Document:

TRANSITION AND RELEASE AGREEMENT

 

This TRANSITION AND RELEASE AGREEMENT (the
“Transition Agreement”) is made and entered into as of June 12, 2012 by and among Gramercy Capital Corp., a Maryland
corporation (“Gramercy”), GKK Capital LP, a Delaware limited partnership (the “Partnership”) (together
with Gramercy, the “Gramercy Parties”), and Timothy J. O’Connor (the “Executive”).

 

WHEREAS, Gramercy and the Executive
are parties to that certain Severance Agreement, dated as of November 13, 2008 (the “Severance Agreement”);

 

WHEREAS, the Partnership is
the successor to the obligations of GKK Manager LLC (“GKK Manager”) under that certain Employment and Noncompetition
Agreement, dated as of November 13, 2008, between GKK Manager and the Executive (the “Employment Agreement,” and together
with the Severance Agreement, the “Agreements”);

 

WHEREAS, the Gramercy Parties and
the Executive are parties to that certain Amendment to the Agreements, dated as of July 28, 2011 (the “Amendment”);

 

WHEREAS, pursuant to the Amendment,
the term of each of the Agreements is scheduled to expire on June 30, 2012 (the “Expiration Date”); and

 

WHEREAS, the parties hereto desire
(i) to extend the term of each of the Agreements, as amended, for a period of one (1) month on the terms and conditions set forth
herein, (ii) to enter into an agreement pursuant to which the Executive shall provide transitional services to the Gramercy Parties
for a period of three (3) months following the expiration of the Agreements, (iii) to set forth their responsibilities to one another
in connection with and following the expiration of the Agreements and (iv) to amicably resolve any and all issues relating to the
foregoing;

 

NOW, THEREFORE, in consideration
of the mutual covenants contained herein, the parties agree as follows:

 

1.Expiration
Date. The Expiration Date, as defined in the Amendment, is hereby extended to continue through July 31, 2012 (the “Extended
Expiration Date”).

 

2.Employment
to the Extended Expiration Date. The Executive’s employment under the Agreements shall continue to the Extended Expiration
Date in accordance with the terms of the Agreements, as amended, unless earlier terminated thereunder; provided, however,
that the Executive shall be permitted to work from home on two (2) work days of each work week during the period from July 1, 2012
to the Extended Expiration Date.

 

3.Confirmation
of the Expiration; Resignation from Other Positions. The Gramercy Parties and the Executive acknowledge that the term of each
of the Agreements (i.e., the Employment Period of the Employment Agreement and the Term of the Severance Agreement) expires effective
on the Extended Expiration Date, and that from and after the Extended Effective Date the Executive shall no longer be employed
under the Agreements and shall be relieved of all his duties and responsibilities under the Agreements (except the Continuing Obligations
described in Section 11 below). The Executive hereby irrevocably resigns from any and all other positions that he holds with the
Gramercy Parties, including without limitation his position as an officer of Gramercy, effective on the Extended Expiration Date.
To the extent requested, the Executive shall submit to the Gramercy Parties any reasonably requested documentation confirming such
resignations. The Executive acknowledges that as of the date he signs this Transition Agreement, he has been paid all amounts due
and payable to him through that date under the Agreements, as amended. For avoidance of doubt, “amounts due and payable”
shall not include amounts, such as base salary and business related expenses, that have accrued to the Executive but that are not
yet due and payable to him.

 

    	 

    	 

    

4.Discretionary
Bonus. Pursuant to Section 2 of the Amendment, the Partnership shall award the Executive a discretionary bonus for the period
from January 1, 2012 through June 30, 2012 of at least $287,500 (the “2012 Bonus”) and shall pay the 2012 Bonus to
the Executive within thirty (30) days following June 30, 2012; provided the Executive remains employed by Gramercy and/or
the Partnership through June 30, 2012. The Executive acknowledges that other than the compensation and benefits specified in Sections
3(a), (c), (d), (e) and (f) of the Employment Agreement, which shall continue through the Extended Expiration Date, the 2012 Bonus
is the sole remaining amount owed to him under the Agreements, as amended.

