Document:

Exhibit
10.4

 

Execution Version

 

EMPLOYMENT AND NONCOMPETITION AGREEMENT

 

This EMPLOYMENT AND
NONCOMPETITION AGREEMENT (“Agreement”) is made as of the 13th day of November,
2008, between Timothy O’Connor (“Executive”) and GKK Manager LLC, a Delaware
limited liability company (the “Employer”), to be effective as of November 13,
2008 (the “Effective Date”).

 

1.             Term.  The term of this Agreement shall commence on
the Effective Date and shall continue through, and terminate on, December 31,
2011 (the “Original Term”) unless earlier terminated as provided in Section 6
below.  The Original Term shall
automatically be extended for successive one (1) year periods (each a “Renewal
Term”), unless either party gives the other party at least three (3) months
written notice of desire to negotiate terms and/or non-renewal prior to the
expiration of the then current term.  The
period of Executive’s employment hereunder consisting of the Original Term and
all Renewal Terms, if any, is herein referred to as the “Employment Period.”

 

2.             Employment and Duties.

 

(a)           Duties.  During the Employment Period, Executive shall
be employed in the business of the Employer and its affiliates.  Executive shall serve the Employer as a
senior executive.  In addition, Executive
shall serve as President  of Gramercy
Capital Corp. (“Gramercy”).  In his
capacity as President, Executive’s duties and authority shall be those as would
normally attach to Executive’s position as President, including such duties and
responsibilities as are customary among persons employed in similar capacities
for similar companies, but in all events such duties shall be commensurate with
his position as President of Gramercy. 
Executive’s duties and authority shall be as further set forth by the
Employer.

 

(b)           Best Efforts.  Executive agrees to his employment as
described in this Section 2 and agrees to devote substantially all of his
business time and efforts to the performance of his duties under this
Agreement, except as otherwise approved by the Employer; provided, however,
that nothing herein shall be interpreted to preclude Executive, so long as
there is no material interference with his duties hereunder, from (i) participating
as an officer or director of, or advisor to, any charitable or other tax exempt
organization or otherwise engaging in charitable, fraternal or trade group
activities; (ii) investing and
managing his assets as an investor in other entities or business ventures;
provided that he performs no management or similar role (or, in the case of
investments other than those in entities or business ventures engaged in
the Business (as defined in Section 8),
he performs a management role comparable to the role that a significant limited
partner would have, but performs no day-to-day management or similar role) with
respect to such entities or ventures and such investment does not violate Section 8
hereof; and provided, further, that, in any case in which Executive knows that
another party involved in the investment has a business relationship with the
Employer, Executive shall give prior written notice thereof to the Employer; or
(iii) serving as a member of the Board of Directors of a for-profit
corporation with the approval of the Employer. 
Notwithstanding the foregoing, Executive shall be entitled to maintain
the investments disclosed on Schedule I attached hereto.

 

(c)           Travel.  In performing his duties hereunder, Executive
shall be available for all reasonable travel as the needs of the Employer’s
business may require.  Executive shall be
based in, or within 50 miles of, Manhattan.

 

 

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

 

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

 

(b)           Signing Bonus; Incentive
Compensation Bonuses.  In addition
to Base Salary, during the Employment Period, Executive shall be eligible for
and shall receive from the Employer such discretionary annual bonuses as the
Employer, in its sole discretion, may deem appropriate to reward Executive for
job performance.  The target
discretionary annual bonus for each year after 2008 shall be at least $500,000;
provided that the actual bonus paid shall be determined by the Employer, in its
sole discretion, based on such factors as it deems relevant.  Any bonuses awarded for a fiscal year shall
be paid after the end of such fiscal year and on or before the 15th day of the third month of the following fiscal
year (e.g., a bonus for 2009 will be paid sometime between January 1, 2010
and March 15, 2010), provided that, in 2009, the Employer will pay
$175,000 of Executive’s bonus in advance on June 30, 2009.  In lieu of a bonus for 2008, the Employer
shall pay Executive a signing bonus of $100,000 (the “Signing Bonus”) on the 30th day following the Effective Date; provided
that Executive remains employed by the Employer on such date.

 

(c)           Expenses.  Executive shall be reimbursed for all
reasonable business related expenses incurred by Executive at the request of or
on behalf of the Employer, provided that such expenses are incurred and
accounted for in accordance with the policies and procedures established by the
Employer.  Any expenses incurred during
the Employment Period but not reimbursed by the Employer by the end of the
Employment Period, shall remain the obligation of the Employer to so reimburse
Executive.

 

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

 

(e)           Vacations.  Executive shall be entitled to paid vacations
in accordance with the then regular procedures of the Employer governing senior
executive officers, except that Executive shall be credited with a minimum of
20 vacation days per calendar year, pro-rated for any partial year.  The Employer will pay Executive for unused
accrued vacation upon termination of his employment.

 

(f)            Other Benefits.  During the Employment Period, the Employer
shall provide to Executive such other benefits, as generally made available to
other senior executives of the Employer;  provided
that it is acknowledged that the Employer’s Chief Executive Officer may be
provided with additional benefits not made available to Executive.

 

4.             Indemnification and
Liability Insurance.  The
Employer agrees to
indemnify Executive to the full extent permitted by applicable law, as the same
exists and may hereafter be amended, from and 

 

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against any and
all losses, damages, claims, liabilities and expenses asserted against, or
incurred or suffered by, Executive (including the costs and expenses of legal
counsel retained by the Employer to defend Executive and judgments, fines and
amounts paid in settlement actually and reasonably incurred by or imposed on
such indemnified party) with respect to any action, suit or proceeding, whether
civil, criminal administrative or investigative (a “Proceeding”) in which
Executive is made a party or threatened to be made a party or is otherwise
involved, either with regard to his entering into this Agreement with the
Employer or in his capacity as an officer or director, or former officer or
director of the Employer, Gramercy (to extent Executive served or is serving in
such capacity at the request of the Employer) or any affiliate thereof for
which he may serve in such capacity; provided however, that, to the extent the
indemnification provided for herein relates to a Proceeding in which Executive
is made a party or threatened to be made a party or is otherwise involved in
his capacity as an officer or director, or former officer or director, of
Gramercy, the Employer will only provide such indemnification to the extent
that Gramercy does not do so.  The Employer
also agrees to secure promptly and maintain officers and directors liability
insurance providing coverage for Executive, with such coverage to be reasonably
comparable to the coverage maintained by SL Green Realty Corp., for such time
as SL Green Realty Corp. controls the Employer. 
The provisions of this Section 4 shall remain in effect after this
Agreement is terminated irrespective of the reasons for termination.

 

5.             Employer’s Policies.  Executive agrees to observe and comply with
the reasonable written rules and regulations of the Employer regarding the
performance of his duties and to carry out and perform orders, directions and
policies communicated to him from time to time by the Employer, so long as same
are otherwise consistent with this Agreement.

 

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

 

(a)           Termination by the Employer.

 

(i)            Death.  Executive’s employment hereunder shall
terminate upon his death.

 

(ii)           Disability.  If, as a result of Executive’s incapacity due
to physical or mental illness or disability, Executive shall have been
incapable of performing his duties hereunder even with a reasonable
accommodation on a full-time basis for the entire period of four consecutive
months or any 120 days in a 180-day period, and within 30 days after written
Notice of Termination (as defined in Section 6(d)) is given he shall not
have returned to the performance of Executive’s duties hereunder on a full-time
basis, the Employer may terminate Executive’s employment hereunder.

 

(iii)          Cause.  The Employer may terminate Executive’s
employment hereunder for Cause.  For
purposes of this Agreement, “Cause” shall mean Executive’s:  (A) engaging in conduct which is a
felony; (B) material breach of any of his obligations under Sections 8(a) through
8(e) of this Agreement; (C) willful misconduct of a material nature
or gross negligence with regard to the Employer or Gramercy or any of their
affiliates; (D) material fraud with regard to the Employer or Gramercy or
any of their affiliates; (E) willful or material violation of any
reasonable written rule, regulation or policy of the Employer or Gramercy
applicable to senior executives unless such a violation is cured within 30 days
after written notice of such violation by the Employer or Gramercy; or (F) failure
to competently perform his duties which failure is not cured within 30 days
after receiving notice from the Employer specifically identifying the manner in
which Executive has failed to perform (it being understood that, for this 

 

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purpose, the manner and
level of Executive’s performance shall not be determined based on the financial
performance (including without limitation the performance of the stock of
Gramercy) of the Employer or Gramercy).

