Document:

Exhibit 10.11

 

GRAMERCY CAPITAL CORP.

1,000,000 SHARES

CONTROLLED
EQUITY OFFERINGSM

SALES AGREEMENT

May 10, 2006

 

CANTOR FITZGERALD &
CO.

110 East 59th Street

New York, NY 10022

Ladies and Gentlemen:

GRAMERCY CAPITAL CORP., a Maryland corporation (the “Company”), GKK Capital LP, a
Delaware limited partnership (the “Operating Partnership”),
and GKK Manager, LLC, a Delaware limited liability company and the manager of
the Company and the Operating Partnership (together with its affiliates, the “Manager”) confirms their respective
agreements (this “Agreement”)
with Cantor Fitzgerald & Co. (“CF&Co”),
as follows:

1. Issuance and
Sale of Shares. The Company agrees that, from time to time during the term
of this Agreement, on the terms and subject to the conditions set forth herein,
it may issue and sell through CF&Co, acting as agent and/or principal, (a) up
to 1,000,000 shares (the “Shares”) of the Company’s common
stock, par value $0.001 per share (the “Common Stock”).
Notwithstanding anything to the contrary contained herein, and provided that
CF&Co complies with the Placement Notice (as defined herein), the parties
hereto agree that compliance with the limitation set forth in this Section 1
on the number and aggregate market value of Shares issued and sold under this
Agreement shall be the sole responsibility of the Company, and CF&Co shall
have no obligation in connection with such compliance. The issuance and sale of
Shares through CF&Co will be effected pursuant to the Registration
Statement (as defined below) filed by the Company and declared effective by the
Securities and Exchange Commission (the “Commission”),
although nothing in this Agreement shall be construed as requiring the Company
to use the Registration Statement to issue Common Stock.

The Company filed
on August 31, 2005, in accordance with the provisions of the Securities
Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the “Securities Act”),
with the Commission a registration statement on Form S-3 (File No. 333-1280130),
including a base prospectus, relating to certain securities, including the
Shares to be issued from time to time by the Company, and which incorporates by
reference documents that the Company has filed or will file in accordance with
the provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (collectively, the “Exchange Act”).
The Company has prepared a prospectus supplement specifically relating to the
Shares (the “Prospectus Supplement”) to the
base prospectus included as part of such registration statement. The Company
has furnished to CF&Co, for use by CF&Co, copies of the prospectus

 

included as part of such
registration statement, as supplemented by the Prospectus Supplement, relating
to the Shares. Except where the context otherwise requires, such registration
statement, as amended when it became effective, including all documents filed
as part thereof or incorporated by reference therein, and including any
information contained in a Prospectus (as defined below) subsequently filed
with the Commission pursuant to Rule 424(b) under the Securities Act
and also including any other registration statement filed pursuant to Rule 462(b) under
the Securities Act, collectively, are herein called the “Registration
Statement,” and the base prospectus, including all documents
incorporated therein by reference, included in the Registration Statement, as
it may be supplemented by the Prospectus Supplement, in the form in which such prospectus and/or Prospectus Supplement
have most recently been filed by the Company with the Commission
pursuant to Rule 424(b) under the Securities Act, together with any
“issuer free writing prospectus,” as defined in Rule 433 of the 1933 Act
Regulations (“Rule 433”), relating to the
Shares that (i) is required to be filed with the Commission by the Company or
(ii) is exempt from filing pursuant to Rule 433(d)(5)(i), in each case in the
form filed or required to be filed with the Commission or, if not required to
be filed, in the form retained in the Company’s records pursuant to Rule
433(g), is herein called the “Prospectus.”
Any reference herein to the Registration Statement, the Prospectus or any
amendment or supplement thereto shall be deemed to refer to and include the
documents incorporated by reference therein, and any reference herein to the
terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and include the filing
after the execution hereof of any document with the Commission deemed to be
incorporated by reference therein. For purposes of this Agreement, all
references to the Registration Statement, the Prospectus or to any amendment or
supplement thereto shall be deemed to include any copy filed with the
Commission pursuant to its Electronic Data Gathering Analysis and Retrieval
System (“EDGAR”).

2. Placements.
Each time that the Company wishes to issue and sell Shares hereunder (each, a “Placement”), it will notify
CF&Co by email notice (or other method mutually agreed to in writing by the
Parties) containing the parameters in accordance with which it desires the
Shares to be sold, which shall at a minimum include the number of Shares (the “Placement Shares”) to be issued,
the time period during which sales are requested to be made, any limitation on
the number of Shares that may be sold in any one day and any minimum price
below which sales may not be made (a “Placement Notice”),
a form of which containing such minimum sales parameters necessary is attached
hereto as Schedule 1. The Placement
Notice shall originate from any of the individuals from the Company set forth
on Schedule 3  (with a copy to each of
the other individuals from the Company listed on such schedule), and shall be
addressed to each of the individuals from CF&Co set forth on Schedule 3, as such Schedule 3 may be amended from time
to time. The Placement Notice shall be effective upon receipt by CF&Co
unless and until (i) in accordance with the notice requirements set forth
in Section 4, CF&Co declines to accept the terms contained
therein for any reason, in its sole discretion, (ii) the entire amount of
the Placement Shares have been sold, (iii) in accordance with the notice
requirements set forth in Section 4, the Company suspends or terminates
the Placement Notice, (iv) the Company issues a subsequent Placement
Notice with parameters superseding those on the earlier dated Placement Notice,
or (iv) the Agreement has been terminated under the provisions of Section 10.
 The amount of any discount, commission
or other compensation to be paid by the Company to CF&Co in connection with
the sale of the Placement Shares shall be calculated in accordance with the
terms set forth in Schedule 2. It
is expressly acknowledged and agreed that neither the Company nor CF&Co
will have any obligation whatsoever with respect to a Placement or any
Placement Shares unless and until the Company delivers a Placement Notice to
CF&Co and CF&Co does not decline such Placement Notice pursuant to the terms
set forth above, and then only upon the terms specified therein and herein. In
the event of

 2
 

 

a conflict between the
terms of this Agreement and the terms of a Placement Notice, the terms of the
Placement Notice will control.

3. Sale of
Placement Shares by CF&Co. Subject to the terms and conditions herein
set forth, upon the Company’s issuance of a Placement Notice, and unless the
sale of the Placement Shares described therein has been declined, suspended, or
otherwise terminated in accordance with the terms of this Agreement, CF&Co,
for the period specified in the Placement Notice, will use its commercially
reasonable efforts consistent with its normal trading and sales practices to
sell such Placement Shares up to the amount specified, and otherwise in accordance
with the terms of such Placement Notice. CF&Co will provide written
confirmation to the Company no later than the opening of the Trading Day (as
defined below) immediately following the Trading Day on which it has made sales
of Placement Shares hereunder setting forth the number of Placement Shares sold
on such day, the compensation payable by the Company to CF&Co pursuant to Section 2
with respect to such sales, and the Net Proceeds (as defined below) payable to
the Company, with an itemization of the deductions made by CF&Co (as set
forth in Section 5(a)) from the gross proceeds that it receives from such
sales. After consultation to the Company and subject to the terms of the
Placement Notice, CF&Co may sell Placement Shares by any method permitted
by law deemed to be an “at the market” offering as defined in Rule 415 of
the Securities Act, including without limitation sales made directly on the New
York Stock Exchange (the “Exchange”), on any other existing
trading market for the Common Stock or to or through a market maker. After
consultation with the Company and subject to the terms of the Placement Notice,
CF&Co may also sell Placement Shares in privately negotiated transactions. The
Company acknowledges and agrees that (i) there can be no assurance that
CF&Co will be successful in selling Placement Shares, and (ii) CF&Co
will incur no liability or obligation to the Company or any other person or
entity if it does not sell Placement Shares for any reason other than a failure
by CF&Co to use its commercially reasonable efforts consistent with its
normal trading and sales practices to sell such Placement Shares as required
under this Section 3. For the purposes hereof, “Trading Day” means any day on which
Common Stock is purchased and sold on the principal market on which the Common
Stock is listed or quoted.

4. Suspension
of Sales. The Company or CF&Co may, upon notice to the other party in
writing (including by email correspondence to each of the individuals of the
other Party set forth on Schedule 3, if
receipt of such correspondence is actually acknowledged by any of the
individuals to whom the notice is sent, other than via auto-reply) or by
telephone (confirmed immediately by verifiable facsimile transmission or email
correspondence to each of the individuals of the other Party set forth on Schedule 3), suspend any sale of
Placement Shares; provided, however,
that such suspension shall not affect or impair either party’s obligations with
respect to any Placement Shares sold hereunder prior to the receipt of such
notice. Except as set forth in Section 11 herein, each of the
Parties agrees that no such notice under this Section 4 shall be
effective against the other unless it is made to one of the individuals named
on Schedule 3 hereto, as such Schedule
may be amended from time to time.

5. Settlement.

(a) Settlement of Placement Shares. Unless otherwise
specified in the applicable Placement Notice, settlement for sales of Placement
Shares will occur on the third (3rd) Trading Day (or such earlier day as is
industry practice for regular-way

 3
 

 

trading)
following the date on which such sales are made (each, a “Settlement Date”). The amount of
proceeds to be delivered to the Company on a Settlement Date against receipt of
the Placement Shares sold (the “Net
Proceeds”) will be equal to the aggregate sales price received
by CF&Co at which such Placement Shares were sold, after deduction for (i) CF&Co’s
commission, discount or other compensation for such sales payable by the
Company pursuant to Section 2 hereof, (ii) any other amounts
due and payable by the Company to CF&Co hereunder pursuant to Section 7(g) (Expenses)
hereof, and (iii) any transaction fees imposed by any governmental or
self-regulatory organization in respect of such sales.

(b) Delivery
of Placement Shares. On or before each Settlement Date, the Company will,
or will cause its transfer agent to, electronically transfer the Placement
Shares being sold by crediting CF&Co’s or its designee’s account at The
Depository Trust Company through its Deposit and Withdrawal at Custodian System
or by such other means of delivery as may be mutually agreed upon by the
parties hereto which in all cases shall be freely tradeable, transferable,
registered shares in good deliverable form. On each Settlement Date, CF&Co
will deliver the related Net Proceeds in same day funds to an account
designated by the Company on, or prior to, the Settlement Date. The Company
agrees that if the Company defaults in its obligation to deliver Placement
Shares on a Settlement Date, the Company agrees that in addition to and in no
way limiting the rights and obligations set forth in Section 9(a) (Indemnification
and Contribution) hereto, it will (i) hold CF&Co harmless against any
loss, claim, damage, or expense (including reasonable out-of-pocket fees and
expenses of external counsel), as incurred, arising out of or in connection
with such default by the Company and (ii) pay to CF&Co any commission,
discount, or other compensation to which it would otherwise have been entitled
absent such default.

6. Representations
and Warranties.

(a) The Company and the Operating Partnership each severally
represents and warrants to, and agrees with, CF&Co that as of the date of
this Agreement and as of each Representation Date (as defined in Section 7(m) below)
on which a certificate is required to be delivered pursuant to Section 7(m) of
this Agreement and as of each Applicable Time, as the case may be:

(1)                                  Registration
Statement and Prospectus. The Company meets the requirements for use of Form S-3
under the Securities Act. The Registration Statement has been filed with the
Commission and has been declared effective under the Securities Act. The
Registration Statement or Prospectus has named CF&Co as an underwriter,
acting as principal and/or agent that the Company might engage in the section
entitled “Plan of Distribution.”  The
Company has not received, and has no notice of, any order of the Commission
preventing or suspending the use of the Registration Statement, or threatening
or instituting proceedings for that purpose. Copies of the Registration
Statement, the Prospectus, and any such amendments or supplements and all
documents incorporated by

 4
 

 

reference
therein that were filed with the Commission on or prior to the date of this
Agreement have been delivered, or made available through EDGAR, to CF&Co
and their counsel. The Company has not distributed and will not distribute any
offering material in connection with the offering or sale of the Placement
Shares other than the Registration Statement or the Prospectus. The Common
Stock is currently listed on the Exchange under the trading symbol “GKK.”

(2)                                  No
Misstatement or Omission. The Registration Statement, at each deemed
effective date with respect to CF&Co pursuant to Rule 430B(f)(2) of
the Securities Act will comply in all material respects with the requirements
of the Securities Act and did not, or will not, contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading. The Prospectus and
any amendment or supplement thereto, on the date thereof at each Applicable
Time and at Settlement Date, did not or will not include an untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The foregoing shall not apply to statements in, or omissions
from, any such document made in reliance upon, and in conformity with,
information furnished to the Company by CF&Co specifically for use in the
preparation thereof.

(3)                                  Company
Authorization of Agreement. This Agreement and the transactions
contemplated herein have been duly and validly authorized by the Company and
this Agreement has been duly and validly executed and delivered by the Company.

(4)                                  Operating
Partnership Authorization of Agreement. This Agreement and the transactions
contemplated herein have been duly and validly authorized by the Operating
Partnership and this Agreement has been duly and validly executed and delivered
by the Operating Partnership.

(5)                                  Authorization
of Management Agreement and Origination Agreement. The amended and restated
management agreement (the “Management
Agreement”), effective as of April 19, 2006, among the
Company, the Operating Partnership and the Manager has been duly authorized,
executed and delivered by each of the Company and the Operating Partnership and
constitutes a valid and binding agreement of each of the Company and the
Operating Partnership enforceable in accordance with its terms, except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or other laws affecting enforcement of creditors’ rights or by
general equitable principles. The amended and restated origination agreement
(the “Origination Agreement”),
effective as of April 19, 2006, among the Company, the Operating
Partnership and SL Green Operating Partnership, L.P. has been

 5
 

 

duly
authorized, executed and delivered by each of the Company and the Operating
Partnership and constitutes a valid and binding agreement of each of the
Company and the Operating Partnership enforceable in accordance with its terms,
except to the extent that enforcement thereof may be limited by bankruptcy,
insolvency, reorganization or other laws affecting enforcement of creditors’
rights or by general equitable principles.

(6)                                  Financial
Statements. The financial statements of the Company and its subsidiaries,
together with the related schedules (if any) and notes (the “Company Financial Statements”), and any
financial statements required by Rule 3-14 of Regulation S-X (the “Acquisition Financial Statements”),
included in the Registration Statement and the Prospectus present fairly the
financial position of the Company and its consolidated subsidiaries at the
dates indicated, or with respect to the Acquisition Financial Statements, the
respective property or tenant; and all such financial statements have been
prepared in conformity with GAAP applied on a consistent basis (except as
otherwise noted herein) throughout the periods involved and comply with all
applicable accounting requirements under the Securities Act. The supporting
schedules, if any, included in the Registration Statement present fairly, in
accordance with GAAP, the information required to be stated therein. There are
no financial statements or schedules required to be included in the Prospectus
which are not so included. The unaudited pro forma financial information
(including the related notes) included in the Prospectus and any preliminary
Prospectus complies as to form in all material respects with the applicable
accounting requirements of the Securities Act, and management of the Company
believes that the assumptions underlying the pro forma adjustments are
reasonable. Such pro forma adjustments have been properly applied to the
historical amounts in the compilation of the information and such information
fairly presents with respect to the Company and its consolidated subsidiaries,
the financial position, results of operations and other information purported
to be shown therein at the respective dates and for the respective periods
specified. No pro forma financial information is required to be included in the
Prospectus which is not so included.

(7)                                  No
Material Adverse Change in Business. Since the respective dates as of which
information is given in the Registration Statement and the Prospectus (in each
case exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement), except as otherwise stated therein, (A) there has been
no material adverse change or any development involving a prospective material
adverse change in the operations, condition (financial or otherwise), or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries, including, without limitation, the Operating Partnership,
considered as one enterprise, whether or not arising in the ordinary course of
business (a

 6
 

 

“Material Adverse Effect”),
and (B) since the date of the latest balance sheet presented in the
Registration Statement and Prospectus, neither the Company nor any of its
subsidiaries has incurred or undertaken any liabilities or obligations, direct
or contingent, which are material to the Company and its subsidiaries considered
as one enterprise, except for liabilities or obligations which are described in
the Registration Statement and the Prospectus.

(8)                                  Good
Standing of the Company and the Operating Partnership. The Company has been
duly organized and is validly existing as a corporation in good standing under
the laws of the State of Maryland and has power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement;
and the Operating Partnership has been duly formed and is validly existing as a
limited partnership in good standing under the laws of the State of Delaware
and has authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus. Each of the Company and the Operating
Partnership is duly qualified as a foreign corporation to transact business and
is in good standing in the State of New York and in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except (solely in the case of
jurisdictions other than the State of New York) where the failure so to qualify
or to be in good standing would not result in a Material Adverse Effect.

(9)                                  The
Partnership Agreement. The Third Amended and Restated Agreement of Limited
Partnership of the Operating Partnership (the “Partnership Agreement”) has been duly and validly
authorized, executed and delivered by the Company and is a valid and binding
agreement, enforceable against the Company in accordance with its terms, except
to the extent that enforcement thereof may be limited by bankruptcy,
insolvency, reorganization or other laws affecting enforcement of creditors’
rights or by general equitable principles. The Partnership Agreement has been
duly executed and delivered by the other parties thereto and, to the Company’s
knowledge, is a valid and binding agreement enforceable against such parties in
accordance with its terms, except to the extent that enforcement thereof may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
enforcement of creditors’ rights or by general equitable principles.

(10)                            Good
Standing of Subsidiaries. Each subsidiary of the Company listed on Exhibit A hereto has been duly
organized and is validly existing as a corporation, limited or general
partnership or limited liability company, as the case may be, in good standing
under the laws of the jurisdiction of its organization, has power and authority
to conduct its business as described in the Prospectus and is duly qualified as
a foreign corporation, limited or

 7
 

 

general
partnership or limited liability company, as the case may be, to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement and the Prospectus, all of
the issued and outstanding stock of each such subsidiary that is a corporation,
all of the issued and outstanding partnership interests of each such subsidiary
that is a limited or general partnership and all of the issued and outstanding
limited liability company interests, membership interests or other similar
interests of each such subsidiary that is a limited liability company have been
duly authorized and validly issued, and, in the case of each subsidiary that is
a corporation, are fully paid and nonassessable and are owned by the Company or
the Operating Partnership, directly or indirectly, free and clear of any lien;
and none of the outstanding shares of stock, partnership interests or limited
liability company interests, membership interests or other similar interests of
any such subsidiary was issued in violation of any preemptive rights, rights of
first refusal or other similar rights of any securityholder of such subsidiary
or any other person. The only subsidiaries of the Company are the subsidiaries
listed on Exhibit A hereto
and Exhibit A accurately sets
forth whether each such subsidiary is a corporation, limited or general
partnership or limited liability company and the jurisdiction of organization
of each such subsidiary and, in the case of any subsidiary which is a
partnership or limited liability company, its general partners and managing
members, respectively. Any subsidiaries of the Company which are “significant
subsidiaries” as defined by Rule 1-02 of Regulation S-X are listed
on Exhibit A hereto under the caption “Significant Subsidiaries.”

