Termination Date and all unvested equity interests in theCorporation which have been awarded under a compensatory arrangement, includingwithout limitation the restricted stock (or equivalent) granted on or beforethe date hereof, shall automatically be forfeited, and (ii) in the case of atermination for Cause under clause (iv) of the second sentence of Section6(a)(iii), all vested options shall be exercisable for three months from theTermination Date; provided, however, that nothing in this sentence shall extendthe term of any option.  Otherthan as may be provided under Section 4 or as expressly provided in thisSection 7(b), the Employer shall have no further obligations hereunder followingsuch termination.

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## (c)   Termination by Reason of Death.    If Executive’s employment terminates due to his death, the Employershall pay Executive’s Base Salary plus any applicable pro rata portion of theannual performance bonus described in Section 3(b) above for a period of sixmonths from the date of his death, or such longer period as the Employer maydetermine, to Executive’s estate or to a beneficiary designated

 

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## by Executive inwriting prior to his death.  In the caseof such a termination, (i) Executive shall be credited with six months aftertermination under any provisions governing restricted stock (or its equivalent)or options relating to the vesting or initial exercisability thereof, and (ii)if such six months of credit would fall within a vesting period, a pro rataportion of the unvested shares of restricted stock (or its equivalent) grantedto Executive that otherwise would have become vested upon the conclusion ofsuch vesting period shall become vested on the date of Executive’s terminationdue to his death, and a pro rata portion of the unexercisable stock optionsgranted to Executive that otherwise would have become exercisable upon theconclusion of such vesting period shall become exercisable on the date ofExecutive’s termination due to such death. Furthermore, upon such death, any vested unexercised stock optionsgranted to Executive shall remain vested and exercisable until the earlier of(A) the date on which the term of such stock options otherwise would haveexpired, or (B) the second January 1 after the date of Executive’s terminationdue to his death.  Other than as may beprovided under Section 4 or as expressly provided in this Section 7(c), theEmployer shall have no further obligations hereunder following suchtermination.

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## (d)   Termination by Reason of Disability. In the event that Executive’s employment terminates due to hisdisability as defined in Section 6(a)(ii) above, Executive shall be entitled tobe paid his Base Salary plus any applicable pro rata portion of the annualperformance bonus described in Section 3(b) above for a period of six monthsfrom the date of such termination, or for such longer period as such benefitsare then provided with respect to other senior executives of the Employer.  In the case of such a termination, ifExecutive has fully complied with Section 6(e) above, (i) Executive shall becredited with six months after termination under any provisions governingrestricted stock (or its equivalent) or options relating to the vesting orinitial exercisability thereof, and (ii) if such six months of credit wouldfall within a vesting period, a pro rata portion of the unvested shares ofrestricted stock (or its equivalent) granted to Executive that otherwise wouldhave become vested upon the conclusion of such vesting period shall becomevested on the date of Executive’s termination due to his disability, and a prorata portion of the unvested or unexercisable stock options granted toExecutive that otherwise would have become vested or exercisable upon theconclusion of such vesting period shall become vested and exercisable on thedate of Executive’s termination due to such disability.  Furthermore, upon such disability, any vestedunexercised stock options granted to Executive shall remain vested andexercisable until the earlier of (A) the date on which the term of such stockoptions otherwise would have expired, or (B) the second January 1 after thedate of Executive’s termination due to his disability.  Other than as expressly provided in thisSection 7(d), the Employer shall have no further obligations hereunderfollowing such termination.