 

(iv)          Without Cause.  Executive’s employment hereunder may be
terminated by the Employer at any time without Cause (as defined in Section 6(a)(iii) above),
subject only to the severance provisions specifically set forth in Section 7.

 

(b)           Termination by Executive.

 

(i)            Disability.  Executive may terminate his employment
hereunder for Disability within the meaning of Section 6(a)(ii) above.

 

(ii)           With Good Reason.  Executive’s employment hereunder may be terminated by
Executive with Good Reason effective immediately by written notice to the
Employer providing at least ten (10) days notice prior to such
termination. For purposes of this Agreement, termination with “Good Reason”
shall mean termination following:

 

(A)            a material change in
Executive’s duties, responsibilities, status or positions with the Employer
that does not represent a promotion from or maintaining of Executive’s duties,
responsibilities, status or positions (which material change, so long as
Executive is the President of Gramercy, shall include the appointment of
another person as co-President of Gramercy), except in connection with the
termination of Executive’s employment for Cause, disability, retirement or
death;

 

(B)             a failure by the Employer to
pay compensation when due in accordance with the provisions of Section 3,
which failure has not been cured within 10 business days after the notice of
the failure (specifying the same) has been given by Executive to the Employer;

 

(C)             a material breach by the
Employer of any provision of this Agreement, which breach has not been cured
within 30 days after notice of noncompliance (specifying the nature of the
noncompliance) has been given by Executive to the Employer;

 

(D)            the Employer requiring
Executive to be based in an office more than 50 miles outside of Manhattan;

 

(E)             a reduction by the Employer
in Executive’s Base Salary to less than the minimum Base Salary set forth in Section 3(a);

 

(F)             the failure by the Employer
to continue in effect an equity award program or other substantially similar
program under which Executive is eligible to receive awards;

 

(G)             a material reduction in
Executive’s benefits under any benefit plan (other than an equity award
program) compared to those currently received (other than in connection with
and proportionate to the reduction of the benefits received by all or most
senior executives or undertaken in order to maintain such plan in compliance
with any federal, state or local law or regulation governing 

 

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benefits plans, including,
but not limited to, the Employee Retirement Income Security Act of 1974); or

 

(H)            the failure by the Employer to obtain from any
successor to the Employer an agreement to be bound by this Agreement pursuant
to Section 15 hereof, which has not been cured within 30 days after the
notice of the failure (specifying the same) has been given by Executive to the
Employer.

 

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

 

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

 

(i)            A “Change-in-Control” shall
be deemed to have occurred if:

 

(A)            any “person,” including a “group” (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act,
but excluding the Employer, SL Green Realty Corp. (or a successor thereto that
directly or indirectly acquires all or substantially all of the assets of SL
Green Realty Corp., whether by merger, consolidation, asset acquisition or
otherwise) (“SL Green”),
any entity controlling, controlled by or under common control with the
Employer, or SL Green, any trustee, fiduciary or other person or entity holding
securities under any employee benefit plan or trust of the Employer, Gramercy,
SL Green or any such entity, and Executive and any “group” (as such term is
used in Section 13(d)(3) of the Exchange Act) of which Executive is a
member), is or becomes the “beneficial owner” (as defined in Rule 13(d)(3) under the
Exchange Act), directly or indirectly, of securities of Gramercy representing
25% or more of either (1) the combined voting power of Gramercy’s then
outstanding securities or (2) the then outstanding common stock (or other
similar equity interest, in the case of a company other than a corporation) of
Gramercy (in either such case other than as a result of an acquisition of
securities directly from Gramercy); or

 

(B)             any consolidation or merger of Gramercy
where the shareholders of Gramercy, as applicable, immediately prior to the
consolidation or merger, would not, immediately after the consolidation or
merger, beneficially own (as such term is defied in Rule 13d-3 under the
Exchange Act), directly or indirectly, shares representing in the aggregate 50%
or more of the combined voting power of the securities of the corporation
issuing cash or securities in the consolidation or merger (or of its ultimate
parent corporation, if any); or

 

(C)             there shall occur (1) any sale,
lease, exchange or other transfer (in one transaction or a series of
transactions contemplated or arranged by any party as a single plan) of all or
substantially all of the assets of Gramercy, other than a sale or disposition
by Gramercy of all or substantially all of Gramercy’s assets to an entity at
least 50% of the combined voting power of the voting securities of which are
owned by “persons” (as defined above) in substantially the same proportion as
their ownership of Gramercy, as applicable, immediately prior to such sale, or (2) the
approval by shareholders of Gramercy, as applicable, of any plan or proposal
for the liquidation or dissolution of Gramercy, as applicable; or

 

5

 

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

 

Notwithstanding the
foregoing, a Change-in-Control shall not be deemed to have occurred if SL Green
Realty Corp. (or a successor thereto that directly or indirectly acquires all
or substantially all of the assets of SL Green Realty Corp., whether by merger,
consolidation, asset acquisition or otherwise) or one of its direct or indirect
subsidiaries continues to be the external manager of Gramercy at the applicable
time.

 

(d)           Notice of Termination.  Any
termination of Executive’s employment by the Employer or by Executive (other
than on account of death) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 11 of
this Agreement.  For purposes of this
Agreement, a “Notice of Termination” shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and, as
applicable, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive’s employment under the
provision so indicated.  Executive’s
employment shall terminate as of the effective date set forth in the Notice of
Termination (the “Termination Date”), which date shall not be more than thirty
(30) days after the date of the Notice of Termination.  For avoidance of doubt, a notice of
non-renewal pursuant to Section 1 shall not be considered a Notice of
Termination.

 

(e)           Resignation Upon Termination. 
In the event that Executive’s employment with the Employer is
terminated, Executive (i) shall, within five business days of receipt of a
written request for resignation, resign all positions (including, without
limitation, as officer, employee, director and member of any committee) with
the Employer and Gramercy and their subsidiaries and affiliates, and (ii) shall
provide such written confirmation thereof as may be reasonably required by the
Employer.  In the event that Executive’s
service with Gramercy is terminated other 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
Gramercy and its subsidiaries, and (ii) shall provide such written
confirmation thereof as may be reasonably required by the Employer.

 

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7.             Compensation Upon
Termination; Change-in-Control.

 

(a)           Termination By the Employer
Without Cause or By Executive With Good Reason.  If (i) Executive is terminated by the
Employer without Cause pursuant to Section 6(a)(iv) above, or (ii) Executive
shall terminate his employment hereunder with Good Reason pursuant to Section (6)(b)(ii) above,
then the Employment Period shall terminate as of the Termination Date and
Executive shall be entitled to the following payments and benefits, subject to
Executive’s execution of a mutual release agreement in form and substance
satisfactory to the Employer, whereby, in general, each party releases
the other from all claims such party may have against the other party (other
than (A) claims against the Employer relating to the Employer’s
obligations under this Agreement and certain other specified agreements arising
in connection with or after Executive’s termination, including, without
limitation, the Employer’s obligations hereunder to provide severance payments
and benefits and accelerated vesting of equity awards and (B) claims
against Executive relating to or arising out of any act of fraud, intentional
misappropriation of funds, embezzlement or any other action with regard to the
Employer or any of its affiliated companies that constitutes a felony under any
federal or state statute committed or perpetrated by Executive during the
course of Executive’s employment with the Employer or its affiliates, in any
event, that would have a material adverse effect on the Employer, or any other
claims that may not be released by the Employer under applicable law) (the “Release
Agreement”), and the effectiveness thereof on or within 30 days
after the Termination Date (with the date of such effectiveness being referred
to herein as the “Release Effectiveness Date”):

 

(i)            Executive shall receive any
earned and accrued but unpaid Base Salary (at the rate in effect on the date of
his termination) on the first regular payroll payment date for the period in
which the Termination Date occurs, and shall continue to receive Base Salary
(at the rate in effect on the date of his termination) for a period of twelve
(12) months following the Termination Date on the same periodic payment dates
as payment would have been made to Executive had Executive not been terminated;
provided that no payments of continued Base Salary will be made until the first
regular payroll payment date that commences 30 days after the Termination Date,
provided that the Release Effectiveness Date has occurred (with the first such
payment to include a catch up payment covering amounts that would otherwise
have been paid prior to such date but for the application of this provision).