(11)                            Capitalization.
The authorized, issued and outstanding stock of the Company is as set forth
under the caption “Capitalization” in the Prospectus. The issued and
outstanding shares of stock of the Company have been duly authorized and are
validly issued, fully paid and nonassessable; and none of the outstanding
shares of stock of the Company was issued in violation of any preemptive
rights, rights of first refusal or other similar rights of any securityholder
of the Company or any other person. The authorized, issued and outstanding
units of partnership interest in the Operating Partnership, including the Class B
Limited Partner interests (the “OP Units”),
have been duly authorized and validly issued; and all of such OP Units have
been sold in compliance with applicable laws (including, without limitation,
federal and state securities laws).

(12)                            Authorization
of Securities. The Placement Shares have been duly authorized for issuance
and sale to CF&Co pursuant to this Agreement and, when issued and delivered
by the Company pursuant to this

 8
 

 

Agreement
against payment of the consideration set forth herein, will be validly issued,
fully paid and nonassessable; no holder of the Placement Shares is or will be
subject to personal liability by reason of being such a holder; and the
issuance of the Placement Shares is not subject to any preemptive right, right
of first refusal or other similar right of any securityholder of the Company or
any other person, except for the rights of SL Green Realty Corp. (“SL Green”) pursuant to the Origination
Agreement, as described in the Prospectus.

(13)                            Absence
of Defaults and Conflicts. Neither the Company, the Operating Partnership
nor any of their respective subsidiaries is in violation of its Organizational
Documents or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any Company Document, except for
such defaults that would not result in a Material Adverse Effect. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein and in the Registration Statement and the
Prospectus (including the issuance and sale of the Securities and the use of
the proceeds from the sale of the Securities as described in the Prospectus
under the caption “Use of Proceeds”) and compliance by each of the Company and
the Operating Partnership with its obligations under this Agreement do not and
will not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default under, or result in
the creation or imposition of any Lien upon any property or assets of the
Company, the Operating Partnership or any of their respective subsidiaries
pursuant to any Company Documents, nor will such action result in any violation
of the provisions of the Organizational Documents of the Company, the Operating
Partnership or any of their respective subsidiaries or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any of its subsidiaries or any of their respective assets,
properties or operations.

(14)                            Absence
of Proceedings. There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or body,
domestic or foreign, now pending, against or affecting the Company, the
Operating Partnership or any of their respective subsidiaries or which has as a
subject thereof, any officer or director of the Company in their capacity as
such or as would otherwise be required to be disclosed in the Prospectus. To
the knowledge of the Company or the Operating Partnership, there is no action,
suit, proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, threatened, against or
affecting the Company, the Operating Partnership or any of their respective
subsidiaries except as would not have a Material Adverse Effect or which has as
a subject thereof, any officer or director of the Company in their capacity as
such or as would otherwise be required to be disclosed in the Prospectus.

 9

 

(15)                            Independent
Public Accountant. Ernst & Young LLP (“E&Y”), who certified the financial statements and
supporting schedules included in the Registration Statement and the Prospectus,
are independent public accountants as required by the Securities Act and the
Exchange Act.

(16)                            Accuracy
of Descriptions and Exhibits. The information in the Prospectus under the
captions “Description of Common Stock,” “Certain Provisions of Maryland Law and
of Our Charter and Bylaws,” “The Operating Partnership Agreement” and “Material
U.S. Federal Income Tax Considerations” is correct in all material respects;
all descriptions in the Registration Statement and the Prospectus of any
Company Documents are accurate in all material respects; and there are no
franchises, contracts, indentures, mortgages, deeds of trust, loan or credit
agreements, bonds, notes, debentures, evidences of indebtedness, leases or
other instruments or agreements required to be described or referred to in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which have not been so described and filed as required. The
statistical and market-related data included in the Prospectus are based on or
derived from sources which the Company and the Operating Partnership believe to
be reliable and accurate.

(17)                            Possession
of Intellectual Property. The Company, the Operating Partnership and their
respective subsidiaries own or possess or have the right to use on reasonable
terms all patents, patent rights, patent applications, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names, service names and other intellectual
property (collectively, “Intellectual
Property”) necessary to carry on their respective businesses as
described in the Prospectus and as proposed to be conducted; and neither the
Company, the Operating Partnership nor any of their respective subsidiaries has
received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances which would render any Intellectual Property invalid
or inadequate to protect the interest of the Company, the Operating Partnership
or any of their respective subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, individually or in the aggregate, would result in a
Material Adverse Effect.

(18)                            Absence
of Further Requirements. (A) No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of,
any court or governmental authority or agency, domestic or foreign, (B) no
authorization, approval, vote or other consent of any stockholder or creditor
of the Company or the Operating Partnership, (C) no waiver or consent
under any Company Document, and (D) no authorization,

 10
 

 

 

approval, vote
or other consent of any other person or entity, is necessary or required for
the performance by the Company or the Operating Partnership of their respective
obligations under this Agreement, for the offering, issuance, sale or delivery
of the Securities hereunder, or for the consummation of any of the other
transactions contemplated by this Agreement, in each case on the terms
contemplated by the Prospectus, except such as have been already obtained under
the 1933 Act or the 1933 Act Regulations or such as may be required under state
securities laws.

(19)                            Possession
of Licenses and Permits. The Company, the Operating Partnership and their
respective subsidiaries possess such permits, licenses, approvals, consents and
other authorizations issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies (collectively, “Governmental Licenses”) as are necessary to conduct the
business now operated by them; the Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental Licenses,
except where the failure so to comply would not, individually or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have a Material Adverse Effect; and neither the
Company, the Operating Partnership nor any of their respective subsidiaries has
received any notice of proceedings relating to the revocation or modification
of any such Governmental Licenses which, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.

(20)                            Absence
of Registration Rights. Except as disclosed in the Prospectus, there are no
persons with registration rights or other similar rights to have any securities
(debt or equity) (A) registered pursuant to the Registration Statement or
included in the offering contemplated by this Agreement or (B) otherwise
registered by the Company under the 1933 Act. There are no persons with
tag-along rights or other similar rights to have any securities (debt or
equity) included in the offering contemplated by this Agreement or sold in
connection with the sale of Securities by the Company pursuant to this
Agreement.

(21)                            Joint
Ventures. All of the joint ventures in which the Company or any subsidiary
owns any interest (the “Joint Ventures”)
are listed in Exhibit B
hereto.

(22)                            1934
Act Registration; New York Stock Exchange. The Common Stock has been
registered pursuant to Section 12(b) of the 1934 Act. The outstanding
shares of Common Stock and the Securities being sold hereunder will have been
approved for listing, subject only to official notice of issuance, on the NYSE.

 11
 

 

 

(23)                            NASD
Matters. All of the information (including, but not limited to, information
regarding affiliations, security ownership and trading activity) provided to
CF&Co or to counsel for CF&Co by the Company, its officers and
directors and the holders of any securities (debt or equity) or options to
acquire any securities of the Company in connection with letters, filings or
other supplemental information provided to NASD Regulation Inc. pursuant to
NASD Conduct Rule 2710 or 2720 is true, complete and correct.

(24)                            Insurance.
The Company, the Operating Partnership and each of their respective
subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent and customary
in the businesses in which they are engaged; all policies of insurance and any
fidelity or surety bonds insuring the Company, the Operating Partnership or any
of their respective subsidiaries or their respective businesses, assets,
employees, officers and directors are in full force and effect; the Company,
the Operating Partnership and their respective subsidiaries are in compliance
with the terms of such policies and instruments in all material respects; there
are no claims by the Company, the Operating Partnership or any of their
respective subsidiaries under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation of
rights clause; neither the Company, the Operating Partnership nor any such
subsidiary has been refused any insurance coverage sought or applied for; and
neither the Company, the Operating Partnership nor any such subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.

(25)                            Disclosure
Controls and Procedures. The Company and the Operating Partnership have
established and maintain disclosure controls and procedures (as such term is
defined in Rule 13a-15(e) under the Exchange Act) that (i) are
designed to ensure that material information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company’s management, including the Company’s
principal executive officer and principal financial officer, particularly
during the preparation of the reports that it files or submits under the
Exchange Act; and (ii) are effective to ensure that information required
to be disclosed by the Company in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the Commission’s rules and forms.

(26)                            Accounting
Controls. The Company and its subsidiaries maintain a system of internal
control over financial reporting sufficient to provide reasonable assurance
that financial reporting is reliable and financial

 12
 

 

 

statements for
external purposes are prepared in accordance with GAAP and includes policies
and procedures that (i) pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with GAAP, and to maintain asset
accountability; (iii) access to assets is permitted only in accordance
with management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

(27)                            Absence
of Manipulation. Each of the Company and the Operating Partnership has not
taken and will not take, directly or indirectly, any action designed to or that
would constitute or that might reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security to facilitate the
sale or resale of the Shares.

(28)                            ERISA.
Except as set forth in the Company’s financial statements, each of the Company
and the Operating Partnership does not have any material liabilities under the
Employee Retirement Income Security Act of 1974, as amended, or Section 4975
of the Internal Revenue Code of 1986, as amended from time to time

(29)                            REIT
Status. Commencing with its taxable year ended December 31, 2004, the
Company has been organized and operated in conformity with the requirements for
qualification and taxation as a real estate investment trust (“REIT”) under the Internal Revenue Code
of 1986, as amended, and the regulations and published interpretations
thereunder (collectively, the “Code”),
and the Company’s current and proposed method of operations as described in the
Prospectus will enable it to continue to meet the requirements for
qualification and taxation as a REIT under the Code.

(30)                            Tax
Returns. All tax returns required to be filed as of the date hereof by the
Company and each of is subsidiaries have been timely filed (or valid extensions
to such filings have been obtained), all such tax returns are true, correct and
complete in all material respects, and all material taxes and other assessments
of a similar nature (whether imposed directly or through withholding) including
any interest, additions to tax or penalties applicable thereto due or claimed
to be due from such entities have been paid, other than those being contested
in good faith and for which adequate reserves have been provided.

(31)                            Related
Party Transactions. There are no business relationships or related-party
transactions involving the Company, the Operating Partnership or the Manager
required to be described in the Prospectus which have not been so described as
required.

 13
 

 

 

(32)                            No
Unlawful Contributions or Other Payments. Neither the Company, the
Operating Partnership nor any subsidiary nor, to the best of the Company’s
knowledge, any employee or agent of the Company, the Operating Partnership or
any subsidiary, has made any contribution or other payment to any official of,
or candidate for, any federal, state or foreign office in violation of any law
or of the character required to be disclosed in the Prospectus.

(33)                            Investment
Company Act. The Company is not, and upon the issuance and sale of the
Placement Shares, as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus, will not be, an “investment
company” or an entity “controlled” by an “investment company,” as such terms
are defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”).

(34)                            Brokers
and Finders. Neither the Company, the Operating Partnership nor any subsidiary
has incurred any liability for a fee, commission or other compensation on
account of the employment of a broker or finder in connection with the
transactions contemplated by this Agreement other than as contemplated hereby.

(35)                            No
Prohibition on Subsidiaries from Paying Dividends or Making Other Distributions.
No subsidiary is currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distribution on such subsidiary’s
capital stock or other equity interests, from repaying to the Company any loans
or advances to such subsidiary from the Company or from transferring any of
such subsidiary’s property or assets to the Company or any other Subsidiary.

(36)                            Title
to Real and Personal Property. The Company and its subsidiaries, including
the Operating Partnership, have (or in the case of a Joint Venture, such
limited partnership, limited liability company or other joint venture entity
has) good and marketable title in fee simple to, or a valid leasehold interest
in, any real property currently leased or owned or controlled by them, or to be
leased or owned or to be controlled by them (collectively, the “Real
Property”) and good and marketable title to any and all personal property
owned by the Company or any of its Subsidiaries that is material to the
business of the Company or the Operating Partnership, in each case free and
clear of all liens, encumbrances and defects, except as described in the
Prospectus or such as would not reasonably be expected to result in a Material
Adverse Effect; and any real property, buildings and equipment held under lease
by the Company and its subsidiaries are held by them under valid, subsisting
and enforceable leases (the “Leases”) with such exceptions as are
disclosed in the Prospectus or such as would not reasonably be expected to
result in a Material Adverse Effect; (ii) neither the Company nor any of
its Subsidiaries has received notice of any claim that has been or may be

 14
 

 

 

asserted by
anyone adverse to the rights of the Company or any subsidiary with respect to
any such Real Properties, personal property or Leases or affecting or
questioning the rights of the Company to the continued ownership, lease,
possession or occupancy of such Real Properties, personal property or Leases,
except for such claims that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; (iii) no person
or entity, including, without limitation, any tenant under the leases, if any,
for the Real Properties has an option or right of first refusal or any other
right to purchase any of such Real Properties, except as disclosed in the
Prospectus; (iv) all of the Leases are in full force and effect, except
where the failure to be in full force or effect would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, and
neither the Company nor any of its subsidiaries is in default in the payment of
any amounts due under any such Leases or in any other default thereunder and
neither the Company nor any of its subsidiaries knows or an event which, with
the passage of time or the giving of notice or both, would constitute a default
under any such Lease, except such defaults that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect; and (v) there
is no pending or, to the knowledge of the Company or its subsidiaries,
threatened condemnation, zoning change, or other proceeding or action that
would in any manner affect the size of, use of, improvements on, construction
on or access to any Real Property, except such proceedings or actions that,
either individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.

(37)                            Title
Insurance. The Company and its subsidiaries or as applicable, a Joint
Venture, has either (i) an owner’s or leasehold title insurance policy,
from a title insurance company licensed to issue such policy, on any Real
Property, that insures the fee or leasehold interest, as the case may be, which
policies include only commercially reasonable exceptions, and with coverages in
amounts at least equal to amounts that the Company believes are generally
commercially reasonable in the markets where the Real Properties are located or
(ii) with respect to mortgage loans extended by the Company and its
subsidiaries, the Company or its subsidiary has one or more lender’s title
insurance policies insuring the lien of the mortgages encumbering the real
property underlying such loans with coverages, in the aggregate, equal to at
least the maximum aggregate principal amount of such loan.

(38)                            Compliance
with Environmental Laws. Except to an extent that would not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect or as otherwise disclosed in the Prospectus: (i) neither the
Company nor any of its subsidiaries nor, to the knowledge of the Company, any
other owners of the Real Property at any time, or to the knowledge of the
Company, any other party has at any time, handled, stored, treated,
transported, manufactured, spilled, leaked, or discharged,

 15
 

 

 

dumped,
transferred or otherwise disposed of or dealt with, Hazardous Materials (as
hereinafter defined) on, to or from any Real Property, other than by any such
action taken in material compliance with all applicable Environmental Statutes
(as hereinafter defined) or by the Company, any of its subsidiaries or any
other party in connection with the ordinary use of residential, retail or
commercial properties owned by the Company or any subsidiary; (ii) the
Company and its subsidiaries do not intend to use the Real Property or any
subsequently acquired properties for the purpose of handling, storing,
treating, transporting, manufacturing, spilling, leaking, discharging, dumping,
transferring or otherwise disposing of or dealing with Hazardous Materials
other than by any such action taken in material compliance with all applicable
Environmental Statues or by the Company, any of its subsidiaries or, to the
knowledge of the Company, any other party in connection with the ordinary use
of residential, retail or commercial properties owned by the Company or any
subsidiary; (iii) the Company and the Operating Partnership do not know of
any seepage, leak, discharge, release, emission, spill, or dumping of Hazardous
Materials from the Real Property into waters on or adjacent to the Real
Property or from the Real Property onto any real property owned or occupied by
any other party, or onto lands from which Hazardous Materials might seep, flow
or drain into such waters other than in material compliance with Environmental
Statutes; (iv) neither the Company nor any of its subsidiaries has
received any notice of, or has knowledge of, any occurrence or circumstance
which, with notice or passage of time or both, would give rise to a claim under
or pursuant to any U.S. federal, state or local environmental statute or
regulation or under common law, pertaining to Hazardous Materials on or
originating from any of the Real Property or arising out of the conduct of the
Company or any of its subsidiaries, including without limitation a claim under
or pursuant to any Environmental Statute (as hereinafter defined); and (v) neither
the Real Property is included nor, to the Company’s or the Operating
Partnership’s knowledge, is proposed for inclusion on the National Priorities
List issued pursuant to CERCLA (as hereinafter defined) by United States
Environmental Protection Agency (the “EPA”) or, to the Company’s or to the
Operating Partnership’s knowledge, proposed for inclusion on any similar list
or inventory issued pursuant to any other Environmental Statute or issued by
any other governmental authority.

As used
herein, “Hazardous Materials”
shall include, without limitation, any flammable explosives, radioactive
materials, hazardous materials, hazardous wastes, toxic substances, or related
materials, asbestos or any hazardous material as defined by any U.S. federal,
state or local environmental law, ordinance, rule or regulation including
without limitation the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Sections 9601-9675 (“CERCLA”), the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Sections 1801-1819, the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Sections 6901-6992K,
the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.

 16
 

 

 

Sections 11001-11050, the Toxic
Substances Control Act, 15 U.S.C. Sections 2601-2671, the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections 136-136y,
the Clean Air Act, 42 U.S.C. Sections 7401-7642, the Clean Water Act
(Federal Water Pollution Control Act), 33 U.S.C. Sections 1251-1387, the
Safe Drinking Water Act, 42 U.S.C. Sections 300f-330j-26, and the
Occupational Safety and Health Act, 29 U.S.C. Sections 651-678, as any of
the above statutes may be amended from time to time, and in the regulations
promulgated pursuant to each of the foregoing (individually, an “Environmental Statute”) or by any governmental
authority.

(39)                            Compliance
with ADA. The Company and its subsidiaries and each Real Property are
currently in compliance with all presently applicable provisions of the
Americans with Disabilities Act, as amended, except for any such non-compliance
that would not, individually or in aggregate, reasonably be expected to have a
Material Adverse Effect.

(40)                            Sarbanes-Oxley
Act. The Company and each of the Company’s directors and officers, in their
capacities as such, are in full compliance with all applicable provisions of
the Sarbanes-Oxley Act and the rules and regulations promulgated in
connection therewith, including Section 402 related to loans and Sections
302 and 906 related to certifications.

(41)                            S-3
Eligibility. The conditions for the use by the Company of a registration
statement on Form S-3 have been satisfied and the Company is
entitled to use such form for the transactions contemplated herein.

(b) Representations
and Warranties by the Manager. The Manager represents and warrants to
CF&Co, and agrees with, CF&Co that as of the date of this Agreement and
as of each Representation Date (as defined in Section 7(m) below)
on which a certificate is required to be delivered pursuant to Section 7(m) of
this Agreement, as the case may be:

(1)                                  Accurate
Disclosure. The information regarding the Manager in the Prospectus is true
and correct in all material respects.

(2)                                  Good
Standing of the Manager. The Manager has been duly formed and is validly
existing as a limited liability company in good standing under the laws of the
State of Delaware and has power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and to
enter into and perform its obligations under this Agreement, the Management Agreement,
the amended and restated asset servicing agreement between the Manager and SLG
Management Services LLC effective as of April 19, 2006 (the “Asset Servicing Agreement”) and the
amended and restated outsource agreement between the Manager and SL Green
Operating Partnership, L.P. effective as of April 19, 2006 (the “Outsource Agreement”); and the Manager
is duly qualified as a foreign limited liability company to transact business
and is in good standing in each other jurisdiction in which such qualification
is required,

 17
 

 

 

whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.

