Document:

Exhibit 10.2

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

This Amendment to Employment Agreement (this “Amendment”)
attaches to and forms part of the Employment Agreement dated as of May 2,
2005 and amended effective March 13, 2008 (the “Agreement”), between Aon
Corporation (the “Company”) and Ted T. Devine (the “Executive”).

 

WHEREAS, the Company and the Executive mutually desire
to further amend the Agreement, as provided in this Amendment;

 

NOW, THEREFORE, in consideration of the premises and
the mutual agreements contained herein, the parties hereby agree as follows:

 

1.                                       The last sentence of Section 1, “Employment,”
is deleted in its entirety and replaced with the following:

 

“The term of employment of
the Executive pursuant to this Agreement (the “Employment Period”) commenced on
May 2, 2005 (the “Effective Date”) and will end on April 30, 2013,
unless earlier terminated pursuant to Section 4 hereof.”

 

2.                                       The first sentence of Section 2(a), “Position
and Duties,” is deleted in its entirety and replaced with the following:

 

“The Company will employ the
Executive during the Employment Period as Executive Vice President of Aon
Corporation and President of the global Aon Risk Services business, or in
another Level 1A senior executive capacity with profit and loss responsibility
as may be authorized or directed by the CEO.”

 

3.                                       Section 2(b), “Responsibilities,” is
deleted in its entirety and replaced with the following:

 

“(b)  Responsibilities.  The Executive will have the authority and
responsibility typically held by an Executive Vice President of a large, global
publicly-traded company.  The Executive
will also perform such other duties (not inconsistent with his positions) on
behalf of the Company and its subsidiaries as may be from time to time
authorized or directed by the CEO.  The
Executive will report to the CEO.”

 

4.                                       A new subsection (g) is hereby added
to Section 3, “Compensation”:

 

“(g)                           Award of Restricted Stock Units. 
In consideration for entering into this Amendment, the Executive will
receive an award of 25,000 restricted stock units of Aon Corporation common
stock under the 2001 Aon Stock Incentive Plan, as amended from time to
time.  The restricted stock units will be
granted as of the date this Amendment is executed by both parties, in
accordance with the approval provided by the Organization and Compensation
Committee of Aon Corporation’s board of directors on January 29,
2009.  The award will be subject to the
Company’s standard terms and provisions, including vesting provisions.  For the avoidance of doubt, the restricted
stock units will 

 

 

vest in equal
installments of 25% on the second through fifth anniversary of the date of
grant subject to the Executive’s continued employment.”

 

5.                                       Subpart (ii)(A) of Section 4(c) —
the first prong of the definition of “cause” — is deleted in its entirety.

 

6.                                       Subpart (v) of Section 4(c) is
deleted in its entirety.

 

7.                                       Subsection 4(d), “Termination Without
Cause,” is deleted in its entirety and replaced with the following:

 

“(d)  Termination
Without Cause.  If, during the
Employment Period, the Company terminates the employment of the Executive
hereunder for any reason other than a reason set forth in Section 4(a), (b) or
(c), the Company will give the Executive 12 months’ prior written notice of
such termination and:

 

(i)                                     during the notice period or thereafter,
as applicable, the Executive will be entitled to the payments and benefits
specified by Sections 4(c)(iv)(A) and (B); and

 

(ii)                                  concurrent with the last day of the
notice period, the Executive will be entitled to receive a lump sum cash
payment.  The lump sum payment will be
equal to the product of (x) two and (y) the sum of the annual Base
Salary and the Executive’s target annual incentive bonus for the Bonus Year in
which the Executive’s employment terminates.

 

Notwithstanding the foregoing provisions of this Section 4(d),
if any payment specified by this Section 4(d) would not be deductible
by the Company for federal income tax purposes by reason of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the “Code”), or any similar or
successor statute (excluding Section 280G of the Code), such payment will
be deferred and the amount thereof (plus earnings thereon in accordance with
the terms of such deferral) will be paid to the Executive at the earliest time
that such payment is deductible by the Company.”

 

8.                                       A new subsection (f) is added to Section 4
as follows:

 

“(f)  Termination
for Good Reason.  (i) Upon 30
days’ prior written notice to the Company, the Executive may voluntarily
terminate his employment for Good Reason (as herein defined).  If the Executive voluntarily terminates
employment pursuant to this Section 4(f), the Executive’s entitlement to
compensation and benefits will cease immediately, except that the Executive
will be entitled to the payments and benefits specified in Section 4(d);

 

(ii)                                  As used in this Agreement, “Good Reason”
means, during the Employment Period and without the written consent of the
Executive, the following, provided that an isolated, insubstantial or inadvertent
action not taken in bad faith or a failure not occurring in bad faith, which is
reasonably remedied by the Company promptly after receipt of notice thereof
given by the Executive will not constitute Good Reason:

 

2

 

(A)                       the assignment to the Executive of
duties, authority or responsibilities materially inconsistent in any respect
with a Level 1A senior executive position as contemplated by this Agreement;

 

(B)                         any failure by the Company to comply with
the provisions of Section 3 hereof;

 

(C)                         any requirement by the Company that the
Executive’s principal office be located more than 50 miles outside of the
greater Chicago metropolitan area; or

 

(D)                        any other material breach by the Company
of this Agreement.”

 

9.                                       A new Section 21, “Code Section 409A,”
is hereby added as follows:

 

“21.                           Code Section 409A.  (a) The
time or schedule of any payment or amount scheduled to be paid pursuant to the
terms of this Agreement, including but not limited to any restricted stock unit
or other equity-based award, payment, or amount that provides for the ‘deferral
of compensation’ (as such term is described under Section 409A of the
Internal Revenue Code of 1986, as amended (‘Code Section 409A’), may not
be accelerated except as otherwise permitted under Code Section 409A and
the guidance and Treasury regulations issued thereunder.

 

(b)                         The parties intend that this Agreement
and the benefits provided hereunder be interpreted and construed to comply with
Code Section 409A to the extent applicable thereto.  The time and form of payment of incentive
compensation, disability benefits, severance payments, expense reimbursements
and payments of in-kind benefits described herein will be made in accordance
with the applicable sections of this Agreement, provided that with respect to
termination of employment for reasons other than death, the payment at such
time can be characterized as a ‘short-term deferral’ for purposes of Code Section 409A
or as otherwise exempt from the provisions of Code Section 409A, or if any
portion of the payment cannot be so characterized, and the Executive is a ‘specified
employee’ under Code Section 409A, such portion of the payment will be
delayed until the earlier to occur of the Executive’s death or the date that is
six months and one day following the Executive’s termination of employment (the
‘Delay Period’).  Upon the expiration of
the Delay Period, all payments and benefits delayed pursuant to this section
will be paid or reimbursed to the Executive in a lump sum, and any remaining
payments due under this Agreement will be payable at the same time and in the
same form as such amounts would have been paid. 
Further, if the Executive is a ‘specified employee’ and if any
equity-based awards granted to the Executive by the Company pursuant to this
Agreement or otherwise, continue to vest upon the Executive’s termination of
employment, and are deemed a ‘deferral of compensation’ (as such term is
described under Code Section 409A), the equity-based awards will not be
settled or released until the expiration of the Delay Period.  For purposes of applying the provisions of
Code Section 409A, each separately identifiable amount to which the
Executive is entitled will be treated as a separate payment.  In addition, the disability benefits and
severance payments will be treated as a series of separate payments.

 

3

 

(c)                          Although the Company intends to
administer the Agreement so that it will comply with the requirements of Code Section 409A,
the Company does not represent or warrant that the Agreement will comply with
Code Section 409A or any other provision of federal, state, local or
non-United States law.  Provided that the
Company administers this Agreement in a manner consistent with the terms of
this Agreement, neither the Company, its subsidiaries, nor their respective
directors, officers, employees or advisers will be liable to the Executive (or
any other individual claiming a benefit through the Executive) for any tax,
interest, or penalties the Executive may owe as a result of compensation paid
under the Agreement, and the Company and its subsidiaries will have no
obligation to indemnify or otherwise protect the Executive from the obligation
to pay any taxes pursuant to Code Section 409A.”

 

10.                                 A new Section 22, “Mediation,” is
hereby added as follows:

 

“22.                           Mediation. 
In the event a dispute arises in connection with this Agreement, the
Company and the Executive agree to submit the dispute to non-binding mediation
to be paid for by the Company which shall select the mediator.”

 

IN WITNESS WHEREOF, the parties hereto have executed
this Amendment to the Agreement as of the 27th day of April, 2009.

 

 

	
  AON
  CORPORATION

  	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Greg Case

  	
   

  	
  /s/
  Ted T. Devine

  
	
   

  	
   

  	
  Ted
  T. Devine

  
	
  Title:

  	
  President and Chief
  Executive Officer

  	
   

  	
   

  

 

4Exhibit
10.1

 

EXECUTION
VERSION

 

 

SECURITIES
TRANSFER AGREEMENT

 

by and
among

 

GRAMERCY
CAPITAL CORP.

 

GKK
CAPITAL LP

 

SL GREEN
OPERATING PARTNERSHIP, L.P.

 

GKK
MANAGER MEMBER CORP.

 

and

 

SL GREEN
REALTY CORP.

(solely for the purpose of Sections 2.6, 5.4, 5.5, 5.6, 6.3, 6.4, 6.5, 7.1,
7.2, 7.3, 7.4(a), 7.4(b), 7.4(d), 7.4(e), 7.5, 7.6 and 7.7 and Article VIII
of this Agreement)

 

with
respect to

 

all of
the outstanding

 

membership
interests of

 

GKK
MANAGER LLC

 

and

 

certain Class B
Limited Partnership Units of

 

GKK
CAPITAL LP

 

Dated as
of April 24, 2009

 

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
  Definitions

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  THE TRANSFERS;
  CLOSING

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
  Transfers

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 2.2.

  	
  Consideration

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 2.3.

  	
  Closing

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 2.4.

  	
  Closing Deliveries by Parent

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 2.5.

  	
  Closing Deliveries by SLGOP and
  Manager Corp

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 2.6.

  	
  Termination

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 2.7.

  	
  Class B Distributions

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  REPRESENTATIONS
  AND WARRANTIES RELATING TO SLGOP, MANAGER CORP AND THE MANAGER

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
  Organization and Qualification

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 3.2.

  	
  Authority; Non-Contravention;
  Approvals

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 3.3.

  	
  The Manager Corp Owned Manager
  Interests, the SLGOP Owned Manager Interests, the SLGOP Owned Class B
  Units and the Manager Owned Class B Units

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 3.4.

  	
  Capitalization

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 3.5.

  	
  Subsidiaries and Equity Investments

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 3.6.

  	
  Financial Statements

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 3.7.

  	
  Absence of Undisclosed Liabilities

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 3.8.

  	
  Intentionally Omitted

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 3.9.

  	
  Books and Records

  	
  17

  
	
   

  	
   

  	
   

  
	
  Section 3.10.

  	
  Tax Matters

  	
  17

  
	
   

  	
   

  	
   

  
	
  Section 3.11.

  	
  ERISA and Employee Benefits

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 3.12.

  	
  Employment Matters

  	
  19

  
	
   

  	
   

  	
   

  
	
  Section 3.13.

  	
  Labor Relations

  	
  19

  
	
   

  	
   

  	
   

  
	
  Section 3.14.

  	
  Absence of Litigation

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 3.15.

  	
  No Violation of Law

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 3.16.

  	
  Title to Assets; Encumbrances

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 3.17.

  	
  Sufficiency of Assets

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 3.18.

  	
  Insurance

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 3.19.

  	
  Contracts and Other Agreements

  	
  21

  
	
   

  	
   

  	
   

  
	
  Section 3.20.

  	
  Intellectual Property

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 3.21.

  	
  Real Property

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 3.22.

  	
  Environmental Matters

  	
  23

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 3.23.

  	
  Bank Accounts

  	
  23

  
	
   

  	
   

  	
   

  
	
  Section 3.24.

  	
  Permits

  	
  23

  
	
   

  	
   

  	
   

  
	
  Section 3.25.

  	
  Powers of Attorney

  	
  23

  
	
   

  	
   

  	
   

  
	
  Section 3.26.

  	
  No Other Clients

  	
  23

  
	
   

  	
   

  	
   

  
	
  Section 3.27.

  	
  Transactions and Related Parties

  	
  23

  
	
   

  	
   

  	
   

  
	
  Section 3.28.

  	
  Brokers

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  REPRESENTATIONS
  AND WARRANTIES OF PARENT AND THE OPERATING PARTNERSHIP

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
  Organization and Qualification of
  Parent and the Operating Partnership

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 4.2.

  	
  Authority; Non-Contravention;
  Approvals

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 4.3.

  	
  Brokers

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  COVENANTS

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
  Commercially Reasonable Efforts

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 5.2.

  	
  Use of Name

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 5.3.

  	
  Transfer Taxes

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 5.4.

  	
  Officers and Employees

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 5.5.

  	
  Public Statements

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 5.6.

  	
  Confidentiality

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 5.7.

  	
  Management Agreement
  Acknowledgement

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 5.8.

  	
  Parent Equity Awards

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 5.9.

  	
  Certain Amendments

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 5.10.

  	
  D&O Insurance

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 5.11.

  	
  Obligations of American Financial
  Realty Trust

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  POST-CLOSING
  TAX MATTERS

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
  Covenants

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 6.2.

  	
  Cooperation on Tax Matters

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 6.3.

  	
  Tax Indemnity

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section 6.4.

  	
  Disputes

  	
  30

  
	
   

  	
   

  	
   

  
	
  Section 6.5.

  	
  Tax Returns

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  SURVIVAL;
  INDEMNIFICATION

  	
  31

  
	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
  Survival of Representations,
  Warranties, Covenants and Agreements

  	
  31

  
	
   

  	
   

  	
   

  
	
  Section 7.2.

  	
  Indemnification of Parent

  	
  31

  
	
   

  	
   

  	
   

  
	
  Section 7.3.

  	
  Indemnification of SLG, SLGOP and
  Manager Corp

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 7.4.

  	
  Limitations

  	
  32

  

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 7.5.

  	
  Method of Asserting Claims

  	
  33

  
	
   

  	
   

  	
   

  
	
  Section 7.6.

  	
  Subrogation; Insurance

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 7.7.

  	
  Exclusive Remedy

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  MISCELLANEOUS

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
  Notices

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 8.2.

  	
  Entire Agreement

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 8.3.

  	
  Expenses

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 8.4.

  	
  Waiver

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 8.5.

  	
  Amendment

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 8.6.

  	
  No Third-Party Beneficiary

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 8.7.

  	
  Assignment; Binding Effect

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 8.8.

  	
  CONSENT TO JURISDICTION; SERVICE OF
  PROCESS; WAIVER OF TRIAL BY JURY

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 8.9.

  	
  Specific Performance

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 8.10.

  	
  Invalid Provisions

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 8.11.

  	
  GOVERNING LAW

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 8.12.

  	
  Manager Disclosure Schedule

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 8.13.

  	
  Counterparts; Effectiveness

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 8.14.

  	
  Interpretation

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 8.15.

  	
  Parent Board Actions

  	
  38

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  A                 Form of
  Special Rights Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  B                 Form of Special Servicing
  Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  C                 Joint Press Release

  	
   

  

 

iii

 

SECURITIES
TRANSFER AGREEMENT

 

THIS SECURITIES TRANSFER AGREEMENT, dated as of April 24,
2009 (this “Agreement” ), is made by and among Gramercy Capital Corp., a
Maryland corporation (“Parent”), GKK Capital LP, a Delaware limited
partnership (the “Operating Partnership”), SL Green Operating
Partnership, L.P., a Delaware limited partnership (“SLGOP”), GKK Manager
Member Corp., a Delaware corporation (“Manager Corp”), and, solely for the purpose of Sections 2.6, 5.4,
5.5, 5.6, 6.3, 6.4, 6.5, 7.1, 7.2,
7.3, 7.4(a), 7.4(b), 7.4(d), 7.4(e), 7.5,
7.6 and 7.7 and Article VIII of this Agreement, SL
Green Realty Corp., a Maryland corporation (“SLG”).
Capitalized terms used herein but not otherwise defined (including in the
Recitals to this Agreement) shall have the meanings ascribed to such terms in Article I
of this Agreement.