 

(ii)           the Employer shall pay
Executive annual performance bonuses as follows: (A) if the Termination
Date is during 2009 or any later year, a prorated annual performance bonus (the
“Prorated Annual Bonus”) equal to (x) Executive’s annual performance bonus
for the most recent prior fiscal year for which the amount of such bonus had
been determined or, if the Termination Date occurs prior to Executive’s annual
performance bonus for 2009 having been determined, the amount of $500,000 (with
the applicable amount being referred to herein as the “Prior Annual Bonus”)
multiplied by (y) a fraction, the numerator of which is the number of days
in the fiscal year in which Executive’s employment terminates through the Termination
Date (and the number of days in the prior fiscal year (other than 2008), in the
event that Executive’s annual cash bonus for such year had not been determined
as of the Termination Date) and the denominator of which is 365, and (B) an
annual performance bonus (the “Additional 12-Month Bonus”) for the 12 months
following the Termination Date (or, if shorter, the portion of such period that
is in 2009 or a later year) equal to the Prior Annual Bonus (or a prorated
portion thereof to the extent such period is shortened in accordance with the
previous parenthetical); provided that the amounts set forth in (A) and (B) above
shall be 

 

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reduced
by the amount of any annual performance bonus, or advance thereof, previously
paid for the periods set forth in (A) and (B) above.  In addition, if the Termination Date occurs
prior to the payment of the Signing Bonus, the Employer shall also pay
Executive the Signing Bonus.  Such
payments shall be made on the later of (A) the dates the Employer would
have otherwise paid such annual performance bonuses and the Signing Bonus, if
applicable, to Executive under the terms of this Agreement if Executive had
remained employed by the Employer or (B) the 30th day after the Termination
Date.

 

(iii)          Executive shall continue to
receive from the Employer all benefits described in Section 3(d) existing
on the Termination Date for a period of twelve (12) months after the
Termination Date, subject to the terms and conditions upon which such benefits
may be offered to continuing senior executives from time to time.  For purposes of the application of such
benefits, Executive shall be treated as if he had remained in the employ of the
Employer with a Base Salary at the rate in effect on the date of
termination.  Notwithstanding the
foregoing, (A) nothing in this Section 7(a)(iii) shall restrict
the ability of the Employer to amend or terminate the plans and programs
governing the benefits described in Section 3(d) from time to time in
its sole discretion, and (B) the Employer shall in no event be required to
provide any benefits otherwise required by this Section 7(a)(iii) after
such time as Executive becomes entitled to receive benefits of the same type
from another employer or recipient of Executive’s services (such entitlement
being determined without regard to any individual waivers or other similar
arrangements).

 

(iv)          Executive shall be credited
with twelve (12) months after termination under any provisions governing
restricted stock, options or other equity-based awards granted to Executive by
the Employer relating to the vesting or initial exercisability thereof;
provided that any unvested or unexercisable restricted stock, options or other
equity based awards that were granted as payment of a cash bonus, as determined
at the time of grant by the Employer, in its sole discretion, shall become
fully vested and exercisable on the date of Executive’s termination.  For purposes of determining the effect of
such twelve (12) months of credit with respect to any performance-based vesting
criteria, (A) if such termination occurs less than six months after the
beginning of a performance period, then performance-based vesting shall be
based on performance during the prior performance period and (B) if such
termination occurs more than six months after the beginning of a performance
period, then performance-based vesting shall be based on performance during
such interim period through the most recently completed fiscal quarter.  Furthermore, upon such termination, any then
vested unexercised stock options granted to Executive by the Employer shall
remain exercisable until the second January 1 to follow the Termination
Date or, if earlier, the expiration of the initial applicable term stated at the
time of the grant.  The provisions of
this Section are subject to Section 7(e) below.

 

(v)           In the event such termination occurs in connection
with or within eighteen (18) months after a Change-in-Control, then Executive
will be entitled to the payments and benefits provided under the foregoing
Sections 7(a)(i) — (iv), except that the references to “12 months” in the
salary and bonus continuation provisions set forth in Section 7(a)(i) and
(ii) above will be replaced with “24 months.”

 

Other
than as may be provided under Section 4 or as expressly provided in this Section 7(a),
the Employer shall have no further obligations hereunder following such
termination.

 

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(b)           Termination By the Employer
For Cause or By Executive Without Good Reason.  If (i) Executive is terminated by the
Employer for Cause pursuant to Section 6(a)(iii) above, or (ii) Executive
voluntarily terminates his employment hereunder without Good Reason pursuant to
Section 6(b)(iii) above, then the Employment Period shall terminate
as of the Termination Date and Executive shall be entitled to receive any earned and accrued but unpaid
Base Salary (at the rate in effect on the date of his termination) on the first
regular payroll payment date for the period in which the Termination Date
occurs, but, for avoidance of doubt, shall not be entitled to any annual cash
bonus for the year in which the termination occurs, severance payment,
continuation of benefits or acceleration of vesting or extension of exercise
period of any equity awards, except as otherwise provided in the documentation
applicable to such equity awards.  Other
than as may be provided under Section 4 or as expressly provided in this Section 7(b),
the Employer shall have no further obligations hereunder following such
termination.

 

(c)           Termination by Reason of Death. 
If Executive’s employment terminates due to his death, Executive’s
estate (or a beneficiary designated by Executive in writing prior to his death)
shall be entitled to the following payments and benefits:

 

(i)            On the first regular payroll payment date for the
period in which the Termination Date occurs, Executive’s estate (or a
beneficiary designated by Executive in writing prior to his death) shall
receive from the Employer an amount equal to (A) any earned and accrued
but unpaid Base Salary, (B) if the Termination Date is during 2009 or any
later year, the Prorated Annual Bonus, less the amount of any annual
performance bonus, or advance thereof, previously paid for the period
associated with the Prorated Annual Bonus and (C) if the Termination Date
occurs prior to the payment of the Signing Bonus, the Signing Bonus.

 

(ii)           Executive shall be credited with twelve (12) months
after termination under any provisions governing restricted stock, options or
other equity-based awards granted to Executive by the Employer relating to the
vesting or initial exercisability thereof; provided that any unvested or
unexercisable restricted stock, options or other equity-based awards that were
granted as payment of a cash bonus, as determined at the time of grant by the
Employer, in its sole discretion, shall become fully vested and exercisable on
the date of Executive’s death.  For purposes of
determining the effect of such twelve (12) months of credit with respect to any
performance-based vesting criteria, (A) if such termination occurs less
than six months after the beginning of a performance period, then
performance-based vesting shall be based on performance during the prior
performance period and (B) if such termination occurs more than six months
after the beginning of a performance period, then performance-based vesting
shall be based on performance during such interim period through the most
recently completed fiscal quarter.  Furthermore, upon such death, any then
vested unexercised stock options granted to Executive by the Employer shall
remain vested and exercisable until the earlier of (A) the date on which
the term of such stock options otherwise would have expired, or (B) the
second January 1 after the date of Executive’s termination due to his
death.  The provisions of this Section are
subject to Section 7(e) below.

 

Other
than as may be provided under Section 4 or as expressly provided in this Section 7(c),
the Employer shall have no further obligations hereunder following such
termination.

 

(d)           Termination by Reason of
Disability.  In the
event that Executive’s employment terminates due to his disability as defined
in Section 6(a)(ii) above, Executive shall be entitled to 

 

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the following payments and
benefits, subject to Executive’s execution of the Release Agreement and the
effectiveness thereof on or within 30 days after the Termination Date:

 

(i)            On the first regular payroll payment date for
the period in which the Termination Date occurs, Executive shall receive from
the Employer any earned and accrued but unpaid Base Salary.  Executive shall also receive Base Salary (at
the rate in effect on the date of his termination) for a period of twelve (12)
months following the Termination Date on the same periodic payment dates as
payment would have been made to Executive had Executive not been terminated;
provided that no payments of continued Base Salary will be made until the first
regular payroll payment date that commences 30 days after the Termination Date,
provided that the Release Effectiveness Date has occurred (with the first such
payment to include a catch-up payment covering amounts that would otherwise
have been paid prior to such date but for the application of this
provision).  The Employer shall also pay
Executive: (A) if the Termination Date is during 2009 or any later year,
the Prorated Annual Bonus and (B) the Additional 12-Month Bonus; provided
that the Prorated Annual Bonus and Additional 12-Month Bonus shall be reduced
by the amount of any annual performance bonus, or advance thereof, previously
paid for the periods associated with the Prorated Annual Bonus and the Additional
12-Month Bonus.  In addition, if the
Termination Date occurs prior to the payment of the Signing Bonus, the Employer
shall also pay Executive the Signing Bonus. 
The Employer shall make such payments of the Prorated Annual Bonus, the
Additional 12-Month Bonus and the Signing Bonus, if applicable, on the later of
(x) the dates the Employer would have otherwise paid such annual
performance bonuses and the Signing Bonus, if applicable, to Executive under
the terms of this Agreement if Executive had remained employed by the Employer
or (y) the 30th day after the Termination Date.