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# 8.     Confidentiality; Prohibited Activities. Executive and the Employer (which, for purposes of this Section 8, andany related enforcement provisions hereof, except at the context requiresotherwise, shall include not only GKK Manager LLC, but shall also severallyinclude the Corporation) recognize that due to the nature of his employment andrelationship with the Employer, Executive has access to and developsconfidential business information, proprietary information, and trade secretsrelating to the business and operations of the Employer.  Executive acknowledges that (i) suchinformation is valuable to the business of the Employer, (ii) disclosure to, oruse for the benefit of, any person or entity other than the Employer, wouldcause irreparable damage to the Employer, (iii) the principal businesses of theEmployer are originating and acquiring real estate related loans and securitiesassociated with commercial and multi-family properties (collectively, the “Business”),(iv) the Employer is one of the limited number of persons who have developed abusiness such as the Business, and (v) the Business is national in scope.  Executive further acknowledges that hisduties for the Employer include the duty to develop and maintain client,customer, employee, and other business relationships on behalf of the Employer;and that access to

 

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# and development ofthose close business relationships for the Employer render his servicesspecial, unique and extraordinary.  Inrecognition that the good will and business relationships described herein arevaluable to the Employer, and that loss of or damage to those relationshipswould destroy or diminish the value of the Employer, and in consideration ofthe compensation (including severance) arrangements hereunder, and other goodand valuable consideration the receipt and sufficiency of which are herebyacknowledged by Executive, Executive agrees as follows:

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## (a)   Confidentiality. During the term of this Agreement (including any renewals), and at alltimes thereafter, Executive shall maintain the confidentiality of all confidentialor proprietary information of the Employer (“Confidential Information”), and,except in furtherance of the business of the Employer or as specificallyrequired by law or by court order, he shall not directly or indirectly discloseany such information to any person or entity; nor shall he use ConfidentialInformation for any purpose except for the benefit of the Employer.  For purposes of this Agreement, “ConfidentialInformation” includes, without limitation: client or customer lists, identities, contacts, business and financialinformation (excluding those of Executive prior to employment with Employer);investment strategies; pricing information or policies, fees or commissionarrangements of the Employer; marketing plans, projections, presentations orstrategies of the Employer; financial and budget information of the Employer;new personnel acquisition plans; and all other business related informationwhich has not been publicly disclosed by the Employer.  This restriction shall apply regardless ofwhether such Confidential Information is in written, graphic, recorded,photographic, data or any machine readable form or is orally conveyed to, ormemorized by, Executive.

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## (b)   Prohibited Activities. Because Executive’s services to the Employer are essential and becauseExecutive has access to the Employer’s Confidential Information, Executivecovenants and agrees that:

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## (i)            during the Employment Period, and for theone-year period following the termination of Executive by either party for anyreason including the expiration of the term of this Agreement, Executive willnot, anywhere in the United States, withoutthe prior written consent of the Employer and the unanimous consent of theDirectors other than any other officer of the Employer, directly or indirectly(individually, or through or on behalf of another entity as owner, partner,agent, employee, consultant, or in any other capacity), engage, participate orassist, as an owner, partner, employee, consultant, director, officer, trusteeor agent, in any element of the Business, subject, however, toSection 8(c) below. Notwithstanding the forgoing, in the event that the Employer extends theterm of its existing management agreement by matching a bona fide third-partyoffer which provides for materially less fees than the existing agreement, thensuch period of restriction shall only apply during the remaining period of theterm of this Agreement; and

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## (ii)           during the Employment Period, and during(x) the two-year period following the termination of Executive by either partyfor any reason (including the expiration of the term of the Agreement) in thecase of clause (A) below, or (y) the one-year period following such terminationin the case of clause (B) below, Executive will not, without the prior writtenconsent of the Employer and the unanimous consent of the Directors other thanany other officer of the Employer, directly or indirectly (individually, orthrough or on behalf of another entity as owner, partner, agent,

 

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## employee, consultant, or in any other capacity), (A)solicit, encourage, or engage in any activity to induce any employee of theEmployer to terminate employment with the Employer, or to become employed by,or to enter into a business relationship with, any other person or entity;provided, however, that the two-year period otherwise set forth in clause (x)above shall be one-year in the case of an employee hired after the date hereofby Executive with whom as of the date hereof, Executive has a materialpre-existing relationship; or (B) engage in any activity intentionally tointerfere with, disrupt or damage the Business of the Employer, or itsrelationships with any client, supplier or other business relationship of theEmployer.  For purposes of thissubsection, the term “employee” means any individual who is an employee of orconsultant to the Employer (or any affiliate) during the six-month period priorto Executive’s last day of employment.