 

RECITALS

 

WHEREAS, (i) SLGOP owns
34.02% of the issued and outstanding membership interests (the “SLGOP Owned
Manager Interests”) in GKK Manager LLC, a Delaware limited liability
company (the “Manager”) and (ii) Manager Corp owns 65.98% of the
issued and outstanding membership interests (the “Manager Corp Owned Manager
Interests”) in the Manager;

 

WHEREAS, (i) SLGOP is a
limited partner of the Operating Partnership and owns 70.00 Class B Units
(the “SLGOP Owned Class B Units”), representing 70.00% of the
issued and outstanding Class B Units and (ii) the Manager is a
limited partner of the Operating Partnership and owns 30.00 Class B Units
(the “Manager Owned Class B Units”), representing 30.00% of the
issued and outstanding Class B Units;

 

WHEREAS, Parent, the Operating
Partnership and the Manager are parties to the Second Amended and Restated
Management Agreement, dated as of October 27, 2008 (the “Management
Agreement”), pursuant to which the Manager provides management, advisory
and various other services to Parent and the Operating Partnership;

 

WHEREAS, Parent and SLGOP are
parties to and wish to terminate the Amended and Restated Origination
Agreement, dated as of April 19, 2006 (the “Origination Agreement”
), and Parent and SLGOP wish to enter into a Special Rights Agreement in the
form attached hereto as Exhibit A (the “Special Rights Agreement”);

 

WHEREAS, Parent, Gramercy
Loan Services LLC and Green Loan Services, LLC wish to enter into an Special
Servicing Agreement in the form attached hereto as Exhibit B  (the “Special Servicing Agreement”);

 

WHEREAS, the Operating Partnership, Parent, SLGOP and
SLG are parties to and wish to terminate the Services Agreement, dated as of October 27,
2008 (the “Services Agreement”  ),
pursuant to which SLGOP and SLG provide certain consulting and other services
to Parent and the Operating Partnership;

 

WHEREAS, the Operating Partnership, Parent, SLGOP and
the Manager are parties to an Agreement, dated as of December 30, 2008,
pursuant to which, among other things, (i) the Manager paid to the
Operating Partnership $2.75 million in cash simultaneously with the execution
of such agreement and (ii) SLGOP transferred to Parent 1.9 million shares
of Parent’s common stock, in full satisfaction of all potential obligations
that the holders of Class B Units may have had to the Operating
Partnership, and that the Operating Partnership may have had to the holders of Class B
Units; and

 

 

WHEREAS, the parties to this
Agreement wish to provide for a transaction in which SLGOP and Manager Corp
will assign, transfer, convey and deliver to the Operating Partnership all of
the Manager Corp Owned Manager Interests, SLGOP Owned Manager Interests and the
SLGOP Owned Class B Units, and in consideration therefor, Parent and the
Operating Partnership will take the actions and pay the amounts set forth in
this Agreement;

 

NOW, THEREFORE, the parties agree as follows:

 

ARTICLE
I

DEFINITIONS

 

Section 1.1.            Definitions.

 

(a)           As used in this Agreement, the following terms have
the respective meanings indicated:

 

“Affiliate” means, with respect to any Person,
any other Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person
specified.  The term “control” (including
the terms “controlling,” “controlled by” and “under common control with”) means
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.

 

“Business Day” means any day other than a
Saturday, Sunday or any day on which banks located in the State of New York are
authorized or required to be closed for the conduct of regular banking
business.

 

“Class B Units”
means the Class B units of the Operating Partnership.

 

“Closing” means the
closing of the transactions contemplated by this Agreement.

 

“Closing Date” means the date on which the
Closing occurs.

 

“Code” means the Internal Revenue Code of 1986,
as amended.

 

“Company Plan” means a Plan that the Manager or
any ERISA Affiliate sponsors, maintains, has any obligation to contribute to,
has or may have Liability under or is otherwise a party to, or which otherwise
provides benefits for employees, former employees, independent contractors or
former independent contractors (or their dependents and beneficiaries) who
provide or provided services primarily to the Manager; provided,
that Company Plan shall not include any Plan sponsored or maintained by Parent
or the Operating Partnership, or any Plan to which Parent or the Operating
Partnership is a party.

 

“Encumbrances” means any and all liens,
charges, security interests, mortgages, pledges, options, preemptive rights,
rights of first refusal or first offer, proxies, levies, voting trusts or
agreements, or other adverse claims or restrictions on title or transfer of any
nature whatsoever, but excluding non-exclusive licenses of Intellectual
Property.

 

“Environmental Law” means any Law relating to
the protection, investigation or restoration of the environment (including
natural resources) or the health or safety of human or other 

 

5

 

living organisms,
including the manufacture, introduction into commerce, export, import,
processing, distribution, use, generation, treatment, storage, handling,
presence, disposal, transportation, release or management of, or other
activities with respect to, Hazardous Substances, in each case as presently in
effect.

 

“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder.

 

“ERISA Affiliate” means a person required at
any particular time to be aggregated with the Manager under
Sections 414(b), (c), (m) or (o) of the Code or Section 4001
of ERISA.

 

“GAAP” means United States generally accepted
accounting principles.

 

“Governmental Authority” means any U.S. or
foreign federal, state, municipal or local government, any instrumentality,
subdivision, court, administrative or regulatory agency or commission or other
authority thereof, or any quasi-governmental or private body exercising any
regulatory, taxing, importing or other governmental or quasi-governmental
authority or self-regulatory agency or authority.

 

“Governmental Consent” means any material
declaration, filing or registration with, or notice to, or authorization,
consent, order or approval of, any Governmental Authority.

 

“Hazardous Substance” means (i) any
petroleum or petroleum products, flammable explosives, radioactive materials,
medical waste, radon, asbestos or asbestos-containing products or materials,
chloroflourocarbon, hydroflourocarbon, urea formaldehyde foam insulation,
polychlorinated biphenyls (PCBs) or lead-containing paint or plumbing, and (ii) any
element, compound, substance, waste or other material that is regulated under
any Environmental Law or is defined as, or included in the definition of, or
deemed by or pursuant to any Environmental Law or by any Governmental Authority
to be “hazardous,” “toxic,” a “contaminant,” “waste,” a “pollutant,” “hazardous
substance,” “hazardous waste,” “restricted hazardous waste,” “hazardous material,”
“extremely hazardous waste,” a “toxic substance,” a “toxic pollutant” or words
with similar meaning.

 

“Indebtedness” means, as to any Person, (i) all
obligations of such Person for borrowed money (including reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers’
acceptances, whether or not matured), (ii) all obligations of such Person
evidenced by notes, bonds, debentures or similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable and accrued commercial or trade
payables arising in the ordinary course of business, (iv) all interest
rate and currency swaps, caps, collars and similar agreements or hedging
devices under which payments are obligated to be made by such Person, whether
periodically or upon the happening of a contingency, (v) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person, (vi) all
obligations of such Person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, (vii) all indebtedness
secured by any lien on any property or asset owned or held by such Person
regardless of whether the indebtedness secured thereby shall have been assumed
by such Person or is non-recourse to the credit of such Person, and (viii) all
guarantees by such Person of any of the indebtedness specified in clauses (i) through
(vii) of this definition of any other Person.

 

“Indemnified Party” means any Person claiming
indemnification under any provision of Article VII.

 

“Indemnifying Party” means any Person against
whom a claim for indemnification is being asserted under any provision of Article VII.

 

6

 

“Intellectual Property” means all of the
following intellectual property and intellectual property rights:  (i) all names and marks, brands and
slogans, all registered and unregistered trademarks, trade names, service marks
and applications therefor and all goodwill associated therewith; (ii) all
patents, patent applications and inventions conceived or reduced to practice
prior to the Closing, including any provisional, utility, continuation,
continuation-in-part or divisional applications filed in the United States or
other jurisdiction prior to the Closing, and all reissues thereof and all
reexamination certificates issuing therefrom; (iii) all copyrights,
including all related copyright registrations; (iv) all know-how or other
trade secrets, whether or not reduced to practice; (v) the right to sue
for and recover damages, assert, settle and/or release any claims or demands
and obtain all other remedies and relief at law or equity for any past, present
or future infringement or misappropriation of any of the foregoing; (vi) all
licenses, options to license and other contractual rights to use such
intellectual property or intellectual property rights; and (vii) all
computer and electronic data processing programs and software programs and
related documentation.

 

“Knowledge of the Manager” means the actual knowledge (after
reasonable inquiry) of the persons listed on Section 1.1(a)(i) of
the Manager Disclosure Schedule.

 

“Laws” means all laws, statutes, regulations,
ordinances, orders, judgments, decrees or other legally binding requirements
issued, promulgated, adopted or imposed by any Governmental Authority.

 

“Liabilities” means
all indebtedness, liabilities, obligations, responsibilities, commitments and
expenses of every kind, whether or not accrued or fixed, known or unknown,
absolute or contingent, matured or unmatured, determined or determinable.

 

“Losses” means any and all damages, fines,
fees, penalties, Liabilities, settlements and judgments, losses and costs and
expenses (including loss of value, interest, court costs and fees, and
reasonable costs of attorneys, accountants and other experts, expenses of
investigation or other reasonable expenses of litigation or other proceedings
or of any claim, default or assessment); provided, that
Losses shall not include any indirect, special, punitive, incidental or
consequential damages of any kind (except to the extent such damages are
awarded against any Indemnified Party in a claim by a third party).

 

“Manager Material Adverse Effect” means, with
respect to the Manager, any development, occurrence, effect, event or change
that, individually or taken together with all other developments, occurrences,
effects, events or changes occurring prior thereto, has or is reasonably likely
to have (i) a material adverse effect on the business, operations,
properties, condition (financial or otherwise) or assets of the Manager and the
Manager Subsidiary, taken as a whole (provided, however, that Manager Material Adverse Effect shall not be
deemed to include any developments, occurrences, effects, events or changes to
the extent resulting from (A) changes in general political, economic or
business conditions (including the commencement, continuation or escalation of
a war, material armed hostilities or other material international or national
calamity or acts of terrorism or earthquakes, hurricanes, other natural
disasters or acts of God) affecting the business or industry in which the
Manager and the Manager Subsidiary, as applicable, operates, except to the
extent that such changes in general political, economic or business conditions
have a materially disproportionate adverse effect on the Manager and the
Manager Subsidiary, as applicable, relative to other similarly situated
participants, (B) changes in general financial and capital market
conditions, except to the extent that such changes in general financial and
capital market conditions have a materially disproportionate adverse effect on
the Manager and the Manager Subsidiary, as applicable, relative to other
similarly situated participants, (C) changes, after the date hereof, in
Laws of general applicability or interpretations thereof by courts or
Governmental Authorities, (D) changes, after the date hereof, in GAAP,
applicable to the business or industry in which the Manager and the Manager
Subsidiary, as applicable, operates generally, (E) the 

 

7

 

announcement or
performance of the transactions contemplated by this Agreement or the Special
Rights Agreement or (F) matters expressly requested by Parent or consented
to by Parent); or (ii)  a material adverse effect on the enforceability of
SLG’s, SLGOP’s or Manager Corp’s obligations under this Agreement or the
Special Rights Agreement, as the case may be, or SLG’s, SLGOP’s or Manager Corp’s
ability to perform its obligations under this Agreement or the Special Rights
Agreement in a timely manner or to consummate the transactions contemplated by
this Agreement or the Special Rights Agreement, as the case may be, without
material delay.

 

“OP Agreement” means the Third Amended
and Restated Agreement of Limited Partnership of the Operating Partnership, as
amended.

 

“OP Units” means, collectively, the Class A
Units, the Class B Units, the Class C Units and units of limited
partnership of the Operating Partnership classified as LTIP Units.

 

“Parent Material Adverse Effect” means, with
respect to Parent and the Operating Partnership, any development, occurrence,
effect, event or change that, individually or taken together with all other
developments, occurrences, effects, events or changes occurring prior thereto,
has or is reasonably likely to have a material adverse effect on the
enforceability of such party’s obligations under this Agreement or the Special
Rights Agreement or on such party’s ability to perform its obligations under
this Agreement or the Special Rights Agreement in a timely manner or to
consummate the transactions contemplated by this Agreement or the Special
Rights Agreement without material delay.

 

“Permit” means any permit, license, franchise,
approval, consent, registration, clearance, variance, exemption, order,
certificate or authorization by or of any Governmental Authority.

 

“Permitted Encumbrances” means (a) liens
for Taxes not yet due and payable or, if due and payable, are being contested
in good faith in appropriate proceedings, (b) mechanics’, workmen’s,
repairmen’s, warehousemen’s, carriers’ and other statutory liens arising or
incurred in the ordinary course of business in respect of Liabilities that will
have been paid prior to the Closing or that are not yet due and payable or, if
due and payable, are being contested in good faith in appropriate proceedings, (c) Encumbrances
consisting of pledges or deposits made in connection with obligations under
workers’ compensation laws, unemployment insurance or similar legislation,
including liens of judgments thereunder which are not currently dischargeable, (d) Encumbrances
over goods or equipment arising under the supplier’s standard retention of
title arrangements or (e) Encumbrances constituted by existing credit
facilities, finance or capital leases.

 

“Person” means any natural person, corporation,
general partnership, limited partnership, limited or unlimited liability
company, proprietorship, joint venture, other business organization, trust,
union, association or Governmental Authority.

 

“Plan” means any employment, consulting, bonus,
incentive compensation, deferred compensation, pension, profit sharing, retirement,
stock purchase, stock option, stock ownership, stock appreciation rights,
phantom stock, equity (or equity-based), leave of absence, layoff, vacation,
day or dependent care, legal services, cafeteria, life, health, medical,
dental, vision, welfare, accident, disability, workmen’s compensation or other
insurance, severance, separation, termination, change of control, collective
bargaining or other benefit plan, agreement, practice, policy or arrangement,
whether written or oral, and whether or not subject to ERISA, including any “employee
benefit plan” within the meaning of Section 3(3) of ERISA.

 

“Pre-Closing Tax Period” means any Tax period
ending on or before the Closing Date.

 

8

 

“SEC” means the U.S. Securities and Exchange
Commission.

 

“Securities Act” means the Securities Act of
1933, as amended.

 

“Securities Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

“SLG Material Adverse Effect” means, with
respect to SLG, SLGOP and Manager Corp, any development, occurrence, effect,
event or change that, individually or taken together with all other
developments, occurrences, effects, events or changes occurring prior thereto,
has or is reasonably likely to have a material adverse effect on the
enforceability of such party’s obligations under this Agreement or the Special
Rights Agreement or on such party’s ability to perform its obligations under
this Agreement or the Special Rights Agreement in a timely manner or to consummate
the transactions contemplated by this Agreement or the Special Rights Agreement
without material delay.

 

“Straddle Period” means any Tax period
beginning, but not ending, on or before the Closing Date.

 

“Subsidiary” means, with respect to any Person,
any other Person (i) of which the first Person owns directly or indirectly
50% or more of the equity interest in the other Person, (ii) of which the
first Person or any other Subsidiary of the first Person is a general partner
or (iii) of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions with respect to the other Person are at the time
owned by the first Person and/or one or more of the first Person’s
Subsidiaries.

 

“Tax” means any tax, governmental fee or other
like assessment or charge of any kind whatsoever (including withholding on
amounts paid to or by any Person), whether federal, state, local, foreign or
other, together with any interest, penalty, addition to tax or additional
amount imposed by any Tax Authority and any Liability for any of the foregoing
as transferee or successor.

 

“Tax Authority” means any Governmental
Authority responsible for the imposition of any Tax.

 

“Tax Return” means any return, declaration,
report, claim for refund or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.