 

(ii)           Executive shall be credited
with twelve (12) months after termination under any provisions governing
restricted stock, options or other equity-based awards granted to Executive by
the Employer relating to the vesting or initial exercisability thereof;
provided that any unvested or unexercisable restricted stock, options or other
equity-based awards that were granted as payment of a cash bonus, as determined
at the time of grant by the Employer, in its sole discretion, shall become
fully vested and exercisable on the Release Effectiveness Date.  For purposes of determining the effect of
such twelve (12) months of credit with respect to any performance-based vesting
criteria, (A) if such termination occurs less than six months after the
beginning of a performance period, then performance-based vesting shall be
based on performance during the prior performance period and (B) if such
termination occurs more than six months after the beginning of a performance
period, then performance-based vesting shall be based on performance during
such interim period through the most recently completed fiscal quarter.  Any then vested unexercised stock options
granted to Executive by the Employer shall remain vested and exercisable until
the earlier of (A) the date on which the term of such stock options
otherwise would have expired, or (B) the second January 1 after the
Termination Date.  The provisions of this
Section are subject to Section 7(e) below.

 

(iii)          Executive
shall continue to receive from the Employer all benefits described in Section 3(d) existing on the
Termination Date for a period of twelve (12) months after the Termination Date,
subject to the terms and conditions upon which such benefits may be offered to
continuing senior executives from time to time. 
For purposes of the application of such benefits, Executive shall be
treated as if he had remained in the 

 

10

 

employ
of the Employer with a Base Salary at the rate in effect on the date of
termination.  Notwithstanding the
foregoing, (A) nothing in this Section 7(d)(iii) shall restrict
the ability of the Employer to amend or terminate the plans and programs
governing the benefits described in Section 3(d) from time to time in
its sole discretion so long as it does so for all senior executives of the
Employer, and (B) the Employer shall in no event be required to provide
any benefits otherwise required by this Section 7(d)(iii) after such
time as Executive becomes entitled to receive benefits of the same type from
another employer or recipient of Executive’s services (such entitlement being
determined without regard to any individual waivers or other similar
arrangements).

 

Other
than as may be provided under Section 4 or as expressly provided in this Section 7(d),
the Employer shall have no further obligations hereunder following such
termination.

 

(e)           Gramercy Equity Awards. 
Notwithstanding anything herein to the contrary, the provisions of this Section 7
related to the acceleration of vesting and extension of the period within which
to exercise vested stock options, shall not be deemed to apply to any
equity-based awards of Gramercy, GKK Capital LP or any of their subsidiaries
made to Executive (the “Gramercy Equity Awards”) that may be deemed to have
been first granted to the Employer and then granted by the Employer to
Executive.  Any acceleration of the
vesting of the Gramercy Equity Awards will be governed by the terms of such awards
and, unless terminated, that certain Severance Agreement entered into by
Gramercy and Executive as of the date hereof, as amended or superseded from
time to time.

 

8.             Confidentiality; Prohibited
Activities.  Executive
and the Employer recognize that due to the nature of Executive’s employment and
relationship with the Employer, Executive has access to and develops
confidential business information, proprietary information, and trade secrets
relating to the business and operations of the Employer.  Executive acknowledges that (i) such
information is valuable to the business of the Employer, (ii) disclosure
to, or use for the benefit of, any person or entity other than the Employer,
would cause irreparable damage to the Employer, (iii) the principal business
of the Employer as of the date hereof is managing the business and affairs of
Gramercy, which is in the business among other things, (A) the
acquisition, development, asset management and servicing of commercial real
estate property and (B) the origination and acquisition of real estate
related loans and securities, and financing such investments, including without
limitation the origination of first-mortgage and mezzanine debt or preferred
equity financing for real estate projects throughout the United States (the
business of the Employer, and of Gramercy, both as of the date hereof and from
time to time hereafter, are collectively referred to as the “Business”), (iv) the
Employer is one of the limited number of persons who have developed a business
such as the Business, and (v) the Business is national in scope.  Executive further acknowledges that his
duties for the Employer include the duty to develop and maintain client,
customer, employee, and other business relationships on behalf of the Employer;
and that access to and development of those close business relationships for
the Employer render his services special, unique and extraordinary.  In recognition that the goodwill and business
relationships described herein are valuable to the Employer, and that loss of
or damage to those relationships would destroy or diminish the value of the
Employer, and in consideration of the compensation (including severance)
arrangements hereunder, and other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged by Executive, Executive agrees
as follows:

 

(a)           Confidentiality.  During the term of this Agreement (including
any renewals), and at all times thereafter, Executive shall maintain the
confidentiality of all confidential or proprietary information of the Employer
or Gramercy (“Confidential Information”), and, except in furtherance of the
business of the Employer or as specifically required by law or by court order,
he shall not directly or indirectly disclose any such information to any person
or entity; nor 

 

11

 

shall he use Confidential
Information for any purpose except for the benefit of the Employer.  For purposes of this Agreement, “Confidential
Information” includes, without limitation: 
client or customer lists, identities, contacts, business and financial
information (excluding those of Executive prior to employment with the
Employer); investment strategies; pricing information or policies, fees or
commission arrangements of the Employer or Gramercy; marketing plans,
projections, presentations or strategies of the Employer or Gramercy; financial
and budget information of the Employer or Gramercy; new personnel acquisition
plans; and all other business related information which has not been publicly
disclosed by the Employer or Gramercy. 
This restriction shall apply regardless of whether such Confidential
Information is in written, graphic, recorded, photographic, data or any machine
readable form or is orally conveyed to, or memorized by, Executive.

 

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

 

(i)            During the Employment
Period, and for the one-year period following the date that Executive is no
longer employed by the Employer, Executive will not, anywhere in the United States, without the prior written consent
of the Employer, directly or indirectly (individually, or through or on behalf
of another entity as owner, partner, agent, employee, consultant, or in any
other capacity), engage, participate or assist, as an owner, partner, employee,
consultant, director, officer, trustee or agent, in any element of the Business,
provided, however, that (A) such one year period shall only be three
months if (i) Executive is no longer employed by the Employer following a
non-renewal of this Agreement by the Employer or (ii) in the event
Executive’s employment is terminated for Cause based on conduct or alleged
conduct that was not related to the Business of the Employer, (B) such one
year period shall only be six months in the event Executive terminates his
employment within sixty (60) days after the payment of a discretionary bonus for
any year in an amount less than $500,000 and (C) such one year period
shall not apply in the event Executive terminates his employment without Good
Reason within sixty (60) days after (i) Gramercy files, in any court or agency pursuant to
any statute or regulation of any state or country, a petition in bankruptcy or
insolvency or for reorganization or for an arrangement or for the appointment
of a receiver or trustee of Gramercy or of its assets, or (ii) the 90th day after
Gramercy is served with an involuntary petition in bankruptcy or seeking
reorganization, liquidation, dissolution, winding-up arrangement, composition
or readjustment of its debts or any other relief under any bankruptcy,
insolvency, reorganization or other similar act or law of any jurisdiction now
or hereafter in effect, if such petition is not dismissed on or before such
date; with this subparagraph (i) being subject, however, to Section 8(c) below;
and

 

(ii)           Executive will not, without
the prior written consent 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), during the Employment
Period and (A) during the two-year period following the termination of
Executive by either party for any reason (including the expiration of the term
of the Agreement) solicit, encourage, or engage in any activity to induce any
employee of the Employer or Gramercy to terminate employment with the Employer
or Gramercy, or to become employed by, or to enter into a business relationship
with, any other person or entity, or (B) during the one-year period
following such termination, engage in any activity intentionally to interfere
with, disrupt or damage the relationship of the Employer or 

 

12

 

Gramercy with any existing
borrower, tenant, client or, supplier, or disrupt or damage any other existing
business relationship of the Employer or Gramercy.  For purposes of this subsection, the term “employee”
means any individual who is an employee of or consultant to the Employer or
Gramercy (or any affiliate of either) during the six-month period prior to
Executive’s last day of employment.