 

5.Vacation.
The vacation accrued but unused by the Executive during the term of the Employment Agreement shall be rolled over for use during
the Transitional Period (as defined below) in accordance with the Partnership’s standard policy for senior executives. Any
of the Executive’s accrued vacation that remains unused as of the end of the Transitional Period will be paid out in accordance
with the Partnership’s standard policy for senior executives.

 

6.401(k)
Payment. Unless the Partnership has amended its 401(k) plan on or before October 31, 2012 to provide that the Executive is
fully vested in all contributions made to such plan by the Partnership for the benefit of the Executive, the Gramercy Parties shall
pay the Executive a lump sum of $40,000 (the “401(k) Payment”), less tax-related deductions and withholdings, on October
31, 2012.

 

7.Transitional
Services.

 

A.Transitional
Period. The transitional period shall commence on August 1, 2012 and shall continue through, and terminate on, October 31,
2012 (the “Transitional Period”) unless earlier terminated as provided in Section 7(F) below.

 

B.Position
and Duties. During the Transitional Period, the Executive shall be employed by the Partnership as a Consultant. In his position
as a Consultant, the Executive shall work on a full time basis for the Company and shall perform such transitional work as the
Company requests; provided that the Executive shall be permitted to work from home on two (2) work days of each work week.

 

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C.Compensation
and Benefits. During the Transitional Period, the Partnership shall provide the Executive the compensation and benefits specified
in Sections 3(a), (c), (d), (e) and (f) of the Employment Agreement (together, the “Transitional Compensation and Benefits”).

 

D.Transitional
Bonus. The Partnership shall award the Executive a discretionary bonus for the period from July 1, 2012 through October 31,
2012 of at least $287,500 (the “Transitional Bonus”), which shall be paid to the Executive in the following installments:
(i) $100,000 on July 2, 2012, (ii) $100,000 on August 1, 2012 and (iii) $87,500 on October 31, 2012.

 

E.Resignation.
Effective October 31, 2012, the Executive shall be considered to have resigned from employment as a Consultant, unless his employment
as a Consultant is earlier terminated as provided in Section 7(F) below.

 

F.Termination.

 

(i)Termination
by the Partnership for Cause. The Partnership may terminate the Executive’s employment as a Consultant for Cause. For
purposes of this Transition Agreement, “Cause” shall have the same meaning as set forth in Section 6(a)(iii) of the
Employment Agreement.

 

(ii)Termination
by the Partnership without Cause. The Partnership may terminate the Executive’s employment as a Consultant at any time
without Cause (as defined in Section 7(F)(i) above).

 

(iii)Termination
by the Executive. The Executive may terminate his employment as a Consultant at any time for any reason; provided that
the Executive gives the Partnership at least two (2) weeks’ written notice of such termination.

 

G.Compensation
Upon Termination. Notwithstanding any provision of the Agreements, as amended by the Amendment, or any other prior agreement
between the Executive and either of the Gramercy Parties, if the Executive’s employment is terminated at any time on or after
the Extended Expiration Date, the Executive shall not be entitled to receive any compensation or benefits from the Gramercy Parties
except as set forth below:

 

(i)Termination
Generally. If the Executive’s employment as a Consultant is terminated for any reason, the Partnership shall pay or provide
the following to the Executive: (a) on or before the time required by law but in no event more than 30 days after the Executive’s
date of termination, any earned but unpaid base salary, any unpaid expense reimbursements, any accrued but unused vacation (including
any vacation rolled over pursuant to Section 6 above) and any vested benefits accrued through the date of termination, if any,
under the terms of any employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended) applicable to the Executive (together, the “Accrued Benefit”) and (b) the 401(k) Payment in accordance
with Section 6 above to the extent such payment is due.