 

“Tax Sharing Agreements” means all existing or
effective agreements or arrangements (whether or not written) binding on the
Manager that provide for the allocation, apportionment, sharing or assignment
of any Tax Liability or benefit, or the transfer or assignment of income,
revenues, receipts, or gains for the purpose of determining any person’s Tax
Liability (other than any indemnification agreement or arrangement pertaining
to the sale or lease of assets or subsidiaries).

 

 

(b)           In addition, the following terms are defined on the pages of
this Agreement indicated below:

 

	
  401(k) Plan Transfer Amount

  	
   

  	
  Section 5.4(a)

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Balance Sheet

  	
   

  	
  Section 3.6

  
	
  Confidential Information

  	
   

  	
  Section 5.6

  
	
  Employee

  	
   

  	
  Section 3.12(a)

  
	
  Financial Statements

  	
   

  	
  Section 3.6

  

 

9

 

	
  Fundamental Representations

  	
   

  	
  Section 7.1(a)

  
	
  Indemnity Amount

  	
   

  	
  Section 7.4(a)

  
	
  Individuals

  	
   

  	
  Section 3.10(b)

  
	
  Leased Real Property

  	
   

  	
  Section 3.21(a)

  
	
  Leases

  	
   

  	
  Section 3.21(a)

  
	
  Management Agreement

  	
   

  	
  Recitals

  
	
  Manager

  	
   

  	
  Recitals

  
	
  Manager Corp

  	
   

  	
  Preamble

  
	
  Manager Corp Consideration

  	
   

  	
  Section 2.2(b)

  
	
  Manager Corp Owned Manager
  Interests

  	
   

  	
  Recitals

  
	
  Manager Corp Transfer

  	
   

  	
  Section 2.1(b)

  
	
  Manager Disclosure Schedule

  	
   

  	
  ARTICLE III

  
	
  Manager Indemnified Parties

  	
   

  	
  Section 7.3

  
	
  Manager Owned Class B
  Units

  	
   

  	
  Recitals

  
	
  Manager Permits

  	
   

  	
  Section 3.24

  
	
  Manager Subsidiary

  	
   

  	
  Section 3.1(c)

  
	
  Operating Partnership

  	
   

  	
  Preamble

  
	
  Origination Agreement

  	
   

  	
  Recitals

  
	
  Parent

  	
   

  	
  Preamble

  
	
  Parent 401(k) Plan

  	
   

  	
  Section 5.4(a)

  
	
  Parent Deductible

  	
   

  	
  Section 7.4(b)

  
	
  Parent Indemnified Parties

  	
   

  	
  Section 7.2

  
	
  Post Closing Amount

  	
   

  	
  Section 2.7

  
	
  Qualifying Losses

  	
   

  	
  Section 7.4(a)

  
	
  Representatives

  	
   

  	
  Section 5.6

  
	
  Services Agreement

  	
   

  	
  Recitals

  
	
  SLG

  	
   

  	
  Preamble

  
	
  SLGOP

  	
   

  	
  Preamble

  
	
  SLGOP Consideration

  	
   

  	
  Section 2.2(a)

  
	
  SLGOP Deductible

  	
   

  	
  Section 7.4(a)

  
	
  SLGOP Owned Class B Units

  	
   

  	
  Recitals

  
	
  SLGOP Owned Manager Interests

  	
   

  	
  Recitals

  
	
  SLGOP Transfer

  	
   

  	
  Section 2.1(a)

  
	
  Special Rights Agreement

  	
   

  	
  Recitals

  
	
  Special Servicing Agreement

  	
   

  	
  Recitals

  
	
  Tax Loss

  	
   

  	
  Section 6.3(a)

  
	
  Tax Referee

  	
   

  	
  Section 6.4

  
	
  Transfers

  	
   

  	
  Section 2.1(b)

  

 

(c)           For the purposes of this Agreement, except to the
extent the context otherwise requires:

 

(i)            when a reference is made in this
Agreement to an Article, Section, Exhibit or Schedule, such reference is
to an Article or Section of, or an Exhibit or Schedule to, this Agreement;

 

(ii)           the table of contents and headings in
this Agreement are for reference purposes only and do not affect in any way the
meaning or interpretation of this Agreement;

 

10

 

(iii)          whenever
the words “include,” “includes” or “including” (or similar terms) are used in
this Agreement, they are deemed to be followed by the words “without limitation”;

 

(iv)          the words “hereof,” “herein” and “hereunder”
and words of similar import, when used in this Agreement, refer to this
Agreement as a whole and not to any particular provision of this Agreement;

 

(v)           all terms defined in this Agreement have
their defined meanings when used in any certificate or other document made or
delivered pursuant hereto, unless otherwise defined therein;

 

(vi)          the definitions contained in this
Agreement are applicable to the singular as well as the plural forms of those
terms;

 

(vii)         if
any action is to be taken by any party hereto pursuant to this Agreement on a
day that is not a Business Day, such action shall be taken on the next Business
Day following such day;

 

(viii)        references
to a party are also to its permitted successors and assigns;

 

(ix)           the use of “or” is not intended to be
exclusive unless expressly indicated otherwise;

 

(x)            “contract” includes any note, bond,
mortgage, indenture, deed of trust, loan, credit agreement, franchise
concession, contract, agreement, Permit, license, lease, purchase order, sales
order, arrangement or other commitment, obligation or understanding, whether
written or oral;

 

(xi)           “ordinary course of business” (or similar
terms) shall be deemed followed by “consistent with past practice;”

 

(xii)          “assets”
shall include “rights,” including rights under contracts;

 

(xiii)         “reasonable
efforts” or similar terms shall not require the waiver of any rights under this
Agreement; and

 

(xiv)        “extent” in the phrase “to the extent”
shall mean the degree to which a subject or other thing extends, and such
phrase shall not mean simply “if.”

 

ARTICLE
II

THE TRANSFERS; CLOSING

 

Section 2.1.            Transfers.  At the
Closing, upon the terms and subject to the conditions of this Agreement:

 

(a)           SLGOP hereby transfers, assigns, conveys and delivers
to the Operating Partnership, and the Operating Partnership hereby accepts from
SLGOP, good and valid title, free and clear of all Encumbrances (other than
Encumbrances arising under applicable federal and state securities 

 

11

 

Laws), to all of (i) the SLGOP Owned Manager
Interests and (ii) the SLGOP Owned Class B
Units (collectively, the “SLGOP Transfer”); and

 

(b)           Manager Corp hereby transfers, assigns, conveys and
delivers to the Operating Partnership, and the Operating Partnership hereby
accepts from Manager Corp, good and valid title, free and clear of all
Encumbrances (other then Encumbrances arising under applicable federal and
state securities Laws), to all of the Manager Corp Owned Manager Interests (the
“Manager Corp Transfer” and, together with the SLGOP Transfer, the “Transfers”).

 

Section 2.2.            Consideration.

 

(a)           In consideration of the SLGOP Transfer, SLGOP’s entry
into this Agreement and the Special Rights Agreement and other value and
benefit to be provided by SLGOP hereunder and thereunder, Parent and the
Operating Partnership shall at the Closing pay SLGOP an amount in cash equal to
$10.00 (the “SLGOP Consideration” ) and shall take the other actions and
enter into the other agreements required by this Agreement.

 

(b)           In consideration of the Manager Corp Transfer, Manager
Corp’s entry into this Agreement and other value and benefit to be provided by
Manager Corp hereunder, Parent and the Operating Partnership shall at the
Closing pay Manager Corp an amount in cash equal to $10.00 (the “Manager
Corp Consideration” ) and shall take the other actions and enter into the
other agreements required by this Agreement.

 

(c)           Each of SLGOP and Manager Corp acknowledges and agrees
that, notwithstanding any provision to the contrary in the OP Agreement or any
other agreement or understanding among SLGOP or Manager Corp or any of their
respective Subsidiaries or Affiliates, on the one hand, and Parent or the
Operating Partnership or any of their respective Subsidiaries or Affiliates, on
the other hand, the payment of the cash consideration set forth in Section 2.2(a) and
Section 2.2(b), the entry by each of Parent and the Operating
Partnership into this Agreement and, in the case of Parent, the Special Rights
Agreement and other value and benefit to be provided by Parent and the
Operating Partnership hereunder and thereunder constitute the only
consideration payable in exchange for the SLGOP Transfer and the Manager Corp Transfer  and that no other consideration is payable to SLGOP or Manager Corp
in exchange for the SLGOP Transfer and the Manager
Corp Transfer and in respect of any other actual, potential or perceived
ownership interest in the Manager, the Operating Partnership or any of their
respective Subsidiaries or Affiliates.

 

Section 2.3.            Closing.  The Closing
shall be held at the offices of Clifford Chance US LLP, 31 West 52nd
Street, New York, New York 10019, at 10:00 a.m. local time, on the date
hereof.

 

Section 2.4.            Closing Deliveries by Parent. 
At the Closing, Parent and/or the Operating Partnership, as applicable,
will deliver or cause to be delivered to SLGOP and Manager Corp, as applicable:

 

(a)           to SLGOP, cash in an
aggregate amount equal to the sum of (i) $1,737,158, which amount
represents the netting of (x) certain accrued and unpaid bonuses of the
Manager due to Parent and (y) certain consulting fees, management fees,
special servicing fees and other expenses due to SLGOP or its Affiliate and (ii) the SLGOP Consideration;

 

(b)           to Manager Corp, cash in an aggregate amount equal to
the Manager Corp Consideration;

 

12

 

(c)           a duly executed counterpart of the Special Rights
Agreement;

 

(d)           duly executed counterparts of the Special Servicing
Agreement; and

 

(e)           such further instruments and documents as may be
required to be delivered by Parent or the Operating Partnership pursuant to the
terms of this Agreement or as may be reasonably requested by SLGOP in
connection with the Closing.

 

Section 2.5.            Closing Deliveries by SLGOP and Manager Corp. 
At the Closing, SLGOP and Manager Corp, as applicable, will deliver to
Parent:

 

(a)           a duly executed assignment of each of the SLGOP Owned Manager Interests, the Manager Corp Owned Manager
Interests and the SLGOP Owned Class B
Units, as applicable, in each case in form and substance reasonably satisfactory
to Parent;

 

(b)           duly executed counterparts of the Special Rights
Agreement;

 

(c)           a duly executed counterpart of the Special Servicing
Agreement; and

 

(d)           such further instruments and documents as may be
required to be delivered by SLGOP and Manager Corp pursuant to the terms of
this Agreement or as may be reasonably requested by Parent or the Operating
Partnership in connection with the Closing.

 

Section 2.6.            Termination.  Immediately
upon the Closing, each of the Origination Agreement and the Services Agreement
shall automatically terminate and be of no further force and effect without any
further action by any party thereto.  For
the avoidance of doubt, it is acknowledged that no provisions set forth in these
agreements shall have any further force of effect even if the terms of any of
these agreements may be interpreted otherwise.

 

Section 2.7.            Class B Distributions. 
The Operating Partnership shall have an obligation to pay to SLGOP an
amount equal to the amount that would have been payable, if any, to SLGOP and
the Manager in their capacities as holders of the SLGOP Owned Class B
Units and the Manager Owned Class B Units under the terms of Section 5.01(C) of
the OP Agreement (the “Post Closing Amount”) in respect of the quarter
ended March 31, 2009 had this Agreement not been entered into.  Such Post Closing Amount shall be paid in the
same manner and timing as distributions on Class B Units would normally be
paid under the OP Agreement; provided, however, that if the Operating Partnership is, at the time a
Post Closing Amount is due as set forth above, restricted from making
distributions on Class B Units pursuant to an agreement existing as of the
date hereof, the obligation to make a payment in respect of the Post Closing
Amount, if any, will be deferred until such time that all such restrictions no
longer exist.  No interest shall accrue
with respect to such deferred payment. 
SLGOP agrees that it, as the sole holder of Class B Units as of the
date hereof (other than the Manager), waives any rights to receive any
distributions in respect of the Class B Units in respect of any prior or
future periods.  The holders of the SLGOP
Owned Class B Units and the Manager Owned Class B Units and the
Operating Partnership agree that they have no obligations to each other under
the terms of Section 5.01(C) of the OP Agreement.

 

13

 

ARTICLE
III

 

REPRESENTATIONS
AND WARRANTIES RELATING TO

SLGOP, MANAGER CORP AND THE MANAGER

 

Each of SLGOP and Manager Corp, jointly and severally,
represents and warrants to Parent and the Operating Partnership that, except as
set forth in the disclosure schedule delivered by SLGOP and Manager Corp to
Parent and the Operating Partnership prior to the execution and delivery of
this Agreement (the “Manager Disclosure Schedule”), as of the date
hereof (except that with respect to the representations and warranties
related to the Manager Subsidiary, all such representations and warranties are
made only for the period from April 1, 2008 to and including the date
hereof):

 

Section 3.1.            Organization and Qualification.

 

(a)           SLGOP is a limited partnership duly organized, validly
existing and in good standing under the Laws of the State of Delaware and has
all requisite power and authority to own, license, use, lease and operate its
assets and properties (including the SLGOP Owned Manager Interests and the
SLGOP Owned Class B Units) and to carry on its business as it is now being
conducted.  SLGOP is not in default under
any provision of its certificate of limited partnership or its limited
partnership agreement.

 

(b)           Manager Corp is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware and has
all requisite power and authority to own, license, use, lease and operate its
assets and properties (including the Manager Corp Owned Manager Interests) and
to carry on its business as it is now being conducted.  Manager Corp is not in default under any
provision of its certificate of incorporation or bylaws.

 

(c)           The Manager is a limited liability company duly
organized, validly existing and in good standing under the Laws of the State of
Delaware and has all requisite power and authority to own, license, use, lease
and operate its assets and properties (including the Manager Owned Class B
Units) and to carry on its business as it is now being conducted.  First States Services Management LLC (the “Manager
Subsidiary”) is a limited liability company duly organized, validly
existing and in good standing under the Laws of the Commonwealth of
Pennsylvania.  Each of the Manager and
the Manager Subsidiary is duly qualified, licensed or admitted to do business
and is in good standing in every jurisdiction in which such qualification,
licensing or admission is necessary because of the nature of the property
owned, leased or operated by it or the nature of the business conducted by it
(each of which jurisdictions is listed in Section 3.1(c) of the
Manager Disclosure Schedule), except where the failure to be so qualified,
licensed or admitted or in good standing would not reasonably be expected to
have a Manager Material Adverse Effect. 
Neither the Manager nor the Manager Subsidiary is in default under any
provision of its certificate of formation or operating agreement.  SLGOP has delivered to Parent true, complete
and correct copies of the certificate of formation, operating agreement, minute
books and member ledgers of each of the Manager and the Manager Subsidiary as
are in effect on the date hereof.

 

Section 3.2.            Authority; Non-Contravention; Approvals.

 

(a)           Each of SLGOP and Manager Corp has all requisite power
and authority to execute and deliver this Agreement and, in the case of SLGOP,
the Special Rights Agreement and to perform the transactions contemplated by
this Agreement and, in the case of SLGOP, the Special Rights Agreement.  The execution and delivery of this Agreement
and, in the case of SLGOP, the Special Rights Agreement and the performance by
each of SLGOP and Manager Corp of the transactions contemplated by this
Agreement and, in the case of SLGOP, the Special Rights Agreement has been
approved by the 

 

14

 

general partner of SLGOP or the members and the board
of managers of Manager Corp, as applicable, and no partnership or limited
liability company, as applicable, or other proceedings on the part of SLGOP or
Manager Corp are necessary to authorize the execution and delivery of this
Agreement or, in the case of SLGOP, the Special Rights Agreement and the
performance by SLGOP and Manager Corp of the transactions contemplated by this
Agreement and, in the case of SLGOP, the Special Rights Agreement.