 

(c)           Other Investments/Activities.  Notwithstanding anything contained herein to
the contrary, Executive is not prohibited by this Section 8 from making
investments (i) set forth on Schedule I attached hereto; (ii) solely
for investment purposes and without participating in the business in which the
investments are made, in any entity that engages, directly or indirectly, in
the acquisition, development, construction, operation, management, financing or
leasing of office real estate properties, regardless of where they are located,
if (x) Executive’s aggregate investment in each such entity constitutes
less than one percent of the equity ownership of such entity, (y) the
investment in the entity is in securities traded on any national securities
exchange, and (z) Executive is not a controlling person of, or a member of
a group which controls, such entity; or (iii) if
(A) except with the prior written consent of the Employer, Executive has
less than a 25% interest in the investment in question, (B) except with
the prior written consent of the Employer, Executive does not have the role of
a general partner or managing member, or any similar role, (C) the
investment is not an appropriate investment opportunity for the Employer, and (D) the
investment activity is not directly competitive with the businesses of the
Employer.  Additionally, during the
Employment Period, for so long as either: 
(i) Gramercy is externally advised by the Employer, SL Green Realty Corp. or a direct or indirect
majority owned subsidiary of the Employer or SL Green Realty Corp. (and is not self-managed)
or (ii) the Employer, together with SL Green Realty Corp. or direct or indirect
majority owned subsidiary of the Employer or the SL Green Realty Corp., directly or indirectly
owns securities representing 20% or more of the outstanding common equity of Gramercy,
Executive shall be permitted to serve as an officer of Gramercy notwithstanding
anything to the contrary contained in this Section 8.

 

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

 

(e)           No Disparagement.  For one year following termination of
Executive’s employment for any reason, Executive shall not intentionally
disclose or cause to be disclosed any negative, adverse or derogatory comments
or information about (i) the Employer, Gramercy and their parent,
affiliates or subsidiaries, if any; (ii) any product or service provided
by the Employer, Gramercy and their parent, affiliates or subsidiaries, if any;
or (iii) the Employer’s, Gramercy’s and their parents’, affiliates’ or
subsidiaries’ prospects for the future. 
For one year following termination of Executive’s employment for any
reason, the Employer shall not disclose or cause to be disclosed any negative,
adverse or derogatory comments or information about 

 

13

 

Executive.  Nothing in this Section shall prohibit
either the Employer or Executive from testifying truthfully in any legal or administrative
proceeding.

 

(f)            Remedies.  Executive declares that the foregoing
limitations in Sections 8(a) through 8(e) above are reasonable and
necessary for the adequate protection of the business and the goodwill of the
Employer.  If any restriction contained
in this Section 8 shall be deemed to be invalid, illegal or unenforceable
by reason of the extent, duration or scope thereof, or otherwise, then the
court making such determination shall have the right to reduce such extent,
duration, scope, or other provisions hereof to make the restriction consistent
with applicable law, and in its reduced form such restriction shall then be
enforceable in the manner contemplated hereby. 
In the event that Executive breaches any of the promises contained in
this Section 8, Executive acknowledges that the Employer’s remedy at law
for damages will be inadequate and that the Employer will be entitled to
specific performance, a temporary restraining order or preliminary injunction
to prevent Executive’s prospective or continuing breach and to maintain the
status quo.  The existence of this right
to injunctive relief, or other equitable relief, or the Employer’s exercise of
any of these rights, shall not limit any other rights or remedies the Employer
may have in law or in equity, including, without limitation, the right to
arbitration contained in Section 9 hereof and the right to compensatory
and monetary damages.  Executive hereby
agrees to waive his right to a jury trial with respect to any action commenced
to enforce the terms of this Agreement.  Executive shall have remedies comparable to those
of the Employer as set forth above in this Section 8(f) if the
Employer breaches Section 8(e).

 

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

 

(h)           Cooperation with Respect to
Litigation.  During the
Employment Period and at all times thereafter, Executive agrees to give prompt
written notice to the Employer of any claim relating to the Employer and to
cooperate fully, in good faith and to the best of his ability with the Employer
in connection with any and all pending, potential or future claims,
investigations or actions which directly or indirectly relate to any action,
event or activity about which Executive may have knowledge in connection with
or as a result of his employment by the Employer hereunder.  Such cooperation will include all assistance
that the Employer, its counsel or its representatives may reasonably request,
including reviewing documents, meeting with counsel, providing factual
information and material, and appearing or testifying as a witness; provided,
however, that the Employer will reimburse Executive for all reasonable
expenses, including travel, lodging and meals, incurred by him in fulfilling
his obligations under this Section 8(h) and, except as may be
required by law or by court order, should Executive then be employed by an
entity other than the Employer, such cooperation will not materially interfere
with Executive’s then current employment.

 

(i)            Survival.  The provisions of this Section 8 shall
survive termination of Executive’s employment any other provisions relating to
the enforcement thereof.

 

9.             Arbitration.  Any controversy or claim arising out of or
relating to this Agreement or the breach of this Agreement (other than a
controversy or claim arising under Section 8, to the extent necessary for
the Employer (or its affiliates, where applicable) to avail itself of the
rights and remedies referred to in Section 8(f)) that is not resolved by
Executive and the Employer (or its affiliates, where applicable) shall be
submitted to arbitration in New York, New York in accordance with New York law 

 

14

 

and the procedures of the American Arbitration Association.  The determination of the arbitrator(s) shall
be conclusive and binding on the Employer (or its affiliates, where applicable)
and Executive and judgment may be entered on the arbitrator(s)’ award in any
court having jurisdiction.

 

10.           Conflicting Agreements.  Executive hereby represents and warrants that
the execution of this Agreement and the performance of his obligations
hereunder will not breach or be in conflict with any other agreement to which
he is a party or is bound, and that he is not now subject to any covenants
against competition or similar covenants which would affect the performance of
his obligations hereunder.

 

11.           Notices.  All notices or other communications required
or permitted to be given hereunder shall be in writing and shall be delivered
by hand and or sent by prepaid telex, cable or other electronic devices or
sent, postage prepaid, by registered or certified mail or telecopy or overnight
courier service and shall be deemed given when so delivered by hand, telexed,
cabled or telecopied, or if mailed, three days after mailing (one business day
in the case of express mail or overnight courier service), as follows:

 

(a)           if to Executive:

 

Timothy
O’Connor, at the address shown on the execution page hereof.

 

and:

 

Hoguet
Newman Regal & Kenney, LLP

10
East 40th Street

New
York, New York 10016

Attention:  Laura B. Hoguet

 

(b)           if to the Employer:

 

GKK Manager LLC

420 Lexington Avenue

New York, New York 10170

Attn: Corporate Secretary

 

and:

 

Goodwin
Procter LLP

Exchange
Place

Boston,
Massachusetts  02109

Attention:  Daniel Adams

 

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

 

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

 

13.           Severability.  If any provision of this Agreement (or any
portion thereof) or the application of any such provision (or any portion
thereof) to any person or circumstances shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such invalidity,

 

15

 

illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion hereof) or the application of such provision
to any other persons or circumstances.

 

14.           Withholding.  The Employer shall be entitled to withhold
from any payments or deemed payments any amount of tax withholding it
determines to be required by law.

 

15.           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the Employer may be
merged or which may succeed to its assets or business, provided, however, that
the obligations of Executive are personal and shall not be assigned by
him.  This Agreement shall inure to the
benefit of and be enforceable by Executive’s personal and legal
representatives, executors, administrators, assigns, heirs, distributees,
devisees and legatees.  It is expressly
acknowledged and agreed that (i) the Employer may assign this Agreement in
its entirety, and its rights under this Agreement, to Gramercy or one of
Gramercy’s subsidiaries; and (ii) at the request of the Employer,
Executive shall execute an employment agreement with Gramercy or one of
Gramercy’s subsidiaries on substantially the same terms as are contained herein
with respect to the Employer.

 

16.           Counterparts.  This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.

 

17.           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.

 

18.           Choice of Venue.  Subject to the provisions of Section 9,
Executive agrees to submit to the jurisdiction of the United States District
Court for the Southern District of New York or the Supreme Court of the State
of New York, New York County, for the purpose of any action to enforce any of
the terms of this Agreement.

 

19.           Section 409A.

 

(a)           Anything in this Agreement to the contrary
notwithstanding, if at the time of Executive’s separation from service within
the meaning of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), the Employer determines that Executive is a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code,
then to the extent any payment or benefit that Executive becomes entitled to
under this Agreement would be considered deferred compensation subject to the
20 percent additional tax imposed pursuant to Section 409A(a) of the
Code as a result of the application of Section 409A(a)(2)(B)(i) of
the Code, such payment shall not be payable and such benefit shall not be
provided until the date that is the earlier of (A) six months and one day
after Executive’s separation from service, or (B) Executive’s death.  If any such delayed cash payment is otherwise
payable on an installment basis, the first payment shall include a catch-up
payment covering amounts that would otherwise have been paid during the
six-month period but for the application of this provision, and the balance of
the installments shall be payable in accordance with their original
schedule.  Any such delayed cash payment
shall earn interest at a simple annual rate equal to 5% per annum, from the
date such payment would have been made if not for the operation of this Section until
the payment is actually made.

