Document:

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement is entered into on July 28, 2011 (the “Effective Date”), by and between Vu1 Corporation, a California corporation having its principal executive office at 469 Seventh Avenue, Suite 356, New York, NY 10018 (the “Company”), and Billy K. Hamlin, an individual residing at _______________________________ (“Executive”).

1.           Employment.

(a) The Company hereby employs Executive and Executive hereby accepts employment by the Company as its President and Chief Operating Officer.  The Executive shall perform such executive and managerial duties and responsibilities customary to his office and as are reasonably necessary to the operations of the Company and as may be assigned to him from time to time by or under authority of the Board of Directors of the Company (the “Board”).  Executive shall report to the Board.

(b)           Executive agrees that, during the Employment Period (as defined below), he will devote all of his normal working time and energies to his responsibilities for the Company, and will faithfully and to the best of his ability, discharge those duties to the reasonable satisfaction of the Board.  During the Employment Period, Executive will not accept other gainful employment or become or remain an officer or director of any other corporation, except that Executive may continue to serve as the Chief Executive Officer, CEO of Integrated Sales Solutions, Inc. and as the CEO of Hamlin Consulting, LLC, (but only for so long as such companies do not compete with any product or service of the Company or its subsidiaries (as such products and services exist now at the Effective Date or at any time during the Employment Period) or require in excess of ten hours per month of Executive’s time), or otherwise with the prior consent of the Board.

(c)           As a condition to the effectiveness of this Agreement, concurrently with this Agreement, Executive shall execute and deliver to the Company the Executive Nondisclosure, Nonsolicitation and Invention Assignment Agreement in the form attached hereto as Exhibit A, which is part of this Agreement.

2.           Term.  Unless earlier terminated by either party, the term of this Agreement shall be for a period of one (1) year, commencing on the Effective Date (the “Employment Period”).

3.           Compensation.  During the term of this Agreement, the Company shall pay or cause to be paid to Executive, and Executive shall accept in exchange for the services rendered hereunder by him, the following compensation:

(a)           Base Salary.  Executive’s annual base salary (the “Base Salary”) will be $210,000, before all customary payroll deductions. Fifty Percent of the Base Salary shall be paid to Executive in substantially equal installments and at the same intervals as other executives of the Company are paid, at a minimum of one payment per calendar month.  The remaining 50% will be paid to the executive via the issuance of a grant of shares of common stock at the market price on the Effective Date, which shares shall vest

  

 

  

(b)           Stock Options.  Executive shall be granted as of the Effective Date stock options to purchase 600,000 shares of Common Stock of the Company (“Initial Grant”) under the Company’s 2007 Stock Compensation Plan, as amended (the “Plan”), at an exercise price equal to the closing market price of the Common Stock as of the grant date. Such Initial Grant shall vest in equal monthly installments over the Employment Period and shall have a term of two (2) years after the Effective Date.

(c)           Incentive Compensation.  Executive shall be granted as of the Effective Date stock options to purchase up to 800,000 shares of Common Stock of the Company (“Initial Grant”) under the Company’s 2007 Stock Compensation Plan, as amended (the “Plan”), at an exercise price equal to the closing market price of the Common Stock as of the grant date. Such Initial Grant shall vest upon the achievement of the performance goals as agreed to by the Company and the Executive.  Such final determination of the achievement of the performance goals will be at the sole discretion of the Board of Directors.

4.           Benefits.

(a)           Health Benefits.  The Board and Executive agree that Executive will be eligible for any health insurance plan established by the Company and made available to other executive officers of the Company.  Upon such health insurance plan being established, the Company shall provide Executive with family coverage health insurance. Executive will be entitled to participate, subject to and in accordance with applicable eligibility requirements, in fringe benefit programs as shall be provided from time to time by, to the extent required, action of the Board (or any person or committee appointed by the Board to determine fringe benefit programs).

(b)           Business Expenses.  During the Employment Period, Executive shall be reimbursed for all reasonable business expenses according to the Company’s standard practices for expense reimbursement.  The Executive, as a condition precedent to obtaining such payment or reimbursement, shall provide to the Company any and all statements, bills or receipts evidencing the travel or out-of-pocket expenses for which the Executive seeks payment or reimbursement, and any other information or materials, as the Company may from time to time reasonably request.

