Document:

Exhibit
10.12

 

EMPLOYMENT
AND NONCOMPETITION AGREEMENT

 

This
EMPLOYMENT AND NONCOMPETITION AGREEMENT (“Agreement”) is made as of the      
day of July, 2004 between Hugh Hall (“Executive”) and GKK Manager LLC (the “Employer”).

 

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

 

2.     Employment and Duties.

 

(a)                   Duties.  During the Employment Period, Executive shall
be employed in the business of the Employer and its affiliates.  Executive shall serve the Employer as a
senior executive and shall have the title of Managing Director of the Employer.
In such capacity, Executive, in conjunction with other senior officers and
managers of the Employer, shall be responsible for, among other things,
structuring and pricing investments, sourcing investments, sourcing credit
facilities and selling, syndicating and securitizing investments in whole or in
part.  In addition, Executive shall serve
as Chief Operating Officer of Gramercy Capital Corp. (the “Corporation”), and
shall initially be a member of the Board of Directors of the Corporation (the “Board”).  In such capacity, Executive shall have the
general powers and duties of management usually vested in the chief operating
officer of a comparable company in the same industry, including, without
limitation, responsibility for the day-to-day operations of the Corporation,
overseeing service contracts with third parties and management of any employees
of the Corporation.  Executive’s duties
and authority shall be as further set forth by the Employer.    Executive will report to the managing
member of the Employer (the “Managing Member”) with respect to functions as
Managing Director and to the President and Chief Executive Officer of the
Corporation (the “CEO”) with respect to functions as Chief Operating Officer.

 

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

 

 

limited partner would have, but performs no day-to-day management or
similar role) with respect to such entities or ventures and such investment
does not violate Section 8 hereof; and provided, further, that, in any case in
which another party involved in the investment has a material business
relationship with the Employer, Executive shall give notice prior written notice to
the Managing Member and the CEO; or (iii) serving as a member of the Board of
Directors of a for-profit corporation with the approval of the CEO and the
Managing Member.

 

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

 

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

 

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

 

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

 

(c)                   Equity-Based Awards. 
In the discretion of the Board or the Compensation Committee thereof,
Executive shall be eligible to participate in any current or future equity incentive plan that has been or may
be established by the Corporation for senior executive officers.  It is acknowledged that Executive has been
previously granted 25,000 shares of restricted stock under that certain
Gramercy Capital Corp. 2004 Equity Incentive Plan Restricted Stock Award
Agreement between the Corporation and Executive, and 125,000 options under that
certain Gramercy Capital Corp. 2004 Equity Incentive Plan Option Award
Agreement between the Corporation and Executive, both dated          ,
2004, copies of each are attached hereto as Exhibits A and B, respectively.

 

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

 

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reimbursed by the
Employer or the Corporation by the end of the Employment Period, shall remain
the obligation of the Employer or the Corporation, as applicable to so
reimburse Executive.

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)   Termination by the Employer.

 

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

 

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

 

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

 

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

 

(b)   Termination by Executive.

 

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

 

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

 

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the occurrence of a Change-in-Control (as defined in
Section 6(c) below), “Good Reason” shall also include, in addition to the
foregoing:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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(A)          any “person,” including a “group” (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act, but excluding the
Employer or the Corporation, any entity controlling, controlled by or under
common control with the Employer or the Corporation, any trustee, fiduciary or
other person or entity holding securities under any employee benefit plan or
trust of the Employer or the Corporation or any such entity, and Executive and any
“group” (as such term is used in Section 13(d)(3) of the Exchange Act) of which
Executive is a member), is or becomes the “beneficial owner” (as defined in
Rule 13(d)(3) under the Exchange Act), directly or indirectly, of securities of
the Employer or the Corporation representing 25% or more of either (A) the
combined voting power of the Employer’s or the Corporation’s then outstanding
securities or (B) the then outstanding common stock (or other similar equity
interest, in the case of  a company other
than a corporation) of the Employer or the Corporation (in either such case
other than as a result of an acquisition of securities directly from the
Employer or the Corporation); provided, however, that, in no event shall a
Change-in-Control be deemed to have occurred upon an initial public offering of
the common stock (or such other equity interest) of the Employer or the
Corporation under the Securities Act; or

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7.     Compensation Upon Termination.