 

(b)           The parties intend that this Agreement will be
administered in accordance with Section 409A of the Code.  To the extent that any provision of this
Agreement is ambiguous as to 

 

16

 

its compliance with Section 409A of the Code, the
provision shall be read in such a manner so that all payments hereunder comply
with Section 409A of the Code.  The
parties agree that this Agreement may be amended, as reasonably requested by
either party, and as may be necessary to fully comply with Section 409A of
the Code and all related rules and regulations in order to preserve the
payments and benefits provided hereunder without additional cost to either
party.

 

(c)           The determination of whether and when a separation
from service has occurred shall be made in accordance with the presumptions set
forth in Treasury Regulation Section 1.409A-1(h).

 

(d)           The Employer makes no representation or warranty and
shall have no liability to Executive or any other person if any provisions of
this Agreement are determined to constitute deferred compensation subject to Section 409A
of the Code but do not satisfy an exemption from, or the conditions of, such
Section.

 

20.           Entire Agreement.  This Agreement, together with that certain
Severance Agreement, of even date herewith, between Gramercy and Executive,
contains the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter. 
The parties hereto shall not be liable or bound to any other party in
any manner by any representations, warranties or covenants relating to such
subject matter except as specifically set forth herein.

 

21.           Paragraph Headings.  Section headings used in this Agreement
are included for convenience of reference only and will not affect the meaning
of any provision of this Agreement.

 

[Remainder of page intentionally
left blank]

 

17

 

IN WITNESS WHEREOF, this Agreement is entered into
as of the date and year first written above, and is being executed on November 13,
2008.

 

 

	
   

  	
  GKK
  MANAGER LLC

  
	
   

  	
   

  
	
   

  	
  By: GKK
  Manager Member Corp., its 

  managing member

  
	
   

  	
   

  
	
  -

  	
  By:

  	
  /s/ Andrew S. Levine

  
	
   

  	
   

  	
  Name:
  Andrew S. Levine

  
	
   

  	
   

  	
  Title:
  Executive Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Timothy J. O’Connor

  
	
   

  	
  Name:
  Timothy J. O’Connor

  

 

[Signature
Page to Employment and Noncompetition Agreement]Exhibit 10.5

 

EMPLOYMENT
AND NONCOMPETITION AGREEMENT

 

This
EMPLOYMENT 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 of this
Agreement shall commence on July [   ], 2004 and, unless
earlier terminated as provided in Section 6 below, shall terminate on the
fourth anniversary of the date of this Agreement (the “Original Term”);  provided, however, that Sections 4, 7 and 8 (and any
enforcement or other procedural provisions hereof affecting Sections 4, 7 and
8) hereof shall survive the termination of this Agreement as provided
therein.  The Original Term may be
extended for such period or periods, if any, as may be mutually agreed to in
writing by Executive and the Employer (each a “Renewal Term”).  If either party intends not to extend the
Original Term, such party shall give the other party at least three months’
written notice of such intention.  If
either party gives such notice with less than three months remaining in the
Original Term, the term of this Agreement shall be extended until the date
which is three months after the date on which the notice is given.  The period of Executive’s employment
hereunder consisting of the Original Term and all Renewal Terms (and any period
of extension under the foregoing sentence), if any, is herein referred to as
the “Employment Period.”

 

2.             Employment and Duties.

 

(a)           Duties.  During the Employment Period, Executive shall
be employed in the business of the Employer and its affiliates.  Executive shall serve the Employer as a
senior executive and shall have the title of Managing Director of the
Employer.  In such capacity, Executive, in conjunction with other
senior officers and managers of the Employer, shall be responsible for, among
other things: sourcing investments; sourcing credit facilities; underwriting,
credit and risk management; asset and portfolio management; and general
administrative functions.  In addition, Executive shall serve as Chief Financial
Officer of Gramercy Capital Corp. (the “Corporation).  Executive shall have the general powers and
duties of management usually vested in the chief financial officer of a
comparable company in the same industry, including but not limited to: managing
liquidity;  arranging financing; raising
equity capital for the business; oversight of accounting and internal control;
financial, risk and management reporting; investor relatations; and general administrative
functions.  Executive will report
to the managing member of the Employer (the “Managing Member”) with respect to
functions as Managing Director and to the President and Chief Executive Officer
of the Corporation (the “CEO”) with respect to functions as Chief Financial
Officer. 
Executive’s duties and authority shall be as further set forth by the
Employer.

 

(b)           Best Efforts.  Executive
agrees to his employment as described in this Section 2 and agrees to
devote substantially all of his business time and efforts to the performance of
his duties under this Agreement, except as otherwise approved by the Managing
Member and the CEO; provided, however, that nothing herein shall be interpreted
to preclude Executive, so long as there is no material interference with his
duties hereunder, from (i) participating as an officer or director of, or
advisor to, any charitable or other tax-exempt organization or otherwise
engaging in charitable, fraternal or trade group activities; (ii) investing and managing his assets as a passive
investor in other entities or business ventures; provided that he performs no
management or similar role (or, in the case of investments other than real
estate investments, he performs a management role comparable to the role that a
significant limited partner 

 

 

would have, but performs no day-to-day management or similar role) with
respect to such entities or ventures and such investment does not violate Section 8
hereof; and provided, further, that, in any case in which another party
involved in the investment has a material business relationship with the
Employer, Executive
shall give 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 corporation with the
approval of the CEO and the Managing Member.

 

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

 

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

 

(a)           Base Salary.  The Employer
shall pay Executive an aggregate minimum annual salary at the rate of $350,000
per annum during the Employment Period (“Base Salary”).  Base Salary shall be payable bi-weekly in
accordance with the Employer’s normal business practices and shall be reviewed
by the Managing Member at least annually (for purposes of possible, upward, but
not downward, adjustment).

 

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

 

(c)           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 may be established by the Corporation for senior executive
officers.  It is acknowledged that
Executive has been previously granted 10,000 shares of restricted stock under
that certain Gramercy Capital Corp. 2004 Equity Incentive Plan Restricted Stock
Award Agreement between the Corporation and Executive, and 140,000 options
under that certain Gramercy Capital Corp. 2004 Equity Incentive Plan Option
Award Agreement between the Corporation and Executive, both dated           ,
2004, copies of each are attached hereto as Exhibits A and B, respectively.

 

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

 

2

 

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

 

(f)            Vacations.  Executive
shall be entitled to paid vacations in accordance with the then regular
procedures of the Employer governing senior executive officers.

 

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

 

4.             Indemnification and Liability Insurance. 
The Employer and Corporation together and severally agree to indemnify
Executive to the full extent permitted by applicable law, as the same exists
and may hereafter be amended, from and against any and all losses, damages,
claims, liabilities and expenses asserted against, or incurred or suffered by,
Executive (including the costs and expenses of legal counsel retained by the
Employer or the Corporation to defend Executive and judgments, fines and
amounts paid in settlement actually and reasonably incurred by or imposed on
such indemnified party) with respect to any action, suit or proceeding, whether
civil, criminal administrative or investigative (a “Proceeding”) in which
Executive is made a party or threatened to be made a party or is otherwise
involved, either with regard to his entering into this Agreement with the
Employer or in his capacity as an officer or director, or former officer or
director, of the Employer, the Corporation or any affiliate thereof for which
he may serve in such capacity.  The
Employer and the Corporation also agree to secure promptly and maintain
officers and directors liability insurance providing coverage for Executive,
the coverage shall be reasonably comparable to the coverage maintained by SL
Green Realty Corp., for such time as SL Green Realty Corp. controls the
Employer, to the extent that coverage can be obtained on reasonable efforts at
a comparable rate.  The provisions of
this Section 4 shall remain in effect after this Agreement is terminated
irrespective of the reasons for termination.

 

5.             Employer’s Policies.  Executive
agrees to observe and comply with the reasonable rules and regulations of
the Employer and the Corporation from time to time regarding the performance of
his duties and to carry out and perform orders, directions and policies
communicated to him from time to time by the Employer and the Corporation, so
long as same are otherwise consistent with this Agreement.

 

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

 

(a)           Termination by the Employer.

 

(i)            Death.  Executive’s
employment hereunder shall terminate upon his death.

 

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

 

3

 

days after written Notice of Termination (as defined
in Section 6(d)) is given he shall not have returned to the performance of
his duties hereunder on a full-time basis, the Employer may terminate Executive’s
employment hereunder.