(c)           Vacation.  During the Employment Period, Executive shall be entitled to three (3) weeks’ paid vacation. Executive agrees that no more than ten (10) days of vacation will be used consecutively without prior consent of the Company. Unused vacation time may be accrued during the term of this Agreement, but in no event shall Executive accrue and carry over more than ten (10) days of paid vacation.  Any unused vacation time above the amount that may be carried over shall be paid in cash.

  

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5.           Payments and Benefits Upon Termination.

(a)           Voluntary Resignation by Executive or Termination for Cause by the Company.  Following termination of the Executive’s employment by Executive or by the Company for Cause (as defined below), the Company shall pay Executive salary due and owing as of the Executive’s last day of employment, plus any accrued but unused vacation, less standard deductions, and shall reimburse Executive for any outstanding expenses.  If Executive voluntarily resigns, dies, is Disabled or is terminated by the Company for Cause, then Executive will have no further right to the compensation set forth in Sections 3(a) and 3(c) hereof, and all of Executive’s unvested stock options granted under Section 3(b) of this Agreement shall be cancelled.  Additionally, if Executive voluntarily resigns within one (1) year after the Effective Date, Executive’s right to the options described in Section 3(b) shall be forfeited to the Company.

(b)           Termination Without Cause.  The Company shall have the right to terminate the Executive upon 30 days notice without cause.

(c) Vesting of Options. Upon a termination covered by Section 5(b) above, any and all stock options described in Section 3(b) or granted subsequent to this Agreement that are not vested as of the date of termination shall expire.

(d)           “Cause” Definition.  For purposes of this Agreement, “Cause” means, in the Company’s sole determination using reasonable standards, the occurrence of any of the following:  (i) the Executive's refusal to perform, or Executive’s gross misconduct or negligence in the performance of, his duties and responsibilities as President and Chief Operating Officer, or the breach by Executive of any provision of this Agreement, but in each case, any occurrence of “Cause” under this subsection 5(d)(i) will exist only if Executive has received first written notice of the alleged misconduct, negligence, or breach and has not performed the duties or responsibilities or cured the alleged breach within the 20-day period following Executive’s receipt of the notice; (ii) violation by Executive of a state or federal law, rule or regulation involving the commission of a crime against the Company (including violation of any statutory or common law duty of loyalty to the Company) or that is potentially materially injurious to the Company, or any felony or any crime involving moral turpitude, dishonesty or theft; (iii) any act of misconduct, theft, misappropriation of Company property, moral turpitude, fraud, intentional misrepresentation, bad faith or dishonesty by Executive; (iv) any act by Executive that substantially materially injures or could reasonably be expected to substantially materially injure the business or business relationships of the Company; or (v) Executive’s inability to perform his duties because of sickness or injury for more than 30 consecutive days.

(e)           “Change of Control” Definition.  For purposes of this Agreement, “Change of Control” shall mean the occurrence of any of the following events:  (i) the consummation of the sale or disposition by the Company of all or substantially all the Company’s assets in one or a series of related transactions; or (ii) the consummation of a merger or consolidation of the Company or share exchange involving any other corporation, other than (A) a merger, consolidation or share exchange which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (B) a merger effected solely for purposes of changing the domicile of the Company.

  

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6.           Ability to Perform.  Executive hereby represents and warrants to the Company that he is under no legal disability and has entered into no agreements which in any way limit or render the Executive incapable of performing his obligations under this Agreement or his fiduciary duties as the President and Chief Operating Officer of the Company.  Executive further covenants that he will not impair his ability to carry out his obligations under this Agreement or his fiduciary duties as President and Chief Operating Officer of the Company by entering into any agreement or in any way assisting others, directly or indirectly, to enter into any agreement which will violate the provisions of the agreement set forth in Exhibit A hereto.

7.           Indemnification. The Company shall include Executive in the coverage provided by its existing indemnity insurance, which insures directors and officers against any liability arising out of their employment by the Company in the aggregate amount of $10,000,000.  In addition, the Company shall indemnify Executive to the fullest extent permitted by California law, consistent with the Company's Certificate of Incorporation and By-Laws.  Without limiting the foregoing, the Company specifically agrees to indemnify and hold harmless the Executive from and against any and all claims, losses or damages and expenses (including reasonable attorneys, fees) judgments, fines, settlements and other amounts actually incurred in connection with any proceeding arising by reason of Executive's employment by the Company, including any employment as a consultant or otherwise prior to the date of this Agreement.  The scope of indemnification provided hereby includes, without limitation, any loss of income or other consequential damages suffered by Executive as a consequence of any claims made by any party or any ensuing claim resolution process.  The Company shall advance to Executive any expenses incurred in defending any such proceeding to the maximum extent permitted by law.