 

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(ii)Termination
by the Partnership without Cause. If the Executive’s employment as a Consultant is terminated by the Employer without
Cause pursuant to Section 7(F)(ii) above, then the Partnership shall, through the date of termination, pay the Executive his Accrued
Benefit and shall pay the Executive the 401(k) Payment in accordance with Section 6 above to the extent such payment is due. In
addition, provided that the Executive executes this Transition Agreement and does not revoke his agreement in Section 13(A) below
to release all Claims of discrimination or retaliation under the Age Discrimination in Employment Act (the “ADEA Release
Agreement”) in accordance with the terms of Section 14 below, the Partnership shall pay the Executive (a) the base salary
specified in Section 3(a) of the Employment Agreement through October 31, 2012 as though he had remained employed as a Consultant
through that date, (b) the Transitional Bonus, on the same schedule as set forth in Section 7(D) and (c) provided that the Executive
elects to continue his health coverage to the extent authorized by and consistent with 29 U.S.C. § 1161 et seq. (commonly
known as “COBRA”), the Partnership shall pay the premiums for the same level of coverage as in effect on the date the
Executive’s employment as a Consultant is terminated until October 31, 2012 to the same extent as if he had remained employed
through such date (together, the “Transition Severance”).

 

8.Tax
Treatment. The Gramercy Parties shall undertake to make deductions, withholdings and tax reports with respect to payments and
benefits under this Transition Agreement to the extent that it reasonably and in good faith determines that it is required to make
such deductions, withholdings and tax reports. Payments under this Transition Agreement shall be in amounts net of any such deductions
or withholdings. Nothing in this Transition Agreement shall be construed to require the Gramercy Parties to make any payments to
compensate the Executive for any adverse tax effect associated with any payments or benefits or for any deduction or withholding
from any payment or benefit.

 

9.Section
409A.

 

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

 

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

 

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

 

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

 

10.Equity
Rights. The Gramercy Parties acknowledge that the Executive has certain equity rights under the LTIP Unit Award Agreement,
as amended, and a Restricted Stock Award between him and Gramercy dated January 4, 2012 and pursuant to his ownership of equity
in Gramercy (collectively, the “Equity Rights”). This Transition Agreement is not intended to modify in any respect
the equity rights to which the Executive would otherwise be entitled pursuant to the Equity Rights if he were not to agree to this
Transition Agreement.

 

11.Continuing
Obligations. The parties acknowledge and agree that the provisions of Section 8 of the Employment Agreement (a copy of which
is attached hereto as Exhibit A) (the “Continuing Obligations”) shall continue in effect as if set forth herein in
accordance with their terms, as if the employment through the Transitional Period constituted the Employment Period for purposes
of Section 8 of the Employment Agreement, except that the parties acknowledge and agree that the Continuing Obligation set forth
Section 8(b)(i) of the Employment Agreement and the associated restrictions on the Executive’s investment activities contained
in Section 8(c) of the Employment Agreement shall end effective October 31, 2012, and the Executive shall accordingly have no restriction
on his investments nor in obtaining employment or engaging in competitive activities subsequent to that date. The Executive further
acknowledges and agrees that the Partnership shall be deemed to have complied with its obligations under Section 8(e) of the Employment
Agreement if it (a) directs its executive officers and the members of its Board of Directors, during such persons’ affiliation
with the Employer as officers or directors, as the case may be, not to intentionally disclose or cause to be disclosed any negative,
adverse or derogatory comments or information about Executive and to respond to any inquiries concerning the Executive by any third
parties by disclosing only the Executive’s title and dates of service, in each case, during the one year period following
the Extended Expiration Period and (b) does not issue any statement in writing containing negative, adverse or derogatory comments
or information about Executive during such one-year period. If either party becomes aware of a violation of Section 8(e) of the
Employment Agreement, as modified herein, such party shall notify the other party in writing of such violation within five (5)
days of becoming aware of the violation.