##  

## (c)   Other Investments. Notwithstanding anything contained herein to the contrary, Executive isnot prohibited by this Section 8 from making investments, (i) expresslydisclosed to the Employer and to the CEO in writing before the date hereof;(ii) solely for investment purposes and without participating in the businessin which the investments are made, in any entity that engages, directly orindirectly, in the acquisition, development, construction, operation,management, financing or leasing of office real estate properties, regardlessof where they are located, if (x) Executive’s aggregate investment in each suchentity constitutes less than one percent of the equity ownership of suchentity, (y) the investment in the entity is in securities traded on anynational securities exchange or the National Association of Securities Dealers,Inc. Automated Quotation System, and (z) Executive is not a controlling personof, or a member of a group which controls, such entity; or (iii) if (A) except with the prior written consent ofthe Employer and the CEO, he has less than a 25% interest in the investment inquestion, (B) except with the prior written consent of the Employer and theCEO, he does not have the role of a general partner or managing member, or anysimilar role, (C) the investment is not an appropriate investment opportunityfor the Employer, and (D) the investment activity is not directly competitivewith the businesses of the Employer.

##  

## (d)   Employer Property. Executive acknowledges that all originals and copies of materials,records and documents generated by him or coming into his possession during hisemployment by the Employer are the sole property of the Employer (“EmployerProperty”).  During his employment, andat all times thereafter, Executive shall not remove, or cause to be removed,from the premises of the Employer, copies of any record, file, memorandum,document, computer related information or equipment, or any other item relatingto the business of the Employer, except in furtherance of his duties under thisAgreement.  When Executive terminates hisemployment with the Employer, or upon request of the Employer at any time,Executive shall promptly deliver to the Employer all originals and copies ofEmployer Property in his possession or control and shall not retain any originalsor copies in any form.

##  

## (e)   No Disparagement. For one year following termination of Executive’s employment for anyreason, Executive shall not intentionally disclose or cause to be disclosed anynegative, adverse or derogatory comments or information about (i) the Employerand its parent, affiliates or subsidiaries, if any; (ii) any product or serviceprovided by the Employer and its parent, affiliates or subsidiaries, if any; or(iii) the Employer’s and its parent’s, affiliates’ or subsidiaries’ prospectsfor the future.  For one year followingtermination of Executive’s employment for any reason, the Employer shall notdisclose or cause to be disclosed any negative, adverse or derogatory

 

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## comments or information about Executive.  Nothing in this Section shall prohibit eitherthe Employer or Executive from testifying truthfully in any legal oradministrative proceeding.

##  

## (f)    Remedies.  Executivedeclares that the foregoing limitations in Sections 8(a) through 8(f) above arereasonable and necessary for the adequate protection of the business and thegoodwill of the Employer.  If anyrestriction contained in this Section 8 shall be deemed to be invalid, illegalor unenforceable by reason of the extent, duration or scope thereof, orotherwise, then the court making such determination shall have the right toreduce such extent, duration, scope, or other provisions hereof to make therestriction consistent with applicable law, and in its reduced form such restrictionshall then be enforceable in the manner contemplated hereby.  In the event that Executive breaches any ofthe promises contained in this Section 8, Executive acknowledges that theEmployer’s remedy at law for damages will be inadequate and that the Employerwill be entitled to specific performance, a temporary restraining order orpreliminary injunction to prevent Executive’s prospective or continuing breachand to maintain the status quo.  Theexistence of this right to injunctive relief, or other equitable relief, or theEmployer’s exercise of any of these rights, shall not limit any other rights orremedies the Employer may have in law or in equity, including, withoutlimitation, the right to arbitration contained in Section 9 hereof and the rightto compensatory and monetary damages. Executive hereby agrees to waive his right to a jury trial with respectto any action commenced to enforce the terms of this Agreement.  Executiveshall have remedies comparable to those of the Employer as set forth above inthis Section 8(f) if the Employer breaches Section 8(e).