8.           Governing Law; Venue.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed there without giving effect to the principles of conflicts of law.  The parties hereby consent and agree that the federal or state courts of the State of New York (located in New York, New York) will have jurisdiction to hear, determine and enforce any claims or disputes arising out of or related to the provisions of this Agreement.

9.           Arbitration and/or Attorneys’ Fees. Any controversy or claim arising from, out of or relating to this Agreement, or the breach hereof (other than controversies or claims arising from, out of or relating to the provisions in Exhibit A), shall be determined by final and binding arbitration in New York, New York, in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association, by a panel of not less than three (3) arbitrators appointed by the American Arbitration Association. The decision of the arbitrators may be entered and enforced in any court of competent jurisdiction be either the Company or the Executive.

  

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The parties hereto indicate their acceptance of the foregoing arbitration requirement by initialing below.

	
/s/ William B. Smith

	  	
/s/ Billy K. Hamlin

	
For the Company

	  	
For the Executive

The substantially prevailing party in any arbitration litigation or similar proceeding shall be entitled to recover from the other party all costs and expenses, including reasonable attorneys’ fees and disbursements, in connection with such litigation, arbitration or similar proceeding.

10.          Amendments; Waiver; Cure.  No amendment, waiver or modification in whole or in part of this Agreement, or any term or condition of this Agreement, shall be effective unless in writing and duly signed by the party sought to be bound.  Any waiver of any breach of any provision hereof or any right or power by any party on one occasion shall not be construed as a waiver of, or a bar to, the exercise of such right or power on any other occasion or as a waiver of any subsequent breach.

11.          Binding Effect; Successors.  This Agreement shall be binding upon, inure to the benefit of and be enforceable by the Company and Executive and their respective heirs, legal representatives, successors and assigns.

12.          Survival of Obligations.  The covenants and agreements set forth in this Agreement (including Exhibit A hereto) shall survive any termination of this Agreement and remain in full force and effect regardless of the cause of the termination to the full extent necessary to protect the interest of the party in whose favor they run.

13.          Assignability of Agreement.

(a)           By Executive.  Except as otherwise provided in this Agreement, the Executive shall not be entitled to assign (voluntarily or involuntarily, by operation of law or otherwise) any of his rights under this Agreement, nor delegate any of his duties or obligations under this Agreement, without the prior written consent of the Company.

(b)           By the Company.  The benefits hereunder with respect to the rights of the Company to the services of the Executive may be assigned by the Company, with the consent of the Executive, to any other Company or other business entity which succeeds to all or substantially all of the business of the Company through merger, consolidation, corporate reorganization or by acquisition of all or substantially all of the assets of the Company or to a company controlled by it, or controlling it, or under common control with it; provided, however, that the obligations and liabilities of the Company under this Agreement shall be binding upon any such successors in interest or transferees.

14.          Supersedes Other Agreements.  This Agreement supersedes and replaces all prior negotiations, proposed agreements and agreements, written or oral.

  

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15.          Counterparts.  This Agreement may be executed in two original counterparts.  Both counterparts shall constitute one and the same Agreement.

EXECUTED by the parties hereto as of the date above:

	
EXECUTIVE:

	  
	  	  
	  	
/s/ Billy K. Hamlin

	  	
Billy K. Hamlin

	 	 
	
COMPANY:

	  
	  	
VU1 CORPORATION

	  	  	  
	  	
By: 

	/s/ William B. Smith	
 

	  	  	
Name: William B. Smith

	  	  	
Title:  Chairman of the Board

  

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Exhibit A

Form of Executive Nondisclosure, Nonsolicitation And

Invention Assignment Agreement

This Executive Nondisclosure, Nonsolicitation and Invention Assignment Agreement (“Agreement”) is entered into by and between the individual referenced on the signature page (“Executive”) and Vu1 Corporation, a California corporation (the “Company”), in connection with the Executive’s employment by the Company.