(3)                                  Authorization
of Management Agreement, Asset Servicing Agreement and Outsource Agreement.
Each of this Agreement, the Management Agreement, the Asset Servicing Agreement
and the Outsource Agreement (collectively, the “Manager Agreements”) has been duly authorized, executed
and delivered by the Manager and constitutes a valid and binding agreement of
the Manager enforceable in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization or
other laws affecting enforcement of creditors’ rights or by general equitable
principles.

(4)                                  Absence
of Defaults and Conflicts. The Manager is not in violation of its
Organizational Documents or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any Company Document,
Manager Agreement or otherwise, except for such defaults that would not result
in a Material Adverse Effect. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein and in
the Manager Agreements and compliance by the Manager with its obligations under
this Agreement do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any Lien upon any
property or assets of the Manager, nor will such action result in any violation
of the provisions of the Organizational Documents of the Manager or any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Manager or any of its subsidiaries or any of their
respective assets, properties or operations.

(5)                                  Absence
of Proceedings. There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the Manager,
threatened, against or affecting the Manager.

(6)                                  Absence
of Further Requirements. (A) No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of,
any court or governmental authority or agency, domestic or foreign, (B) no
authorization, approval, vote or other consent of any stockholder or creditor
of the Manager, (C) no waiver or consent under any Company Document, and (D) no
authorization, approval, vote or other consent of any other person or entity,
is necessary or required for the performance by the Manager of its obligations
under this Agreement or the Manager Agreements and the transactions
contemplated thereby, in each case on the

 

 18

 

terms
contemplated by the Prospectus, except such as have been already obtained.

(7)                                  Possession
of Licenses and Permits. The Manager possesses such Governmental Licenses
issued by the appropriate federal, state, local or foreign regulatory agencies
or bodies necessary to conduct its business as described in the Prospectus; the
Manager is in material compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
individually or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not have a Material Adverse
Effect; and the Manager has not received any notice of proceedings relating to
the revocation or modification of any such Governmental Licenses which,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.

(8)                                  Investment
Advisers Act. The Manager is not prohibited by the Investment Advisers Act
of 1940, as amended (the “Advisers Act”),
or the rules and regulations thereunder, from performing under the
Management Agreement as contemplated by the Management Agreement and as
described in the Prospectus.

7. Covenants of the
Company. Each of the Company and the Operating Partnership, severally,
covenants and agrees with CF&Co as follows:

(a) Registration
Statement Amendments. After the date of this Agreement and during any
period in which a Prospectus relating to any Placement Shares is required to be
delivered by CF&Co under the Securities Act (including in circumstances
where such requirement may be satisfied pursuant to Rule 172 under the
Securities Act), (i) the Company will notify CF&Co promptly of the
time when any subsequent amendment to the Registration Statement, other than
documents incorporated by reference, has been filed with the Commission and/or
has become effective or any subsequent supplement to the Prospectus has been
filed and of any request by the Commission for any amendment or supplement to
the Registration Statement or Prospectus or for additional information, (ii) the
Company will prepare and file with the Commission, promptly upon CF&Co’s
request, any amendments or supplements to the Registration Statement,
Prospectus or free writing prospectus that, in the opinion of external counsel
for CF&Co, is necessary in order that the Registration Statement or
Prospectus will not include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein not
misleading (with respect to the Prospectus only, in the light of the
circumstances existing at the time it is delivered to a purchaser), or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the Securities Act in connection with the
distribution of the Placement Shares by

 19
 

 

 

CF&Co (provided,
however, that the failure of CF&Co to make such request shall
not relieve the Company of any obligation or liability hereunder, or affect
CF&Co’s right to rely on the representations and warranties made by the
Company in this Agreement); (iii) the Company will not file any amendment
or supplement to the Registration Statement or Prospectus or prepare any free
writing prospecuts relating to the Placement Shares unless a copy thereof has
been submitted to CF&Co within a reasonable period of time before the
filing and CF&Co has not reasonably objected thereto (provided, however, that the failure of
CF&Co to make such objection shall not relieve the Company of any
obligation or liability hereunder, or affect CF&Co’s right to rely on the
representations and warranties made by the Company in this Agreement) and the
Company will furnish to CF&Co at the time of filing thereof a copy of any
document that upon filing is deemed to be incorporated by reference into the
Registration Statement or Prospectus, except for those documents available via
EDGAR; and (iv) the Company will promptly effect the filing or cause each
amendment or supplement to the Prospectus to be filed with the Commission as
required pursuant to the applicable paragraph of Rule 424(b) of the
Securities Act or, in the case of any document to be incorporated therein by
reference, to be filed with the Commission as required pursuant to the Exchange
Act, within the time period prescribed (the determination to file or not file
any amendment or supplement with the Commission under this Section 7(a),
based on the Company’s reasonable opinion or reasonable objections, shall be
made exclusively by the Company).

(b) Notice
of Commission Stop Orders. The Company will advise CF&Co, promptly
after it receives notice or obtains knowledge thereof, of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, of the suspension of the qualification of the Placement Shares for
offering or sale in any jurisdiction, or of the initiation or threatening of
any proceeding for any such purpose; and it will make every reasonable effort
to prevent the issuance of any stop order or to obtain its withdrawal if such a
stop order should be issued.

(c) Delivery
of Prospectus; Subsequent Changes. During any period in which a Prospectus
relating to the Placement Shares is required to be delivered by CF&Co under
the Securities Act with respect to the offer and sale of the Placement Shares,
(including in circumstances where such requirement may be satisfied pursuant to
Rule 172 under the Securities Act), the Company will comply with all
requirements imposed upon it by the Securities Act, as from time to time in
force, and to file on or before their respective due dates all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission under the Exchange Act. If during such period any event
occurs as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, or if during such period it is
necessary to amend or supplement the Registration Statement or Prospectus to
comply with the Securities Act, the Company will promptly notify CF&Co to
suspend the offering of Placement Shares during such period and the Company will
promptly amend or supplement the Registration Statement or

 20
 

 

 

Prospectus (at the expense of the Company) so
as to correct such statement or omission or effect such compliance.

(d) Listing
of Placement Shares. During any period in which the Prospectus relating to
the Placement Shares is required to be delivered by CF&Co under the
Securities Act with respect to the offer and sale of the Placement Shares
(including in circumstances where such requirement may be satisfied pursuant to
Rule 172 under the Securities Act), the Company will use its reasonable
best efforts to effect the listing on the Exchange and to qualify the Placement
Shares for sale under the securities laws of such jurisdictions as CF&Co
reasonably designates and to continue such qualifications in effect so long as
required for the distribution of the Placement Shares; provided, however, that the Company shall
not be required in connection therewith to qualify as a foreign corporation or
dealer in securities or file a general consent to service of process in any
jurisdiction.

(e) Delivery
of Registration Statement and Prospectus. The Company will furnish to
CF&Co and its counsel (at the expense of the Company) copies of the
Registration Statement, the Prospectus (including all documents incorporated by
reference therein and any free writing prospectus) and all amendments and
supplements to the Registration Statement or Prospectus that are filed with the
Commission during any period in which a Prospectus relating to the Placement
Shares is required to be delivered under the Securities Act (including all
documents filed with the Commission during such period that are deemed to be
incorporated by reference therein), in each case as soon as reasonably
practicable and in such quantities as CF&Co may from time to time
reasonably request and, at CF&Co’s request, will also furnish copies of the
Prospectus to each exchange or market on which sales of the Placement Shares
may be made; provided, however,
that the Company shall not be required to furnish any document (other than the
Prospectus) to CF&Co to the extent such document is available on EDGAR.

(f) Earnings
Statement. The Company will make generally available to its security
holders as soon as practicable, an earnings statement that satisfies the
provisions of Section 11(a) and Rule 158 of the Securities Act.

(g) Expenses.
The Company, whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, in accordance with the provisions
of Section 11 hereunder, will pay the following all expenses incident to
the performance of its obligations hereunder, including, but not limited to,
expenses relating to (i) the preparation, printing and filing of the
Registration Statement and each amendment and supplement thereto, of each Prospectus
and of each amendment and supplement thereto, (ii) the preparation,
issuance and delivery of the Placement Shares, (iii) the qualification of
the Placement Shares under securities laws in accordance with the provisions of
Section 7(d) of this Agreement, including filing fees and any
reasonable fees or disbursements of counsel for CF&Co in connection
therewith, not to exceed $5,000 (iv) the printing and delivery to
CF&Co of copies of the Prospectus and any amendments or supplements
thereto, and of this Agreement, (v) the fees and expenses incurred in connection
with the listing of the

 21
 

 

 

Placement Shares for trading on the Exchange,
(vi) filing fees and expenses, if any, of the NASD Corporate Financing
Department.

(h) Use
of Proceeds. The Company will use the Net Proceeds as described in the
Prospectus in the section entitled “Use of Proceeds.”

(i) Restriction
on Sale of Securities. Each of the Company and the Operating Partnership
will not, if there is a Placement Notice pending, without providing CF&Co
notice as promptly as reasonably possible before taking any of the actions
listed below, offer, sell, agree to offer or sell, solicit offers to purchase,
grant any call option or purchase any put option with respect to, pledge,
borrow or otherwise dispose of, or establish or increase a “put equivalent
position” or liquidate or decrease a “call equivalent position” within the
meaning of Section 16 of the Securities Act, or otherwise enter into any
swap, derivative or other transaction or arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership, whether or
not such transaction is to be settled by delivery of such securities, other
securities, cash or other consideration with respect to, the Company’s Common
Stock, OP Units or other stock of the Company or any other equity securities
convertible into, or exercisable or exchangeable for, shares of the Company’s
Common Stock, or other stock, or publicly announce an intention to effect any
such transaction, during the term of this Agreement provided, however no notice
is required (A) the Company issues and sells the Shares pursuant to this
Agreement, (B) the Company issues and sells Common Stock and options to
purchase Common Stock pursuant to any employee or director stock option or
stock purchase plans in effect on the date of this Agreement (so long as each
such plan and issuance is described in the Prospectus), (C) the Operating
Partnership issues OP Units in consideration for acquisitions of assets and (D) the
Company may issue Common Stock upon the conversion of its outstanding
securities, upon exchange of OP Units, or upon exercise of warrants, options or
other rights in effect or outstanding.

(j) Change
of Circumstances. The Company will, at any time during a fiscal quarter in
which the Company intends to tender a Placement Notice or sell Placement Shares
during the term of this Agreement, as supplemented from time to time, advise
CF&Co promptly after it shall have received notice or obtained knowledge
thereof, of any material events respecting
its activities, affairs or condition, financial or otherwise, and the Company
will forthwith supply such information to CF&Co as shall be necessary in
the opinion of counsel to the Company for the Company to prepare any necessary
amendment or supplement to the Prospectus so that, as so amended or
supplemented, the Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time it is delivered
to a purchaser, not misleading.

(k) Due
Diligence Cooperation. The Company will cooperate with any reasonable due
diligence review conducted by CF&Co or its agents in connection with the
transactions contemplated hereby, including, without limitation, providing

 22
 

 

 

information and making available documents
and senior corporate officers, during regular business hours and at the Company’s
principal offices, as CF&Co may reasonably request.

(l) Required
Filings Relating to Placement of Placement Shares. The Company agrees that
on such dates as the Securities Act shall require, the Company will (i) file
a prospectus supplement with the Commission under the applicable paragraph of Rule 424(b) under
the Securities Act (each and every filing under Rule 424(b), a “Filing Date”), which prospectus
supplement will set forth, within the relevant period, the amount of Placement
Shares sold through CF&Co, the Net Proceeds to the Company and the
compensation payable by the Company to CF&Co with respect to such Placement
Shares, and (ii) deliver such number of copies of each such prospectus
supplement to each exchange or market on which such sales were effected as may
be required by the rules or regulations of such exchange or market, and
(iii) make any other filings required by the Securities Act required with
the placement of the Shares.

(m) Representation
Dates; Certificate. During the term of this Agreement, on or prior to the
date that the first Shares are sold pursuant to the terms of this Agreement and
each time the Company (i) files the Prospectus relating to the Placement
Shares or amends or supplements the Registration Statement or the Prospectus
relating to the Placement Shares (other than a prospectus supplement filed in
accordance with Section 7(l) of this Agreement) by means of a
post-effective amendment, sticker, or supplement but not by means of
incorporation of document(s) by reference to the Registration Statement or
the Prospectus relating to the Placement Shares; (ii) files an annual
report on Form 10-K under the Exchange Act (“Form 10-K”); (iii) files
its quarterly reports on Form 10-Q under the Exchange Act (“Form 10-Q”); or (iv) files
a report on Form 8-K containing audited financial statements of the
Company (other than an earnings release, to “furnish” information pursuant to
Items 2.02 or 7.01 of Form 8-K or to provide disclosure pursuant to
Item 8.01 of Form 8-K relating to the reclassifications of certain
properties as discontinued operations in accordance with Statement of Financial
Accounting Standards No. 144) under the Exchange Act (each date of filing
of one or more of the documents referred to in clauses (i) through (iv) shall
be a “Representation Date”);
the Company shall furnish CF&Co with a certificate, in the form attached
hereto as Exhibit 7(m). The requirement to provide a certificate
under this Section 7(m) shall be waived for any Representation
Date occurring at a time at which no Placement Notice is pending, which waiver
shall continue until the earlier to occur of the date the Company delivers a
Placement Notice hereunder (which for such calendar quarter shall be considered
a Representation Date) and the next occurring Representation Date; provided, however,
that such waiver shall not apply for any Representation Date on which the
Company files its annual report on Form 10-K. Notwithstanding the
foregoing, if the Company subsequently decides to sell Placement Shares
following a Representation Date when the Company relied on such waiver and did
not provide CF&Co with a certificate under this Section 7(m),
then before the Company delivers the Placement Notice or CF&Co sells any
Placement Shares, the Company shall provide CF&Co with a certificate, in
the form attached hereto as Exhibit 7(m), dated the date of the
Placement Notice.

 

 23

 

(n) Legal
Opinion. On or prior to the date that the first Shares are sold pursuant to
the terms of this Agreement, and within three (3) Trading Days of each
Representation Date with respect to which the Company is obligated to deliver a
certificate in the form attached hereto as Exhibit 7(m) for
which no waiver is applicable, the Company shall cause to be furnished to
CF&Co written opinions of Clifford Chance US LLP (“Company Counsel”)
and Wilkie Farr & Gallagher LLP (“Special
40 Act Counsel”), or other counsel satisfactory to CF&Co, in
form and substance satisfactory to CF&Co and its counsel, dated the date of
this Agreement or the Representation Date, as the case may be, substantially
similar to the form attached hereto as Exhibit 7(n)(1)(a) and Exhibit 7(n)(1)(b),
respectively, modified, as necessary, to relate to the Registration Statement
and the Prospectus as then amended or supplemented; provided, however,
that in lieu of such opinions for subsequent Representation Dates, counsel may
furnish CF&Co with a letter (a “Reliance
Letter”) to the effect that CF&Co may rely on a prior
opinion delivered under this Section 7(n) to the same extent
as if it were dated the date of such letter (except that statements in such
prior opinion shall be deemed to relate to the Registration Statement and the
Prospectus as amended or supplemented at such Representation Date).

(o) Comfort
Letter. On or prior to the date that the first Shares are sold pursuant to
the terms of this Agreement and thereafter within three (3) Trading Days
of each Representation Date occurring during any period in which the Prospectus
relating to the Placement Shares is required to be delivered by CF&Co
(including in circumstances where such requirement may be satisfied pursuant to
Rule 172 under the Act) and each Representation Date with respect to which
the Company is obligated to deliver a certificate in the form attached hereto
as Exhibit 8(m) for which no waiver is applicable, the Company
shall cause its independent accountants to furnish CF&Co letters (the “Comfort Letters”), dated the date
of the Comfort Letter is delivered, in form and substance satisfactory to
CF&Co, (i) confirming that they are an independent public accounting
firm  within the meaning of the
Securities Act and the PCAOB, (ii) stating, as of such date, the
conclusions and findings of such firm with respect to the financial information
and other matters ordinarily covered by accountants’ “comfort letters” to
underwriters in connection with registered public offerings (the first such
letter, the “Initial Comfort Letter”)
and (iii) updating the Initial Comfort Letter with any information that
would have been included in the Initial Comfort Letter had it been given on
such date and modified as necessary to relate to the Registration Statement and
the Prospectus, as amended and supplemented to the date of such letter.

(p) No
Price Stabilization or Manipulation. During the pendency of any Placement
Notice hereunder, the Company will not, and will use its best efforts to cause
its officers, directors and affiliates not to, (i) take, directly or
indirectly any action designed to stabilize or manipulate the price of any
security of the Company, or which may cause or result in, or which might in the
future reasonably be expected to cause or result in, the stabilization or
manipulation of the price of any security of the Company, to facilitate the
sale or resale of any of the Shares, (ii) sell, bid for, purchase or pay
anyone any compensation for soliciting purchases of the Shares 

 24
 

 

other than           
CF&Co, or (iii) pay or agree to pay to any person (other than
CF&Co) any compensation for soliciting any order to purchase any other
securities of the            Company.

(q) REIT
Treatment. The Company will use its commercially reasonable efforts to
continue to meet the requirements for qualification and taxation as a REIT
under the Code for subsequent tax years that include any portion of the term of
this Agreement.

(r) Company
Not an “Investment Company.”  The Company is familiar with the Investment
Company Act of 1940, as amended, and the rules and regulations thereunder,
and will in the future conduct its and the Operating Partnership’s affairs, in
such a manner and will use its commercially reasonable best efforts to ensure
that the Company and the Operating Partnership will not be an “investment
company” within the meaning of the Investment Company Act of 1940 and the rules and
regulations thereunder.

(s) CF&Co
Purchases. The Company acknowledges and agrees that CF&Co has informed
the Company that CF&Co may, to the extent permitted under the Securities Act and the Exchange Act,
purchase and sell shares of Common
Stock for its own account while this Agreement is in effect, provided,  that
(i) no such purchase or sales shall take place while a Placement Notice is
in effect (except to the extent CF&Co may engage in sales of Placement
Shares purchased or deemed purchased from the Company as a “riskless principal”
or in a similar capacity) and (ii) the Company shall not be deemed to have
authorized or consented to any such purchases or sales by CF&Co.