 

(b)           This Agreement has been, and upon its execution by
SLGOP the Special Rights Agreement will be, duly and validly executed and
delivered by SLGOP or Manager Corp, as applicable, and, assuming the due
authorization, execution and delivery of this Agreement and, in the case of
SLGOP, the Special Rights Agreement by each other party thereto, constitute,
and upon their execution, this Agreement and, in the case of SLGOP, the Special
Rights Agreement will constitute, legal, valid and binding obligations of SLGOP
or Manager Corp, as applicable, enforceable against SLGOP or Manager Corp, as
applicable, in accordance with their respective terms.

 

(c)           The execution and delivery of this Agreement and, in
the case of SLGOP, the Special Rights Agreement by SLGOP and Manager Corp and
the performance of the transactions contemplated by this Agreement and, in the
case of SLGOP, the Special Rights Agreement by SLGOP and Manager Corp do not
and will not (i) conflict with or result in a breach of any provision of
the organizational documents of SLGOP, Manager Corp, the Manager or the Manager
Subsidiary, (ii) result in a violation or breach of or constitute a
default (or an event which, with or without notice or lapse of time or both,
would constitute a default) under, or result in the termination, modification
or cancellation of, or the loss of a benefit under or accelerate the performance
required by, or result in a right of termination, modification, cancellation or
acceleration under, the terms, conditions or provisions of any contract or
other instrument of any kind to which SLGOP, Manager Corp, the Manager or the
Manager Subsidiary is a party or by which any of their respective properties or
assets may be bound or affected, or (iii) violate any order, writ,
judgment, injunction, decree, statute, treaty, rule or regulation
applicable to SLGOP, Manager Corp, the Manager or the Manager Subsidiary or any
of their respective properties or assets, excluding from the foregoing clauses (ii) and
(iii) such violations, breaches, defaults, terminations, modifications,
cancellations, losses or accelerations that would not reasonably be expected to
have a Manager Material Adverse Effect or SLG Material Adverse Effect, as the
case may be.

 

(d)           No Governmental Consent is required to be obtained or
made in connection with or as a result of the execution and delivery of this
Agreement and, in the case of SLGOP, the Special Rights Agreement by SLGOP or
Manager Corp, as applicable, or the performance by SLGOP or Manager Corp, as
applicable, of the transactions contemplated by this Agreement and, in the case
of SLGOP, the Special Rights Agreement or the consummation of the transactions
contemplated by this Agreement and, in the case of SLGOP, the Special Rights
Agreement.

 

Section 3.3.            The Manager Corp Owned Manager Interests, the SLGOP
Owned Manager Interests, the SLGOP Owned Class B Units and the Manager
Owned Class B Units.

 

(a)           As of the date hereof, (i) SLGOP is the lawful
record and beneficial owner of the SLGOP Owned Manager Interests and the SLGOP
Owned Class B Units, (ii) Manager Corp is the lawful record and
beneficial owner of the Manager Corp Owned Manager Interests and (iii) the
Manager is the lawful record and beneficial owner of the Manager Owned Class B
Units, in each case free and clear of all Encumbrances whatsoever, other than
Encumbrances arising under this Agreement or the Special Rights Agreement or
restrictions on transfer imposed under applicable federal and state securities
Laws or, with respect to the Class B Units only, the OP Agreement.  The Manager Corp Owned Manager Interests, the
SLGOP Owned Manager Interests, the SLGOP Owned Class B Units and the
Manager Owned Class B Units have been duly authorized and are validly
issued, fully-paid and non-assessable and have been issued in accordance with
all applicable federal and state securities Laws.

 

15

 

(b)           Upon the conveyance of the SLGOP Owned Manager
Interests and the SLGOP Owned Class B Units by SLGOP, in each case in the
manner contemplated under Article II, SLGOP will transfer, assign,
convey and deliver beneficial and legal title to the Operating Partnership of
all of the SLGOP Owned Manager Interests  and the SLGOP
Owned Class B Units free and clear of all Encumbrances, except for
Encumbrances created by the Operating Partnership, the OP Agreement or
restrictions on transfer imposed under federal and state securities Laws.

 

(c)           Upon the conveyance of the Manager Corp Owned Manager
Interests by Manager Corp in the manner contemplated under Article II,
Manager Corp will transfer, assign, convey and deliver beneficial and legal
title to the Operating Partnership of all of the Manager Corp Owned Manager
Interests free and clear of all Encumbrances, except for Encumbrances created
by the Operating Partnership, the OP Agreement or restrictions on transfer
imposed under federal and state securities Laws.

 

(d)           There are no outstanding options, warrants or other
rights of any kind to acquire any membership or other interest in the Manager
or the Manager Subsidiary or securities convertible into or exchangeable for,
or which otherwise confer on the holder thereof any right to acquire any such
interests, nor is the Manager or the Manager Subsidiary committed to issue any
such option, warrant, right or security.

 

Section 3.4.            Capitalization.  The SLGOP
Owned Manager Interests and the Manager Corp Owned Manager Interests constitute
all of the issued and outstanding membership interests in the Manager.  The Manager has no other outstanding
membership or other equity interests.  No
Person other than SLGOP and Manager Corp has any right to participate in the
revenues, profits, control or administration of the Manager.

 

Section 3.5.            Subsidiaries and Equity Investments. 
The Manager has no Subsidiaries other than the Manager Subsidiary and
does not have, directly or indirectly, any equity interest in any other
Person.  The Manager owns all the
outstanding limited liability company interests in the Manager Subsidiary free
and clear of all Encumbrances.

 

Section 3.6.            Financial Statements.  Section 3.6
of the Manager Disclosure Schedule sets forth the (i) unaudited
balance sheet of the Manager as of each of March 31, 2009 (the “Balance
Sheet”) and  December 31,
2008  and (ii) unaudited statement
of income for each of the years ended December 31, 2008, 2007, 2006 and
2005 (collectively, the “Financial Statements”).  The Financial Statements were prepared in
accordance with GAAP on a basis consistent with prior periods and fairly
present in all material respects the financial position and results of
operations of Manager as of the dates and for the respective periods presented
(subject to the absence of  footnote
disclosures otherwise required by GAAP).

 

Section 3.7.            Absence of Undisclosed Liabilities. 
There are no Liabilities of the Manager or the Manager Subsidiary of any
nature, whether accrued, contingent or otherwise, except for Liabilities (a) reflected
in the Financial Statements, (b) that were incurred since the date of the
Balance Sheet and were normal and recurring expenses incurred in the ordinary
course of business that would not reasonably be expected to have a Manager
Material Adverse Effect, (c) that have been discharged or paid in full
prior to the date hereof or (d) that derive from actions, inactions or
omissions that any of the Manager Indemnified Parties (as defined in Section 7.3)
would be entitled to indemnification for under Section 7.3(c).

 

Section 3.8.            Intentionally Omitted.

 

16

 

Section 3.9.            Books and Records.  The minute
books and other similar records of the Manager and the Manager Subsidiary as
made available to Parent prior to the execution of this Agreement contain a
true and complete record, in all material respects, of all actions taken at all
meetings and by written consents in lieu of meetings of the members, board of
managers, and committees of the board of managers of the Manager and the
Manager Subsidiary.

 

Section 3.10.          Tax Matters.

 

(a)           All Tax Returns required to be filed with any Tax
Authority or delivered to any Person by the Manager or the Manager Subsidiary
have been timely filed or delivered in accordance with applicable Law, and all
such Tax Returns were true, correct and complete.  No claim has been made by a Tax Authority in
a jurisdiction where Tax Returns are not filed by the Manager or the Manager
Subsidiary that the Manager or the Manager Subsidiary is or may be subject to
taxation by that jurisdiction.

 

(b)           At all times since the organization of the Manager (i) all
of the issued and outstanding membership interests of the Manager have been
owned by SLGOP and/or Manager Corp or were owned by the individuals listed on Section 3.10(b) of
the Manager Disclosure Schedule (the “Individuals”), (ii) the
Manager has been treated as a partnership for U.S. federal income Tax and all
state and local income and franchise Tax purposes and (iii) no election
has been made by the Manager or any other Person to treat the Manager as other
than a partnership for such purposes.  At
all times since the organization of the Manager Subsidiary (i) the Manager
Subsidiary has been treated as a “disregarded entity” within the meaning of
U.S. Treasury Regulation Section 301.7701-3 for U.S.
federal income Tax and all state and local income or franchise Tax purposes,
and (ii) no election has been made by the Manager Subsidiary or any other
person to treat the Manager Subsidiary as other than a “disregarded entity” for
such purposes.  Except for the interests
in the Manager Subsidiary owned by the Manager, none of the Manager or the
Manager Subsidiary owns securities (A) possessing more than 10% of the
total voting power of the outstanding securities of any one issuer or (B) having
a value of more than 10% of the total value of the outstanding securities of
any issuer.

 

(c)           No audit or other examination by any Tax Authority
that relates to any Taxes of the Manager or the Manager Subsidiary is currently
in progress (and to the Knowledge of the Manager, no such audit or examination
is pending or has been threatened), and neither the Manager nor the Manager
Subsidiary has received any notification from any Tax Authority relating to any
issue that could affect any Liability for Taxes of the Manager or the Manager
Subsidiary.

 

(d)           No agreement or waiver extending the statue of
limitations relating to the payment, assessment or collection of any Taxes of
the Manager or the Manager Subsidiary has been entered into or requested, and
no contest that relates to any Taxes of the Manager or the Manager Subsidiary
exists.

 

(e)           There are no agreements in effect between the Manager
or the Manager Subsidiary and any Person (including, but not limited to, any
Tax Sharing Agreements) or any other statutory, judicial or contractual
agreements or provisions under which the Manager or the Manager Subsidiary
could be liable for any Taxes of any Person or claims related to any Taxes of
any Person (including, but not limited to SLGOP and Manager Corp).  None of the Manager or the Manager Subsidiary
has (i) requested, received or been the subject of any written ruling of
any Tax Authority relating to Taxes of the Manager or the Manager Subsidiary
and has entered into any written agreement with a Tax Authority relating to
Taxes of the Manager or the Manager Subsidiary, (ii) engaged in any
transaction of which it has made (or intends to make or was required to make)
any disclosure to any Tax Authority to avoid the imposition of any penalties,
interest or addition to Taxes of the Manager or the 

 

17

 

Manager Subsidiary, or (iii) filed any Tax Return
of the Manager or the Manager Subsidiary containing any position that is, or
would be, subject to penalties under Code Section 6662
(or any similar provision of state, local or foreign Law).

 

(f)            None of the Manager or the Manager Subsidiary has
changed any method of accounting (or requested any change in any method of
accounting) that related to any Taxes of the Manager or the Manager Subsidiary
as a separate entity, and is not required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any (i) “closing
agreement” as described in Code Section 7121 (or any similar
provision of state, local or foreign Law) executed on or before the Closing
Date, (ii) installment sale or open transaction made on or prior to the
Closing Date, or (iii) prepaid amount on or prior to the Closing Date.

 

(g)           None of SLGOP or Manager Corp expects any Governmental
Authority to assess any additional Taxes of the Manager or the Manager
Subsidiary for any period for which Tax Returns have been or should have been
filed.  There is no dispute or claim concerning
any Tax Liability of the Manager or the Manager Subsidiary either (i) claimed
or raised by any Governmental Authority in writing or (ii) to the
Knowledge of the Manager, pending or threatened.  Section 3.10(g) of the Manager
Disclosure Schedule lists all jurisdictions in which state, local and
foreign Tax Returns are filed by or with respect to the Manager and the Manager
Subsidiary and indicates any Tax Returns that have been audited or that are
currently the subject of audit.

 

(h)           All Taxes owed by the Manager and the Manager Subsidiary
have been paid whether or not reflected on any Tax Return.  The charges, accruals and reserves with
respect to Taxes on the books of the Manager and the Manager Subsidiary were
determined in accordance with GAAP consistently applied and are adequate to cover
any Taxes of the Manager and the Manager Subsidiary that have accrued but are
not yet due and payable.  All Taxes that
the Manager and the Manager Subsidiary is or was required by Law to withhold or
collect in connection with amounts owing to any employee, independent
contractor, creditor, member or other third party have been duly withheld or
collected and, to the extent required, have been paid to the appropriate
Governmental Authority.  There are no
Encumbrances with respect to Taxes upon any of the properties or assets, real
or personal, tangible or intangible, of the Manager or the Manager Subsidiary
(except statutory Encumbrances for Taxes not yet due or payable).

 

Section 3.11.          ERISA and Employee Benefits.

 

(a)           Section 3.11(a) of the Manager Disclosure
Schedule contains
a correct and complete list of each Company Plan; provided,
that a Company Plan does not need to be listed on Section 3.11(a) if
it is maintained by an ERISA Affiliate and has never been maintained or
participated in by the Manager or the Manager Subsidiary and if no employee or
independent contractor of the Manager or the Manager Subsidiary is or has ever
been eligible to participate therein. 
Neither the Manager nor the Manager Subsidiary has any obligation to
change or otherwise modify any existing Company Plan or program or to establish
any new Company Plan or program.

 

(b)           Each of the Company Plans maintained or participated
in by the Manager or the Manager Subsidiary and, to the Knowledge of the
Manager (for purposes of this Section 3.11(b)), each other
Company Plan, is, and its administration (including without limitation, with
respect to reporting and disclosure) is and has been, in compliance in all
material respects with, and neither the Manager nor the Manager Subsidiary has
not received any claim or notice that any such Company Plan is not in
compliance in all material respects with, its terms and with applicable Law.
Neither Parent nor any 

 

18

 

subsidiary thereof shall be required to pay or
otherwise have any Liability in respect of a Company Plan that is not
maintained or participated in by the Manager or the Manager Subsidiary.

 

(c)           SLGOP has delivered to Parent prior to the execution
of this Agreement correct and complete copies of each Company Plan required to
be listed on Section 3.11(a) of the Manager Disclosure Schedule,
together with all amendments and supplements thereto.

 

(d)           Each of the Company Plans that is intended to be
tax-qualified under Section 401(a) of the Code
has been determined by the IRS to be so qualified and such determination has
not been modified, revoked or limited, and, to the Knowledge of the Manager, no
circumstances have occurred that would adversely affect the tax-qualified
status of any such Plan that cannot be corrected under the Self-Correction
Program of the Employee Plans Compliance Resolution System of the Internal
Revenue Service.

 

(e)           There is no suit, action, dispute, claim, arbitration
or legal, administrative or other proceeding or governmental investigation
pending, or, to the Knowledge of the Manager, threatened, alleging any breach
of the terms of any Company Plan or of any fiduciary duties thereunder or
violation of any applicable Law with respect to any such Plan that would be reasonably
likely to result in a Manager Material Adverse Effect.

 

(f)            No Company Plan is subject to Title IV of ERISA.  Parent, the Operating Partnership and its
Affiliates (including without limitation, on and after the Closing Date, the
Manager and its ERISA Affiliates) shall have no Liability for, under, with
respect to or otherwise in connection with any Plan, which Liability arises
under ERISA or the Code, solely by virtue of the Manager or the Manager
Subsidiary being aggregated, with any other person that is an ERISA Affiliate
(other than with the Manager or Manager Subsidiary), in a controlled group or
affiliated service group for purposes of ERISA or the Code at any relevant time
prior to the Closing Date.

 

Section 3.12.          Employment Matters.

 

(a)           Section 3.12(a) of
the Manager Disclosure Schedule sets forth the name and
base compensation of all officers, managers, consultants and employees of each
of the Manager and the Manager Subsidiary and their Affiliates who provide
services to the Manager or the Manager Subsidiary, as applicable (each, an “Employee”).  All commitments and/or obligations of the
Manager or the Manager Subsidiary to pay any Employee or any other Person any
form of compensation (whether base compensation, bonus, benefits, severance or other
termination payments) are set forth in the Plans or other documents listed on Section 3.11(a) of
the Manager Disclosure Schedule.