 

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12.Continuing
Indemnification and Insurance Coverage. The Gramercy Parties acknowledge that the provisions of Section 4 of each of the Agreements
(the “Continuing Indemnification”) shall continue in effect as if set forth herein.

 

13.Releases
of Claims.

 

A.The
Executive’s Release of Claims. In consideration for, among other terms, the opportunity presented by Section 7 of this
Transition Agreement to be employed as a Consultant and, with respect to the ADEA Release Agreement, the Gramercy Parties’
release pursuant to Section 13(C) (the “Gramercy Release”) and the opportunity to receive the Transition Severance,
to which the Executive acknowledges he would otherwise not be entitled, the Executive voluntarily releases and forever discharges
the Gramercy Parties (which for purposes of this Section shall include their affiliated and related entities), their respective
predecessors, successors and assigns, their respective employee benefit plans and fiduciaries of such plans, and the current and
former officers, directors, shareholders, employees, attorneys, accountants and agents of each of the foregoing in their official
and personal capacities (collectively referred to as the “Gramercy Releasees”) generally from all claims, demands,
debts, damages and liabilities of every name and nature, known or unknown (“Claims”) that, as of the date when the
Executive signs this Transition Agreement, he has, ever had, now claims to have or ever claimed to have had against any or all
of the Gramercy Releasees. This release includes, without limitation, all Claims:

 

		·	relating to the Executive’s employment by and termination of employment with the Gramercy Parties;

		·	of wrongful discharge or violation of public policy;

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		·	of breach of contract;

		·	of defamation or other torts;

		·	of retaliation or discrimination under federal, state or local law (including, without limitation, Claims of discrimination
or retaliation under the Age Discrimination in Employment Act, the Americans with Disabilities Act, and Title VII of the Civil
Rights Act of 1964);

		·	under any other federal or state statute;

		·	for wages, bonuses, incentive compensation, stock, stock options, vacation pay or any other compensation or benefits; and

		·	for damages or other remedies of any sort, including, without limitation, compensatory damages, punitive damages, injunctive
relief and attorney’s fees;

 

provided, however, that this release shall not affect
the Equity Rights, the Executive’s rights to the Continuing Indemnification, the Executive’s rights under this Transition
Agreement or any claims that accrue subsequent to the effective date of this Transition Agreement. The Executive acknowledges that
a termination of his employment in accordance with this Transition Agreement and pursuant to the expiration of the term of each
of the Agreements, as amended, shall not give rise to any Claims.

 

The Executive agrees not to accept damages of any nature, other
equitable or legal remedies for his own benefit or attorney’s fees or costs from any of the Gramercy Releasees with respect
to any Claim released by this Transition Agreement. As a material inducement to the Gramercy Parties to enter into this Transition
Agreement, the Executive represents that he has not assigned any Claim to any third party. For avoidance of doubt, in the event
that an action is brought against the Executive, nothing in this Section 13(A) shall be deemed to limit the affirmative defenses
that the Executive may assert in such action, except to the extent such affirmative defense is premised on the existence of a Claim
that has been released hereunder.

 

B.Consideration.
The sole consideration for the ADEA Release Agreement consists of the Gramercy Release and the opportunity to receive the Transition
Severance.

 