##  

## (g)   Transition. Regardless of the reason for his departure from the Employer, Executiveagrees that at the Employer’s sole costs and expense, for a period of not morethan 30 days after termination of Executive, he shall take all steps reasonablyrequested by the Employer to effect a successful transition of client andcustomer relationships to the person or persons designated by the Employer,subject to Executive’s obligations to his new employer.

##  

## (h)   Cooperation with Respect to Litigation. During the Employment period and at all times thereafter, Executiveagrees to give prompt written notice to the Employer of any claim relating tothe Employer and to cooperate fully, in good faith and to the best of hisability with the Employer in connection with any and all pending, potential orfuture claims, investigations or actions which directly or indirectly relate toany action, event or activity about which Executive may have knowledge in connectionwith or as a result of his employment by the Employer hereunder.  Such cooperation will include all assistancethat the Employer, its counsel or its representatives may reasonably request,including reviewing documents, meeting with counsel, providing factualinformation and material, and appearing or testifying as a witness; provided,however, that the Employer will reimburse Executive for all reasonableexpenses, including travel, lodging and meals, incurred by him in fulfillinghis obligations under this Section 8(h) and, except as may be required by lawor by court order, should Executive then be employed by an entity other thanthe Employer, such cooperation will not materially interfere with Executive’sthen current employment.

##  

## (i)    Survival.  Theprovisions of this Section 8 shall survive termination of Executive’semployment any other provisions relating to the enforcement thereof.

 

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# 9.     Equity Interest in the Employer. It is expressly acknowledged that Executive has been granted an equityinterest in the Employer by that certain Membership Interest Issuance, Vestingand Repurchase Agreement between Executive and Employer, dated as of the datehereof.

#  

# 10.   Arbitration.  Anycontroversy or claim arising out of or relating to this Agreement or the breachof this Agreement (other than a controversy or claim arising under Section 8,to the extent necessary for the Employer or the Corporation (or theiraffiliates, where applicable) to avail themselves of the rights and remediesreferred to in Section 8(f)) that is not resolved by Executive and the Employeror the Corporation (or their affiliates, where applicable) shall be submittedto arbitration in New York, New York in accordance with New York law and theprocedures of the American Arbitration Association.  The determination of the arbitrator(s) shallbe conclusive and binding on the Employer and the Corporation (or theiraffiliates, where applicable) and Executive and judgment may be entered on thearbitrator(s)’ award in any court having jurisdiction.

#  

# 11.   Conflicting Agreements.  Executivehereby represents and warrants that the execution of this Agreement and theperformance of his obligations hereunder will not breach or be in conflict withany other agreement to which he is a party or is bound, and that he is not nowsubject to any covenants against competition or similar covenants which wouldaffect the performance of his obligations hereunder.

#  

# 12.   No Duplication of Payments. Executive shall not be entitled to receive duplicate payments under anyof the provisions of this Agreement.

#  

# 13.   Notices.  All noticesor other communications required or permitted to be given hereunder shall be inwriting and shall be delivered by hand and or sent by prepaid telex, cable orother electronic devices or sent, postage prepaid, by registered or certifiedmail or telecopy or overnight courier service and shall be deemed given when sodelivered by hand, telexed, cabled or telecopied, or if mailed, three days aftermailing (one business day in the case of express mail or overnight courierservice), as follows:

 

## (a)   if to Executive:

 

Robert R. Foley, at theaddress shown on the execution page hereof.

 

With a copy to:

 

Friedman Kaplan Seiler& Adelman LLP

1633 Broadway

New York, NY 10019

Attn: Edward A. Friedman

 

## (b)   if to the Employer:

 

Gramercy ManagerLLC

420 LexingtonAvenue

New York, New York10170

Attn:  Marc Holliday

 

with a copy to:

 

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Clifford Chance US LLP

31 West 52nd Street

New York, New York  10019

Attention:  Robert E. King, Jr.

 

## (c)   if to the Corporation:

 

Gramercy CapitalCorp.