 

(a)                   Termination By Employer Without Cause or
By Executive With Good Reason.  If
(i) Executive is terminated without Cause pursuant to Section 6(a)(iv)
above, or (ii) Executive shall terminate his employment hereunder with Good
Reason pursuant to Section (6)(b)(ii) above, then, if Executive has fully
complied with Section 6(e) above, the Employment Period shall terminate as of
the

 

7

 

effective date set
forth in the written notice of such termination (the “Termination Date”) and
Executive shall be entitled to the following payment and benefits:

 

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

 

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

 

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

 

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

 

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

 

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(c)                   Termination by Reason of Death.    
If Executive’s employment terminates due to his death, the Employer
shall pay Executive’s Base Salary plus any applicable pro rata portion of the
annual performance bonus described in Section 3(b) above for a period of six
months from the date of his death, or such longer period as the Employer may
determine, to Executive’s estate or to a beneficiary designated by Executive in
writing prior to his death.  In the case
of such a termination, (i) Executive shall be credited with six months after
termination under any provisions governing restricted stock (or its equivalent)
or options relating to the vesting or initial exercisability thereof, and (ii)
if such six months of credit would fall within a vesting period, a pro rata
portion of the unvested shares of restricted stock (or its equivalent) granted
to Executive that otherwise would have become vested upon the conclusion of
such vesting period shall become vested on the date of Executive’s termination
due to his death, and a pro rata portion of the unexercisable stock options
granted to Executive that otherwise would have become exercisable upon the
conclusion of such vesting period shall become exercisable on the date of
Executive’s termination due to such death. 
Furthermore, upon such death, any vested unexercised stock options
granted to Executive shall remain vested and exercisable until the earlier of
(A) the date on which the term of such stock options otherwise would have
expired, or (B) the second January 1 after the date of Executive’s termination
due to his death.  Other than as may be
provided under Section 4 or as expressly provided in this Section 7(c), the
Employer shall have no further obligations hereunder following such
termination.

 

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

 

8.     Confidentiality; Prohibited Activities. 
Executive and the Employer (which, for purposes of this Section 8, and
any related enforcement provisions hereof, except at the context requires
otherwise, shall include not only GKK Manager LLC, but shall also severally
include the Corporation) recognize that due to the nature of his employment and
relationship with the Employer, Executive has access to and develops
confidential business information, proprietary information, and trade secrets
relating to the business and operations of the Employer.  Executive acknowledges that (i) such information
is valuable to the business of the Employer, (ii) disclosure to, or use for the
benefit of, any person or entity other than the Employer, would cause
irreparable damage to the Employer, (iii) the principal businesses of the
Employer are originating and acquiring real estate related loans and securities
associated with commercial

 

9

 

and multi-family
properties (collectively, the “Business”), (iv) the Employer is one of the
limited number of persons who have developed a business such as the Business,
and (v) the Business is national in scope. 
Executive further acknowledges that his duties for the Employer include
the duty to develop and maintain client, customer, employee, and other business
relationships on behalf of the Employer; and that access to and development of
those close business relationships for the Employer render his services
special, unique and extraordinary.  In
recognition that the good will and business relationships described herein are
valuable to the Employer, and that loss of or damage to those relationships
would destroy or diminish the value of the Employer, and in consideration of
the compensation (including severance) arrangements hereunder, and other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged by Executive, Executive agrees as follows:

 

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

 

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

 

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

 

(ii)           during the Employment Period, and during
(x) the two-year period following the termination of Executive by either party
for any reason (including the expiration of the term of the Agreement) in the
case of clause (A) below, or (y) the one-

 