 

(b)           Neither the execution and delivery of this Agreement
or the Special Rights Agreement, nor the performance of the transactions
contemplated hereby and thereby, will (either alone or in conjunction with any
other event, such as termination of employment) (i) result in any material
payment (including severance payments, payments under any other agreements or
unemployment compensation payments, payments subject to Section 280G
of the Code or otherwise) becoming due from the Manager, the Manager Subsidiary
or any ERISA Affiliate to any officer, manager or employee of the Manager, the
Manager Subsidiary or any other Person, under any Company Plan, (ii) materially
increase any benefits otherwise payable under any Company Plan or (iii) other
than as provided in Section 5.8 herein, result in any acceleration
of the time of payment or vesting of any material benefits payable by the
Manager, the Manager Subsidiary or any ERISA Affiliate under any Company Plan.

 

Section 3.13.          Labor Relations.  Other than as
set forth on Schedule 3.13: (i) there is no unfair labor practice, charge
or complaint or other proceeding pending or, to the Knowledge of the Manager, 

 

19

 

threatened against the Manager or the Manager
Subsidiary, (ii) each of the Manager and the Manager Subsidiary complies
all in material respects, and at all times in the past, has complied in all
material respects with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, and wages and hours, and has not
engaged in any unfair labor practice that is likely to result in any material Liability
to the Parent or the Operating Partnership, (iii) neither the Manager nor
the Manager Subsidiary is a party to, nor does it have any direct or indirect
material Liability with respect to, any collective bargaining agreement or
other labor union contract applicable to its employees or to any other Persons
providing services to the Manager or the Manager Subsidiary or, to the
Knowledge of the Manager, are any activities or proceedings of any labor union
or other Person to organize any such employees ongoing and (iv) there is
no labor strike, slowdown, work stoppage or lockout pending or, to the
Knowledge of the Manager, threatened, against or affecting the Manager or the
Manager Subsidiary, nor has there been any such activity within the past two
years.

 

Section 3.14.          Absence of Litigation.  There are no
claims, suits, proceedings, actions, investigations, oppositions, challenges or
cancellation proceedings pending or, to the Knowledge of the Manager,
threatened against or affecting any of the Manager or the Manager Subsidiary or
relating to or affecting any of their respective properties or assets that, if
adversely determined, would reasonably be expected to result in a Manager
Material Adverse Effect.  There are no
outstanding orders, writs, judgments, decrees, injunctions or settlements that (i) prohibit
or restrict the consummation of the transactions contemplated by this Agreement
or the Special Rights Agreement, (ii) would reasonably be expected to have
a Manager Material Adverse Effect, (iii) would materially adversely affect
the operations of the Manager, Parent or the Operating Partnership following
the Closing or (iv) that otherwise restrict the Manager or the
Manager Subsidiary in any material respect.

 

Section 3.15.          No Violation of Law.  Neither the
Manager nor the Manager Subsidiary is, or in the past two years has it been, in
default under or in violation of, or has it been charged with any violation of,
any material Law.  The business of each
of the Manager and the Manager Subsidiary has during the last two years been
operated in all material respects in accordance with applicable material
Laws.  This Section 3.15 does
not relate to matters with respect to Taxes, which are the subject of Section 3.10,
employee benefits and labor matters, which are the subject of Sections 3.11,
3.12 and 3.13, environmental matters, which are the subject of Section 3.22,
and Permits, which are the subject of Section 3.24.

 

Section 3.16.          Title to Assets; Encumbrances. 
Each of the Manager and the Manager Subsidiary has good, valid and
marketable title to all of its assets and properties, free and clear of all
Encumbrances (other than Permitted Encumbrances).

 

Section 3.17.          Sufficiency of Assets.  Immediately
following the Closing, none of SLGOP or any of its Affiliates will own or lease
any assets or properties (other than Parent’s lease of its office in New York,
NY from SLG) that are used in or are necessary for the conduct of the business
consistent with past practice of the Manager or the Manager Subsidiary.  For purposes of this Section 3.17,
“Affiliates” shall not include Parent, the Operating Partnership, the Manager
or the Manager Subsidiary.

 

Section 3.18.          Insurance.  Section 3.18
of the Manager Disclosure Schedule sets forth a complete and correct list
of all policies held by for the benefit of the Manager or the Manager
Subsidiary as of the date hereof and a brief description of the coverage
provided by such insurance policies. 
SLGOP has delivered to Parent a complete and correct copy of all such
policies together with all riders and amendments thereto entered into prior to
the date hereof.  All the insurance
policies listed on Section 3.18 of the Manager Disclosure Schedule
are in full force and effect, all premiums due and payable thereon have been
paid and no notice of cancellation or termination has been received with
respect to any such policy.

 

20

 

Section 3.19.          Contracts and Other Agreements.

 

(a)           Section 3.19(a) of the Manager Disclosure
Schedule contains
a correct and complete list of all of the following contracts or other
arrangements to which the Manager or the Manager Subsidiary is a party or by
which any of their respective assets is bound:

 

(i)            all contracts or other arrangements
providing for a commitment of employment or consultation services;

 

(ii)           all contracts or other arrangements with
any Person containing any provision or covenant prohibiting or materially
limiting the ability of the Manager or the Manager Subsidiary to engage in any
business activity or compete with any Person;

 

(iii)          all material partnership, joint venture,
shareholders’ or other similar contracts or other arrangements with any Person;

 

(iv)          all contracts or other arrangements
related to Indebtedness of the Manager or the Manager Subsidiary;

 

(v)           all contracts or other arrangements
involving payments or potential payments by or to the Manager or the Manager
Subsidiary of more than $100,000;

 

(vi)          all contracts or other arrangements for
the purchase of materials, supplies, equipment, software or technology
providing for payments in excess of $100,000;

 

(vii)         all contracts or other arrangements
pursuant to which the Manager or the Manager Subsidiary is a lessee of any
machinery, equipment, motor vehicle, office furniture, fixtures or other
personal property providing for lease payments in excess of $100,000 per year;
and

 

(viii)        all contracts or other arrangements
providing for payments in excess of $100,000 in any twelve-month period from
the Manager and the Manager Subsidiary and are not otherwise required to be
included in Section 3.19(a) of the Manager Disclosure Schedule
by clauses (i) through (vii).

 

(b)           Each contract and other arrangement set forth on Section 3.19(a) of
the Manager Disclosure Schedule is in full force and effect and constitutes
a legal, valid and binding agreement enforceable against the Manager or the
Manager Subsidiary, as applicable, and, to the Knowledge of the Manager, each
other party thereto, in accordance with its terms.  None of the Manager, the Manager Subsidiary
or, to the Knowledge of the Manager, any other party to any such contract or
other arrangement is in material violation or material breach of, or in
material default under, and, to the Knowledge of the Manager, there has not
occurred an event or condition that with the passage of time or giving of
notice (or both) would constitute a material default under, or permit the
termination of, any such contract or other arrangement.

 

(c)           SLGOP has delivered to Parent correct and complete
copies (or if none exists, reasonably complete and accurate written
descriptions) of each contract and other arrangement required to be listed on Section 3.19(a) of
the Manager Disclosure Schedule, together with all amendments and
supplements thereto.

 

21

 

Section 3.20.          Intellectual Property.

 

(a)           Section 3.20(a) of the Manager Disclosure
Schedule sets
forth a correct and complete list of (i) all material Intellectual
Property owned by the Manager or the Manager Subsidiary, (ii) all licenses
of material Intellectual Property to which the Manager or the Manager
Subsidiary is a party (other than any “off the shelf” computer software that at
the time of Closing is commercially available) and (iii) all material
Intellectual Property used by the Manager or the Manager Subsidiary pursuant to
formal or informal arrangements with any of their respective Affiliates
(including SLGOP and its Affiliates).

 

(b)           The Manager or the Manager Subsidiary, as applicable,
owns or otherwise has the right to use all of the material Intellectual
Property necessary for the conduct of the businesses of the Manager and the
Manager Subsidiary as they are currently conducted (other than Permitted
Encumbrances).

 

(c)           The conduct of the Manager’s and the Manager
Subsidiary’s businesses does not infringe upon or misappropriate the rights of
any other Person except for such infringement or misappropriation that would
not reasonably be expected to have a Manager Material Adverse Effect nor, to
the Knowledge of the Manager, is any Intellectual Property owned by or licensed
to the Manager or the Manager Subsidiary being infringed upon or
misappropriated by any other Person.

 

(d)           Consummation of the transactions contemplated by this
Agreement will not result in the elimination of Manager’s or the Manager
Subsidiary’s right to use any of the Intellectual Property described in Section 3.20(a) of
the Manager Disclosure Schedule or result in the imposition of any material
financial or other obligation on the Manager, the Manager Subsidiary or Parent
in respect of any such Intellectual Property, except for such eliminations of
rights that would not reasonably be expected to have a Manager Material Adverse
Effect.

 

Section 3.21.          Real Property.

 

(a)           Neither the Manager nor the Manager Subsidiary owns
any real property.  Section 3.21(a) of
the Manager Disclosure Schedule contains a correct and complete list of
each parcel of real property leased or subleased to or by the Manager or the
Manager Subsidiary (the “Leased Real Property”) and also lists the full
name of each lease agreement, sublease agreement and any amendments thereto
pursuant to which such Leased Real Property is leased (collectively, the “Leases”).

 

(b)           The Manager or the Manager Subsidiary, as applicable,
has a valid and subsisting leasehold estate in and the right to quiet enjoyment
of the Leased Real Property for the full term of the applicable lease or leases
of such property.  Each lease required to
be listed on Section 3.21(a) of the Manager Disclosure Schedule
is a legal, valid and binding agreement of the Manager or the Manager
Subsidiary, as applicable, enforceable against the Manager or the Manager
Subsidiary, as applicable, and, to the Knowledge of the Manager, each other
party thereto, in accordance with its terms. 
Since October 1, 2006, neither the Manager nor the Manager
Subsidiary is, nor has either of them received any written notice that any
other party is, in default (or any condition or event that, after notice or
lapse of time or both, would constitute a default) under any such lease, except
for such defaults that would not reasonably be likely to have a Manager
Material Adverse Effect.  Neither the
Manager nor the Manager Subsidiary owes any brokerage commissions with respect
to any such leased space (including any contingent obligation in respect of
future lease extensions).

 

22

 

(c)           SLGOP has delivered to Parent prior to the execution
of this Agreement correct and complete copies of all Leases (including any
amendments and renewal letters) required to be listed on Section 3.21(a) of
the Manager Disclosure Schedule.

 

(d)           No other Person holds any written sublease, lease
option or other current or contingent right to occupy any of the Leased Real
Property before the expiration of the applicable lease.  No tenant or other party in possession of any
of the Leased Real Property has any right to purchase, or holds any right of
first refusal to purchase, such properties.

 

Section 3.22.          Environmental Matters.  The Manager
and the Manager Subsidiary comply and at all times have complied in material
respects with all applicable Environmental Laws and no claim has been asserted
against the Manager or the Manager Subsidiary under any Environmental Law, nor
is there any basis on which such material Liability might validly be imposed on
the Manager or the Manager Subsidiary in the future.

 

Section 3.23.          Bank Accounts.  Section 3.23
of the Manager Disclosure Schedule sets forth (a) a true and complete
list of the names and locations of all banks, trust companies, securities
brokers and other financial institutions at which the Manager or the Manager
Subsidiary has an account or safe deposit box or maintains a banking,
custodial, trading or other similar relationship and (b) a true and
complete list and description of each such account, safe deposit box and
relationship, indicating in each case the account number and the names of the
respective managers, officers, employees, agents or other similar representatives
of the Manager or the Manager Subsidiary, as applicable, having signatory power
with respect thereto.

 

Section 3.24.          Permits.  Each of the
Manager and the Manager Subsidiary holds all Permits that are required to be
maintained by it in connection with the conduct of its business, except for
such Permits the absence of which would not reasonably be expected to have a
Manager Material Adverse Effect.  All the
Permits held by the Manager and the Manager Subsidiary are listed in Section 3.24
of the Manager Disclosure Schedule (the “Manager Permits”).  All the Manager Permits have been legally
obtained and maintained and are in full force and effect except where such
failure to maintain or to cause such Manager Permits to be in full force effect
would not reasonably be expected to have a Manager Material Adverse
Effect.  None of the Manager, the Manager
Subsidiary or any of their Affiliates is in violation of or is being operated
in violation of the terms of any Manager Permit, except for such violations
which would not reasonably be expected to have a Manager Material Adverse
Effect.  Neither the execution and
delivery of this Agreement or the Special Rights Agreement nor the performance
of any of the transactions contemplated hereby or thereby will:  (i) require any assignment, consent,
waiver or other action in respect of any Manager Permit; (ii) result in
the termination or modification of any Manager Permit; or (iii) result in
a need for additional Permits, except in the case of foregoing clauses (i), (ii) and
(iii), as would not reasonably be expected to have a Manager Material Adverse
Effect.

 

Section 3.25.          Powers of Attorney.  There are no
outstanding powers of attorney executed on behalf of the Manager or the Manager
Subsidiary.

 

Section 3.26.          No Other Clients.  The Manager’s
and the Manager Subsidiary’s only clients since their respective inceptions
have been Parent and the Operating Partnership.

 

Section 3.27.          Transactions and Related Parties. 
There is no (a) loan outstanding from or to the Manager or the
Manager Subsidiary, on the one hand, from or to any employee, officer, manager
or consultant of the Manager or the Manager Subsidiary (other than (i) salaries
or fees for services rendered and reimbursable business expenses paid to
employees, officers, managers or consultants or (ii) advances made to
employees, officers, managers or consultants in the ordinary course of the
business to meet 

 

23

 

reimbursable business expenses anticipated to be
incurred by such obligor), or any of the Manager’s or the Manager Subsidiary’s
Affiliates, on the other hand, or (b) agreement between the Manager or the
Manager Subsidiary and any Affiliate or any such employee, officer or manager
that is not reflected in Section 3.19(a) of the Manager Disclosure
Schedule.

 

Section 3.28.          Brokers.  No agent,
broker, investment banker, financial advisor or other firm or Person is
entitled to any brokerage, finder’s, financial advisor’s or other similar fee
or commission for which Parent or any of its Subsidiaries (including the
Operating Partnership) could become liable in connection with the transactions
contemplated by this Agreement or the Special Rights Agreement as a result of
any action taken by or on behalf of SLG, SLGOP, Manager Corp, the Manager or
the Manager Subsidiary other than Citigroup Global Markets, Inc., whose
fees and expenses will be paid by SLGOP at or prior to Closing.

 

ARTICLE
IV

REPRESENTATIONS AND WARRANTIES

OF PARENT AND THE OPERATING PARTNERSHIP

 

Parent and the Operating
Partnership, jointly and severally, hereby represent and warrant to SLGOP and
Manager Corp that:

 

Section 4.1.            Organization and Qualification of Parent and the
Operating Partnership.  Parent is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Maryland.  The Operating Partnership is a
limited partnership duly organized, validly existing and in good standing under
the Laws of the State of Delaware.  Each
of Parent and the Operating Partnership has all requisite power and authority
to own, license, use, lease and operate its assets and properties and to carry
on its business as it is now being conducted. 
Parent is not in default under any provision of its articles of
incorporation or it bylaws and the Operating Partnership is not in default
under any provision of its certificate of limited partnership or the OP
Agreement.

 

Section 4.2.            Authority; Non-Contravention; Approvals.

 

(a)           Each of Parent and the Operating Partnership has all
requisite power and authority to execute and deliver this Agreement and, in the
case of Parent, the Special Rights Agreement and to perform the transactions
contemplated by this Agreement and the Special Rights Agreement.  The execution and delivery of this Agreement
and, in the case of Parent, the Special Rights Agreement and the performance by
each of Parent and the Operating Partnership of the transactions contemplated
by this Agreement and, in the case of Parent, the Special Rights Agreement have
been approved by the board of directors of Parent, on behalf of itself and as
the general partner of the Operating Partnership, and no other corporate or
partnership, as applicable, or other proceedings on the part of Parent or the
Operating Partnership are necessary to authorize the execution and delivery of
this Agreement or, in the case of Parent, the Special Rights Agreement and the
performance by Parent and the Operating Partnership of the transactions
contemplated by this Agreement and, in the case of Parent, the Special Rights
Agreement.