The parties hereto agree as follows:

1.           Confidentiality.  Executive recognizes that during the course of employment with the Company, Executive will have access to certain Confidential Information (as defined below) relating to the business of the Company.  Executive agrees that all Confidential Information shall remain the exclusive property of the Company.

At all times during or following Executive’s employment with the Company, Executive agrees not to disclose to anyone outside the Company, nor to use for any purpose other than Executive’s work for the Company, (i) any Confidential Information or (ii) any information the Company has received from others which Executive knows the Company is obligated to treat as confidential or proprietary.

2.           Definition of Confidential Information.  “Confidential Information” means any information or material in which the Company has rights, whether or not owned or developed by the Company, which is not generally known other than by the Company, and which Executive may obtain knowledge of through or as a result of the employment relationship established with the Company.

Without limiting the foregoing, Confidential Information includes:  (a) any and all information in which the Company has rights relating to the invention, design and development of the Company’s products and any other proprietary technical information of the Company that is not generally known other than by the Company; and (b) any and all business plans, marketing techniques and plans, financial materials, cost data, customer lists, vendor lists, pricing policies and other proprietary business information of the Company that is not generally known other than by the Company.

Confidential Information will not include information that (i) Executive lawfully obtains from any third party who has lawfully obtained such information; (ii) is generally available to the public or is later published or generally disclosed to the public by the Company; or (iii) was already known to or in possession of Executive prior to disclosure by the Company.

3.           Inventions, Copyrights and Patents.  The Company owns all Inventions and Works (as defined below) that Executive makes, conceives, develops, discovers, reduces to practice or fixes in a tangible medium of expression, alone or with others, either (a) during the term of Executive’s employment by the Company (whether or not during working hours), or (b) within 12 months after Executive’s employment ends if the Invention or Work is derived from or relates to any work Executive performed for the Company or involves the use or assistance of the Company’s facilities, materials, personnel or Confidential Information.  The Company also owns all Inventions and Works that Executive brings to the Company that are used in the course of the Company’s business or that are incorporated into any Inventions or Works that belong to the Company.

  

 

  

Executive will promptly disclose to the Company, hold in trust for the Company’s sole benefit, and assign to the Company and hereby assigns exclusively to the Company all Executive’s right, title, and interest in and to any and all Inventions and Works.  Executive hereby waives any and all claims of any nature whatsoever that Executive now or hereafter may have for infringement of any patent resulting from any patent applications for any Inventions.  Executive agrees that all Works shall be considered “works made for hire” so that the Company will be considered the author of the Works under the federal copyright laws.  At the Company’s direction and expense Executive will execute all documents and take all actions necessary or convenient for the Company to give effect to the assignment to, and vesting of ownership in, the Company of all Inventions and Works.  The Company shall have full control over all applications for patents or other legal protection of Inventions and Works.

“Inventions” means discoveries, developments, concepts, ideas, improvements to existing technology, processes, procedures, machines, products, compositions of matter, formulae, algorithms, software, computer programs and techniques, and all other matters ordinarily intended by the word “invention,” whether or not patentable or copyrightable, including all copyrights (including renewal rights), patent rights and trade secret rights, vested and contingent.  “Inventions” also includes all records and expressions of those matters.  “Works” means original works of authorship, including interim work product, modifications and derivative works, and all similar matter, whether or not copyrightable.

Except as expressly provided herein, “Inventions” or “Works” shall not include inventions or works for which no equipment, supplies, facilities or trade secret information of the Company was used and which were developed entirely on Executive’s own time, unless (a) the invention or work relates directly to the Company’s actual or demonstrably anticipated business, or (b) the invention or work derives from or relates to any work Executive performed for the Company.

4.           Reverse Engineering.  Executive agrees that Executive will not engage, nor cause any other person, firm, corporation or other entity to engage, in the reproduction of Confidential Information, Inventions or Works through the techniques of “reverse engineering” as described in Title 17, United States Code, Section 906, as such statute may be amended from time to time.

5.           Return of Materials.  At the time Executive leaves the employ of the Company, or sooner at the request of the Company, Executive shall return all papers, drawings, notes, memoranda, manuals, specifications, designs, devices, documents, diskettes, tapes, prototypes and products, and any other material on any media containing or disclosing any confidential or proprietary technical or business information, except for any documents or other materials received as a shareholder of the Company, this Agreement, the Executive Employment Agreement and any other Company documents describing or setting forth Executive’s rights to compensation or benefits from the Company.  Executive shall also return any keys, pass cards, identification cards, or other property belonging to the Company.