C.Release
of the Gramercy Parties’ Claims. Provided that the Executive executes this Transition Agreement and does not revoke the
ADEA Release Agreement in accordance with the terms of Section 14 below, the Gramercy Parties, in consideration for, among other
terms, the Executive’s release pursuant to Section 13(A), shall voluntarily release and forever discharge the Executive generally
from all Claims that, as of the date when the Gramercy Parties sign this Transition Agreement, the Gramercy Parties have, ever
had, now claim to have or ever claimed to have had against the Executive, including, without limitation, all Claims relating to
the Executive’s employment by and termination of employment with the Gramercy Parties or GKK Manager; provided that
the Gramercy Parties shall not release the Executive from any Claim relating to or arising out of any act of fraud, intentional
misappropriation of funds, embezzlement or any other action with regard to the Gramercy Parties that constitutes a felony under
any federal or state statute committed or perpetrated during the course of Executive’s employment with the Gramercy Parties
or their affiliates, in any event, that would have a material adverse effect on the Gramercy Parties, or any other claims that
may not be released by the Gramercy Parties under applicable law. For purposes of this Section, an act of fraud, intentional misappropriation
of funds, embezzlement or any other action with regard to the Gramercy Parties that constitutes a felony under any federal or state
statute shall be deemed to have a material adverse effect on the Gramercy Parties to the extent that (and only to the extent that):
(i) the Executive actually received an improper benefit or profit in money, property, or services as a result of such act or (ii) such
act was the result of the Executive’s active and deliberate dishonesty. For avoidance of doubt, in the event that an action
is brought against any of the Gramercy Releasees, nothing in this Section 13(C) shall be deemed to limit the affirmative defenses
that any of the Gramercy Releasees may assert in such action, except to the extent such affirmative defense is premised on the
existence of a Claim that has been released hereunder.

 

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14.Time
for Consideration; Effective Date. The Executive acknowledges that he has been given the opportunity to consider this Transition
Agreement for twenty-one (21) days before signing it (the “Consideration Period”). To accept this Transition Agreement,
the Executive must return a signed original or a signed PDF copy of this Transition Agreement so that it is received by Edward
J. Matey Jr. of the Gramercy Parties at or before the expiration of the Consideration Period. If the Executive signs this Transition
Agreement before the end of the Consideration Period, he acknowledges by signing this Transition Agreement that such decision was
entirely voluntary and that he had the opportunity to consider this Transition Agreement for the entire Consideration Period. The
Executive acknowledges and agrees that any changes or modifications to this Transition Agreement shall
not restart or in any way affect the Consideration Period. For the period of seven (7) days from the date when the Executive
executes this Transition Agreement, he has the right to revoke the ADEA Release Agreement by
written notice that must be received by Mr. Matey before the end of such revocation period. The ADEA Release
Agreement shall become effective on the business day immediately following the expiration of
the revocation period (the “ADEA Release Agreement Effective Date”), provided
that the Executive does not revoke the ADEA Release Agreement during the revocation period. In
the event that the Executive exercises his right to revoke the ADEA Release Agreement during the revocation period, he acknowledges
that all of the terms and conditions of this Transition Agreement, other than the ADEA Release Agreement, shall remain in full
force and effect, except that the Gramercy Release shall be null and void and the Executive shall not have the opportunity to receive
the Transition Severance.

 

15.Arbitration.
Any controversy or claim arising out of or relating to this Transition Agreement or the breach of this Transition Agreement (other
than a controversy or claim arising under Section 11 of this Transition Agreement, to the extent necessary for the Gramercy Parties
to avail themselves of the rights and remedies referred to in Section 8 of the Employment Agreement) that is not resolved by the
Executive and the Gramercy Parties (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 Gramercy Parties (or their affiliates, where applicable) and the Executive and judgment
may be entered on the arbitrator(s)’ award in any court having jurisdiction.

 

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16.Miscellaneous.
This Transition Agreement contains the entire agreement between the Executive and the Gramercy Parties with respect to the subject
matter hereof and supersedes any prior agreements or understandings between them relating to such subject matter, except the agreements
and understandings relating to the Equity Rights (other than the Agreements, as amended), the Continuing Obligations and the Continuing
Indemnification. The terms of this Transition Agreement are contractual in nature and not mere recitals. This Transition Agreement
shall be governed and construed in accordance with the laws of the State of New York without regard to its conflict of law provisions.
All modifications and changes to this Transition Agreement must be in writing and signed by the parties hereto. If any term or
provision shall be invalid or unenforceable, the remainder of the Transition Agreement shall not be affected thereby and shall
be valid and enforced to the fullest extent permitted by law. This Transition Agreement shall be binding upon the parties and their
respective heirs, administrators, representatives, executors, successors and assigns and shall inure to the benefit of each party
and to their heirs, administrators, representatives executors, successors and assigns.