(t) No
Offer to Sell. Other than a free writing prospectus (as defined in Rule 405
under the Act) approved in advance by the Company and CF&Co in its capacity
as principal or agent hereunder, neither CF&Co nor the Company (including
its agents and representatives, other than CF&Co in its capacity as such)
will make, use, prepare, authorize, approve or refer to any written
communication (as defined in Rule 405 under the Act), required to be filed
with the Commission, that constitutes an offer to sell or solicitation of an
offer to buy Shares hereunder

8. Conditions to
CF&Co’s Obligations. The obligations of CF&Co hereunder with
respect to a Placement will be subject to the completion by CF&Co of a due
diligence review satisfactory to CF&Co in its reasonable judgment, and to
the continuing satisfaction (or waiver by CF&Co in its sole discretion) of
the following additional conditions:

(a) Registration
Statement Effective. The Registration Statement shall have become effective
and shall be available for the (i) resale of all Placement Shares issued
to CF&Co and not yet sold by CF&Co and (ii) the sale of all
Placement Shares contemplated to be issued by any Placement Notice.

(b) No
Material Notices. None of the following events shall have occurred and be
continuing:  (i) receipt by the
Company of any request for additional

 25
 

 

information from the Commission or any other
federal or state governmental authority during the period of effectiveness of
the Registration Statement, the response to which would require any
post-effective amendments or supplements to the Registration Statement or the
Prospectus; (ii) the issuance by the Commission or any other federal or
state governmental authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose; (iii) receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Placement Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the occurrence of any
event that makes any material statement made in the Registration Statement or
the Prospectus or any material document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in the Registration Statement, related
Prospectus or documents so that, in the case of the Registration Statement, it
will not contain any materially untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and, that in the case of the Prospectus, it
will not contain any materially untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

(c) Representations
and Warranties. All the representations and warranties of the Company,
the Operating Partnership, and the Manager contained in this Agreement shall be
true and correct on each Representation Date, with the same force and effect as
if made on and as of such Representation Date, and the Company, the Operating
Partnership, and the Manager shall have complied with all agreements and all
conditions on its part to be performed or satisfied hereunder at or prior to
such Representation Date.

(d) Legal
Opinion. CF&Co shall have received the opinions of Company Counsel
required to be delivered pursuant Section 7(n) on or before
the date on which such delivery of such opinion is required pursuant to Section 7(n).

(e) Comfort
Letter. CF&Co shall have received the Comfort Letter required to be
delivered pursuant Section 7(o) on or before the date on which
such delivery of such opinion is required pursuant to Section 7(o).

(f) Representation
Certificate. CF&Co shall have received the certificate required to be
delivered pursuant to Section 7(m) on or before the date on
which delivery of such certificate is required pursuant to Section 7(m).

(g) No
Suspension. Trading in the Shares shall not have been suspended on the
Exchange.

(h) Other
Materials. On each date on which the Company is required to deliver a
certificate pursuant to Section 8(m), the Company shall have
furnished to

 26
 

 

CF&Co such appropriate further
information, certificates and documents as CF&Co may reasonably request.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof. The Company will furnish CF&Co with
such conformed copies of such opinions, certificates, letters and other
documents as CF&Co shall reasonably request.

(i) No Objection. Prior to the date of this Agreement, NASD Regulation Inc. shall have
confirmed in writing that it has no objection with respect to the fairness and
reasonableness of the underwriting terms and arrangements.

(j) No
Termination Event. There shall not have
occurred any event that would permit CF&Co to terminate this Agreement
pursuant to Section 11(a).

9. Indemnification
and Contribution.

(a) Indemnification by the Company and the Operating
Partnership. Each of the Company and the Operating Partnership, jointly and
severally, agrees to indemnify and hold harmless CF&Co and each person, if
any, who controls CF&Co within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act as follows:

(i) 
against any and all loss, liability, claim, damage and expense whatsoever, as
incurred, arising in whole or in part out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus, or in any supplement thereto or amendment thereof, or arising
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading;

(ii) 
against any and all loss, liability, claim, damage and expense whatsoever, as
incurred, to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any of (i) above;
provided that (subject to Section 9(d) below) any such settlement is
effected with the written consent of the Company; and

(iii) 
against any and all expense whatsoever, as incurred (including the fees and
disbursements of counsel chosen by the Company), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any of (i) above, to the extent that any such
expense is not paid under (i) or (ii) above,

provided,
however, that this indemnity agreement shall not apply to any loss, liability,
claim, damage or expense to the extent arising out of any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by CF&Co
expressly for use in the Registration Statement (or any amendment thereto), or
in any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).

 27
 

 

The
indemnity agreement set forth in this Section 10(a) shall be
in addition to any liabilities that the Company may otherwise have.

(b) Indemnification by CF&Co. CF&Co agrees to
indemnify and hold harmless the Company, its directors, each of its officers who
signed the Registration Statement and the Operating Partnership and each
person, if any, who controls the Company and the Operating Partnership within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section 10,
as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendment thereto), or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by CF&Co expressly for use in the Registration Statement (or
any amendment thereto), which information is described in Section 7(a)(2)
hereof or the Prospectus (or any amendment or supplement thereto). The
indemnity agreement set forth in this Section 9(b) shall be in
addition to any liabilities that CF&Co may otherwise have.

(c) Actions against Parties; Notification. Promptly after receipt by an indemnified party
under subsection (a) or (b) above of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to
be made against an indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify such indemnifying party shall not relieve the indemnifying party from
any liability which it may have to any indemnified party under such subsection
except to the extent it has been materially prejudiced by such failure. In case
any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such subsection for any legal or other expenses, in each case
subsequently incurred by such indemnified party, in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened

 28
 

 

action or claim in respect of which indemnification or contribution may
be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party
from all liability arising out of such action or claim and (ii) does not
include any statement as to, or an admission of, fault, culpability or a
failure to act, by or on behalf of any indemnified party.

(d) Settlement Without Consent if Failure to
Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 9(a)(ii) effected without its written consent if (i) such
settlement is entered into more than 45 days after delivery to such
indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 30 days prior
to such settlement being entered into and (iii) such indemnifying party
shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.

(e) Contribution. If the indemnification provided for in
this Section 9 is for any reason unavailable to or insufficient to
hold harmless an indemnified party in respect of any losses, liabilities,
claims, damages or expenses referred to therein, then each indemnifying party
shall contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Operating Partnership on the one hand and CF&Co on the
other hand from the offering of the Shares pursuant to this Agreement or (ii) if
the allocation provided by clause (i) is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
and the Operating Partnership on the one hand and of CF&Co on the other
hand in connection with the inaccuracies, statements or omissions which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Operating Partnership on the one hand and CF&Co on the
other hand in connection with the offering of the Shares pursuant to this
Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Shares pursuant to this Agreement (before
deducting expenses) received by the Company and the Operating Partnership and
the total underwriting discount received by CF&Co, in each case as set
forth on the cover of the Prospectus, bear to the aggregate public offering
price of the Shares as set forth on such cover. The relative fault of the
Company and the Operating Partnership on the one hand and CF&Co on the
other hand shall be determined by reference to, among other things, whether any
such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
the Company, the Operating Partnership, or by CF&Co and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Operating Partnership and
CF&Co agree that it would not be just and equitable if contribution
pursuant to this Section 9(e) were determined by pro rata
allocation or by any other method of allocation

 29
 

 

which does not
take account of the equitable considerations referred to above in this Section 9(e).
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 9(e) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission. Notwithstanding
the provisions of this Section 9(e), CF&Co shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which CF&Co has
otherwise been required to pay by reason of any such untrue or alleged untrue
statement or omission or alleged omission.

No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

For purposes of this Section 9(e), each person, if any, who
controls CF&Co within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution
as CF&Co, and each director of the Company, each officer of the Company who
signed the Registration Statement, the Operating Partnership, and each person,
if any, who controls the Company and the Operating Partnership within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Company and the
Operating Partnership.

10. Representations
and Agreements to Survive Delivery. The indemnity and contribution
agreements contained in Section 9 of this Agreement and all
representations and warranties of the Company herein or in certificates
delivered pursuant hereto shall survive, as of their respective dates, regardless
of (i) any investigation made by or on behalf of CF&Co, any
controlling persons, or the Company (or any of their respective officers,
directors or controlling persons), (ii) delivery and acceptance of the
Placement Shares and payment therefor or (iii) any termination of this
Agreement.

11. Termination.

(a) CF&Co
shall have the right by giving notice as hereinafter specified at any time to
terminate this Agreement if (i) any Material Adverse Effect, or any
development that has actually occurred and that is reasonably expected to cause
a Material Adverse Effect has occurred that, in the reasonable judgment of
CF&Co, may materially impair the ability of CF&Co to sell the Placement
Shares hereunder, (ii) the Company shall have failed, refused or been
unable at or prior to any Settlement Date to perform any agreement on its part
to be performed hereunder; provided,
however, in the case of any failure of the Company to deliver (or
cause another person to deliver) any certification, opinion, or letter required
under

 30
 

 

Sections  7(m),
7(n), or 7(o), CF&Co’s right to terminate shall not arise
unless such failure to deliver (or cause to be delivered) continues for more
than thirty (30) days from the date such delivery was required; or (iii) any
other condition of CF&Co’s obligations hereunder is not fulfilled, or (iv),
any suspension or material limitation of trading in the Placement Shares or in
securities generally on the Exchange shall have occurred. Any such termination
shall be without liability of any party to any other party except that the
provisions of Section 7(g) (Expenses), Section 9
(Indemnification), Section 10 (Survival of Representations), Section 15
(Applicable Law; Consent to Jurisdiction) and Section 16 (Waiver of
Jury Trial) hereof shall remain in full force and effect notwithstanding such
termination. If CF&Co elects to terminate this Agreement as provided in
this Section 11(a), CF&Co shall provide the required notice as
specified in Section 11 (Notices).

(b) The
Company shall have the right, by giving ten (10) days notice as
hereinafter specified to terminate this Agreement in its sole discretion at any
time after the date of this Agreement. Any such termination shall be without
liability of any party to any other party except that the provisions of Section 7(g),
Section 9, Section 10, Section 15 and Section 16
hereof shall remain in full force and effect notwithstanding such termination.

(c) CF&Co
shall have the right, by giving ten (10) days notice as hereinafter
specified to terminate this Agreement in its sole discretion at any time after
the date of this Agreement. Any such termination shall be without liability of
any party to any other party except that the provisions of Section 7(g),
Section 9, Section 10, Section 15 and Section 16
hereof shall remain in full force and effect notwithstanding such termination.

(d) Unless
earlier terminated pursuant to this Section 11, this Agreement shall
automatically terminate upon the issuance and sale of all of the Placement
Shares through CF&Co on the terms and subject to the conditions set forth
herein; provided that
the provisions of Section 7(g), 
Section 10, Section 10, Section 16
and Section 17 hereof shall remain in full force and effect
notwithstanding such termination.

(e) This
Agreement shall remain in full force and effect unless terminated pursuant to Sections
10(a), (b), (c), or (d) above or otherwise by mutual
agreement of the parties; provided, however,
that any such termination by mutual agreement shall in all cases be
deemed to provide that Section 7(g), Section 9, Section 10,
Section 15 and Section 16 shall remain in full force
and effect.

(f) Any
termination of this Agreement shall be effective on the date specified in such
notice of termination; provided, however,
that such termination shall not be effective until the close of business on the
date of receipt of such notice by CF&Co or the Company, as the case may be.
If such termination shall occur prior to the Settlement Date for any sale of
Placement Shares, such Placement Shares shall settle in accordance with the
provisions of this Agreement.

 31

 

(g) Notices.
All notices or other communications required
or permitted to be given by any party to any other party pursuant to the terms
of this Agreement shall be in writing, unless otherwise specified, and
if sent to CF&Co, shall be delivered to CF&Co at Cantor Fitzgerald &
Co., 110 East 59th Street, New York, New York 10022, fax no. (212) 829-4972,
Attention: ITD-Investment Banking, with copies to Stephen Merkel, General
Counsel, at the same address, and DLA Piper Rudnick Gray Cary US LLP, 1251
Avenue of the Americas, New York, NY 10020, fax no. (212) 884-8494,
Attention: Dean M. Colucci; or if sent to the Company, shall be delivered to
Gramercy Capital Corp., Marc Holliday, President and Chief Executive Officer,
420 Lexington Avenue, New York, New York 10170, (212) 297-1000, with a
copy to  Clifford Chance US LLP, 31 West
52nd Street, New York, New York 10019, (212) 878-8000,  attention: Larry
P. Medvinsky, Esq., Esq. Each party to this Agreement may
change such address for notices by sending to the parties to this Agreement
written notice of a new address for such purpose. Each such notice or other communication shall be deemed given (i) when
delivered personally or by verifiable facsimile transmission (with an original
to follow) on or before 4:30 p.m., New York City time, on a Business Day
or, if such day is not a Business Day, on the next succeeding Business Day, (ii) on
the next Business Day after timely delivery to a nationally-recognized
overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail
(certified or registered mail, return receipt requested, postage prepaid). For
purposes of this Agreement, “Business Day”
shall mean any day on which the Exchange and commercial banks in the City of
New York are open for business.

12. Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the Company and CF&Co and their respective successors and the affiliates,
controlling persons, officers and directors referred to in Section 9
hereof. References to any of the parties contained in this Agreement shall be
deemed to include the successors and permitted assigns of such party. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and permitted assigns any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement. Neither party may assign its rights or obligations
under this Agreement without the prior written consent of the other party.

13.  Adjustments for Stock Splits. The parties
acknowledge and agree that all share-related numbers contained in this
Agreement shall be adjusted to take into account any stock split, stock
dividend or similar event effected with respect to the Shares.

14. Entire Agreement;
Amendment; Severability. This Agreement (including all schedules and
exhibits attached hereto and Placement Notices issued pursuant hereto)
constitutes the entire agreement and supersedes all other prior and
contemporaneous agreements and undertakings, both written and oral, among the
parties hereto with regard to the subject matter hereof. Neither this Agreement nor any term hereof may be amended except
pursuant to a written instrument executed by the Company and CF&Co. In the
event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable as written by a court of competent jurisdiction, then such provision shall be given full
force and effect to the fullest possible extent that it is valid, legal and enforceable, and the

 32
 

 

remainder of the terms and provisions herein shall be
construed as if such invalid, illegal or
unenforceable term or provision was not contained herein, but only to
the extent that giving effect to such provision and the remainder of the terms
and provisions hereof shall be in accordance with the intent of the parties as
reflected in this Agreement.

15. Applicable Law;
Consent to Jurisdiction. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York without regard
to the principles of conflicts of laws. Each
party hereby irrevocably submits to the non-exclusive jurisdiction of the state
and federal courts sitting in the City of New York, borough of Manhattan, for
the adjudication of any dispute hereunder or in connection with any transaction
contemplated hereby, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof (certified or registered mail, return
receipt requested) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law.

16. Waiver of Jury
Trial. The Company and CF&Co each hereby irrevocably waives any right
it may have to a trial by jury in respect of any claim based upon or arising
out of this agreement or any transaction contemplated hereby.

17. Absence of Fiduciary Relationship.

The Company, the Operating Partnership and the Manager
acknowledge and agree that:

(a)                 the CF&Co has been retained
solely to act as CF&Co in connection with the sale of the Shares and that
no fiduciary, advisory or agency relationship between the Company, the
Operating Partnership or the Manager and the CF&Co has been created in
respect of any of the transactions contemplated by this Agreement, irrespective
of whether the CF&Co has advised or is advising the Company, the Operating Partnership
or the Manager on other matters;

(b)                the
price of the Shares set forth in this Agreement was established by the Company
and the CF&Co following discussions and arms-length negotiations with the
CF&Co and the Company, and the Company, the Operating Partnership and the
Manager are capable of evaluating and understanding and understand and accept
the terms, risks and conditions of the transactions contemplated by this
Agreement;

(c)                 they
have been advised that the CF&Co and its affiliates are engaged in a broad
range of transactions which may involve interests that differ from those of the
Company, the Operating Partnership or the Manager and that the CF&Co have
no obligation to disclose such interests and transactions to the Company, the
Operating Partnership or the Manager by virtue of any fiduciary, advisory or
agency relationship; and

(d)                they
waive, to the fullest extent permitted by law, any claims they may have against
the CF&Co, for breach of fiduciary duty or alleged breach of fiduciary duty
and agree that the CF&Co shall have no liability (whether direct or
indirect) to the Company, the Operating Partnership or the Manager in respect
of such a fiduciary claim or to any person asserting a fiduciary duty claim on
behalf of or in right of the Company, including stockholders, employees or
creditors of the Company, the Operating Partnership or the Manager.

18. Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. Delivery of an executed Agreement by one party to the other may be
made by facsimile transmission.

19. Definitions. As
used in this Agreement, the following terms have the respective meanings set
forth below:

(a) “Applicable Time” means the time of each
sale of any Shares or any securities pursuant to this Agreement.

(b) “Company
Documents” means any contracts, indentures, mortgages, deeds of trust, loan
or credit agreements, bonds, notes, debentures, evidences of indebtedness,
leases or other instruments or agreements to which the Company, the Operating
Partnership, the Manager or any of their respective subsidiaries is a party or
by which the Company, the Operating Partnership, the Manager or any of their
respective subsidiaries is bound or to which any of the property or assets of
the Company, the Operating Partnership, the Manager or any of their respective
subsidiaries is subject.

(c) “GAAP”
means United States generally accepted accounting principles.

(d) “Organizational
Documents” means (a) in the case of a corporation, its charter and
by-laws; (b) in the case of a limited or general partnership, its
partnership certificate, certificate of formation or similar organizational
document

 33
 

 

and its partnership agreement; (c) in
the case of a limited liability company, its articles of organization,
certificate of formation or similar organizational documents and its operating
agreement, limited liability company agreement, membership agreement or other
similar agreement; (d) in the case of a trust, its certificate of trust,
certificate of formation or similar organizational document and its trust
agreement or other similar agreement; and (e) in the case of any other
entity, the organizational and governing documents of such entity.

 34
 

 

If the foregoing correctly sets forth the
understanding between the Company and CF&Co, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement between the Company and CF&Co. 

	
  

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GRAMERCY CAPITAL CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GKK CAPITAL LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Gramercy Capital Corp., its

  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GKK MANAGER LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ACCEPTED as of the date

  
	
   

  	
  First-above written:

  
	
   

  	
   

  
	
   

  	
  CANTOR FITZGERALD & CO.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Jeffrey Lumby

  
	
   

  	
   

  	
  Managing Director

  
						

 

 35

 

SCHEDULE 1

FORM OF
PLACEMENT NOTICE

From:                                                                  [                               ]

Cc:                                                                               [                               ]

To:                                                                            [                               ]

Subject:                  Controlled Equity Offering—Placement Notice

Gentlemen:

Pursuant
to the terms and subject to the conditions contained in the Controlled Equity
OfferingSM Sales Agreement between Gramercy Capital Corp.. (the “Company”),
and Cantor Fitzgerald & Co. (“CF&Co”) dated May 10,
2006 (the “Agreement”), I hereby request on behalf of the Company that
CF&Co sell up to ____________ shares of the Company’s common stock, par
value $0.001 per share, at a minimum market price of $_______ per share.