 

(b)           This Agreement has been, and upon its execution by
Parent the Special Rights Agreement will be, duly and validly executed and
delivered by Parent or the Operating Partnership, as applicable, and, assuming
the due authorization, execution and delivery of this Agreement and, in the
case of Parent, the Special Rights Agreement by each other party thereto,
constitute, and upon their execution, this Agreement and, in the case of
Parent, the Special Rights Agreement will constitute, legal, valid and binding
obligations of Parent or the Operating Partnership, as applicable, enforceable
against Parent or the Operating Partnership, as applicable, in accordance with
their respective terms.

 

24

 

(c)           The execution and delivery of this Agreement and the
Special Rights Agreement by Parent or the Operating Partnership, as applicable,
and the performance of the transactions contemplated by this Agreement and the
Special Rights Agreement by Parent or the Operating Partnership, as applicable,
do not and will not (i) conflict with or result in a breach of any
provisions of the articles of incorporation or bylaws of Parent or the
certificate of limited partnership or the OP Agreement, as applicable, (ii) result
in a violation or breach of or constitute a default (or an event which, with or
without notice or lapse of time or both, would constitute a default) under, or
result in the termination, modification or cancellation of, or the loss of a
benefit under or accelerate the performance required by, or result in a right
of termination, modification, cancellation or acceleration under, the terms,
conditions or provisions of any contract or other instrument of any kind to
which Parent or any of its Subsidiaries (including the Operating Partnership)
is a party or by which any of their respective properties or assets may be
bound or affected or (iii) violate any order, writ, judgment, injunction,
decree, statute, treaty, rule or regulation applicable to Parent or any of
its Subsidiaries (including the Operating Partnership) or any of their
respective properties or assets excluding from the foregoing clauses (ii) and
(iii) such violations, breaches, defaults, terminations, modifications,
cancellations, losses or accelerations that would not reasonably be expected to
have a Parent Material Adverse Effect.

 

(d)           No Governmental Consent is required to be obtained or
made in connection with or as a result of the execution and delivery of this
Agreement and the Special Rights Agreement by either Parent or the Operating
Partnership or the performance by Parent and the Operating Partnership of the
transactions contemplated by this Agreement and the Special Rights Agreement or
the consummation of the transactions contemplated by this Agreement and the
Special Rights Agreement, other than (i) the filing with the SEC of any
reports or filings under the Securities Act or the Securities Exchange Act and (ii) the
filing with the appropriate state authorities of any required “blue sky” filings.

 

Section 4.3.            Brokers.  No agent,
broker, investment banker, financial advisor or other firm or Person is
entitled to any brokerage, finder’s, financial advisor’s or other similar fee
or commission for which SLGOP could become liable in connection with the
transactions contemplated by this Agreement and the Special Rights Agreement as
a result of any action taken by or on behalf of Parent or the Operating
Partnership other than Goldman, Sachs & Co., whose fees and expenses
will be paid by Parent at or prior to Closing.

 

ARTICLE
V

 

COVENANTS

 

Section 5.1.            Commercially Reasonable Efforts. 
Upon the terms and subject to the conditions of this Agreement, each of
the parties hereto shall use its respective commercially reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Special Rights Agreement; provided, however, that each party’s obligations pursuant to this Section 5.1
shall be limited only to those sections specifically applicable to such party.

 

Section 5.2.            Use of Name.  SLGOP and
Manager Corp agree, for themselves and their respective Affiliates, that from
and after the Closing, other than in connection with any regulatory filings and
public statements, none of them will use the names “GKK” or “Gramercy” or any
abbreviation of or derivation from that name or any name similar to it in any
form whatsoever, including in connection with advertising and promotional
materials.  Parent and the Operating
Partnership agree, for themselves and their respective Affiliates, that from
and after the Closing, other than in connection with any regulatory filings
(including filings with the SEC) and public statements, none of them will use
the names “SLG” or 

 

25

 

“SL Green” or any abbreviation of or derivation from
that name or any name similar to it in any form whatsoever, including in
connection with advertising and promotional materials.  Within 10 Business Days after the Closing,
Manager Corp shall amend its certificate of incorporation to change its name to
a name that does not contain the word “GKK” or substantially similar words.

 

Section 5.3.            Transfer Taxes.  The
responsibility for, and the payment obligation in connection therewith, all
transfer, registration, stamp, documentary, sales, use and similar Taxes
(including all applicable real estate transfer or gains Taxes and transfer
Taxes), any penalties, interest and additions to Tax, and fees incurred in
connection with the transactions contemplated by this Agreement shall be borne
one-half by Parent on the one hand, and one-half by SLGOP and Manager Corp, on
the other hand.  Parent, on the one hand,
and SLGOP and Manager Corp, on the other hand, shall cooperate in the timely
making of all filings, returns, reports and forms as may be required in
connection therewith.

 

Section 5.4.            Officers and Employees.

 

(a)           SLG agrees to take all actions as are necessary to
permit Employees to continue to participate in the SL Green Realty Corp. 401(k) Plan
(“SLG 401(k) Plan”) after the Closing Date.  As soon as practicable after Parent or the
Operating Partnership has established a retirement plan qualified under Section 401(a) and
Section 401(k) of
the Code (the “Parent 401(k) Plan”), SLG shall cause the trustee of
the SLG 401(k) Plan to transfer to the qualified trust established under
the Parent 401(k) Plan the account balances, whether or not vested, of all
Employees in the SLG 401(k) Plan (the “401(k) Plan Transfer Amount”).  The 401(k) Plan Transfer Amount shall be
transferred as cash and calculated as the value of account balances, determined
by the trustee of the SLG 401(k) Plan as of the applicable daily valuation
date of the SLG 401(k) Plan.  With
respect to notes evidencing plan loans, the SLG 401(k) Plan shall assign
such notes to the Parent 401(k) Plan. 
Parent and SLG shall cooperate in making, and shall make, all
appropriate filings required under the Code and ERISA, and the regulations
thereunder, and shall further cooperate to ensure that the transfers described
herein satisfy the applicable requirements of Sections 401(k), 414(l) and
401(a)(12) of the Code and the regulations thereunder.

 

(b)           Prior to the Closing Date, SLG and Parent or the
Operating Partnership shall take all actions necessary so that the
participation of, and any expense related to, all Employees (and their
dependents and beneficiaries)  in the
Plans of SLG, as set forth in Section 5.4(b) of the Manager
Disclosure Schedule, shall cease as of the Closing, and their participation
in the applicable Plans maintained by Parent or the Operating Partnership shall
commence immediately upon the Closing with no waiting periods or other
exclusions being applied if they were not applied to the Employee’s
participation in the corresponding Plans of SLG.  In addition to the foregoing, SLG and Parent
or the Operating Partnership shall take all actions necessary to ensure that,
as soon as practicable following the Closing, the employee benefits provided to
current and former employees of SLG or SLGOP (and their dependents and
beneficiaries), on the one hand, and current and former employees of Parent,
the Operating Partnership and the Manager (and their dependents and
beneficiaries), on the other hand, will be provided under Plans and pursuant to
insurance or other funding arrangements maintained solely by the applicable
party.

 

Section 5.5.            Public Statements.  The parties
hereby agree to, and approve, the form of joint press release attached hereto
as Exhibit C.  After Closing,
none of the parties hereto shall issue any other press release or any other
written public statement with respect to this Agreement or the Special Rights
Agreement or the transactions contemplated hereby or thereby without the prior
written approval of the other parties hereto, except that prior review and
approval shall not be required if, in the reasonable judgment of the party
seeking to issue such release or public statement, prior review and approval
would prevent the timely dissemination of such release or announcement in
violation of any applicable Law or 

 

26

 

NYSE policy or other rules and regulations
governing the stock exchange on which any such party’s stock is listed.

 

Section 5.6.            Confidentiality.  From the
Closing and for two years thereafter, SLG, SLGOP and Manager Corp will not,
except in connection with this Agreement, disclose to any third party any
confidential and non-public information concerning the business of the Manager
and the Manager Subsidiary (“Confidential Information”); provided, SLG, SLGOP or Manager Corp may disclose
Confidential Information (x) if required by Law or legal process or (y) to
any of their respective employees, agents, counsel, accountants, financial
managers, lenders, consultants and other representatives (together, its “Representatives”  ) if such Representatives need to know
Confidential Information to advise any of SLG, SLGOP, Manager Corp or any of
their respective Affiliates; provided, however, that SLG, SLGOP or Manager Corp, as applicable, shall inform each
such Person of the confidential nature of such Confidential Information and
direct such Representatives to treat the Confidential Information with strict
confidence.  In the event that SLG, SLGOP or Manager Corp
is requested or required (by Law, oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil investigative
demand or similar process) to disclose any Confidential Information, the
applicable Person will, to the extent permitted by applicable Law, notify
Parent promptly of such request or requirement so that Parent may, at Parent’s
sole cost and expense, seek an appropriate protective order or waive compliance
with the provisions of this Section 5.6.  If, in the absence of a protective order or
the receipt of a waiver hereunder, SLG, SLGOP or Manager Corp is, on the advice
of counsel, compelled to disclose any Confidential Information, then such
Person may disclose the Confidential Information; provided,
that such Person shall use its commercially reasonable efforts to obtain, at
the request of Parent (at Parent’s sole cost and expense), an order or other
assurance that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as Parent shall
designate.  The term Confidential
Information shall not include information which (i) is or subsequently may
become generally available to the public, other than as a result of disclosure
by SLG, SLGOP or Manager Corp in violation of this Section 5.6, or (ii) is
disclosed with Parent’s prior approval.

 

Section 5.7.            Management Agreement Acknowledgement. 
Parent and the Operating Partnership acknowledge and agree that none of
the Manager or its Affiliates or any of their respective members, stockholders,
partners, managers, directors, officers, employees and agents will be liable to
Parent, the Operating Partnership and their respective Affiliates or any of
their respective members, stockholders, partners, managers, directors,
officers, employees and agents for any acts or omissions performed or not
performed on or prior to the Closing in accordance with and pursuant to the
Management Agreement, except for any acts or omissions performed or not
performed on or prior to the Closing that constituted willful misconduct, gross
negligence or fraud in connection with the exercise of Manager’s duties under
the Management Agreement.  The parties
acknowledge and agree that in the event of a conflict between the terms and
provisions of this Agreement and the Management Agreement in respect of the
foregoing, the terms and provisions of this Agreement shall govern and
control.  The parties acknowledge and
agree that this Section 5.7 has no effect on the other terms and
provisions of this Agreement or the respective rights, duties and obligations
of the parties hereto.

 

Section 5.8.            Parent Equity Awards.  Notwithstanding
anything to the contrary contained in any Plan of Parent or any individual
award document under any Plan of Parent, from and after the date of this
Agreement, each issued and outstanding Parent equity award (including stock
options and restricted stock) granted to any SLG or SLGOP employees that will
not become employees of Manager as a result of the transactions contemplated by
this Agreement shall become immediately vested and exercisable in accordance
with its terms.  Prior to the Closing,
Parent has taken all necessary corporate and board action in order to authorize
and effectuate the transactions described in this Section 5.8.

 

27

 

Section 5.9.            Certain Amendments.  Without the
prior written consent of SLGOP, Parent shall not amend or cause to be amended
for six years after the Closing Date Sections 6.8, 12.1, 12.2, 12.3, 12.4, 12.5
and 12.6 of the Limited Liability Company Operating Agreement of the Manager,
in any case in a manner that is adverse to SLGOP or any of the Individuals.

 

Section 5.10.          D&O
Insurance.  Parent and the Operating Partnership shall
not terminate any of the existing insurance policies relating to director and/or
officer liability as disclosed by the Parent and the Operating Partnership and
set forth on Schedule 5.10 prior to their expiration (and represent and
warrant that no such insurance policies have been terminated by Parent or the
Operating Partnership since January 1, 2009) unless any such policy is
replaced with a policy that provides for at least the same coverage
and amounts containing terms and conditions that are no less favorable to the
past directors and officers of the Manager covered by the policy to be
terminated.

 

Section 5.11.          Obligations
of American Financial Realty Trust.  Parent and
the Operating Partnership acknowledge and agree that all obligations and
liabilities under the employment-related agreements of employees of American
Financial Realty Trust that became employees of the Manager following Parent’s
acquisition of American Financial Realty Trust, which agreements are set forth
in Section 5.11 of the Manager Disclosure Schedule, shall be the
responsibility of the Parent and/or the Operating Partnership, and none of SLG,
SLGOP, or Manager Corp shall have any obligations or liabilities with respect
to such employment-related agreements.

 

ARTICLE VI

POST-CLOSING TAX MATTERS

 

Section 6.1.            Covenants.  Without the
prior written consent of Parent (which consent shall not be unreasonably
withheld, conditioned or delayed), neither SLGOP nor Manager Corp shall, to the
extent it may affect or relate to the Manager or the Manager Subsidiary, (i) make
or change any Tax election, (ii) change any annual Tax accounting period, (iii) adopt
or change any method of Tax accounting, (iv) file any amended Tax Return, (v) enter
into any closing agreement related to any taxes, (vi) settle any Tax claim
or assessment, (vii) surrender any right to claim a Tax refund, (viii) offset
or effect any other reduction in Tax Liability, (ix) consent to any
extension or waiver of the limitations period applicable to any Tax claim or
assessment or (x) take or omit to take any other action, if any such
action or omission would have the effect of increasing the Tax Liability or
reducing any Tax asset of the Manager or the Manager Subsidiary for any period
after the Closing; provided, that
the provisions of this Section 6.1 shall only apply to the extent
that they relate to the Tax Liability of the Manager and the Manager Subsidiary
as entities.

 

Section 6.2.            Cooperation on Tax Matters. 
Parent and SLGOP shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the preparation and filing of
any Tax Return and any audit or other proceeding with respect to Taxes.  Such cooperation shall include the retention
and (upon the other party’s reasonable request) the provision of records and
information which are reasonably relevant to any such audit or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.  The parties agree (i) to retain all
books and records with respect to Tax matters pertinent to the Manager or the
Manager Subsidiary relating to any Pre-Closing Tax Period, and to abide by all
record retention agreements entered into with any Tax Authority, and (ii) to
give the other party reasonable written notice prior to destroying or
discarding any such books and records and, if the other party so requests,
Parent or SLGOP, as the case may be, shall allow the other party or parties, as
applicable, to take possession of such books and records (to the extent ever
received by Parent).  The provisions of
this 

 

28

 

Section 6.2 shall only apply to the extent that they relate to
the Tax Liability of the Manager and the Manager Subsidiary as entities.

 

Section 6.3.            Tax Indemnity.

 

(a)           SLG, SLGOP and Manager Corp, jointly and severally,
hereby indemnify Parent and the Operating Partnership and their Affiliates
(including, effective upon the Closing, the Manager and the Manager Subsidiary)
against and agree to hold them harmless from any (i) Taxes of the Manager
and the Manager Subsidiary attributable to a Pre-Closing Tax Period or to the
portion of a Straddle Period ending on the date preceding the Closing Date, (ii) without
duplication, any and all Losses, directly or indirectly arising out of or
resulting from a breach of the provisions of Section 3.10, Section 6.1
or Section 6.2, (iii) any Liability for Taxes of others
(including, but not limited to, SLGOP and Manager Corp) which Liability results
from the Manager and the Manager Subsidiary having been disregarded entities
(within the meaning of U.S. Treasury Regulation Section 301.7701-3)
of SLGOP, or which is imposed by Law (including, without limitation, U.S.
Treasury Regulation Section 1.1502-6 or any
similar provision of state, local or foreign Law) or as a result of any
agreement or transaction that the Manager or the Manager Subsidiary was a party
to or subject to prior to the Closing Date, and (iv) without duplication,
any and all Losses arising out of or incident to the imposition, assessment or
assertion of any Tax described in clauses (i), (ii) or (iii) (the
sum of (i), (ii), (iii) and (iv) being referred to herein
as a “Tax Loss”).