 

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IN WITNESS WHEREOF, the parties
have executed this Transition Agreement.

 

THE EXECUTIVE IS ADVISED TO CONSULT WITH
AN ATTORNEY BEFORE SIGNING THIS TRANSITION AGREEMENT. THIS IS A LEGAL DOCUMENT. THE EXECUTIVE’S SIGNATURE WILL COMMIT HIM
TO ITS TERMS. BY SIGNING BELOW, THE EXECUTIVE ACKNOWLEDGES THAT HE HAS CAREFULLY READ AND FULLY UNDERSTANDS ALL OF THE PROVISIONS
OF THIS TRANSITION AGREEMENT AND THAT HE IS VOLUNTARILY ENTERING INTO THIS TRANSITION AGREEMENT. 

 

	/s/ Timothy J. O’Connor	 	June 12, 2012	 
	Timothy J. O’Connor	 	Date	 
	 	 	 	 	 
	GRAMERCY CAPITAL CORP.	 	 	 
	 	 	 	 	 
	By:	/s/ Jon W. Clark	 	June 12, 2012	.
	 	Jon W. Clark	 	Date	 
	 	Chief Financial Officer	 	 	 
	 	 	 	 	 
	GKK CAPITAL LP	 	 	 
	 	 	 	 	 
	By:	Gramercy Capital Corp., its general partner	 	 	 
	 	 	 	 	 
	By:	/s/ Jon W. Clark	 	June 12, 2012	.
	 	Jon W. Clark	 	Date	 
	 	Chief Financial Officer	 	 	 

 

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EXHIBIT A

 

Employment Agreement – Continuing
Obligations

 

(See attached)EXECUTION COPY

 

AMENDMENT TO

 

RETENTION AGREEMENT

 

This Amendment to Retention Agreement (this
“Amendment”) is made and entered into as of June 12, 2012, by and between Michael G. Kavourias (“Employee”)
and Gramercy Capital Corp., a Maryland corporation (“Gramercy”).

 

WHEREAS, Gramercy and Employee are parties
to a Retention Agreement dated August 31, 2011, but effective as of July 28, 2011 (the “Agreement”);

 

WHEREAS, the parties hereto desire to amend
the Agreement to, among other things, add compensation terms and amend the term of the Agreement; and

 

WHEREAS, capitalized terms used herein and
not otherwise defined herein shall have the meanings ascribed to them in the Agreement.

 

NOW, THEREFORE, in consideration of the
mutual covenants contained herein, the parties agree as follows:

 

1.          Section
1 of the Agreement is hereby amended by deleting such Section in its entirely and substituting the following therefor:

 

“1.          Term.
Except to the extent that any provision of this Agreement would, by its terms, survive the termination of this Agreement, the term
of this Agreement shall commence on June 12, 2012 and shall continue through, and terminate on December 31, 2012 (the “Term”).
The duration of the Term may be shortened or extended by the mutual agreement of the parties.”

 

2.          Section
2 of the Agreement is hereby amended by deleting such Section in its entirely and substituting the following therefor:

 

“2.          Compensation
and Benefits. In consideration of Employee’s services to Gramercy, Gramercy shall compensate Employee as provided in
this Agreement, and Gramercy shall have the obligations as set forth herein.

 

(a)          Base
Salary. Gramercy shall pay Employee an annual salary at the rate of $385,000 per annum during the Term (“Base Salary”).
Base Salary shall be payable in periodic installments in accordance with the regular payroll practices of Gramercy.

 

(b)          Signing
Bonus. In addition to Base Salary, Gramercy shall pay Employee a signing bonus of $100,000, which Gramercy shall pay on December
31, 2012.