[ADDITIONAL SALES PARAMETERS
MAY BE ADDED, SUCH AS THE TIME PERIOD IN WHICH SALES ARE REQUESTED TO BE
MADE, SPECIFIC DATES THE SHARES MAY NOT BE SOLD ON, THE MANNER IN WHICH
SALES ARE TO BE MADE BY CF&CO, AND/OR THE CAPACITY IN WHICH CF&CO MAY ACT
IN SELLING SHARES (AS PRINCIPAL, AGENT, OR BOTH)]

 

SCHEDULE 2

Compensation

CF&Co shall be paid
compensation equal to two and one-half percent (2.5%) of the gross proceeds
from the sales of the Shares pursuant to the terms of this Agreement.

 

SCHEDULE 3

CANTOR FITZGERALD & CO.

Phil
Marber

Marc
J. Blazer

Jeff
Lumby

Patrice McNicoll

GRAMERCY CAPITAL CORP.

Robert Foley

Gregory Hughes

Marc Holliday

 

 

EXHIBIT A

SUBSIDIARIES OF THE COMPANY

	
  Name

  	
   

  	
  Jurisdiction of

  Organization

  	
   

  	
  Type Of Entity

  
	
  GKK Trading Corp.

  	
   

  	
  Delaware

  	
   

  	
  Corporation

  
	
  Gramercy 110 LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
  Gramercy Warehouse
  Funding I LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
  Gramercy Warehouse
  Funding II LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
  Gramercy Capital Trust
  I

  	
   

  	
  Delaware

  	
   

  	
  Statutory Trust

  
	
  Gramercy Capital Trust
  II

  	
   

  	
  Delaware

  	
   

  	
  Statutory Trust

  
	
  Gramercy Capital Trust
  III

  	
   

  	
  Delaware

  	
   

  	
  Statutory Trust

  
	
  Gramercy Real Estate
  CDO 2005-1 Ltd

  	
   

  	
  Cayman Islands

  	
   

  	
  Exempted Limited
  Liability Company

  
	
  Gramercy Real Estate
  CDO 2005-1 LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
  GKK Madison Investment
  LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
  Gramercy Investment QRS
  Corp.

  	
   

  	
  Delaware

  	
   

  	
  Corporation

  
	
  Gramercy Investment
  Trading Corp.

  	
   

  	
  Delaware

  	
   

  	
  Corporation

  
	
  Gramercy Investment
  Trust

  	
   

  	
  Maryland

  	
   

  	
  Trust

  
	
  GKK Trading Warehouse I
  LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
  GKK Trading Warehouse
  II LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
  Gramercy Rockaway 80 PE
  LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
  GKK Liquidity LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
  GKK 55 Corporate LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
  GKK 84 William Street
  LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
  GKK Pasadena Investment
  LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
  GKK Pasadena Owner LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
  GKK Pasadena Tenant LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
  Gramercy 200 Franklin
  LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 2
 

 

 

	
  SIGNIFICANT SUBSIDIARIES

  	
   

  	
   

  	
   

  	
   

  
	
  GKK Capital LP

  	
   

  	
  Delaware

  	
   

  	
  Limited Partnership

  (general partner is Gramercy Capital Corp.)

  
	
  GKK Trading
  Corp.

  	
   

  	
  Delaware

  	
   

  	
  Corporation

  

 

 3
 

 

EXHIBIT B

JOINT VENTURES OF THE COMPANY

 

	
  Name

  	
   

  	
  Jurisdiction of

  Organization

  	
   

  	
  Type Of Entity

  	
   

  	
  Percentage Ownership

  
	
  1 Madison Office
  Fee LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  	
   

  	
  45%

  
	
  200 Franklin
  Trust

  	
   

  	
  Delaware

  	
   

  	
  Statutory Trust

  	
   

  	
  70.3%

  
	
  GKK Pasadena Fee
  Holdings LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  	
   

  	
  50%

  
	
  GKK Pasadena
  Tenant Holdings LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability
  Company

  	
   

  	
  63.57%

  

 

 4

Exhibit 7(n)

Matters to be covered by initial OPINION OF 

FORM OF OPINION OF CLIFFORD CHANCE US LLP

1.             The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Maryland.  The Company has the corporate power and
authority to conduct its business and own its properties as described in the
Prospectus and to enter into and perform its obligations under this
Agreement.  The Operating Partnership has
been duly organized and is validly existing as a limited partnership in good
standing under the laws of the State of Delaware.  The Operating Partnership has the partnership
power and authority to own its properties as described in the Prospectus and to
enter into and perform its obligations under this Agreement.  The Manager has been duly formed and is
validly existing in good standing under the laws of the State of Delaware, and
the Manager has the power and authority to own its properties and to conduct
its business as described in the Prospectus and to enter into and perform its
obligations under this Agreement.

2.             As
of [                  ],
the authorized, issued and outstanding stock of the Company is as set forth in
the most recent Form 10-K or Form 10-Q and such shares of the Company’s issued
and outstanding stock (the “Outstanding Shares”) have been duly authorized and
validly issued and are fully paid and nonassessable and none of the Outstanding
Shares was issued in violation of preemptive rights arising under the laws of
the State of Maryland or the Organizational Documents of the Company.  All of the issued and outstanding OP Units
have been issued in accordance with the requirements of the Partnership
Agreement; none of the OP Units has been issued or is owned or held in
violation of any preemptive right arising by operation of law or under this
Agreement; to such counsel’s knowledge, the outstanding OP Units have been
offered, sold and issued by the Operating Partnership in compliance with all
federal and state securities laws.

3.             The
execution, delivery and performance by the Company of this Agreement, including
the Company’s issuance of the Shares and sale of such Shares to the
Underwriter, has been duly authorized by all necessary corporate action on the
part of the Company.  The execution,
delivery and performance by the Operating Partnership of this Agreement has
been duly authorized by all necessary partnership action on the part of the
Operating Partnership.  The execution,
delivery and performance by the Manager of this Agreement has been duly
authorized by all necessary limited liability company action on the part of the
Manager.  This Agreement has been duly
executed and delivered by each of the Company, the Operating Partnership and
the Manager.

4.             The
Shares have been duly authorized and, when issued and delivered by the Company
pursuant to this Agreement, the Shares will be validly issued, fully paid and
nonassessable.

5.             The
issuance of the Shares is not subject to preemptive rights arising under the
General Corporation Law of the State of Maryland or the Organizational
Documents of the Company.

6.             The
execution, delivery and performance of this Agreement by the Company, the
Operating Partnership and the Manager and the consummation of the transactions
contemplated herein will not (i) result in any violation of the provisions of
the Organizational Documents of the Company, the Operating Partnership or the
Manager, (ii) constitute a violation of or a breach or default under the terms
of any Company Documents or (iii) violate or conflict with, or result in any
contravention of, any law, administrative regulation or administrative or court
decree applicable to the Company, the Operating Partnership or the Manager or
any of their subsidiaries except in the case of (ii) and (iii), such violations
as would not have a Material Adverse Effect.

7.             The
form of certificate representing the Common Stock complies (i) with the
applicable statutory requirements of the laws of the State of Maryland, (ii)
the requirements of the Organizational Documents of the Company and (iii) the
requirements of the NYSE.

8.             We
have reviewed the information (i) in the Prospectus under the captions “Risk
Factors — Risks Related to Our Organization and Structure,” “Risk Factors —
Risks Related to Our Taxation As a REIT,” “Description of Common Stock,”
“Description of Preferred Stock,” “Description of Depositary Shares,”
“Description of Warrants,” “Description of “Certain Provisions of Maryland Law
and of Our Charter and Bylaws,” “The Operating Partnership Agreement” and
“Material U.S. Federal Income Tax Considerations,” and (ii) in Part II of the
Registration Statement in Item 15 and, in each case, to the extent that such
information constitutes matters of law, summaries of legal matters or
documents, summaries of certain provisions of the Organizational Documents of
the Company, the Operating Partnership or the Manager or legal conclusions,
such information is correct in all material respects.  The authorized stock of the Company conforms
in all material respects to the description thereof in the Prospectus under the
captions “Description of Common Stock” and “Description of Preferred Stock.”

9.             Each
of the Company, the Operating Partnership and their subsidiaries are duly
qualified as a foreign corporation, limited partnership or limited liability
company, as the case may be, to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except for
such jurisdictions where the failure to so qualify or to be in good standing
would not, individually or in the aggregate, result in a Material Adverse
Change.

10.           To
the knowledge of such counsel, none of the Company, the Operating Partnership,
the Manager nor any subsidiary is in default under any of its Organizational
Documents.

11.           Other
than SL Green as described in the Prospectus, to the knowledge of such counsel,
no shareholder of the Company or unitholder of the Operating Partnership or any
other person has any preemptive right, right of first refusal or other similar
right to subscribe for or purchase securities of the Company, the Operating
Partnership or any subsidiary.

12.           To
the knowledge of such counsel, there are no legal or governmental proceedings
pending or threatened to which the Company, the Operating Partnership, the
Manager or any of their subsidiaries is a party or to which any property of the
Company or any of its subsidiaries is subject that are required to be disclosed
in the Prospectus that are not so disclosed.

 2
 

13.           No
consent, approval, authorization or other order of, or registration or filing
with, any United States federal, Maryland, Delaware or New York state court or
other governmental or regulatory authority or agency, is required for the
Company’s, the Operating Partnership’s or the Manager’s execution, delivery and
performance of this Agreement and consummation of the transactions contemplated
thereby and by the Prospectus, except such as have already been obtained under
the Securities Act and applicable state securities or blue sky laws and from
the NASD.

14.           Commencing
with its taxable year ended December 31, 2004, the Company has been organized
and operated in conformity with the requirements for qualification and taxation
as a REIT under the Code, and the Company’s current and proposed method of
operation, as described in the Prospectus and as set forth in a certificate of
representations from the Company, will enable it to continue to meet the
requirements for qualification and taxation as a REIT under the Code.

15.           The
Registration Statement has been declared effective by the Commission under the
Securities Act.  To the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration Statement
has been issued under the 1933 Act and no proceedings for such purpose have
been instituted or are pending or are contemplated or threatened by the
Commission.  Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) under the 1933
Act has been made in the manner and within the time period required by such
Rule 424(b).

In addition, such opinion shall also contain a
statement that such counsel has participated in conferences with officers and
other representatives of the Company, representatives of the independent
accountants at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and although it does not pass
upon, or assume any responsibility for, the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the Prospectus and
have made no independent check or verification thereof (except to the extent
referred to in paragraph eight of its opinion to the CF&Co dated the date
hereof), on the basis of the foregoing, (i) the Registration Statement
(including the Incorporated Documents), at each deemed effective date with
respect to CF&Co pursuant to Rule 430B(f)(2), and the Prospectus, as of its
date and as of the date hereof, complied and complies as to form in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations (except that in each case such counsel may state that it does not
express any view as to the financial statements, schedules and other financial
or statistical information derived from such financial statements and schedules
included or incorporated by reference therein) and (ii) no facts have come to
such counsel’s attention that have caused it to believe that the Registration
Statement, at each deemed effective date with respect to CF&Co pursuant to
Rule 430B(f)(2), contained an untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, as of its date and as
of the date hereof, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading (except that in each case such counsel may state that it
does not express any view as to the financial statements, schedules and other
financial or statistical information derived from such financial statements or
schedules included or incorporated by reference therein).

 3
 

FORM OF
OPINION OF WILKIE FARR & GALLAGHER

1.             The Company is not, and after
giving effect to the offering and sale of the Shares and the application of the
proceeds thereof as described under the caption “Use of Proceeds” in the
Prospectus will not be, an “investment company,” as such term is defined in the
Investment Company Act of 1940, as amended.

2.             We have reviewed the information in
the Prospectus under the caption “Risk Factors — Risks Related to Our Business
— We have a limited operating history and may not operate successfully,” “Risk
Factors — Risks Related to Our Business — Maintenance of our Investment Company
Act exemption imposes limits on our operations” and “Risk Factors — Risks
Related to Our Business — Rapid changes in the values of our MBS and other real
estate related investments may make it more difficult for us to maintain our
qualification as a REIT or exemption from the Investment Company Act” and, in
each case, to the extent that such information constitutes matters of law,
summaries of legal matters or documents, summaries of certain provisions of the
Organizational Documents of the Company, the Operating Partnership or the
Manager or legal conclusions, such information is correct in all material
respects.

 

 4

Exhibit 7(n)(2)

Matters
to be covered by subsequent Company Counsel Opinions

(i)            The Registration Statement has
become effective under the Securities Act and, to the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose is pending or threatened by
the Commission.

(ii)           The Registration Statement, at each
deemed effective date with respect to CF&Co pursuant to Rule 430B(f)(2) and
the Prospectus, as of the date of the Prospectus Supplement (in each case,
other than (i) the financial statements, including the notes and schedules
thereto, (ii) any other financial data and (iii) statistical data
that is found in or derived from the internal accounting records of the Company,
the Operating Partnership or their respective subsidiaries, in each case as set
forth or incorporated by reference therein, as to which no opinion need be
rendered), complied as to form in all material respects with the requirements
of the Securities Act and the Exchange Act.

(c)           Commencing
with its taxable year ended December 31, 2004, the Company has been
organized and operated in conformity with the requirements for qualification
and taxation as a REIT under the Code, and the Company’s current and proposed
method of operation, as described in the Prospectus and as set forth in a
certificate of representations from the Company, will enable it to continue to
meet the requirements for qualification and taxation as a REIT under the Code.

In addition, such opinion shall also contain a
statement that such counsel has participated in conferences with officers and
other representatives of the Company, representatives of the independent
accountants at which the contents of the Registration Statement* and the
Prospectus and related matters were discussed, and although it does not pass
upon, or assume any responsibility for, the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the Prospectus and
have made no independent check or verification thereof (except to the extent
referred to in paragraph eight of its opinion to the CF&Co dated the date
hereof), on the basis of the foregoing, (i) the Registration Statement
(including the Incorporated Documents), at each deemed effective date with
respect to CF&Co pursuant to Rule 430B(f)(2), and the Prospectus, as of its
date, as of each Applicable Time and as of the date hereof, complied and
complies as to form in all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations (except that in each case such counsel may state
that it does not express any view as to the financial statements, schedules and
other financial or statistical information derived from such financial
statements and schedules included or incorporated by reference therein) and
(ii) no facts have come to such counsel’s attention that have caused it to
believe that the Registration Statement, at each deemed effective date with
respect to CF&Co pursuant to Rule 430B(f)(2), contained an untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, as of its date, as of each Applicable Time and as of the date hereof,
contained or contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in light 

 

of the circumstances under which they were made, not
misleading (except that in each case such counsel may state that it does not
express any view as to the financial statements, schedules and other financial
or statistical information derived from such financial statements or schedules
included or incorporated by reference therein).

*  Note: “Registration
Statement” and “Prospectus” will be defined to include documents incorporated
by reference therein (“Incorporated Documents”).

 

 2

Exhibit 8(m) 

OFFICER
CERTIFICATE

The undersigned, the duly
qualified and elected _______________________, of GRAMERCY
CAPITAL CORP. (“Company”),
a Maryland
corporation, does hereby certify in such capacity and on behalf of the Company,
pursuant to Section 7(m) of the Sales Agreement dated May 10,
2006 (the “Sales Agreement”) between the
Company and Cantor Fitzgerald & Co., that to the best of the knowledge
of the undersigned.

(i)            The
representations and warranties of the Company, the Operating Partnership, and
the Manager in Section 6 of the Sales Agreement (A) to the
extent such representations and warranties are subject to qualifications and
exceptions contained therein relating to materiality or Material Adverse
Effect, are true and correct on and as of the date hereof, except for those
representations and warranties that speak solely as of a specific date and
which were true and correct as of such date, with the same force and effect as
if expressly made on and as of the date hereof and (B) to the extent such
representations and warranties are not subject to any qualifications or
exceptions, are true and correct in all material respects as of the date hereof
as if made on and as of the date hereof except for those representations and
warranties that speak solely as of a specific date and which were true and
correct as of such date, with the same force and effect as if expressly made on
and as of the date hereof; and

(ii)           The
Company, the Operating Partnership, and the Manager has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied pursuant to the Sales Agreement at or prior to the date hereof.

 

	
  

  	
   

  	
   

  	
   

  	
  GRAMERCY CAPITAL CORP.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  GKK CAPITAL LP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  Gramercy Capital Corp., its

  General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

 

 

 

	
  

  	
   

  	
   

  	
   

  	
  GKK MANAGER LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
									

 

 2Exhibit 10.12

GRAMERCY CAPITAL
CORP.

1,000,000 SHARES

ATM EQUITY OFFERINGSM

SALES AGREEMENT

May 10, 2006

Merrill Lynch &
Co.

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

4 World Financial Center

New York, New York 10080\

Ladies and Gentlemen:

GRAMERCY CAPITAL CORP., a Maryland corporation (the “Company”), GKK Capital LP, a
Delaware limited partnership (the “Operating Partnership”),
and GKK Manager, LLC, a Delaware limited liability company and the manager of
the Company and the Operating Partnership (together with its affiliates, the “Manager”) confirms their respective
agreements (this “Agreement”)
with Merrill Lynch & Co. (“ML&Co”),
as follows:

1. Issuance and Sale
of Shares. The Company agrees that, from time to time during the term of
this Agreement, on the terms and subject to the conditions set forth herein, it
may issue and sell through ML&Co, acting as agent and/or principal, (a) up
to 1,000,000 shares (the “Shares”) of the Company’s common
stock, par value $0.001 per share (the “Common Stock”).
Notwithstanding anything to the contrary contained herein, and provided that
ML&Co complies with the Placement Notice (as defined herein), the parties
hereto agree that compliance with the limitation set forth in this Section 1
on the number and aggregate market value of Shares issued and sold under this
Agreement shall be the sole responsibility of the Company, and ML&Co shall
have no obligation in connection with such compliance. The issuance and sale of
Shares through ML&Co will be effected pursuant to the Registration
Statement (as defined below) filed by the Company and declared effective by the
Securities and Exchange Commission (the “Commission”),
although nothing in this Agreement shall be construed as requiring the Company
to use the Registration Statement to issue Common Stock.

The Company filed on August 31,
2005, in accordance with the provisions of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (collectively, the “Securities Act”), with the
Commission a registration statement on Form S-3 (File No. 333-1280130),
including a base prospectus, relating to certain securities, including the
Shares to be issued from time to time by the Company, and which incorporates by
reference documents that the Company has filed or will file in accordance with
the provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (collectively, the “Exchange Act”).
The Company has prepared a prospectus supplement specifically relating to the
Shares (the “Prospectus Supplement”) to the
base prospectus included as part of such registration

 

statement. The Company has furnished to ML&Co, for
use by ML&Co, copies of the prospectus included as part of such
registration statement, as supplemented by the Prospectus Supplement, relating
to the Shares. Except where the context otherwise requires, such registration
statement, as amended when it became effective, including all documents filed
as part thereof or incorporated by reference therein, and including any
information contained in a Prospectus (as defined below) subsequently filed
with the Commission pursuant to Rule 424(b) under the Securities Act
and also including any other registration statement filed pursuant to Rule 462(b) under
the Securities Act, collectively, are herein called the “Registration
Statement,” and the base prospectus, including all documents
incorporated therein by reference, included in the Registration Statement, as
it may be supplemented by the Prospectus Supplement, in the form in which such prospectus and/or Prospectus
Supplement have most recently been filed by the Company with the
Commission pursuant to Rule 424(b) under the Securities Act, together
with any “issuer free writing prospectus,” as defined in Rule 433 of the 1933
Act Regulations (“Rule 433”),
relating to the Shares that (i) is required to be filed with the
Commission by the Company or (ii) is exempt from filing pursuant to Rule 433(d)(5)(i),
in each case in the form filed or required to be filed with the Commission or,
if not required to be filed, in the form retained in the Company’s records
pursuant to Rule 433(g), is herein called the “Prospectus.”
Any reference herein to the Registration Statement, the Prospectus or any
amendment or supplement thereto shall be deemed to refer to and include the
documents incorporated by reference therein, and any reference herein to the
terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and include the filing
after the execution hereof of any document with the Commission deemed to be
incorporated by reference therein. For purposes of this Agreement, all
references to the Registration Statement, the Prospectus or to any amendment or
supplement thereto shall be deemed to include any copy filed with the
Commission pursuant to its Electronic Data Gathering Analysis and Retrieval
System (“EDGAR”).