 

(iii)          Cause.  The Employer
may terminate Executive’s employment hereunder for Cause.  For purposes of this Agreement, “Cause” shall
mean:  (i) Executive’s engaging in
conduct which is a felony; (ii) Executive’s engaging in conduct
constituting a material breach of fiduciary duty, gross negligence or willful
and material misconduct, material fraud or willful and material
misrepresentation; (iii) Executive’s material breach of any of his
obligations under Section 8(a) through 8(e) of this Agreement;
or (iv) Executive’s failure to competently perform his duties after
receiving notice from the Employer specifically identifying the manner in which
Executive has failed to perform (it being
understood that, for this purpose, the manner and level of Executive’s
performance shall not be determined based on the financial performace of the
Employer or the Corporation (including, without limitation, the performance of
the stock of the Corporation)).

 

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

 

(b)           Termination by Executive.

 

(i)            Disability.  Executive may
terminate his employment hereunder for Disability within the meaning of Section 6(a)(ii) above.

 

(ii)           With Good Reason.  Executive’s
employment hereunder may be terminated by Executive with Good Reason effective
immediately by written notice to the Employer. 
For purposes of this Agreement, with “Good Reason” shall mean, without
Executive’s prior written consent, (i) a failure by the Employer to pay
compensation in accordance with the provisions of Section 3, which failure
has not been cured within 14 days after the notice of the failure (specifying
the same) has been given by Executive to the Employer; (ii) a material
breach by the Employer of any other provision of this Agreement which has not
been cured within 30 days after notice of noncompliance (specifying the nature
of the noncompliance) has been given by Executive to the Employer, (iii) the
Employer requires Executive to relocate his principal office more than 60 miles
outside of Manhattan other than in connection with a change of the Employer’s
principal office to the same new location; or (iv) the Employer enters
into an employment agreement with any person pursuant to which such person will
receive an annual base salary or guaranteed bonus in excess of the highest
salary and guaranteed bonus payable to Executive, and the entering into of such
employment agreement is in contravention of Section 6.4.11 of the LLC
Agreement (as defined in Section 6(c) below).  On and after the occurrence of a
Change-in-Control (as defined in Section 6(c) below), “Good Reason”
shall also include, in addition to the foregoing:

 

4

 

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

 

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

 

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

 

(D)          the failure by the Employer to obtain from any
successor to the Employer an agreement to be bound by this Agreement pursuant
to Section 17 hereof, which has not been cured within 30 days after the
notice of the failure (specifying the same) has been given by Executive to the
Employer.

 

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

 

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

 

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

 

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

 

5

 

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

 

(B)           any consolidation or merger of the Employer or the
Corporation where the shareholders of the Employer or the Corporation, as
applicable, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as such term
is defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
shares representing in the aggregate 50% or more of the combined voting power
of the securities of the corporation issuing cash or securities in the
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 transactions contemplated
or arranged by any party as a single plan) of all or substantially all of the
assets of the Employer or the Corporation, other than a sale or disposition by
the Employer or the Corporation of all or substantially all of the Employer’s
or the Corporation’s assets to an entity, at least 50% of the combined voting
power of the voting securities of which are owned by “persons” (as defined
above) in substantially the same proportion as their ownership of the Employer
or the Corporation, as applicable, immediately prior to such sale or (B) the
approval by shareholders of the Employer or the Corporation, as applicable, of
any plan or proposal for the liquidation or dissolution of the Employer 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 “Incumbent Directors”)
cease for any reason other than due to death to constitute at least a majority
of the members of the Board; provided that any Director whose election, or
nomination for election by the Corporation’s shareholders was approved or
ratified by a vote of at least a majority of the members of the Board then
still in office who were members of the Board at the beginning of such
24-calendar-month period shall be deemed to be an Incumbent Director.

 

Notwithstanding the
foregoing, (i) a Change-in-Control with respect to the Employer or the
Corporation 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 the
Employer, SL Green 

 

6

 

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

 

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

 

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

 

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

 

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

 

7.             Compensation Upon Termination.

 

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

 

7

 

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

 

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

 

(iii)          Any issued but unvested equity awards (i.e., shares
then still subject to restrictions under the applicable award agreement)
granted to Executive by the Employer or the Corporation that would otherwise
become vested and exercisable during the two-year period following the date of
Executive’s termination shall become vested (i.e., free from such
restrictions), and any unexerciseable or unvested stock options granted to Executive
by the Employer or the Corporation that would otherwise become vested and
exercisable during the two-year period following the date of Executive’s
termination shall become vested and exercisable on the date of Executive’s
termination.  Any unexercised stock
options granted to Executive by the Employer or the Corporation that have
become vested and exercisable shall remain exercisable for six months following
the Termination Date or, if earlier, the expiration of the initial applicable
term stated at the time of the grant.

 

Other
than as may be provided under Section 4 or as expressly provided in this Section 7(a),
the Employer shall have no further obligations hereunder following such
termination.

 

(b)           Termination By the Employer For Cause or By Executive
Without Good Reason.  If (i) Executive is terminated for Cause
pursuant to Section 6(a)(iii) above, or (ii) Executive
voluntarily terminates his employment hereunder without Good Reason pursuant to
Section 6(b)(ii) above, then the Employment Period shall terminate as
of the Termination Date and Executive shall be entitled to receive his earned
and accrued but unpaid Base Salary at the rate then in effect until the
Termination Date.  In addition, in such
event, Executive shall be entitled to exercise any options which have vested as
of the termination of Executive’s employment, but only for a period of three
months after the Termination Date (but in no event after the expiration of the
initial applicable term stated at the time of grant) and otherwise in
accordance with the terms of the applicable option grant agreement or
plan.  Notwithstanding the foregoing, and without limiting such other
forfeitures as may be provided under the documentation controlling the
applicable grants or other acquisitions, (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 shall expire on the Termination Date and all unvested equity
interests in the Corporation which have been awarded under a compensatory
arrangement, including without limitation the restricted stock (or equivalent)
granted on or before the date hereof, shall automatically be forfeited, and (ii) in
the case of a termination for Cause under clause (iv) of the second
sentence of Section 6(a)(iii), all vested options shall be exercisable for
three months from the Termination Date; provided, however, that nothing in this
sentence shall extend the term of any option. 
Other than as may be provided under Section 4 or as
expressly provided in this Section 7(b), the Employer shall have no
further obligations hereunder following such termination.

 

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

 

8

 

by Executive in
writing prior to his death.  In the case
of such a termination, (i) Executive shall be credited with six months
after termination under any 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 rata portion of the unvested shares of restricted stock (or its
equivalent) granted to Executive that otherwise would have become vested upon
the conclusion of such vesting period shall become vested on the date of
Executive’s termination due to his death, and a pro rata portion of the
unexercisable stock options granted to Executive that otherwise would have
become exercisable upon the conclusion of such vesting period shall become
exercisable on the date of Executive’s termination due to such death.  Furthermore, upon such death, any vested
unexercised stock options granted to Executive shall remain vested and
exercisable until the earlier of (A) the date on which the term of such
stock options otherwise would have expired, or (B) the second January 1
after the date of Executive’s termination due to his death.  Other than as may be provided under Section 4
or as expressly provided in this Section 7(c), the Employer shall have no
further obligations hereunder following such termination.

 

(d)           Termination by Reason of Disability. 
In the event that Executive’s employment terminates due to his disability
as defined in Section 6(a)(ii) above, Executive shall be entitled to
be paid his Base Salary plus any applicable pro rata portion of the annual
performance bonus described in Section 3(b) above for a period of six
months from the date of such termination, or for such longer period as such
benefits are then provided with respect to other senior executives of the
Employer.  In the case of such a
termination, if Executive has fully complied with Section 6(e) above,
(i) Executive shall be credited with six months after termination 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 rata portion
of the unvested shares of restricted stock (or its equivalent) granted to
Executive that otherwise would have become vested upon the conclusion of such
vesting period shall become vested on the date of Executive’s termination due
to his disability, and a pro rata portion of the unvested or unexercisable
stock options granted to Executive that otherwise would have become vested or
exercisable upon the conclusion of such vesting period shall become vested and
exercisable on the date of Executive’s termination due to such disability.  Furthermore, upon such disability, any vested
unexercised stock options granted to Executive shall remain vested and
exercisable until the earlier of (A) the date on which the term of such
stock options otherwise would have expired, or (B) the second January 1
after the date of Executive’s termination due to his disability.  Other than as expressly provided in this Section 7(d),
the Employer shall have no further obligations hereunder following such
termination.