 

    	 

    	 

    

 

(c)          Guaranteed
Bonus. Subject to the express condition that a Non-Permitted Termination Event (as hereinafter defined) does not occur prior
to the date on which the same becomes due and payable, Gramercy will pay to Employee after December 31, 2012 and on or before January
31, 2013 in accordance with Gramercy’s standard year-end bonus payment procedures a 2012 performance bonus in an amount determined
by Gramercy in its sole discretion but in no event less than $750,000 (the “Guaranteed Bonus”), less applicable
deductions and withholding. For the avoidance of doubt, Employee will not be permitted to receive any full or partial year bonus
upon the occurrence of a Non-Permitted Termination Event.

 

(d)          CDO
Bonus. If a CDO Sale (as hereinafter defined) is consummated with the assistance of Employee on or before December 31, 2012,
Gramercy will pay to Employee an additional $100,000 on the same date that Gramercy pays Employee the Guaranteed Bonus, less applicable
deductions and withholding.

 

(e)          Vesting
Acceleration. The Company agrees that the period of forfeiture with respect to all of the restricted shares of common stock
of Gramercy granted pursuant the Restricted Stock Award Agreement dated August 31, 2011, but effective as of July 28, 2011, by
Gramercy to Employee (the “RSA Agreement”) under the Company’s Amended and Restated 2004 Equity Incentive
Plan (i.e., 100,000 shares) shall end, and all of such restricted shares shall be vested, as of the date hereof notwithstanding
anything to the contrary contained in the RSA Agreement.

 

(f)          Definitions.
For the purposes of this Agreement, the following terms shall have the meaning specified in this Section 2(f):

 

“Cause”
shall mean Employee’s: (A) engaging in conduct which is a felony; (B) material breach of any of his obligations under Section
3 of this Agreement; (C) willful misconduct of a material nature or gross negligence with regard to Gramercy or any of its affiliates;
(D) material fraud with regard to Gramercy or any of its affiliates; (E) willful or material violation of any reasonable written
rule, regulation or policy of Gramercy applicable to senior executives unless such a violation is cured within 30 days after written
notice of such violation by Gramercy; or (F) failure to competently perform his duties which failure is not cured within 30 days
after receiving notice from Gramercy specifically identifying the manner in which Employee has failed to perform (it being understood
that, for this purpose, the manner and level of Employee’s performance shall not be determined based on the financial performance
of Gramercy (including without limitation the performance of the stock of Gramercy)).

 

“CDO Sale”
shall mean the sale, lease, exchange or other transfer by Gramercy and its direct and indirect subsidiaries of (i) all (or all
but one) of the collateral management agreements and/or special servicing agreements (or Gramercy’s rights thereunder) with
respect to the assets owned by the indirect subsidiaries of Gramercy that have issued CDO bonds that are outstanding as of the
date hereof (the “CDO Entities”) or (ii) all or substantially all of their interests in (or the underlying assets
of) all (or all but one) of the CDO Entities.

 

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“Non-Permitted Termination
Event” shall occur if either (i) Employee terminates his employment with Gramercy or (ii) Gramercy terminates Employee’s
employment for Cause.”

 

3.          Section
3(a) of the Agreement is hereby amended by deleting such Section in its entirely and substituting the following therefor:

 

“3.          Non-Compete
and Non-Solicitation Covenants; Remedies.

 