  

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6.           Non-Competition with the Company.  While employed by the Company and for 12 months after employment ends, regardless of the reason it ends, in partial consideration for the Executive’s compensation under his employment agreement, Executive shall not do work anywhere in the United States that competes with or relates to any of the Company’s lighting products or activities without first obtaining the Company’s written permission.  Any business opportunities related to the Company’s business that Executive learns of or obtains while employed by the Company (whether or not during working hours) belong to the Company, and Executive shall pursue them only for the Company’s benefit.

7.           Disclosure of New Work.  Before Executive undertakes any work for any other party during employment by the Company or within 12 months after employment ends that will involve subject matter related to the Company’s activities, Executive shall fully disclose the proposed work to the Company.

8.           Nonsolicitation.  So long as Executive is employed by the Company and for 12 months after employment ends, regardless of the reason it ends, Executive shall not directly or indirectly (a) solicit any employee or executive to leave his or her employment with the Company or (b) solicit business from clients, customers or account holders of the Company that is substantially similar to the business then conducted by the Company.  For purposes of the foregoing, Executive shall not do any of the following:  (i) disclose to any third party the names, backgrounds or qualifications of any Company employees or executives or otherwise identify them as potential candidates for employment; (ii) personally or through any other person, approach, recruit or otherwise solicit employees or executives of the Company to work for any other employer; (iii) participate in any pre-employment interviews with any person who was employed by the Company during the term of this Agreement; (iv) disclose to any third party the names, background or any information about any Company clients, customers or account holders, or otherwise identify them as potential sources of business; or (v) personally or through any other person, approach or otherwise solicit clients, customers or account holders of the Company as potential sources of business.  The term “solicit” or “solicitation” or the like does not include general advertisements or other solicitations to the general public.

9.           No Conflicting Agreements.  Executive is not a party to any agreements, such as confidentiality agreements or assignment of invention agreements with any other party except for those disclosed to the Company in writing prior to the execution of this Agreement.  No agreement with a former employer prohibits Executive from being employed by the Company.

10.         Trade Secrets.  Executive acknowledges that disclosure or use of a trade secret without express or implied consent violates the Uniform Trade Secrets Act.  Executive acknowledges that the Company is not seeking to obtain such trade secrets and agrees not to improperly disclose trade secrets to the Company.

11.         Injunctive Relief.  Executive acknowledges that any violation of this Agreement by Executive will cause irreparable injury to the Company and the Company shall be entitled to extraordinary relief in court, including, but not limited to, temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bond or security. Executive consents to the Company notifying anyone to whom Executive may provide services of the existence and terms of this Agreement.

  

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13.         Severability.  To the extent that any provision of this Agreement shall be determined to be invalid or unenforceable, such provision shall be deleted from this Agreement, and the validity and enforceability of the remainder of this Agreement shall be unaffected.  In furtherance of, and not in limitation of, the foregoing, it is expressly agreed that, should the duration or geographical extent of, or the business activities covered by this Agreement be finally determined to be in excess of that which is valid or enforceable under applicable law, such provision shall be construed to cover only that geography, duration, extent, or activities that may validly or enforceably be covered. Executive acknowledges the uncertainty of the law in this respect and expressly stipulates that this Agreement shall be construed in a manner which renders its provisions valid and enforceable to the maximum extent (not exceeding its express terms) possible under applicable law.

14.         Governing Law; Venue.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed there without giving effect to the principles of conflicts of law.  After consultation with its independent counsel, Executive expressly acknowledges that (a) the parties could have elected California law as the law that would govern this Agreement, and (b) California law may be more favorable to Executive in certain material respects than New York law. Notwithstanding the foregoing, Executive and the Company have specifically bargained for this Agreement to be governed by New York law (without giving effect to the principles of conflicts of law).  The parties hereby consent and agree that the federal or state courts of the State of New York (located in New York, New York) will have jurisdiction to hear, determine and enforce any claims or disputes arising out of or related to the provisions of this Agreement.