 

(b)           For purposes of this Section 6.3, in the
case of any Taxes that are payable for a Straddle Period, the portion of such
Tax related to the portion of such Tax period ending on the date preceding the
Closing Date shall (i) in the case of any Taxes other than gross receipts,
sales or use Taxes and Taxes based upon or related to income, be deemed to be
the amount of such Tax for the entire Tax period for which such Tax is
determined multiplied by a fraction the numerator of which is the number of
days in the Tax period ending on and including the date preceding the Closing
Date and the denominator of which is the number of days in the entire Tax
period, and (ii) in the case of any Tax based upon or related to income
and any gross receipts, sales or use Tax, be deemed equal to the amount which
would be payable if the relevant Tax period ended on and included the date
preceding the Closing Date.  All
determinations necessary to give effect to the allocation set forth in the
foregoing clause (ii) shall be made in a manner consistent with prior
practice of the Manager.

 

(c)           Subject to SLG’s consultation rights under Section 6.3(d),
not later than 30 days after receipt by SLG of written notice from Parent
stating that any Tax Loss has been incurred by any of the Persons specified in Section 6.3(a) and
the amount thereof (specifying with reasonable particularity the calculation
thereof), SLG, SLGOP and Manager Corp shall discharge their indemnification
obligations with respect to such Tax Loss by paying to Parent an amount equal
to the amount of such Tax Loss in immediately available funds by wire transfer.  The payment by Parent or any of the other
Persons specified in Section 6.3(a) of any Tax Loss shall not
relieve SLG, SLGOP or Manager Corp of their obligations under this Section 6.3.

 

(d)           Parent agrees to give prompt written notice to SLG of
any Tax Loss or the assertion of any claim, or the commencement of any suit,
action or proceeding in respect of which indemnity may be sought hereunder
which Parent deems to be within the ambit of this Section 6.3
(specifying with reasonable particularity the basis therefor) and will
give SLG such information with respect thereto as SLG may reasonably
request.  SLG may, at the sole expense of
SLG, SLGOP and Manager Corp, upon notice to Parent, assume the defense of any
such suit, action or proceeding (including any Tax audit); provided,
that (x) SLG shall thereafter consult with Parent upon Parent’s reasonable
request for such consultation from time to time with respect to such suit,
action or proceeding (including any Tax audit) and (y) SLG shall not,
without Parent’s consent, not to be unreasonably 

 

29

 

withheld or delayed, agree to any settlement with
respect to any Tax if such settlement reasonably would be expected to adversely
affect the Tax Liability of Parent, any of its Affiliates or, following the
Closing, the Manager and the Manager Subsidiary.  If SLG assumes such defense, (i) Parent
shall have the right (but not the obligation) to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by SLG (provided, that SLG shall retain
control of all aspects of such defense) and (ii) SLG shall not assert that
the Tax Loss, or any portion thereof, with respect to which Parent seeks
indemnification is not within the ambit of this Section 6.3.  If SLG elects not to assume such defense,
Parent, the Operating Partnership or the Manager may pay, compromise or contest
the Tax at issue.  SLG, SLGOP and Manager
Corp shall be liable for the fees and expenses of counsel employed by Parent
for any period during which SLG has not assumed the defense thereof.  All of the parties hereto shall cooperate in
the defense or prosecution of any claim hereunder.  Parent’s failure to give timely notice of a
claim or otherwise comply with the requirements of this Section 6.3(d) shall
not constitute a defense (in whole or in part) to any claim for indemnification
hereunder.

 

(e)           To the extent permitted by applicable Law, any amount
payable pursuant to this Section 6.3 shall be treated by the
parties to this Agreement for federal income tax as an adjustment to the
consideration payable to SLGOP in return for the SLG Transfer up to the amount
of such consideration, and thereafter as taxable income (and SLG, SLGOP and
Manager Corp shall fully indemnify for any Taxes resulting from such taxable
income).

 

Section 6.4.            Disputes.  Disputes
arising under this Article VI and not resolved by mutual agreement
within 30 days shall be resolved by a nationally recognized Law or accounting
firm with no material relationship with Parent or the Operating Partnership, on
the one hand, or SLG, SLGOP or Manager Corp on the other hand (the “Tax
Referee”), chosen by and mutually acceptable to both Parent and SLG within
five days of the date on which the need to choose the Tax Referee arises.  The Tax Referee shall resolve any disputed
items within 30 days of having the item referred to it pursuant to such
procedures as it may require.  The costs,
fees and expenses of the Tax Referee shall be borne equally by Parent, on the
one hand, and SLG, SLGOP and Manager Corp on the other hand.

 

Section 6.5.            Tax Returns.

 

(a)           The Manager and the Manager Subsidiary shall, and
SLGOP shall cause the Manager and the Manager Subsidiary to, file or cause to
be filed all Tax Returns that are required to be filed by the Manager or the
Manager Subsidiary prior to the Closing Date; provided, that such Tax Returns
shall be prepared and filed in a manner consistent with past practices unless
otherwise required by applicable Law; and provided, further, that, except as
provided in Section 6.5(b), in the case of any Tax Return required
to be filed after the date of this Agreement, the Manager and the Manager
Subsidiary shall, not later than thirty (30) days prior to the due date for
filing any such Tax Return (including extensions), provide Parent with the
opportunity to review a draft copy of such Return (together with any supporting
materials, including schedules and work papers) by sending such draft to
Parent, and Parent shall, not later than fifteen (15) days prior to the date
for filing such Tax Return (including extensions), inform the Manager or the
Manager Subsidiary, as applicable, of any objections to such Tax Return, which
objections shall be resolved in good faith. 
Except as provided in the preceding sentence or in Section 6.5(b),
Parent shall have the exclusive obligation and authority to file or cause to be
filed all Tax Returns that are required to be filed by the Manager or the
Manager Subsidiary, provided, that the Manager and the Manager Subsidiary
shall, not later than thirty (30) days prior to the due date for filing any
such Tax Return (including extensions), provide SLG with the opportunity to
review a draft copy of such Return (together with any supporting materials,
including schedules and work papers) by sending such draft to SLG, and SLG
shall, not later than fifteen (15) days prior to the date for filing such Tax
Return (including extensions), inform the Manager or the Manager Subsidiary, as
applicable, of any objections to such Tax Return, which objections shall be
resolved in good faith.

 

30

 

(b)           Notwithstanding anything to the contrary in this Article VI,
the parties agree that the consummation of the Transfers shall result in a
termination of the Manager as a partnership for federal income tax purposes
under Section 708(b)(1)(A) of the Code and that SLGOP shall have the
exclusive obligation and authority for the preparation and filing of the
federal, state and local income tax returns of the Manager for the taxable year
of the Manager ending on the Closing Date.

 

ARTICLE VII

SURVIVAL; INDEMNIFICATION

 

Section 7.1.            Survival of Representations, Warranties, Covenants and
Agreements.

 

(a)           The representations and warranties of the parties contained
in this Agreement will survive the Closing (i) indefinitely with respect
to the representations and warranties contained in Section 3.1  [Organization and Qualification], Section 3.2(a),
Section 3.2(b) and Section 3.2(c)(i) [Authority], Section 3.3  [The Manager
Corp Owned Manager Interests, the SLGOP Owned Manager Interests, the SLGOP
Owned Class B Units and the Manager Owned Class B Units], Section 3.4
[Capitalization], Section 3.28
[Brokers], Section 4.1  [Organization and Qualification of Parent and Operating Partnership],
Section 4.2(a) and Section 4.2(b) [Authority] and Section 4.3  [Brokers]
(collectively, the “Fundamental Representations”) and with respect to
the assessment of any Taxes or the incurrence of Tax Losses as provided for in Article VI;
(ii) until
60 calendar days after the expiration of all applicable statutes of limitation
(including all periods of extension, whether automatic or permissive) with
respect to the matters contained in Section 3.10  [Tax Matters] and Section 3.11  [ERISA and Employee Benefits]; (iii) until April 30,
2010 in the case of all other representations and warranties; provided, however, that any representation or warranty that
would otherwise terminate in accordance with clause (ii) or (iii) above
will continue to survive if a notice of a claim shall have been validly and
timely given under this Article VII on or prior to the date on
which it otherwise would terminate, until the related claim for indemnification
has been satisfied or otherwise resolved as provided in this Article VII.  Any such extended survival will relate solely
to the specific matters set forth in the notice of claim and for all other
purposes such representation and warranty shall terminate.  Except as otherwise expressly provided in
this Agreement, each covenant hereunder shall survive without limitation as to
time.

 

(b)           For purposes of this Agreement, a party’s
representations and warranties shall be deemed to include such party’s
Disclosure Schedule.

 

Section 7.2.            Indemnification of Parent.  SLG,
SLGOP and Manager Corp, jointly and severally, shall indemnify and hold
harmless Parent and its Subsidiaries (including the Operating Partnership) and
their respective successors and the respective shareholders, members, partners,
officers, directors, managers, employees and agents of each such indemnified
Person (collectively, the “Parent Indemnified Parties”) from and against any and all Losses that
may be asserted against, or paid, suffered or incurred by any Parent
Indemnified Party (whether or not due to third party claims) that, directly or
indirectly, arise out of, result from, are based upon or relate to:  (a) any inaccuracy in or any breach of,
as of the Closing Date (except any representations and warranties that
expressly speak as of a specified date or time, in which case only as of such
specified date or time), any representation or warranty made by SLGOP or
Manager Corp in this Agreement; provided, however, that
if any such representation and warranty is qualified in any respect by materiality,
Manager Material Adverse Effect or SLG Material Adverse Effect, for purposes of
this clause (a) such materiality, Manager Material Adverse Effect or SLG
Material Adverse Effect qualification will in all respects be ignored; (b) any
failure by SLG, SLGOP or Manager Corp to duly and timely perform or fulfill any
of its covenants or agreements required to be 

 

31

 

performed by it under
this Agreement; (c) any acts or omissions performed or not performed by Manager
prior to the Closing in its capacity as “Manager” under the Management
Agreement, to the extent any such acts or omissions performed or not performed
constituted willful misconduct, gross negligence, or fraud in connection with
the exercise of the Manager’s duties under the Management Agreement (it being
understood that in the event of a conflict between the terms and provisions of
this Agreement and the Management Agreement in respect of the foregoing, the
terms and provisions of this Agreement shall govern and control); and (d) any
claims made by any of the individuals party to the agreements set forth on Schedule
7.2(d) with respect to the subject matter covered by those
agreements.  Notwithstanding anything in
this Agreement to the contrary, the parties agree that none of SLG, SLGOP or
Manager Corp shall be liable or responsible under this Section 7.2
or otherwise for Losses of the Manager or Parent arising out of, resulting
from, based upon or relating to the matters set forth on Schedule 7.2.

 

Section 7.3.            Indemnification of SLG, SLGOP and Manager Corp. 
Parent and the Operating Partnership, jointly and severally, shall
indemnify and hold harmless SLG, SLGOP and Manager Corp and their respective
successors and the respective shareholders, members, partners, officers,
directors, managers, employees and agents of each such indemnified Person
(collectively the “Manager Indemnified Parties”) from and against any
and all Losses that may be asserted against, or paid, suffered or incurred by
any Manager Indemnified Party (whether or not due to third party claims) that,
directly or indirectly, arise out of, result from, are based upon or relate
to:  (a) any inaccuracy in or any
breach of, as of the Closing Date (except any representations and warranties
that expressly speak as of a specified date or time, in which case only as of
such specified date or time), any representation or warranty made by Parent or
the Operating Partnership in this Agreement; provided,
however, that if any such representation
and warranty is qualified in any respect by materiality or Parent Material
Adverse Effect, for purposes of this clause (a), such materiality or
Parent Material Adverse Effect qualification will in all respects be ignored; (b) any
failure by Parent or the Operating Partnership to duly and timely perform or
fulfill any of its covenants or agreements required to be performed by it under
this Agreement; (c) any acts or omissions performed or not performed by
Manager prior to the Closing in its capacity as “Manager” under the Management
Agreement and not resulting from the willful misconduct, gross negligence or
fraud in connection with the exercise of the Manager’s duties under the
Management Agreement (it being understood that in the event of a conflict
between the terms and provisions of this Agreement and the Management Agreement
in respect of the foregoing, the terms and provisions of this Agreement shall
govern and control); and (d) any obligations or liabilities (i) under
the Employment and Noncompetition Agreement, dated as of April 16, 2008,
between John Roche and the Manager, as amended by the First Amendment to
Employment and Noncompetition Agreement, dated as of November 3, 2008, the
letter agreement between John Roche and SLGOP, dated as of November 3,
2008 and the Letter Agreements between John Roche and the Manager, dated as of January 9,
2009 and March 16, 2009 and (ii) to Joe DeLuca in connection with his
provision of consulting services to Parent.

 

Section 7.4.            Limitations.

 

(a)           No amounts of indemnity shall be payable by SLG, SLGOP
and Manager Corp as a result of any claim arising under clause (a) of Section 7.2
relating to a breach or alleged breach of a representation or warranty (i) unless
the Losses in respect of such claim or series of related claims exceeds $20,000
(any such Losses being “Qualifying Losses”)  and (ii) unless and until Parent
Indemnified Parties have paid, suffered, incurred, sustained or become subject
to Qualifying Losses referred to in that clause in excess of $500,000 in the
aggregate (the “SLGOP Deductible”), in which case Parent Indemnified
Parties may bring a claim for such Losses to the extent the aggregate amount of
such Losses exceeds the SLGOP Deductible; provided, that
such limitation shall not apply to any claim for Losses based upon a breach of
any Fundamental Representation.  The
maximum aggregate Liability of SLG, SLGOP and Manager Corp under clause (a) of
Section 7.2 shall not exceed $10,000,000  (the
“Indemnity Amount”); provided, that
such limitation shall not apply to any claim for Losses based upon a 

 

32

 

breach of any Fundamental
Representation or to any claim for Losses pursuant to Section 7.2(b), Section 7.2(c) or
Section 7.2(d).

 

(b)           No amounts of indemnity shall be payable as a result
of any claim arising under clause (a) of Section 7.3 relating
to a breach or alleged breach of a representation or warranty (i) unless
the Losses in respect of such claim or series of related claims are Qualifying
Losses and (ii) unless and until the Manager Indemnified Parties have
paid, suffered, incurred, sustained or become subject to Qualifying Losses
referred to in that clause in excess of $500,000 in the aggregate (the “Parent
Deductible”) in which case the Manager Indemnified Parties may bring a
claim for such Losses to the extent the aggregate amount of such Losses exceeds
the Parent Deductible; provided, that
no such limitation exists with respect to a claim based on a breach of any of
Parent’s Fundamental Representations.  The
maximum aggregate Liability of Parent under clause (a) of Section 7.3
shall not exceed the Indemnity Amount; provided, that
no such limitation exists with respect to a claim based on a breach of any of
Parent’s Fundamental Representations.

 

(c)           Notwithstanding anything contained in this Agreement
to the contrary, Parent acknowledges and agrees that the breach by SLGOP of the
representation and warranty contained in Section 3.6 shall not in
and of itself result in a Loss; provided, that
the foregoing shall not prevent or otherwise affect a determination that the
underlying cause of such breach shall have resulted in a Loss.

 

(d)           Nothing in this Section 7.4 shall apply
to, or in any way limit the obligations of, an Indemnifying Party under Section 7.5
to pay all defense costs in respect of third-party claims.

 

(e)           Nothing in this Section 7.4 shall apply
to, or in any way limit the obligations of the parties under Article VI.