(a)          Non-Compete
Covenants. Employee and Gramercy recognize that due to the nature of Employee’s employment and relationship with Gramercy,
Employee has access to and develops confidential business information, proprietary information, and trade secrets relating to the
business and operations of Gramercy. Employee acknowledges that (i) such information is valuable to the business of Gramercy, (ii)
disclosure to, or use for the benefit of, any person or entity other than Gramercy, would cause irreparable damage to Gramercy,
(iii) the principal business of Gramercy as of the date hereof is (A) acquisition of net lease investments and the acquisition,
development, asset management and servicing of commercial real estate property, and (B) the origination, acquisition and disposition
of real estate related loans and securities, and financing such investments, including without limitation the origination of first-mortgage
and mezzanine debt or preferred equity financing for real estate projects throughout the United States (collectively, the “Business”),
(iv) Gramercy is one of the limited number of persons who have developed such a business, and (v) Gramercy’s Business is
national in scope. Employee further acknowledges that his duties for Gramercy include the duty to develop and maintain client,
customer, employee, and other business relationships on behalf of Gramercy, and that access to and development of those close business
relationships for Gramercy render his services special, unique and extraordinary. In recognition that the goodwill and business
relationships described herein are valuable to Gramercy, and that loss of or damage to those relationships would destroy or diminish
the value of Gramercy, and in consideration of the compensation arrangements hereunder, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by Employee, Employee covenants and agrees that during the Term, Employee
will not, without the prior written consent of Gramercy, 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. For the avoidance of doubt, the provisions
set forth in this Section 3(a) shall have no force and effect after December 31, 2012.

 

    	3

    	 

    

 

(b)          Non-Solicitation
Covenants. Employee will not, without the prior written consent of Gramercy, directly or indirectly (individually, or through
or on behalf of another entity as owner, partner, agent, employee, consultant, or in any other capacity), during the period when
Employee is employed by Gramercy and during the two (2) year period following the termination of Employee’s employment, for
any reason (including upon or after the expiration of the Term) solicit, encourage, or engage in any activity to induce any employee
of Gramercy to terminate employment with Gramercy, or to become employed by, or to enter into a business relationship with, any
other person or entity. For purposes of this subsection, the term “employee” means any individual who is an employee
of or consultant to Gramercy (or any affiliate of either).

 

(c)          Remedies.
Employee declares that the foregoing limitations in Sections 3(a) and 3(b) above are reasonable and necessary for
the adequate protection of the business and goodwill of Gramercy. If any restriction contained in this Section 3 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 Employee breaches any of the promises contained in this Section 3, Employee acknowledges that Gramercy’s
remedy at law for damages will be inadequate and that Gramercy will be entitled to specific performance, a temporary restraining
order or preliminary injunction to prevent Employee’s prospective or continuing breach and to maintain the status quo. The
existence of this right to injunctive relief, or other equitable relief, or Gramercy’s exercise of any of these rights, shall
not limit any other rights or remedies Gramercy may have in law or in equity, including, without limitation, the right to arbitration
contained in Section 4 hereof and the right to compensatory and monetary damages. Employee hereby agrees to waive his right
to a jury trial without respect to any action commenced to enforce the terms of this Agreement.

 

(d)          Survival.
Except as expressly provided herein, the provisions of this Section 3 shall survive the Term and the termination of Employee’s
employment and other provisions relating to the enforcement thereof.”

 

4.          Section
4 of the Agreement is hereby amended by deleting the reference to Section 3(b) of the Agreement and replacing it with a reference
to Section 3(c) of the Agreement.

 

5.          All
other provisions of the Agreement shall remain in full force and effect according to their respective terms, and nothing contained
herein shall be deemed a waiver of any right or abrogation of any obligation otherwise existing under the Agreement except to the
extent specifically provided for herein.

 

6.          This
Amendment 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.

 

7.          This
Amendment 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.

 

[Remainder of page left
intentionally blank]

 

    	4

    	 

    

 

IN WITNESS WHEREOF, the undersigned have
caused this Amendment to be executed as of the date first set forth above.

 

	 	GRAMERCY CAPITAL CORP.
	 	 	 
	 	 By:	/s/ Jon W. Clark .
	 	 	Name: 	Jon W. Clark
	 	 	Title: 	Chief Financial Officer and Treasurer
	 	 	 	 
	 	EMPLOYEE
	 	 	 
	 	/s/ Michael G. Kavourias .
	 	Michael G. Kavourias

 

Signature Page to Amendment to Retention
Agreement]

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