15.         Miscellaneous.  The substantially prevailing party in any litigation brought under the terms of this Agreement shall be entitled to an award of reasonable costs and expenses of litigation and any appeal, including reasonable attorneys’ fees.  Executive’s obligations under this Agreement supplement and do not limit other obligations Executive has to the Company, including without limitation under the law of trade secrets.  This Agreement shall be enforceable regardless of any claim Executive may have against the Company.  If any provision of this Agreement is held to be unenforceable as written, it shall be enforced to the maximum extent allowed by applicable law.  If any provision of this Agreement is void or is so declared, such provision shall be severed from this Agreement, which shall otherwise remain in full force and effect.  This Agreement shall survive termination of Executive’s employment, however caused.  This Agreement is the final and complete expression of the parties’ agreement on these subjects, and may be amended only in a writing signed by the Company and Executive.

DATED this 28th day of July, 2011.

	
EXECUTIVE:

	  	  
	  	
/s/ Billy K. Hamlin

	  	
Billy K. Hamlin

	  	  	  
	
COMPANY:

	
VU1 CORPORATION

	  	  	  
	  	
By: 

	
 /s/William B. Smith

	  	  	
Name: William B. Smith

	  	  	
Title: Chairman of the Board

  

A-4Exhibit 10.1

AMENDMENT

This Amendment (this “Amendment”) is made and entered into as of July 28, 2011, by and among Gramercy Capital Corp., a Maryland corporation (“Gramercy”), GKK Capital LP, a Delaware limited partnership (the “Partnership”), and Roger M. Cozzi (the “Executive”).

 

WHEREAS, Gramercy and the Executive are parties to that certain Severance Agreement, dated as of October 27, 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 October 27, 2008, between GKK Manager and the Executive (the “Employment Agreement”);

 

WHEREAS, the initial term of each of the Severance Agreement and the Employment Agreement (collectively, the “Agreements”) is scheduled to expire on December 31, 2011; and

 

WHEREAS, the parties hereto desire to extend the initial term of the Agreements for a period of six months on the terms and conditions set forth herein.

 

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

 

1.           The Original Term of each of the Agreements (as defined therein) is hereby extended to continue through June 30, 2012 (the “Expiration Date”) and the second sentence of Section 1 of each of the Agreements, which relates to the automatic extension of the Original Term in certain circumstances, is hereby deleted from each of the Agreements.

 

2.           The Partnership agrees that the Executive will be awarded the following discretionary bonuses pursuant to Section 3(b) of the Employment Agreement: (i) for 2011, a discretionary bonus of at least $1,300,000, provided that the Executive remains employed by Gramercy and/or the Partnership through December 31, 2011, which bonus shall be paid to the Executive in a single-lump sum on or prior to December 31, 2011, provided however, if the Executive does not remain employed by Gramercy and/or the Partnership through December 31, 2011, then a pro rata portion of such bonus (based on the number of days remaining in 2011 following the date of the Executive’s termination of employment as a percentage of the total number of days in 2011) must be repaid by the Executive to the Partnership within 10 days following the Executive’s termination of employment, and (ii) for the period from January 1, 2012 through the Expiration Date, a discretionary bonus of at least $650,000, which shall be paid to the Executive within 30 days following the Expiration Date provided that the Executive remains employed by Gramercy and/or the Partnership through the Expiration Date.  In addition, for purposes of calculating any Prorated Annual Bonus payable to the Executive pursuant to Section 7(a), (c) or (d) of the Employment Agreement as a result of a termination prior to the Expiration Date, the Prior Annual Bonus shall be deemed to be the greater of $1,300,000 or the amount that it otherwise would have been if calculated in accordance with the Employment Agreement.

  

  

  