2. Placements. Each
time that the Company wishes to issue and sell Shares hereunder (each, a “Placement”), it will notify
ML&Co by email notice (or other method mutually agreed to in writing by the
Parties) containing the parameters in accordance with which it desires the
Shares to be sold, which shall at a minimum include the number of Shares (the “Placement Shares”) to be issued,
the time period during which sales are requested to be made, any limitation on
the number of Shares that may be sold in any one day and any minimum price
below which sales may not be made (a “Placement Notice”),
a form of which containing such minimum sales parameters necessary is attached
hereto as Schedule 1. The Placement
Notice shall originate from any of the individuals from the Company set forth
on Schedule 3  (with a copy to each of
the other individuals from the Company listed on such schedule), and shall be
addressed to each of the individuals from ML&Co set forth on Schedule 3, as such Schedule 3 may be amended from time
to time. The Placement Notice shall be effective upon receipt by ML&Co
unless and until (i) in accordance with the notice requirements set forth
in Section 4, ML&Co declines to accept the terms contained
therein for any reason, in its sole discretion, (ii) the entire amount of
the Placement Shares have been sold, (iii) in accordance with the notice
requirements set forth in Section 4, the Company suspends or
terminates the Placement Notice, (iv) the Company issues a subsequent
Placement Notice with parameters superseding those on the earlier dated
Placement Notice, or (iv) the Agreement has been terminated under the
provisions of Section 10.  The amount of any discount, commission or
other compensation to be paid by the Company to ML&Co in connection with
the sale of the Placement Shares shall be

 2
 

 

calculated in accordance with the terms set forth in Schedule 2. It is expressly
acknowledged and agreed that neither the Company nor ML&Co will have any
obligation whatsoever with respect to a Placement or any Placement Shares
unless and until the Company delivers a Placement Notice to ML&Co and
ML&Co does not decline such Placement Notice pursuant to the terms set
forth above, and then only upon the terms specified therein and herein. In the
event of a conflict between the terms of this Agreement and the terms of a
Placement Notice, the terms of the Placement Notice will control.

3. Sale of Placement
Shares by ML&Co. Subject to the terms and conditions herein set forth,
upon the Company’s issuance of a Placement Notice, and unless the sale of the
Placement Shares described therein has been declined, suspended, or otherwise
terminated in accordance with the terms of this Agreement, ML&Co, for the
period specified in the Placement Notice, will use its commercially reasonable
efforts consistent with its normal trading and sales practices to sell such
Placement Shares up to the amount specified, and otherwise in accordance with
the terms of such Placement Notice. ML&Co will provide written confirmation
to the Company no later than the opening of the Trading Day (as defined below)
immediately following the Trading Day on which it has made sales of Placement
Shares hereunder setting forth the number of Placement Shares sold on such day,
the compensation payable by the Company to ML&Co pursuant to Section 2
with respect to such sales, and the Net Proceeds (as defined below) payable to
the Company, with an itemization of the deductions made by ML&Co (as set
forth in Section 5(a)) from the gross proceeds that it receives from such
sales. After consultation to the Company and subject to the terms of the
Placement Notice, ML&Co may sell Placement Shares by any method permitted
by law deemed to be an “at the market” offering as defined in Rule 415 of
the Securities Act, including without limitation sales made directly on the New
York Stock Exchange (the “Exchange”), on any other existing
trading market for the Common Stock or to or through a market maker. After
consultation with the Company and subject to the terms of the Placement Notice,
ML&Co may also sell Placement Shares in privately negotiated transactions. The
Company acknowledges and agrees that (i) there can be no assurance that
ML&Co will be successful in selling Placement Shares, and (ii) ML&Co
will incur no liability or obligation to the Company or any other person or
entity if it does not sell Placement Shares for any reason other than a failure
by ML&Co to use its commercially reasonable efforts consistent with its
normal trading and sales practices to sell such Placement Shares as required
under this Section 3. For the purposes hereof, “Trading Day” means any day on which
Common Stock is purchased and sold on the principal market on which the Common
Stock is listed or quoted.

4. Suspension of Sales.
The Company or ML&Co may, upon notice to the other party in writing
(including by email correspondence to each of the individuals of the other
Party set forth on Schedule 3, if
receipt of such correspondence is actually acknowledged by any of the
individuals to whom the notice is sent, other than via auto-reply) or by
telephone (confirmed immediately by verifiable facsimile transmission or email
correspondence to each of the individuals of the other Party set forth on Schedule 3), suspend any sale of
Placement Shares; provided, however,
that such suspension shall not affect or impair either party’s obligations with
respect to any Placement Shares sold hereunder prior to the receipt of such
notice. Except as set forth in Section 11 herein, each of the
Parties agrees that no such notice under this Section 4 shall be
effective against the other unless it is made to one of the individuals named
on Schedule 3 hereto, as such Schedule
may be amended from time to time.

 3
 

 

5. Settlement.

(a) Settlement
of Placement Shares. Unless otherwise specified in the applicable Placement
Notice, settlement for sales of Placement Shares will occur on the third (3rd) Trading Day (or such earlier
day as is industry practice for regular-way trading) following the date on
which such sales are made (each, a “Settlement
Date”). The amount of proceeds to be delivered to the Company on
a Settlement Date against receipt of the Placement Shares sold (the “Net Proceeds”) will be equal to the
aggregate sales price received by ML&Co at which such Placement Shares were
sold, after deduction for (i) ML&Co’s commission, discount or other
compensation for such sales payable by the Company pursuant to Section 2
hereof, (ii) any other amounts due and payable by the Company to ML&Co
hereunder pursuant to Section 7(g) (Expenses) hereof, and (iii) any
transaction fees imposed by any governmental or self-regulatory organization in
respect of such sales.

(b) Delivery
of Placement Shares. On or before each Settlement Date, the Company will,
or will cause its transfer agent to, electronically transfer the Placement
Shares being sold by crediting ML&Co’s or its designee’s account at The Depository
Trust Company through its Deposit and Withdrawal at Custodian System or by such
other means of delivery as may be mutually agreed upon by the parties hereto
which in all cases shall be freely tradeable, transferable, registered shares
in good deliverable form. On each Settlement Date, ML&Co will deliver the
related Net Proceeds in same day funds to an account designated by the Company
on, or prior to, the Settlement Date. The Company agrees that if the Company
defaults in its obligation to deliver Placement Shares on a Settlement Date,
the Company agrees that in addition to and in no way limiting the rights and
obligations set forth in Section 9(a) (Indemnification and
Contribution) hereto, it will (i) hold ML&Co harmless against any
loss, claim, damage, or expense (including reasonable out-of-pocket fees and
expenses of external counsel), as incurred, arising out of or in connection
with such default by the Company and (ii) pay to ML&Co any commission,
discount, or other compensation to which it would otherwise have been entitled
absent such default.

6. Representations and
Warranties.

(a) The
Company and the Operating Partnership each severally represents and warrants
to, and agrees with, ML&Co that as of the date of this Agreement, as of
each Representation Date (as defined in Section 7(m) below) on
which a certificate is required to be delivered pursuant to Section 7(m) of
this Agreement and as of each Applicable Time, as the case may be:

(1)           Registration Statement and
Prospectus. The Company meets the requirements for use of Form S-3
under the Securities Act. The Registration Statement has been filed with the
Commission and has been declared effective under the Securities Act. The
Registration Statement or Prospectus has named ML&Co as an underwriter,
acting as principal and/or agent that the Company might engage in the section
entitled “Plan of Distribution.”  The
Company has not received, and has no notice of, any order of

 4
 

 

the Commission
preventing or suspending the use of the Registration Statement, or threatening
or instituting proceedings for that purpose. Copies of the Registration
Statement, the Prospectus, and any such amendments or supplements and all
documents incorporated by reference therein that were filed with the Commission
on or prior to the date of this Agreement have been delivered, or made
available through EDGAR, to ML&Co and their counsel. The Company has not
distributed and will not distribute any offering material in connection with
the offering or sale of the Placement Shares other than the Registration
Statement or the Prospectus. The Common Stock is currently listed on the
Exchange under the trading symbol “GKK.”

(2)           No Misstatement or Omission. The
Registration Statement, at each deemed effective date with respect to ML&Co
pursuant to Rule 430B(f)(2) of the Securities Act will comply in all
material respects with the requirements of the Securities Act and did not, or
will not, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus and any amendment or supplement thereto,
on the date thereof and at each Applicable Time and each Settlement Date, did
not or will not include an untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The foregoing shall
not apply to statements in, or omissions from, any such document made in reliance
upon, and in conformity with, information furnished to the Company by ML&Co
specifically for use in the preparation thereof.

(3)           Company Authorization of Agreement.
This Agreement and the transactions contemplated herein have been duly and
validly authorized by the Company and this Agreement has been duly and validly
executed and delivered by the Company.

(4)           Operating Partnership
Authorization of Agreement. This Agreement and the transactions
contemplated herein have been duly and validly authorized by the Operating
Partnership and this Agreement has been duly and validly executed and delivered
by the Operating Partnership.

(5)           Authorization of Management
Agreement and Origination Agreement. The amended and restated management
agreement (the “Management Agreement”),
effective as of April 19, 2006, among the Company, the Operating
Partnership and the Manager has been duly authorized, executed and delivered by
each of the Company and the Operating Partnership and constitutes a valid and
binding agreement of each of the Company and the Operating Partnership
enforceable in accordance with its terms, except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency, reorganization or other laws
affecting enforcement of creditors’ rights or by general equitable principles. The
amended and restated origination agreement (the “Origination Agreement”), effective as of April 19,
2006, among the Company, the Operating Partnership and SL Green Operating
Partnership, L.P. has been duly authorized, executed and delivered by each of
the Company and the Operating Partnership and constitutes a valid and binding
agreement of each of the Company and the Operating Partnership enforceable in
accordance with its terms, except to the extent that enforcement thereof

 5
 

 

may be limited
by bankruptcy, insolvency, reorganization or other laws affecting enforcement
of creditors’ rights or by general equitable principles.

(6)           Financial Statements. The
financial statements of the Company and its subsidiaries, together with the
related schedules (if any) and notes (the “Company
Financial Statements”), and any financial statements required by
Rule 3-14 of Regulation S-X (the “Acquisition Financial Statements”), included in the
Registration Statement and the Prospectus present fairly the financial position
of the Company and its consolidated subsidiaries at the dates indicated, or
with respect to the Acquisition Financial Statements, the respective property
or tenant; and all such financial statements have been prepared in conformity
with GAAP applied on a consistent basis (except as otherwise noted herein)
throughout the periods involved and comply with all applicable accounting
requirements under the Securities Act. The supporting schedules, if any,
included in the Registration Statement present fairly, in accordance with GAAP,
the information required to be stated therein. There are no financial
statements or schedules required to be included in the Prospectus which are not
so included. The unaudited pro forma financial information (including the
related notes) included in the Prospectus and any preliminary Prospectus
complies as to form in all material respects with the applicable accounting
requirements of the Securities Act, and management of the Company believes that
the assumptions underlying the pro forma adjustments are reasonable. Such pro
forma adjustments have been properly applied to the historical amounts in the
compilation of the information and such information fairly presents with
respect to the Company and its consolidated subsidiaries, the financial
position, results of operations and other information purported to be shown
therein at the respective dates and for the respective periods specified. No
pro forma financial information is required to be included in the Prospectus
which is not so included.

(7)           No Material Adverse Change in
Business. Since the respective dates as of which information is given in
the Registration Statement and the Prospectus (in each case exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement),
except as otherwise stated therein, (A) there has been no material adverse
change or any development involving a prospective material adverse change in
the operations, condition (financial or otherwise), or in the earnings,
business affairs or business prospects of the Company and its subsidiaries,
including, without limitation, the Operating Partnership, considered as one
enterprise, whether or not arising in the ordinary course of business (a “Material Adverse Effect”), and (B) since
the date of the latest balance sheet presented in the Registration Statement
and Prospectus, neither the Company nor any of its subsidiaries has incurred or
undertaken any liabilities or obligations, direct or contingent, which are
material to the Company and its subsidiaries considered as one enterprise,
except for liabilities or obligations which are described in the Registration
Statement and the Prospectus.

(8)           Good Standing of the Company and
the Operating Partnership. The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Maryland and has power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and to
enter into and perform its obligations under this Agreement; and the Operating

 6
 

 

Partnership
has been duly formed and is validly existing as a limited partnership in good
standing under the laws of the State of Delaware and has authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus. Each of the Company and the Operating Partnership is duly qualified
as a foreign corporation to transact business and is in good standing in the
State of New York and in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except (solely in the case of jurisdictions other than the
State of New York) where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect.

(9)           The Partnership Agreement. The
Third Amended and Restated Agreement of Limited Partnership of the Operating
Partnership (the “Partnership Agreement”)
has been duly and validly authorized, executed and delivered by the Company and
is a valid and binding agreement, enforceable against the Company in accordance
with its terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization or other laws affecting enforcement of
creditors’ rights or by general equitable principles. The Partnership Agreement
has been duly executed and delivered by the other parties thereto and, to the
Company’s knowledge, is a valid and binding agreement enforceable against such
parties in accordance with its terms, except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency, reorganization or other laws
affecting enforcement of creditors’ rights or by general equitable principles.

(10)         Good Standing of Subsidiaries. Each
subsidiary of the Company listed on Exhibit A
hereto has been duly organized and is validly existing as a corporation,
limited or general partnership or limited liability company, as the case may
be, in good standing under the laws of the jurisdiction of its organization,
has power and authority to conduct its business as described in the Prospectus
and is duly qualified as a foreign corporation, limited or general partnership
or limited liability company, as the case may be, to transact business and is
in good standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect; except as otherwise disclosed in
the Registration Statement and the Prospectus, all of the issued and
outstanding stock of each such subsidiary that is a corporation, all of the
issued and outstanding partnership interests of each such subsidiary that is a
limited or general partnership and all of the issued and outstanding limited
liability company interests, membership interests or other similar interests of
each such subsidiary that is a limited liability company have been duly
authorized and validly issued, and, in the case of each subsidiary that is a
corporation, are fully paid and nonassessable and are owned by the Company or
the Operating Partnership, directly or indirectly, free and clear of any lien;
and none of the outstanding shares of stock, partnership interests or limited
liability company interests, membership interests or other similar interests of
any such subsidiary was issued in violation of any preemptive rights, rights of
first refusal or other similar rights of any securityholder of such subsidiary
or any other person. The only subsidiaries of the Company are the subsidiaries
listed on Exhibit A hereto
and Exhibit A accurately sets
forth whether each such subsidiary is a corporation, limited or general
partnership or limited liability company and the

 7
 

 

jurisdiction
of organization of each such subsidiary and, in the case of any subsidiary
which is a partnership or limited liability company, its general partners and
managing members, respectively. Any subsidiaries of the Company which are “significant
subsidiaries” as defined by Rule 1-02 of Regulation S-X are listed
on Exhibit A hereto under the caption “Significant Subsidiaries.”

(11)         Capitalization. The authorized,
issued and outstanding stock of the Company is as set forth under the caption “Capitalization”
in the Prospectus. The issued and outstanding shares of stock of the Company
have been duly authorized and are validly issued, fully paid and nonassessable;
and none of the outstanding shares of stock of the Company was issued in
violation of any preemptive rights, rights of first refusal or other similar
rights of any securityholder of the Company or any other person. The
authorized, issued and outstanding units of partnership interest in the
Operating Partnership, including the Class B Limited Partner interests
(the “OP Units”), have been
duly authorized and validly issued; and all of such OP Units have been sold in
compliance with applicable laws (including, without limitation, federal and
state securities laws).

(12)         Authorization of Securities. The
Placement Shares have been duly authorized for issuance and sale to ML&Co
pursuant to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement against payment of the consideration set forth
herein, will be validly issued, fully paid and nonassessable; no holder of the
Placement Shares is or will be subject to personal liability by reason of being
such a holder; and the issuance of the Placement Shares is not subject to any
preemptive right, right of first refusal or other similar right of any
securityholder of the Company or any other person, except for the rights of SL
Green Realty Corp. (“SL Green”)
pursuant to the Origination Agreement, as described in the Prospectus.

(13)         Absence of Defaults and Conflicts.
Neither the Company, the Operating Partnership nor any of their respective
subsidiaries is in violation of its Organizational Documents or in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any Company Document, except for such defaults that
would not result in a Material Adverse Effect. The execution, delivery and
performance of this Agreement and the consummation of the transactions contemplated
herein and in the Registration Statement and the Prospectus (including the
issuance and sale of the Securities and the use of the proceeds from the sale
of the Securities as described in the Prospectus under the caption “Use of
Proceeds”) and compliance by each of the Company and the Operating Partnership
with its obligations under this Agreement do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any Lien upon any property or assets of the Company, the
Operating Partnership or any of their respective subsidiaries pursuant to any
Company Documents, nor will such action result in any violation of the provisions
of the Organizational Documents of the Company, the Operating Partnership or
any of their respective subsidiaries or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign,

 8
 

 

having
jurisdiction over the Company or any of its subsidiaries or any of their
respective assets, properties or operations.

(14)         Absence of Proceedings. There is
no action, suit, proceeding, inquiry or investigation before or brought by any
court or governmental agency or body, domestic or foreign, now pending, against
or affecting the Company, the Operating Partnership or any of their respective
subsidiaries or which has as a subject thereof, any officer or director of the
Company in their capacity as such or as would otherwise be required to be
disclosed in the Prospectus. To the knowledge of the Company or the Operating
Partnership, there is no action, suit, proceeding, inquiry or investigation
before or brought by any court or governmental agency or body, domestic or
foreign, threatened, against or affecting the Company, the Operating
Partnership or any of their respective subsidiaries except as would not have a
Material Adverse Effect or which has as a subject thereof, any officer or
director of the Company in their capacity as such or as would otherwise be
required to be disclosed in the Prospectus.

(15)         Independent Public Accountant. Ernst &
Young LLP (“E&Y”), who
certified the financial statements and supporting schedules included in the
Registration Statement and the Prospectus, are independent public accountants
as required by the Securities Act and the Exchange Act.