420 LexingtonAvenue

New York, New York10170

Attn: CorporateSecretary

 

with copies to:

 

Gramercy ManagerLLC

420 LexingtonAvenue

New York, New York10170

Attn:  Marc Holliday

 

and:

 

Clifford Chance US LLP

31 West 52nd Street

New York, New York  10019

Attention:  Robert E. King, Jr.

 

or such other address aseither party may from time to time specify by written notice to the other partyhereto.

 

# 14.   Amendments.  No amendment,modification or waiver in respect of this Agreement shall be effective unlessit shall be in writing and signed by the party against whom such amendment,modification or waiver is sought.

#  

# 15.   Severability.  If anyprovision of this Agreement (or any portion thereof) or the application of anysuch provision (or any portion thereof) to any person or circumstances shall beheld invalid, illegal or unenforceable in any respect by a court of competentjurisdiction, such invalidity, illegality or unenforceability shall not affectany other provision hereof (or the remaining portion hereof) or the applicationof such provision to any other persons or circumstances.

#  

# 16.   Withholding.  The Employershall be entitled to withhold from any payments or deemed payments any amountof tax withholding it reasonably determines to be required by law.

#  

# 17.   Successors and Assigns; Third-Party Beneficiary. This Agreement shall be binding upon and inure to the benefit of the partiesand their respective successors and assigns, including any corporation withwhich or into which the Employer may be merged or which may succeed to itsassets or business, provided, however, that the obligations of Executive arepersonal and shall not be assigned by him. This Agreement shall inure to the benefit of and be enforceable byExecutive’s personal and legal representatives, executors, administrators,assigns, heirs, distributees, devisees and legatees.  It is

 

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# expresslyacknowledged and agreed that (i) the Corporation is a third-party beneficiaryof any provision hereof running in favor of the Corporation; (ii) the Employermay assign this Agreement in its entirety, and its rights under this Agreement,to the Corporation in connection with a “Sale Event” (as defined in the LLCAgreement); and (iii) at the request of the Employer, Executive shall executean employment agreement with the Corporation on substantially the same terms asare contained herein with respect to the Employer.

#  

# 18.   Counterparts.  ThisAgreement may be executed in one or more counterparts, all of which shall be considered one and the same  agreement, and shall become effective whenone or more such  counterparts have been signedby each of the parties and  delivered tothe other party.

#  

# 19.   Governing Law.  ThisAgreement shall be governed by and construed in accordance with the laws of the State of New Yorkapplicable to agreements made and to be performed entirely within  such State, without regard to the conflicts oflaw principles of such State.

#  

# 20.   Choice of Venue.  Executiveagrees to submit to the  jurisdiction ofthe United States District Court for the Southern District of New York or theSupreme Court of the State of New York, New York County, for the purpose of anyaction to enforce any of the terms of this Agreement.

#  

# 21.   Entire Agreement.  ThisAgreement contains the entire agreement and understanding between the partieshereto with respect to the subject matter hereof and supersedes all prioragreements and understandings relating to such subject matter, includingwithout limitation anything contained in the exhibits to that certainConsulting Agreement between Executive and SL Green Realty Corp. dated as of February23, 2004.  The parties hereto shall notbe liable or bound to any other party in any manner by any representations,warranties or covenants relating to such subject matter except as specificallyset forth herein.

#  

# 22.   Paragraph Headings.  Section headingsused in this  Agreement are included forconvenience of reference only and will not affect the meaning of any provision of this agreement.

 

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# IN WITNESS WHEREOF, this Agreement is entered into asof the date and year first written above, and is being executed on                                         ,2004.

 
|   | GRAMERCY MANAGER LLC |
|--------|----------------------|
|   |                 |
|   |                 |
|   | By:                  |   |   |
|   |                 | Name: |   |
|   |                 | Title: |   |
|   |                 |   |   |
|   |                 |   |   |
|   |                 | Robert R. Foley |   |
|        |                      |  |  |  |

 

 

Agreed,as to the rights and obligations of

theCorporation:  GRAMERCY CAPITALCORP.

 

 
| By:    |   |   |   |
|--------|--------|--------|--------|
|   | Name:  |   |
|   | Title: |   |

 

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