3.           Notwithstanding the provisions of Section 7(a) of the Employment Agreement, but subject to the provisions of Section 19 of the Employment Agreement, which relate to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), if the Executive becomes entitled to receive the severance payments and benefits pursuant to Section 7(a) of the Employment Agreement as a result of a termination of the Executive’s employment with the Partnership in connection with or within 18 months after a Change-in-Control (as defined in the Employment Agreement), then (i) the Partnership, in lieu of continuing to pay Base Salary (at the rate in effect on the date of termination) to the Executive for a period of 24 months on the same periodic payment dates as payment would have been made to the Executive if the Executive had not been terminated, will pay to the Executive an amount equal to 24 months of the Executive’s Base Salary (at the rate in effect on the date of termination) in a single lump-sum on the 30th day following the Termination Date (as defined in the Employment Agreement) and (ii) the Partnership will pay all amounts owed pursuant to Section 7(a)(ii) (as modified by Section 7(a)(v)) of the Employment Agreement in a single lump-sum on the 30th day following the Termination Date; provided that such Change-in-Control also constitutes a “change in ownership or effective control” of Gramercy or a “change in the ownership of a substantial portion of Gramercy’s assets” for purposes of Section 409A of the Code.  If such Change-in-Control does not constitutes a “change in ownership or effective control” of Gramercy or a “change in the ownership of a substantial portion of Gramercy’s assets” for purposes of Section 409A of the Code, then this Section 3 shall not apply and the provisions of Section 7(a) of the Employment Agreement shall apply in accordance with their terms.  For purposes of clarity, nothing in this Section 3 shall amend or otherwise alter the provisions of Section 7(a)(iii) and (iv) of the Employment Agreement, whether in connection with a termination of employment described in this Section 3 or otherwise.

 

4.           The parties hereto hereby agree that the provisions of Section 7(a) of the Employment Agreement and Section 3 of this Amendment shall survive the Expiration Date to the extent that such provisions relate to a termination of employment described in Section 7(a) of the Employment Agreement that occurs either in connection with or within 18 months after a Change-in-Control (as well as the provisions of Sections 6, 14 and 19 Employment Agreement and Section 5 of this Amendment, to the extent necessary to effectuate the survival of such provisions). As a result, in the event that the Executive’s employment is terminated by the Partnership without Cause or by the Executive for Good Reason in connection with or within 18 months after a Change-in-Control, then the Executive will be entitled to receive the severance benefits and payments set forth in the Employment Agreement, as amended by this Amendment, regardless of whether such termination or Change-in-Control occur before or after the Expiration Date. In addition, the parties hereby agree that a termination of the Executive’s employment under the Employment Agreement will be deemed to have been in connection with a Change-in-Control in the event that it occurs after the signing of a definitive agreement to effectuate a transaction that would constitute a Change-in-Control and prior to the closing of such transaction pursuant to such definitive agreement; provided that such termination will not be deemed to have been in connection with a Change-in-Control if such transaction is not consummated or, when consummated, does not constitute a Change-in-Control.

 

5.           The parties hereto hereby agree that upon a termination of employment described in Section 7(a) of the Employment Agreement, if the Executive’s annual performance bonus for the fiscal year prior to the year that includes the Termination Date had been determined but has not been paid to the Executive as of Termination Date, then such bonus shall be paid to the Executive on the 30th day following the Termination Date or such earlier date as may be required by applicable law.

  

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6.           Gramercy, the Partnership and the Executive hereby acknowledge that they are concurrently entering into an amendment to the LTIP Unit Award Agreement that was entered into as of October 28, 2008 and agree that all references in the Severance Agreement to such LTIP Unit Award Agreement shall be deemed to refer to such agreement, as amended.

 

7.           All other provisions of the Agreements 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 Agreements except to the extent specifically provided for herein.

 

8.           Any controversy or claim arising out of or relating to this Amendment or the breach of this Amendment that is not resolved by the parties hereto 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 parties hereto and judgment may be entered on the arbitrator(s)’ award in any court having jurisdiction.

 

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

 

10.           If any provision of this Amendment (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.

 

11.           This Amendment shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any entity with which or into which Gramercy or the Partnership may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Executive are personal and shall not be assigned by him.  This Amendment shall inure to the benefit of and be enforceable by the Executive’s personal and legal representatives, executors, administrators, assigns, heirs, distributees, devisees and legatees.

 

12.           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.

 

13.           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.

  

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14.           Subject to the provisions of Section 8, the 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 Amendment.

 

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

 

	
GRAMERCY CAPITAL CORP.

	  	  
	
By:

	
/s/ Jon W. Clark

	  	
Name: Jon W. Clark

	  	
Title: Chief Financial Officer

	  	  
	
GKK CAPITAL LP

	  	  
	
By:

	
Gramercy Capital Corp., its general

	
partner

	 
	
By:

	
/s/ Jon W. Clark

	  	
Name: Jon W. Clark

	  	
Title: Chief Financial Officer

	  	  
	
EXECUTIVE

	  	  
	/s/ Roger M. Cozzi
	Roger M. Cozzi

  

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