(16)         Accuracy of Descriptions and
Exhibits. The information in the Prospectus under the captions “Description
of Common Stock,” “Certain Provisions of Maryland Law and of Our Charter and
Bylaws,” “The Operating Partnership Agreement” and “Material U.S. Federal
Income Tax Considerations” is correct in all material respects; all
descriptions in the Registration Statement and the Prospectus of any Company
Documents are accurate in all material respects; and there are no franchises,
contracts, indentures, mortgages, deeds of trust, loan or credit agreements,
bonds, notes, debentures, evidences of indebtedness, leases or other
instruments or agreements required to be described or referred to in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which have not been so described and filed as required. The
statistical and market-related data included in the Prospectus are based on or
derived from sources which the Company and the Operating Partnership believe to
be reliable and accurate.

(17)         Possession of Intellectual Property.
The Company, the Operating Partnership and their respective subsidiaries own or
possess or have the right to use on reasonable terms all patents, patent
rights, patent applications, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary
or confidential information, systems or procedures), trademarks, service marks,
trade names, service names and other intellectual property (collectively, “Intellectual Property”) necessary to
carry on their respective businesses as described in the Prospectus and as
proposed to be conducted; and neither the Company, the

 9
 

 

Operating
Partnership nor any of their respective subsidiaries has received any notice or
is otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company, the Operating Partnership or
any of their respective subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, individually or in the aggregate, would result in a
Material Adverse Effect.

(18)         Absence of Further Requirements.
(A) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority
or agency, domestic or foreign, (B) no authorization, approval, vote or
other consent of any stockholder or creditor of the Company or the Operating
Partnership, (C) no waiver or consent under any Company Document, and (D) no
authorization, approval, vote or other consent of any other person or entity,
is necessary or required for the performance by the Company or the Operating
Partnership of their respective obligations under this Agreement, for the
offering, issuance, sale or delivery of the Securities hereunder, or for the
consummation of any of the other transactions contemplated by this Agreement,
in each case on the terms contemplated by the Prospectus, except such as have
been already obtained under the 1933 Act or the 1933 Act Regulations or such as
may be required under state securities laws.

(19)         Possession of Licenses and Permits.
The Company, the Operating Partnership and their respective subsidiaries
possess such permits, licenses, approvals, consents and other authorizations
issued by the appropriate federal, state, local or foreign regulatory agencies
or bodies (collectively, “Governmental
Licenses”) as are necessary to conduct the business now operated
by them; the Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure so to
comply would not, individually or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and
effect, except when the invalidity of such Governmental Licenses or the failure
of such Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company, the Operating Partnership nor
any of their respective subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental Licenses
which, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a Material Adverse Effect.

(20)         Absence of Registration Rights. Except
as disclosed in the Prospectus, there are no persons with registration rights
or other similar rights to have any securities (debt or equity) (A) registered
pursuant to the Registration Statement or included in the offering contemplated
by this Agreement or (B) otherwise registered by the Company under the
1933 Act. There are no persons with tag-along rights or other similar rights to
have any securities (debt or equity) included in the offering contemplated by
this Agreement or sold in connection with the sale of Securities by the Company
pursuant to this Agreement.

(21)         Joint Ventures. All of the joint
ventures in which the Company or any subsidiary owns any interest (the “Joint Ventures”) are listed in Exhibit B hereto.

 10
 

 

(22)         1934 Act Registration; New York
Stock Exchange. The Common Stock has been registered pursuant to Section 12(b) of
the 1934 Act. The outstanding shares of Common Stock and the Securities being
sold hereunder will have been approved for listing, subject only to official
notice of issuance, on the NYSE.

(23)         NASD Matters. All of the
information (including, but not limited to, information regarding affiliations,
security ownership and trading activity) provided to ML&Co or to counsel
for ML&Co by the Company, its officers and directors and the holders of any
securities (debt or equity) or options to acquire any securities of the Company
in connection with letters, filings or other supplemental information provided
to NASD Regulation Inc. pursuant to NASD Conduct Rule 2710 or 2720 is
true, complete and correct.

(24)         Insurance. The Company, the
Operating Partnership and each of their respective subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which
they are engaged; all policies of insurance and any fidelity or surety bonds insuring
the Company, the Operating Partnership or any of their respective subsidiaries
or their respective businesses, assets, employees, officers and directors are
in full force and effect; the Company, the Operating Partnership and their
respective subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; there are no claims by the Company, the
Operating Partnership or any of their respective subsidiaries under any such
policy or instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause; neither the Company, the
Operating Partnership nor any such subsidiary has been refused any insurance
coverage sought or applied for; and neither the Company, the Operating
Partnership nor any such subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse
Effect.

(25)         Disclosure Controls and Procedures.
The Company and the Operating Partnership have established and maintain
disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under
the Exchange Act) that (i) are designed to ensure that material
information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is accumulated and communicated to the
Company’s management, including the Company’s principal executive officer and
principal financial officer, particularly during the preparation of the reports
that it files or submits under the Exchange Act; and (ii) are effective to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Commission’s rules and
forms.

(26)         Accounting Controls. The Company
and its subsidiaries maintain a system of internal control over financial
reporting sufficient to provide reasonable assurance that financial reporting
is reliable and financial statements for external purposes are prepared in
accordance with GAAP and includes policies and procedures

 11
 

 

that (i) pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

(27)         Absence of Manipulation. Each of
the Company and the Operating Partnership has not taken and will not take,
directly or indirectly, any action designed to or that would constitute or that
might reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security to facilitate the sale or resale of
the Shares.

(28)         ERISA. Except as set forth in
the Company’s financial statements, each of the Company and the Operating
Partnership does not have any material liabilities under the Employee
Retirement Income Security Act of 1974, as amended, or Section 4975 of the
Internal Revenue Code of 1986, as amended from time to time

(29)         REIT Status. Commencing with its
taxable year ended December 31, 2004, the Company has been organized and
operated in conformity with the requirements for qualification and taxation as
a real estate investment trust (“REIT”)
under the Internal Revenue Code of 1986, as amended, and the regulations and
published interpretations thereunder (collectively, the “Code”), and the Company’s current and
proposed method of operations as described in the Prospectus will enable it to
continue to meet the requirements for qualification and taxation as a REIT
under the Code.

(30)         Tax Returns. All tax returns
required to be filed as of the date hereof by the Company and each of is
subsidiaries have been timely filed (or valid extensions to such filings have
been obtained), all such tax returns are true, correct and complete in all
material respects, and all material taxes and other assessments of a similar
nature (whether imposed directly or through withholding) including any
interest, additions to tax or penalties applicable thereto due or claimed to be
due from such entities have been paid, other than those being contested in good
faith and for which adequate reserves have been provided.

(31)         Related Party Transactions. There
are no business relationships or related-party transactions involving the
Company, the Operating Partnership or the Manager required to be described in
the Prospectus which have not been so described as required.

(32)         No Unlawful Contributions or Other
Payments. Neither the Company, the Operating Partnership nor any subsidiary
nor, to the best of the Company’s knowledge, any employee or agent of the
Company, the Operating Partnership or any subsidiary, has made any contribution
or other payment to any official of, or candidate for, any federal, state or
foreign office in violation of any law or of the character required to be
disclosed in the Prospectus.

 12

 

(33)         Investment Company Act. The
Company is not, and upon the issuance and sale of the Placement Shares, as
herein contemplated and the application of the net proceeds therefrom as
described in the Prospectus, will not be, an “investment company” or an entity “controlled”
by an “investment company,” as such terms are defined in the Investment Company
Act of 1940, as amended (the “Investment
Company Act”).

(34)         Brokers and Finders. Neither the
Company, the Operating Partnership nor any subsidiary has incurred any
liability for a fee, commission or other compensation on account of the
employment of a broker or finder in connection with the transactions
contemplated by this Agreement other than as contemplated hereby.

(35)         No Prohibition on Subsidiaries from
Paying Dividends or Making Other Distributions. No subsidiary is currently
prohibited, directly or indirectly, from paying any dividends to the Company,
from making any other distribution on such subsidiary’s capital stock or other
equity interests, from repaying to the Company any loans or advances to such
subsidiary from the Company or from transferring any of such subsidiary’s
property or assets to the Company or any other Subsidiary.

(36)         Title to Real and Personal Property.
The Company and its subsidiaries, including the Operating Partnership, have (or
in the case of a Joint Venture, such limited partnership, limited liability
company or other joint venture entity has) good and marketable title in fee
simple to, or a valid leasehold interest in, any real property currently leased
or owned or controlled by them, or to be leased or owned or to be controlled by
them (collectively, the “Real Property”) and good and marketable title
to any and all personal property owned by the Company or any of its Subsidiaries
that is material to the business of the Company or the Operating Partnership,
in each case free and clear of all liens, encumbrances and defects, except as
described in the Prospectus or such as would not reasonably be expected to
result in a Material Adverse Effect; and any real property, buildings and
equipment held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases (the “Leases”) with such
exceptions as are disclosed in the Prospectus or such as would not reasonably
be expected to result in a Material Adverse Effect; (ii) neither the
Company nor any of its Subsidiaries has received notice of any claim that has
been or may be asserted by anyone adverse to the rights of the Company or any
subsidiary with respect to any such Real Properties, personal property or
Leases or affecting or questioning the rights of the Company to the continued
ownership, lease, possession or occupancy of such Real Properties, personal
property or Leases, except for such claims that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect; (iii) no
person or entity, including, without limitation, any tenant under the leases,
if any, for the Real Properties has an option or right of first refusal or any
other right to purchase any of such Real Properties, except as disclosed in the
Prospectus; (iv) all of the Leases are in full force and effect, except
where the failure to be in full force or effect would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, and
neither the Company nor any of its subsidiaries is in default in the payment of
any amounts due under any such Leases or in any other default thereunder and
neither the Company nor any of its subsidiaries knows or an event which, with
the passage of time or the giving of notice or both, would constitute a default
under any such 

 13
 

 

Lease, except
such defaults that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; and (v) there is no pending
or, to the knowledge of the Company or its subsidiaries, threatened
condemnation, zoning change, or other proceeding or action that would in any
manner affect the size of, use of, improvements on, construction on or access
to any Real Property, except such proceedings or actions that, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.

(37)         Title Insurance. The Company and
its subsidiaries or as applicable, a Joint Venture, has either (i) an
owner’s or leasehold title insurance policy, from a title insurance company
licensed to issue such policy, on any Real Property, that insures the fee or
leasehold interest, as the case may be, which policies include only
commercially reasonable exceptions, and with coverages in amounts at least
equal to amounts that the Company believes are generally commercially
reasonable in the markets where the Real Properties are located or (ii) with
respect to mortgage loans extended by the Company and its subsidiaries, the
Company or its subsidiary has one or more lender’s title insurance policies
insuring the lien of the mortgages encumbering the real property underlying
such loans with coverages, in the aggregate, equal to at least the maximum
aggregate principal amount of such loan.

(38)         Compliance with Environmental Laws.
Except to an extent that would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect or as otherwise
disclosed in the Prospectus: (i) neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any other owners of the Real
Property at any time, or to the knowledge of the Company, any other party has
at any time, handled, stored, treated, transported, manufactured, spilled,
leaked, or discharged, dumped, transferred or otherwise disposed of or dealt
with, Hazardous Materials (as hereinafter defined) on, to or from any Real
Property, other than by any such action taken in material compliance with all
applicable Environmental Statutes (as hereinafter defined) or by the Company,
any of its subsidiaries or any other party in connection with the ordinary use
of residential, retail or commercial properties owned by the Company or any
subsidiary; (ii) the Company and its subsidiaries do not intend to use the
Real Property or any subsequently acquired properties for the purpose of
handling, storing, treating, transporting, manufacturing, spilling, leaking,
discharging, dumping, transferring or otherwise disposing of or dealing with
Hazardous Materials other than by any such action taken in material compliance
with all applicable Environmental Statues or by the Company, any of its
subsidiaries or, to the knowledge of the Company, any other party in connection
with the ordinary use of residential, retail or commercial properties owned by
the Company or any subsidiary; (iii) the Company and the Operating
Partnership do not know of any seepage, leak, discharge, release, emission,
spill, or dumping of Hazardous Materials from the Real Property into waters on
or adjacent to the Real Property or from the Real Property onto any real
property owned or occupied by any other party, or onto lands from which
Hazardous Materials might seep, flow or drain into such waters other than in
material compliance with Environmental Statutes; (iv) neither the Company
nor any of its subsidiaries has received any notice of, or has knowledge of,
any occurrence or circumstance which, with notice or passage of time or both,
would give rise to a claim under or pursuant to any U.S. federal, state or
local environmental statute

 14
 

 

or regulation
or under common law, pertaining to Hazardous Materials on or originating from
any of the Real Property or arising out of the conduct of the Company or any of
its subsidiaries, including without limitation a claim under or pursuant to any
Environmental Statute (as hereinafter defined); and (v) neither the Real
Property is included nor, to the Company’s or the Operating Partnership’s knowledge,
is proposed for inclusion on the National Priorities List issued pursuant to
CERCLA (as hereinafter defined) by United States Environmental Protection
Agency (the “EPA”) or, to the Company’s or to the Operating Partnership’s
knowledge, proposed for inclusion on any similar list or inventory issued
pursuant to any other Environmental Statute or issued by any other governmental
authority.

As used
herein, “Hazardous Materials”
shall include, without limitation, any flammable explosives, radioactive materials,
hazardous materials, hazardous wastes, toxic substances, or related materials,
asbestos or any hazardous material as defined by any U.S. federal, state or
local environmental law, ordinance, rule or regulation including without
limitation the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Sections 9601-9675 (“CERCLA”), the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Sections 1801-1819, the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Sections 6901-6992K,
the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
Sections 11001-11050, the Toxic Substances Control Act, 15 U.S.C.
Sections 2601-2671, the Federal Insecticide, Fungicide and Rodenticide Act,
7 U.S.C. Sections 136-136y, the Clean Air Act, 42 U.S.C. Sections 7401-7642,
the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. Sections
1251-1387, the Safe Drinking Water Act, 42 U.S.C. Sections 300f-330j-26,
and the Occupational Safety and Health Act, 29 U.S.C. Sections 651-678,
as any of the above statutes may be amended from time to time, and in the
regulations promulgated pursuant to each of the foregoing (individually, an “Environmental Statute”) or by any
governmental authority.

(39)         Compliance with ADA. The Company
and its subsidiaries and each Real Property are currently in compliance with
all presently applicable provisions of the Americans with Disabilities Act, as
amended, except for any such non-compliance that would not, individually or in
aggregate, reasonably be expected to have a Material Adverse Effect.

(40)         Sarbanes-Oxley Act. The Company
and each of the Company’s directors and officers, in their capacities as such,
are in full compliance with all applicable provisions of the Sarbanes-Oxley Act
and the rules and regulations promulgated in connection therewith,
including Section 402 related to loans and Sections 302 and 906 related to
certifications.

(41)         S-3 Eligibility. The
conditions for the use by the Company of a registration statement on Form S-3
have been satisfied and the Company is entitled to use such form for the
transactions contemplated herein.

 15
 

 

(b) Representations
and Warranties by the Manager. The Manager represents and warrants to
ML&Co, and agrees with, ML&Co that as of the date of this Agreement and
as of eachCation
Date (as defined in Section 7(m) below) on which a certificate
is required to be delivered pursuant to Section 7(m) of this
Agreement, as the case may be:

(1)           Accurate Disclosure. The
information regarding the Manager in the Prospectus is true and correct in all
material respects.

(2)           Good Standing of the Manager. The
Manager has been duly formed and is validly existing as a limited liability
company in good standing under the laws of the State of Delaware and has power
and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement, the Management Agreement, the amended and restated
asset servicing agreement between the Manager and SLG Management Services LLC
effective as of April 19, 2006 (the “Asset
Servicing Agreement”) and the amended and restated outsource
agreement between the Manager and SL Green Operating Partnership, L.P.
effective as of April 19, 2006 (the “Outsource
Agreement”); and the Manager is duly qualified as a foreign
limited liability company to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result in a
Material Adverse Effect.

(3)           Authorization of Management
Agreement, Asset Servicing Agreement and Outsource Agreement. Each of this
Agreement, the Management Agreement, the Asset Servicing Agreement and the
Outsource Agreement (collectively, the “Manager
Agreements”) has been duly authorized, executed and delivered by
the Manager and constitutes a valid and binding agreement of the Manager
enforceable in accordance with its terms, except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency, reorganization or other laws
affecting enforcement of creditors’ rights or by general equitable principles.

(4)           Absence of Defaults and Conflicts.
The Manager is not in violation of its Organizational Documents or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any Company Document, Manager Agreement or otherwise,
except for such defaults that would not result in a Material Adverse Effect. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein and in the Manager Agreements and
compliance by the Manager with its obligations under this Agreement do not and
will not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default under, or result in
the creation or imposition of any Lien upon any property or assets of the
Manager, nor will such action result in any violation of the provisions of the
Organizational Documents of the Manager or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having 

 16
 

 

jurisdiction
over the Manager or any of its subsidiaries or any of their respective assets,
properties or operations.

(5)           Absence of Proceedings. There
is no action, suit, proceeding, inquiry or investigation before or brought by
any court or governmental agency or body, domestic or foreign, now pending, or,
to the knowledge of the Manager, threatened, against or affecting the Manager.

(6)           Absence of Further Requirements.
(A) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority
or agency, domestic or foreign, (B) no authorization, approval, vote or
other consent of any stockholder or creditor of the Manager, (C) no waiver
or consent under any Company Document, and (D) no authorization, approval,
vote or other consent of any other person or entity, is necessary or required
for the performance by the Manager of its obligations under this Agreement or
the Manager Agreements and the transactions contemplated thereby, in each case
on the terms contemplated by the Prospectus, except such as have been already
obtained.

(7)           Possession of Licenses and Permits.
The Manager possesses such Governmental Licenses issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies necessary to
conduct its business as described in the Prospectus; the Manager is in material
compliance with the terms and conditions of all such Governmental Licenses,
except where the failure so to comply would not, individually or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force and
effect would not have a Material Adverse Effect; and the Manager has not
received any notice of proceedings relating to the revocation or modification
of any such Governmental Licenses which, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.

(8)           Investment Advisers Act. The
Manager is not prohibited by the Investment Advisers Act of 1940, as amended
(the “Advisers Act”), or
the rules and regulations thereunder, from performing under the Management
Agreement as contemplated by the Management Agreement and as described in the
Prospectus.