 

8.             Confidentiality; Prohibited Activities. 
Executive and the Employer (which, for purposes of this Section 8,
and any related enforcement provisions hereof, except at the context requires
otherwise, shall include not only GKK Manager LLC, but shall also severally include
the Corporation) recognize that due to the nature of his employment and
relationship with the Employer, Executive has access to and develops
confidential business information, proprietary information, and trade secrets
relating to the business and operations of the Employer.  Executive acknowledges that (i) such
information is valuable to the business of the Employer, (ii) disclosure
to, or use for the benefit of, any person or entity other than the Employer,
would cause irreparable damage to the Employer, (iii) the principal
businesses of the Employer are originating and acquiring real estate related
loans and securities associated with commercial and multi-family properties
(collectively, the “Business”), (iv) the Employer is one of the limited
number of persons who have developed a business such as the Business, and (v) the
Business is national in scope.  Executive
further acknowledges that his duties for the Employer include the duty to
develop and maintain client, customer, employee, and other business
relationships on behalf of the Employer; and that access to 

 

9

 

and development of
those close business relationships for the Employer render his services
special, unique and extraordinary.  In
recognition that the good will and business relationships described herein are
valuable to the Employer, and that loss of or damage to those relationships
would destroy or diminish the value of the Employer, and in consideration of
the compensation (including severance) arrangements hereunder, and other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged by Executive, Executive agrees as follows:

 

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

 

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

 

(i)            during the Employment Period, and for the one-year
period following the termination of Executive by either party for any reason
including the expiration of the term of this Agreement, Executive will not, anywhere in the United States, without the
prior written consent of the Employer and the unanimous consent of the
Directors other than any other officer of the Employer, directly or indirectly
(individually, or through or on behalf of another entity as owner, partner,
agent, employee, consultant, or in any other capacity), engage, participate or
assist, as an owner, partner, employee, consultant, director, officer, trustee
or agent, in any element of the Business, subject, however, to Section 8(c) below.  Notwithstanding the forgoing, in the event
that the Employer extends the term of its existing management agreement by
matching a bona fide third-party offer which provides for materially less fees
than the existing agreement, then such period of restriction shall only apply
during the remaining period of the term of this Agreement; and

 

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

 

10

 

employee, consultant, or in any other capacity), (A) solicit,
encourage, or engage in any activity to induce any employee of the Employer to
terminate employment with the Employer, or to become employed by, or to enter
into a business relationship with, any 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 hereof by
Executive with whom as of the date hereof, Executive has a material
pre-existing relationship; or (B) engage in any activity intentionally to
interfere with, disrupt or damage the Business of the Employer, or its
relationships with any client, supplier or other business relationship of the
Employer.  For purposes of this
subsection, the term “employee” means any individual who is an employee of or
consultant to the Employer (or any affiliate) during the six-month period prior
to Executive’s last day of employment.

 

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

 

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

 

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

 

11

 

comments or information about Executive.  Nothing in this Section shall prohibit
either the Employer or Executive from testifying truthfully in any legal or
administrative proceeding.

 

(f)            Remedies.  Executive
declares that the foregoing limitations in Sections 8(a) through 8(f) above
are reasonable and necessary for the adequate protection of the business and
the goodwill of the Employer.  If any
restriction contained in this Section 8 shall be deemed to be invalid,
illegal or unenforceable by reason of the extent, duration or scope thereof, or
otherwise, then the court making such determination shall have the right to
reduce such extent, duration, scope, or other provisions hereof to make the
restriction consistent with applicable law, and in its reduced form such
restriction shall then be enforceable in the manner contemplated hereby.  In the event that Executive breaches any of
the promises contained in this Section 8, Executive acknowledges that the
Employer’s remedy at law for damages will be inadequate and that the Employer
will be entitled to specific performance, a temporary restraining order or
preliminary injunction to prevent Executive’s prospective or continuing breach
and to maintain the status quo.  The
existence of this right to injunctive relief, or other equitable relief, or the
Employer’s exercise of any of these rights, shall not limit any other rights or
remedies the Employer may have in law or in equity, including, without
limitation, the right to arbitration contained in Section 9 hereof and the
right to compensatory and monetary damages. 
Executive hereby agrees to waive his right to a jury trial with respect
to any action commenced to enforce the terms of this Agreement.  Executive
shall have remedies comparable to those of the Employer as set forth above in
this Section 8(f) if the Employer breaches Section 8(e).

 

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

 

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

 

(i)            Survival.  The
provisions of this Section 8 shall survive termination of Executive’s
employment any other provisions relating to the enforcement thereof.

 

12

 

9.             Equity Interest in the Employer. 
It is expressly acknowledged that Executive has been granted an equity
interest in the Employer by that certain Membership Interest Issuance, Vesting
and Repurchase Agreement between Executive and Employer, dated as of the date
hereof.

 

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

 

11.           Conflicting Agreements.  Executive
hereby represents and warrants that the execution of this Agreement and the
performance of his obligations hereunder will not breach or be in conflict with
any other agreement to which he is a party or is bound, and that he is not now
subject to any covenants against competition or similar covenants which would
affect the performance of his obligations hereunder.

 

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

 

13.           Notices.  All notices
or other communications required or permitted to be given hereunder shall be in
writing and shall be delivered by hand and or sent by prepaid telex, cable or
other electronic devices or sent, postage prepaid, by registered or certified
mail or telecopy or overnight courier service and shall be deemed given when so
delivered by hand, telexed, cabled or telecopied, or if mailed, three days
after mailing (one business day in the case of express mail or overnight
courier service), as follows:

 

(a)           if to Executive:

 

Robert R. Foley, at the
address 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 Manager
LLC

420 Lexington
Avenue

New York, New York
10170

Attn:  Marc Holliday

 

with a copy to:

 

13

 

Clifford Chance US LLP

31 West 52nd Street

New York, New York  10019

Attention:  Robert E. King, Jr.

 

(c)           if to the Corporation:

 

Gramercy Capital
Corp.

420 Lexington
Avenue

New York, New York
10170

Attn: Corporate
Secretary

 

with copies to:

 

Gramercy Manager
LLC

420 Lexington
Avenue

New York, New York
10170

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

 

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

 

15.           Severability.  If any
provision of this Agreement (or any portion thereof) or the application of any
such provision (or any portion thereof) to any person or circumstances shall be
held invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof (or the remaining portion hereof) or the application
of such provision to any other persons or circumstances.

 

16.           Withholding.  The Employer
shall be entitled to withhold from any payments or deemed payments any amount
of 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
parties and their respective successors and assigns, including any corporation
with which or into which the Employer may be merged or which may succeed to its
assets or business, provided, however, that the obligations of Executive are
personal and shall not be assigned by him. 
This Agreement shall inure to the benefit of and be enforceable by
Executive’s personal and legal representatives, executors, administrators, assigns,
heirs, distributees, devisees and legatees. 
It is 

 

14

 

expressly
acknowledged and agreed that (i) the Corporation is a third-party
beneficiary of any provision hereof running in favor of the Corporation; (ii) the
Employer may 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 LLC Agreement); and (iii) at the request of the Employer, Executive
shall execute an employment agreement with the Corporation on substantially the
same terms as are contained herein with respect to the Employer.

 

18.           Counterparts.  This
Agreement may be executed in one or more 
counterparts, all of which shall be considered one and the same  agreement, and shall become effective when
one or more such  counterparts have been
signed by each of the parties and 
delivered to the other party.

 

19.           Governing Law.  This
Agreement shall be governed by and 
construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within  such State, without regard to the conflicts
of law principles of such State.

 

20.           Choice of Venue.  Executive
agrees to submit to the  jurisdiction of
the United States District Court for the Southern District of New York or the
Supreme Court of the State of New York, New York County, for the purpose of any
action to enforce any of the terms of this Agreement.

 

21.           Entire Agreement.  This
Agreement contains the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings relating to such subject matter, including
without limitation anything contained in the exhibits to that certain
Consulting Agreement between Executive and SL Green Realty Corp. dated as of February 23,
2004.  The parties hereto shall not be
liable or bound to any other party in any manner by any representations,
warranties or covenants relating to such subject matter except as specifically
set forth herein.

 

22.           Paragraph Headings.  Section headings
used in this  Agreement are included for
convenience of reference only and will 
not affect the meaning of any provision of this agreement.

 

15

 

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

 

 

	
   

  	
  GRAMERCY MANAGER LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marc Holliday

  
	
   

  	
   

  	
  Name: Marc Holliday

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Robert R. Foley

  
	
   

  	
   

  	
  Robert R. Foley

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed,
  as to the rights and obligations of

  the Corporation: GRAMERCY CAPITAL CORP.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Marc Holliday

  	
   

  
	
   

  	
  Name:
  Marc Holliday

  	
   

  
	
   

  	
  Title:
  President

  	
   

  

 

16

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