 

Section 7.5.            Method of Asserting Claims. 
All claims for indemnification by any Indemnified Party under Section 6.3
and this Article VII shall be asserted and resolved as follows:

 

(a)           If an Indemnified Party intends to seek
indemnification under this Article VII, it shall promptly (i) notify
the Indemnifying Party in writing of such claim, indicating with reasonable
particularity the nature of such claim and the basis therefor (including a good
faith estimate of the amount of Losses), and (ii) provide the Indemnifying
Party with all relevant information that is material to the claim or that the
Indemnifying Party may reasonably request (but any such notice and information
from a Parent Indemnified Party need only be given to SLGOP).  The failure to provide such notice and
information will not affect any rights hereunder except to the extent the
Indemnifying Party is materially prejudiced thereby.

 

(b)           If such claim involves a claim by a third party
against the Indemnified Party, and provided the claim by the Indemnified Party
is not of a type for which the Indemnifying Party’s Liability may be limited by
Section 7.4, the Indemnifying Party may, within twenty days after
receipt of such notice and information, and upon notice to the Indemnified
Party, assume, with counsel reasonably satisfactory to the Indemnified Party,
at the sole cost and expense of the Indemnifying Party, the settlement or
defense thereof (in which case any Loss associated therewith shall be the sole
responsibility of the Indemnifying Party); provided, that
the Indemnified Party may participate in such settlement or defense through
counsel chosen by it; provided further,
that the Indemnifying Party shall not be obligated to obtain the approval of
the Indemnified Party with respect to any monetary settlement which by its
terms unconditionally releases the Indemnified Party completely from all
liability in connection with such claim and does not contain any admission of
guilt, culpability, misconduct or wrongdoing by, or an undertaking or
continuing obligation of the Indemnified Party and is the sole responsibility
of the Indemnifying Party (it being acknowledged that in the event of any
non-monetary or injunctive 

 

33

 

settlement, the
Indemnifying Party must obtain approval of the Indemnified Party prior to
settlement.  If the Indemnifying Party
assumes the settlement or defense of such claim and the Indemnified Party
determines reasonably and in good faith that representation by the Indemnifying
Party’s counsel of both the Indemnifying Party and the Indemnified Party may
present such counsel with a conflict of interest, then the Indemnifying Party
shall pay the reasonable fees and expenses of the Indemnified Party’s
counsel.  Notwithstanding the foregoing, (A) the
Indemnified Party may, at the sole cost and expense of the Indemnified Party,
at any time prior to the Indemnifying Party’s delivery of the notice referred
to in the first sentence of this Section 7.5(b), file any motion,
answer or other pleadings or take any other action that the Indemnified Party
reasonably believes to be necessary or appropriate to protect its interests, provided, that the Indemnified Party shall
not, without the consent of the Indemnifying Party, enter into any settlement
or compromise with respect to a claim unless the Indemnifying Party has failed
to deliver the notice referred to in the first sentence of this Section 7.5(b),
(B) the Indemnified Party may take over the control of the defense or
settlement of a third-party claim at any time if it irrevocably waives its
right to indemnity under this Agreement with respect to such claim and (C) the
Indemnifying Party may not, without the consent of the Indemnified Party,
settle or compromise any action (other than a monetary settlement or compromise
which by its terms unconditionally releases the Indemnified Party completely
from all liability in connection with such claim and does not contain any
admission of guilt, culpability, misconduct or wrongdoing by, or an undertaking
or continuing obligation of the Indemnified Party and is the sole
responsibility of the Indemnifying Party (it being acknowledged that in the
event of any non-monetary or injunctive settlement)) or consent to the entry of
any judgment, such consent not to be unreasonably withheld or delayed.  So long as the Indemnifying Party is contesting
any such claim in good faith, the Indemnified Party shall not pay or settle any
such claim without the Indemnifying Party’s consent, such consent not to be
unreasonably withheld.  If the
Indemnifying Party is not entitled to assume the defense of the claim pursuant
to the foregoing provisions or is entitled but does not contest such claim in
good faith (including if it does not notify the Indemnified Party of its
assumption of the defense of such claim within the twenty day period set forth
above), then the Indemnified Party may conduct and control, through counsel of
its own choosing and at the expense of the Indemnifying Party, the settlement
or defense thereof (it being acknowledged that in such event the Indemnified
Party is not required to obtain the consent of the Indemnifying Party with
respect to any settlement or defense thereof), and the Indemnifying Party shall
cooperate with it in connection therewith. 
Except as otherwise expressly provided in this Section 7.5,
the failure of the Indemnified Party to participate in, conduct or control such
defense shall not relieve the Indemnifying Party of any obligation it may have
hereunder.  Any defense costs required to
be paid by the Indemnifying Party on behalf of the Indemnified Party shall be
paid as incurred, promptly against delivery of reasonably detailed invoices
therefor.

 

(c)           An Indemnified Party shall (i) pursue a claim for
indemnification under this Article VII on a timely basis and (ii) to
the extent it is reasonably practical to do so, provide the Indemnifying Party
with a good faith estimate of the amount of a claim at the time it is asserted;
provided, that the Indemnified Party’s
failure to comply with either of the preceding clauses (i) or (ii) shall
not affect any rights hereunder except to the extent the Indemnifying Party is
materially prejudiced thereby.

 

Section 7.6.            Subrogation; Insurance.  If an
Indemnified Party recovers Losses from an Indemnifying Party, the Indemnifying
Party shall be subrogated, to the extent of such recovery, to the Indemnified
Party’s rights against any third party with respect to such recovered Losses,
subject to the subrogation rights of any insurer providing insurance coverage
under one of the Indemnified Party’s policies and except to the extent that the
grant of subrogation rights to the Indemnifying Party is prohibited by the
terms of the applicable insurance policy. 
In case any event shall occur which would otherwise entitle any party to
assert any claim for indemnification hereunder, no Losses shall be deemed to
have been incurred by such party to the extent of any proceeds actually
received by such party from any insurance policies maintained by the
Indemnified Party with respect thereto, net of any increase in 

 

34

 

premiums or other costs associated with such insurance
recovery, but nothing herein shall require any party to pursue any insurance
claim.

 

Section 7.7.            Exclusive Remedy.  The
right of each party hereto to assert indemnification claims and receive
indemnification payments pursuant to this Article VII shall be the
sole and exclusive right and remedy exercisable by such party with respect to
any breach by the other party hereto of any representation or warranty in this
Agreement, except in the case of Losses attributable to (i) intentional misrepresentation, gross negligence or fraud, (ii) a
breach by the other party of any of its covenants and agreements contained in
this Agreement or (iii) a breach by the other
party of any of its Fundamental Representations; provided,
that the foregoing shall not affect such parties’ rights in Section 8.9.

 

ARTICLE
VIII

 

MISCELLANEOUS

 

Section 8.1.            Notices.  All notices,
requests and other communications under this Agreement must be in writing and
will be deemed to have been duly given upon receipt to the parties at the
following addresses or facsimiles (or at such other address or facsimile for a
party as shall be specified by the notice):

 

If to SLG, SLGOP or Manager Corp:

 

SL Green Realty Corp.

420 Lexington Avenue

New York, NY  10170

Attention:  Andrew S. Levine

Facsimile:  (212) 216-1785

 

With a copy (which shall not constitute notice) to:

 

Fried, Frank, Harris,
Shriver & Jacobson LLP

One New York Plaza

New York, New York 
10004

Attention: 
Jeffrey Bagner and Steven Scheinfeld

Facsimile: 
(212) 859-4000

 

If to Parent or the Operating Partnership:

 

Gramercy Capital Corp.

420 Lexington Avenue

New York, NY  10170

Attention:  Robert R. Foley

Facsimile:  (212) 297-1090

 

With copies (which shall
not constitute notice) to:

 

Clifford Chance US
LLP

31 West 52nd Street

New York, New York  10019

Attention:  Larry P. Medvinsky and Karl
A. Roessner

Facsimile:  (212) 878-8375

 

35

 

Hogan & Hartson LLP

555 Thirteenth Street, NW 

Washington, DC  20004 

Attention:  David W. Bonser and David P.
Slotkin

Facsimile:  (202) 637-5910

 

Section 8.2.            Entire Agreement.  This
Agreement, the exhibits and schedules hereto and the Special Rights Agreement
supersede all prior and contemporaneous discussions and agreements, both
written and oral, among the parties with respect to the subject matter of this
Agreement and the Special Rights Agreement and constitute the sole and entire
agreement among the parties to this Agreement with respect to the subject
matter of this Agreement.

 

Section 8.3.            Expenses.  Except as
otherwise expressly provided in this Agreement, whether or not the transactions
contemplated by this Agreement are consummated, each party will pay its own
costs and expenses incurred in connection with the negotiation, execution and
closing of this Agreement and the Special Rights Agreement and the transactions
contemplated by this Agreement and the Special Rights Agreement.

 

Section 8.4.            Waiver.  Any term or
condition of this Agreement may be waived at any time by the party that is
entitled to the benefit thereof, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the party
waiving such term or condition.  No
waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion.  All remedies, either under this Agreement or
by Law or otherwise afforded, will be cumulative and not alternative.

 

Section 8.5.            Amendment.  This
Agreement may be amended, supplemented or modified only by a written instrument
duly executed by or on behalf of each party to this Agreement.

 

Section 8.6.            No Third-Party Beneficiary. 
The terms and provisions of this Agreement are intended solely for the
benefit of each party hereto and their respective successors or permitted
assigns, and it is not the intention of the parties to confer third-party
beneficiary rights upon any other Person other than any Person entitled to
indemnity under Article VII and other than as provided in Section 5.8
herein.

 

Section 8.7.            Assignment; Binding Effect. 
Neither this Agreement nor any right, interest or obligation under this Agreement
may be assigned by any party to this Agreement by operation of law or otherwise
without the prior written consent of the other party to this Agreement and any
attempt to do so will be void.  Subject
to the foregoing, this Agreement is binding upon, inures to the benefit of and
is enforceable by the parties to this Agreement and their respective successors
and assigns.

 

Section 8.8.            CONSENT TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF
TRIAL BY JURY.

 

(a)           EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK OR ANY COURT OF THE STATE OF NEW YORK LOCATED IN THE COUNTY OF NEW
YORK IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE SPECIAL RIGHTS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY, AND AGREES THAT ANY SUCH ACTION, SUIT OR
PROCEEDING SHALL BE BROUGHT ONLY IN SUCH COURT (AND 

 

36

 

WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS OR ANY OTHER OBJECTION TO VENUE THEREIN); PROVIDED, THAT SUCH CONSENT TO JURISDICTION IS SOLELY FOR
THE PURPOSE REFERRED TO IN THIS SECTION 8.8 AND SHALL NOT BE DEEMED
TO BE A GENERAL SUBMISSION TO THE JURISDICTION OF SAID COURTS OR IN THE STATE
OF NEW YORK OTHER THAN FOR SUCH PURPOSE. 
Any and all process may be served in any action, suit or proceeding
arising in connection with this Agreement or the Special Rights Agreement by
complying with the provisions of Section 8.1.  Such service of process shall have the same
effect as if the party being served were a resident in the State of New York
and had been lawfully served with such process in such jurisdiction.  The parties hereby waive all claims of error
by reason of such service.  Nothing
herein shall affect the right of any party to service process in any other
manner permitted by Law or to commence legal proceedings or otherwise proceed
against the other in any other jurisdiction to enforce judgments or rulings of
the aforementioned courts.

 

(b)           THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO THIS
AGREEMENT.  THE PROVISIONS OF THIS SECTION 8.8
SHALL SURVIVE THE CLOSING.

 

Section 8.9.            Specific Performance.  The parties
hereto agree that if any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached, irreparable
damage would occur, no adequate remedy at Law would exist and damages would be
difficult to determine, and that the parties shall be entitled to seek specific
performance of the terms hereof.

 

Section 8.10.          Invalid Provisions.  If any
provision of this Agreement is held to be illegal, invalid or unenforceable
under any present or future Law, and if the rights or obligations of any party
hereto under this Agreement will not be materially and adversely affected
thereby, (a) such provision will be fully severable, (b) this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.

 

Section 8.11.          GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD FOR THE CONFLICTS OF LAWS
PRINCIPLES THEREOF.

 

Section 8.12.          Manager Disclosure Schedule. 
The disclosure of any fact or item in any portion of the Manager
Disclosure Schedule referenced by a particular Section or subsection of
this Agreement shall, should the existence of the fact or item or its contents
be relevant to any other Section or subsection of this Agreement, and if
such relevance is reasonably apparent on the face thereof, be deemed to be
disclosed with respect to such other Section or subsection of this
Agreement to which such fact or item relates.

 

Section 8.13.          Counterparts; Effectiveness. 
This Agreement may be signed in any number of identical counterparts,
each of which shall be an original (including signatures delivered via
facsimile or electronic mail) with the same effect as if the signatures thereto
and hereto were upon the same instrument. 
The parties hereto may deliver this Agreement and the other documents
required to consummate the transaction contemplated herein by facsimile or
electronic mail and each party shall be 

 

37

 

permitted to rely upon the signatures so transmitted
to the same extent and effect as if they were original signatures.  This Agreement shall become effective when
each party hereto shall have received a counterpart hereof signed by each other
party hereto.

 

Section 8.14.          Interpretation.  The parties
hereto acknowledge and agree that (i) each party hereto and its counsel
reviewed and negotiated the terms and provisions of this Agreement and have
contributed to its revision, (ii) the rule of construction to the
effect that any ambiguities are resolved against the drafting party shall not
be employed in the interpretation of this Agreement and (iii) the terms
and provisions of this Agreement shall be construed fairly as to all parties
hereto, regardless of which party was generally responsible for the preparation
of this Agreement.

 

Section 8.15.          Parent Board Actions.  Except as
otherwise required by Law, all decisions and authorizations that may be
required of Parent’s Board of Directors in respect of this Agreement (including
the enforcement of Parent’s rights hereunder) and the transactions contemplated
hereby shall be made solely by action of those directors who at the time of the
relevant deliberation or action have no beneficial or pecuniary interest,
direct or indirect, in SLGOP.

 

[Signatures
begin on the next page.]

 

38

 

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.

 

	
   

  	
   

  	
  GRAMERCY
  CAPITAL CORP.,

  
	
   

  	
   

  	
     a
  Maryland corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
     By:

  	
  /s/ Roger M.
  Cozzi

  
	
   

  	
   

  	
   

  	
   Name:

  	
  Roger M. Cozzi

  
	
   

  	
   

  	
   

  	
   Title:

  	
  Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GKK
  CAPITAL LP,

  
	
   

  	
   

  	
     a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
     By:

  	
   Gramercy
  Capital Corp., a Maryland Corporation,

   its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
     By:

  	
  /s/ Roger M.
  Cozzi

  
	
   

  	
   

  	
   

  	
   Name:

  	
  Roger M. Cozzi

  
	
   

  	
   

  	
   

  	
   Title:

  	
  Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SL
  GREEN OPERATING PARTNERSHIP, L.P.,

  
	
   

  	
   

  	
     a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
     By:

  	
   SL Green
  Realty Corp., a Maryland Corporation,

   its  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
     By:

  	
  /s/ Andrew S. Levine

  
	
   

  	
   

  	
   

  	
   Name:

  	
  Andrew S. Levine

  
	
   

  	
   

  	
   

  	
   Title:

  	
  Chief Legal
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GKK
  MANAGER MEMBER CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
     By:

  	
  /s/ Andrew S. Levine

  
	
   

  	
   

  	
   

  	
   Name:

  	
  Andrew S. Levine

  
	
   

  	
   

  	
   

  	
   Title:

  	
  Chief Legal
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SL
  GREEN REALTY CORP. (solely for the purpose of

  the Sections and Articles as specified in the Preamble of

  this Agreement)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
     By:

  	
  /s/ Andrew S. Levine

  
	
   

  	
   

  	
   

  	
   Name:

  	
  Andrew S. Levine

  
	
   

  	
   

  	
   

  	
   Title:

  	
  Chief Legal
  Officer

  

 

 

[Signature Page to
Securities Transfer Agreement]

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