10

 

year period following such termination in the case of
clause (B) below, Executive will not, without the prior written consent of the
Employer and the unanimous consent of the Directors other than any other
officer of the Employer, directly or indirectly (individually, or through or on
behalf of another entity as owner, partner, agent, employee, consultant, or in
any other capacity), (A) solicit, encourage, or engage in any activity to
induce any employee of the Employer to terminate employment with the Employer,
or to become employed by, or to enter into a business relationship with, any
other person or entity; provided, however, that the two-year period otherwise
set forth in clause (x) above shall be one-year in the case of an employee
hired after the date hereof by Executive with whom as of the date hereof,
Executive has a material pre-existing relationship; or (B) engage in any
activity intentionally to interfere with, disrupt or damage the Business of the
Employer, or its relationships with any client, supplier or other business
relationship of the Employer.  For
purposes of this subsection, the term “employee” means any individual who is an
employee of or consultant to the Employer (or any affiliate) during the
six-month period prior to Executive’s last day of employment.

 

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

 

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

 

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

 

11

 

or subsidiaries, if any; or (iii) the Employer’s and
its parent’s, affiliates’ or subsidiaries’ prospects for the future.  For one year following termination of
Executive’s employment for any reason, the Employer shall not disclose or cause
to be disclosed any negative, adverse or derogatory comments or information
about Executive.  Nothing in this Section
shall prohibit either the Employer or Executive from testifying truthfully in
any legal or administrative proceeding.

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

(a)   if to Executive:

 

Hugh Hall, at the address
shown on the execution page hereof.

 

With a copy to:

 

Friedman Kaplan Seiler
& Adelman LLP

1633 Broadway

New York, NY 10019

Attn: Edward A. Friedman

 

(b)   if to the Employer:

 

Gramercy Manager
LLC

420 Lexington
Avenue

New York, New York
10170

Attn:  Marc Holliday

 

with a copy to:

 

13

 

Clifford Chance US LLP

31 West 52nd Street

New York, New York  10019

Attention:  Robert E. King, Jr.

 

(c)   if to the Corporation:

 

Gramercy Capital
Corp.

420 Lexington
Avenue

New York, New York
10170

Attn: Corporate
Secretary

 

with copies to:

 

Gramercy Manager
LLC

420 Lexington
Avenue

New York, New York
10170

Attn:  Marc Holliday

 

and:

 

Clifford Chance US LLP

31 West 52nd Street

New York, New York  10019

Attention:  Robert E. King, Jr.

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

	
   

  	
  GRAMERCY MANAGER LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Hugh Hall

  
					

 

Agreed,
as to the rights and obligations of

the
Corporation:  GRAMERCY CAPITAL
CORP.

 

 

	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

16Exhibit
10.13

 

EMPLOYMENT
AND NONCOMPETITION AGREEMENT

 

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

 

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

 

2.     Employment and Duties.

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)   Termination by the Employer.

 

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

 

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

 

3

 

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

 

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

 

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

 

(b)   Termination by Executive.

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

7.     Compensation Upon Termination.

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

(a)   if to Executive:

 

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

 

With a copy to:

 

Friedman Kaplan Seiler
& Adelman LLP

1633 Broadway

New York, NY 10019

Attn: Edward A. Friedman

 

(b)   if to the Employer:

 

Gramercy Manager
LLC

420 Lexington
Avenue

New York, New York
10170

Attn:  Marc Holliday

 

with a copy to:

 

13

 

Clifford Chance US LLP

31 West 52nd Street

New York, New York  10019

Attention:  Robert E. King, Jr.

 

(c)   if to the Corporation:

 

Gramercy Capital
Corp.

420 Lexington
Avenue

New York, New York
10170

Attn: Corporate
Secretary

 

with copies to:

 

Gramercy Manager
LLC

420 Lexington
Avenue

New York, New York
10170

Attn:  Marc Holliday

 

and:

 

Clifford Chance US LLP

31 West 52nd Street

New York, New York  10019

Attention:  Robert E. King, Jr.

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

	
   

  	
  GRAMERCY MANAGER LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Robert R. Foley

  	
   

  
					

 

 

Agreed,
as to the rights and obligations of

the
Corporation:  GRAMERCY CAPITAL
CORP.

 

 

	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

16

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