7. Covenants of the
Company. Each of the Company and the Operating Partnership, severally,
covenants and agrees with ML&Co as follows:

(a) Registration
Statement Amendments. After the date of this Agreement and during any
period in which a Prospectus relating to any Placement Shares is required to be
delivered by ML&Co under the Securities Act (including in circumstances
where such requirement may be satisfied pursuant to Rule 172 under the
Securities Act), (i) the Company will notify ML&Co promptly of the
time when any subsequent amendment to the Registration Statement, other than
documents incorporated by reference, has been filed with the Commission and/or
has become effective or any subsequent supplement to the Prospectus has been
filed and of any

 17
 

 

request by the Commission for any amendment
or supplement to the Registration Statement or Prospectus or for additional
information, (ii) the Company will prepare and file with the Commission,
promptly upon ML&Co’s request, any amendments or supplements to the
Registration Statement, Prospectus or free writing prospectus that, in the
opinion of external counsel for ML&Co, is necessary in order that the
Registration Statement or Prospectus will not include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein not misleading (with respect to the Prospectus only, in the
light of the circumstances existing at the time it is delivered to a
purchaser), or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend, supplement the
Prospectus or deliver any free writing prospectus in order to comply with the
requirements of the Securities Act in connection with the distribution of the
Placement Shares by ML&Co (provided,
however, that the failure of ML&Co to make such request shall
not relieve the Company of any obligation or liability hereunder, or affect
ML&Co’s right to rely on the representations and warranties made by the
Company in this Agreement); (iii) the Company will not file any amendment
or supplement to the Registration Statement or Prospectus or prepare any free
writing prospectus relating to the Placement Shares unless a copy thereof has
been submitted to ML&Co within a reasonable period of time before the
filing and ML&Co has not reasonably objected thereto (provided, however, that the failure of
ML&Co to make such objection shall not relieve the Company of any
obligation or liability hereunder, or affect ML&Co’s right to rely on the
representations and warranties made by the Company in this Agreement) and the
Company will furnish to ML&Co at the time of filing thereof a copy of any
document that upon filing is deemed to be incorporated by reference into the
Registration Statement or Prospectus, except for those documents available via
EDGAR; and (iv) the Company will promptly effect the filing or cause each
amendment or supplement to the Prospectus to be filed with the Commission as
required pursuant to the applicable paragraph of Rule 424(b) of the
Securities Act or, in the case of any document to be incorporated therein by
reference, to be filed with the Commission as required pursuant to the Exchange
Act, within the time period prescribed (the determination to file or not file
any amendment or supplement with the Commission under this Section 7(a),
based on the Company’s reasonable opinion or reasonable objections, shall be
made exclusively by the Company).

(b) Notice
of Commission Stop Orders. The Company will advise ML&Co, promptly
after it receives notice or obtains knowledge thereof, of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, of the suspension of the qualification of the Placement Shares for
offering or sale in any jurisdiction, or of the initiation or threatening of
any proceeding for any such purpose; and it will make every reasonable effort
to prevent the issuance of any stop order or to obtain its withdrawal if such a
stop order should be issued.

(c) Delivery
of Prospectus; Subsequent Changes. During any period in which a Prospectus
relating to the Placement Shares is required to be delivered by ML&Co under
the Securities Act with respect to the offer and sale of the Placement

 18
 

 

Shares, (including in circumstances where
such requirement may be satisfied pursuant to Rule 172 under the
Securities Act), the Company will comply with all requirements imposed upon it
by the Securities Act, as from time to time in force, and to file on or before
their respective due dates all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission under the
Exchange Act. If during such period any event occurs as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances then existing, not
misleading, or if during such period it is necessary to amend or supplement the
Registration Statement or Prospectus to comply with the Securities Act, the
Company will promptly notify ML&Co to suspend the offering of Placement
Shares during such period and the Company will promptly amend or supplement the
Registration Statement or Prospectus (at the expense of the Company) so as to
correct such statement or omission or effect such compliance.

(d) Listing
of Placement Shares. During any period in which the Prospectus relating to
the Placement Shares is required to be delivered by ML&Co under the
Securities Act with respect to the offer and sale of the Placement Shares
(including in circumstances where such requirement may be satisfied pursuant to
Rule 172 under the Securities Act), the Company will use its reasonable
best efforts to effect the listing on the Exchange and to qualify the Placement
Shares for sale under the securities laws of such jurisdictions as ML&Co
reasonably designates and to continue such qualifications in effect so long as
required for the distribution of the Placement Shares; provided, however, that the Company shall
not be required in connection therewith to qualify as a foreign corporation or
dealer in securities or file a general consent to service of process in any
jurisdiction.

(e) Delivery
of Registration Statement and Prospectus. The Company will furnish to
ML&Co and its counsel (at the expense of the Company) copies of the
Registration Statement, the Prospectus (including all documents incorporated by
reference therein and any free writing prospectus) and all amendments and
supplements to the Registration Statement or Prospectus that are filed with the
Commission during any period in which a Prospectus relating to the Placement
Shares is required to be delivered under the Securities Act (including all
documents filed with the Commission during such period that are deemed to be
incorporated by reference therein), in each case as soon as reasonably
practicable and in such quantities as ML&Co may from time to time
reasonably request and, at ML&Co’s request, will also furnish copies of the
Prospectus to each exchange or market on which sales of the Placement Shares
may be made; provided, however,
that the Company shall not be required to furnish any document (other than the
Prospectus) to ML&Co to the extent such document is available on EDGAR.

(f) Earnings
Statement. The Company will make generally available to its security
holders as soon as practicable, an earnings statement that satisfies the
provisions of Section 11(a) and Rule 158 of the Securities Act.

 19
 

 

(g) Expenses.
The Company, whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, in accordance with the provisions
of Section 11 hereunder, will pay the following all expenses incident to
the performance of its obligations hereunder, including, but not limited to,
expenses relating to (i) the preparation, printing and filing of the
Registration Statement and each amendment and supplement thereto, of each
Prospectus and of each amendment and supplement thereto, (ii) the
preparation, issuance and delivery of the Placement Shares, (iii) the
qualification of the Placement Shares under securities laws in accordance with
the provisions of Section 7(d) of this Agreement, including
filing fees and any reasonable fees or disbursements of counsel for ML&Co
in connection therewith, not to exceed $5,000 (iv) the printing and
delivery to ML&Co of copies of the Prospectus and any amendments or
supplements thereto, and of this Agreement, (v) the fees and expenses
incurred in connection with the listing of the Placement Shares for trading on
the Exchange, (vi) filing fees and expenses, if any, of the NASD Corporate
Financing Department.

(h) Use
of Proceeds. The Company will use the Net Proceeds as described in the
Prospectus in the section entitled “Use of Proceeds.”

(i) Restriction
on Sale of Securities. Each of the Company and the Operating Partnership
will not, if there is a Placement Notice pending, without providing ML&Co
notice as promptly as reasonably possible before taking any of the actions
listed below, offer, sell, agree to offer or sell, solicit offers to purchase,
grant any call option or purchase any put option with respect to, pledge,
borrow or otherwise dispose of, or establish or increase a “put equivalent
position” or liquidate or decrease a “call equivalent position” within the
meaning of Section 16 of the Securities Act, or otherwise enter into any
swap, derivative or other transaction or arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership, whether or
not such transaction is to be settled by delivery of such securities, other
securities, cash or other consideration with respect to, the Company’s Common
Stock, OP Units or other stock of the Company or any other equity securities
convertible into, or exercisable or exchangeable for, shares of the Company’s
Common Stock, or other stock, or publicly announce an intention to effect any
such transaction, during the term of this Agreement provided, however no notice
is required (A) the Company issues and sells the Shares pursuant to this
Agreement, (B) the Company issues and sells Common Stock and options to
purchase Common Stock pursuant to any employee or director stock option or
stock purchase plans in effect on the date of this Agreement (so long as each
such plan and issuance is described in the Prospectus), (C) the Operating
Partnership issues OP Units in consideration for acquisitions of assets and (D) the
Company may issue Common Stock upon the conversion of its outstanding
securities, upon exchange of OP Units, or upon exercise of warrants, options or
other rights in effect or outstanding.

(j) Change
of Circumstances. The Company will, at any time during a fiscal quarter in
which the Company intends to tender a Placement Notice or sell Placement Shares
during the term of this Agreement, as supplemented from time to

 20
 

 

time, advise ML&Co promptly after it
shall have received notice or obtained knowledge thereof, of any material events respecting its activities,
affairs or condition, financial or otherwise, and the Company will forthwith
supply such information to ML&Co as shall be necessary in the opinion of
counsel to the Company for the Company to prepare any necessary amendment or
supplement to the Prospectus so that, as so amended or supplemented, the Prospectus
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances existing at the time it is delivered to a purchaser, not
misleading.

(k) Due
Diligence Cooperation. The Company will cooperate with any reasonable due
diligence review conducted by ML&Co or its agents in connection with the
transactions contemplated hereby, including, without limitation, providing
information and making available documents and senior corporate officers,
during regular business hours and at the Company’s principal offices, as
ML&Co may reasonably request.

(l) Required
Filings Relating to Placement of Placement Shares. The Company agrees that
on such dates as the Securities Act shall require, the Company will (i) file
a prospectus supplement with the Commission under the applicable paragraph of Rule 424(b) under
the Securities Act (each and every filing under Rule 424(b), a “Filing Date”), which prospectus
supplement will set forth, within the relevant period, the amount of Placement
Shares sold through ML&Co, the Net Proceeds to the Company and the
compensation payable by the Company to ML&Co with respect to such Placement
Shares, (ii) deliver such number of copies of each such prospectus
supplement to each exchange or market on which such sales were effected as may
be required by the rules or regulations of such exchange or market, and (iii) make
any other filings required by the Securities Act required with the placement of
the Shares.

(m) Representation
Dates; Certificate. During the term of this Agreement, on or prior to the
date that the first Shares are sold pursuant to the terms of this Agreement and
each time the Company (i) files the Prospectus relating to the Placement
Shares or amends or supplements the Registration Statement or the Prospectus
relating to the Placement Shares (other than a prospectus supplement filed in
accordance with Section 7(l) of this Agreement) by means of a
post-effective amendment, sticker, or supplement but not by means of
incorporation of document(s) by reference to the Registration Statement or
the Prospectus relating to the Placement Shares; (ii) files an annual
report on Form 10-K under the Exchange Act (“Form 10-K”); (iii) files
its quarterly reports on Form 10-Q under the Exchange Act (“Form 10-Q”); or (iv) files
a report on Form 8-K containing audited financial statements of the
Company (other than an earnings release, to “furnish” information pursuant to
Items 2.02 or 7.01 of Form 8-K or to provide disclosure pursuant to
Item 8.01 of Form 8-K relating to the reclassifications of certain
properties as discontinued operations in accordance with Statement of Financial
Accounting Standards No. 144) under the Exchange Act (each date of filing
of one or more of the documents referred to in clauses (i) through (iv) shall
be a

 21
 

 

“Representation
Date”); the Company shall furnish ML&Co with a
certificate, in the form attached hereto as Exhibit 7(m). The
requirement to provide a certificate under this Section 7(m) shall
be waived for any Representation Date occurring at a time at which no Placement
Notice is pending, which waiver shall continue until the earlier to occur of
the date the Company delivers a Placement Notice hereunder (which for such
calendar quarter shall be considered a Representation Date) and the next
occurring Representation Date; provided,
however, that such waiver shall
not apply for any Representation Date on which the Company files its annual
report on Form 10-K. Notwithstanding the foregoing, if the Company
subsequently decides to sell Placement Shares following a Representation Date
when the Company relied on such waiver and did not provide ML&Co with a
certificate under this Section 7(m), then before the Company
delivers the Placement Notice or ML&Co sells any Placement Shares, the
Company shall provide ML&Co with a certificate, in the form attached hereto
as Exhibit 7(m), dated the date of the Placement Notice.

(n) Legal
Opinion. On or prior to the date that the first Shares are sold pursuant to
the terms of this Agreement, and within three (3) Trading Days of each
Representation Date with respect to which the Company is obligated to deliver a
certificate in the form attached hereto as Exhibit 7(m) for
which no waiver is applicable, the Company shall cause to be furnished to
ML&Co written opinions of Clifford Chance US LLP (“Company Counsel”)
and Wilkie Farr & Gallagher LLP (“Special
40 Act Counsel”), or other counsel satisfactory to ML&Co, in
form and substance satisfactory to ML&Co and its counsel, dated the date of
this Agreement or the Representation Date, as the case may be, substantially
similar to the form attached hereto as Exhibit 7(n)(1)(a) and Exhibit 7(n)(1)(b),
respectively, modified, as necessary, to relate to the Registration Statement
and the Prospectus as then amended or supplemented; provided, however,
that in lieu of such opinions for subsequent Representation Dates, counsel may
furnish ML&Co with a letter (a “Reliance
Letter”) to the effect that ML&Co may rely on a prior
opinion delivered under this Section 7(n) to the same extent
as if it were dated the date of such letter (except that statements in such
prior opinion shall be deemed to relate to the Registration Statement and the
Prospectus as amended or supplemented at such Representation Date).

(o) Comfort
Letter. On or prior to the date that the first Shares are sold pursuant to
the terms of this Agreement and thereafter within three (3) Trading Days
of each Representation Date occurring during any period in which the Prospectus
relating to the Placement Shares is required to be delivered by ML&Co
(including in circumstances where such requirement may be satisfied pursuant to
Rule 172 under the Act) and each Representation Date with respect to which
the Company is obligated to deliver a certificate in the form attached hereto
as Exhibit 8(m) for which no waiver is applicable, the Company
shall cause its independent accountants to furnish ML&Co letters (the “Comfort Letters”), dated the date
of the Comfort Letter is delivered, in form and substance satisfactory to
ML&Co, (i) confirming that they are an independent public accounting
firm  within the meaning of the
Securities Act and the PCAOB, (ii) stating, as of such date, the
conclusions and findings of such firm with respect to the financial information
and other matters

 22
 

 

ordinarily covered by accountants’ “comfort
letters” to underwriters in connection with registered public offerings (the
first such letter, the “Initial Comfort
Letter”) and (iii) updating the Initial Comfort Letter with
any information that would have been included in the Initial Comfort Letter had
it been given on such date and modified as necessary to relate to the
Registration Statement and the Prospectus, as amended and supplemented to the
date of such letter.

(p) No
Price Stabilization or Manipulation. During the pendency of any Placement
Notice hereunder, the Company will not, and will use its best efforts to cause
its officers, directors and affiliates not to, (i) take, directly or indirectly
any action designed to stabilize or manipulate the price of any security of the
Company, or which may cause or result in, or which might in the future
reasonably be expected to cause or result in, the stabilization or manipulation
of the price of any security of the Company, to facilitate the sale or resale
of any of the Shares, (ii) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of the Shares other than ML&Co, or (iii) pay
or agree to pay to any person (other than ML&Co) any compensation for
soliciting any order to purchase any other securities of the Company.

(q) REIT
Treatment. The Company will use its commercially reasonable efforts to
continue to meet the requirements for qualification and taxation as a REIT under
the Code for subsequent tax years that include any portion of the term of this
Agreement.

(r) Company
Not an “Investment Company.”  The Company is familiar with the
Investment Company Act of 1940, as amended, and the rules and regulations
thereunder, and will in the future conduct its and the Operating Partnership’s
affairs, in such a manner and will use its commercially reasonable best efforts
to ensure that the Company and the Operating Partnership will not be an “investment
company” within the meaning of the Investment Company Act of 1940 and the rules and
regulations thereunder.

(s) ML&Co
Purchases. The Company acknowledges and agrees that ML&Co has informed
the Company that ML&Co may, to the extent permitted under the Securities Act and the Exchange Act,
purchase and sell shares of Common
Stock for its own account while this Agreement is in effect, provided,  that
(i) no such purchase or sales shall take place while a Placement Notice is
in effect (except to the extent ML&Co may engage in sales of Placement
Shares purchased or deemed purchased from the Company as a “riskless principal”
or in a similar capacity) and (ii) the Company shall not be deemed to have
authorized or consented to any such purchases or sales by ML&Co.

(t) No
Offer to Sell. Other than a free writing prospectus (as defined in Rule 405
under the Act) approved in advance by the Company and ML&Co in its capacity
as principal or agent hereunder, neither ML&Co nor the Company (including
its agents and representatives, other than ML&Co in its capacity as such)
will make, use, prepare, authorize, approve or refer to any written
communication

 23
 

 

(as defined in Rule 405 under the Act),
required to be filed with the Commission, that constitutes an offer to sell or
solicitation of an offer to buy Shares hereunder.

8. Conditions to
ML&Co’s Obligations. The obligations of ML&Co hereunder with
respect to a Placement will be subject to the completion by ML&Co of a due
diligence review satisfactory to ML&Co in its reasonable judgment, and to
the continuing satisfaction (or waiver by ML&Co in its sole discretion) of
the following additional conditions:

(a) Registration
Statement Effective. The Registration Statement shall have become effective
and shall be available for the (i) resale of all Placement Shares issued
to ML&Co and not yet sold by ML&Co and (ii) the sale of all
Placement Shares contemplated to be issued by any Placement Notice.

(b) No
Material Notices. None of the following events shall have occurred and be
continuing:  (i) receipt by the
Company of any request for additional information from the Commission or any
other federal or state governmental authority during the period of
effectiveness of the Registration Statement, the response to which would
require any post-effective amendments or supplements to the Registration
Statement or the Prospectus; (ii) the issuance by the Commission or any
other federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose; (iii) receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Placement Shares for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose; (iv) the occurrence of
any event that makes any material statement made in the Registration Statement
or the Prospectus or any material document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in the Registration Statement, related
Prospectus or documents so that, in the case of the Registration Statement, it
will not contain any materially untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and, that in the case of the Prospectus, it
will not contain any materially untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

(c) Representations
and Warranties. All the representations and warranties of the Company,
the Operating Partnership, and the Manager contained in this Agreement shall be
true and correct on each Representation Date, with the same force and effect as
if made on and as of such Representation Date, and the Company, the Operating
Partnership, and the Manager shall have complied with all agreements and all
conditions on its part to be performed or satisfied hereunder at or prior to
such Representation Date.

 24

 

(d) Legal
Opinion. ML&Co shall have received the opinions of Company Counsel
required to be delivered pursuant Section 7(n) on or before
the date on which such delivery of such opinion is required pursuant to Section 7(n).

(e) Comfort
Letter. ML&Co shall have received the Comfort Letter required to be
delivered pursuant Section 7(o) on or before the date on which
such delivery of such opinion is required pursuant to Section 7(o).

(f) Representation
Certificate. ML&Co shall have received the certificate required to be
delivered pursuant to Section 7(m) on or before the date on
which delivery of such certificate is required pursuant to Section 7(m).

(g) No
Suspension. Trading in the Shares shall not have been suspended on the
Exchange.

(h) Other
Materials. On each date on which the Company is required to deliver a
certificate pursuant to Section 8(m), the Company shall have
furnished to ML&Co such appropriate further information, certificates and
documents as ML&Co may reasonably request. All such opinions, certificates,
letters and other documents will be in compliance with the provisions hereof.
The Company will furnish ML&Co with such conformed copies of such opinions,
certificates, letters and other documents as ML&Co shall reasonably
request.

(i) No Objection. Prior to the date of this Agreement, NASD Regulation Inc. shall have
confirmed in writing that it has no objection with respect to the fairness and
reasonableness of the underwriting terms and arrangements.

(j) No
Termination Event. There shall not have
occurred any event that would permit ML&Co to terminate this Agreement
pursuant to Section 11(a).

9. Indemnification
and Contribution.

(a) Indemnification by the Company and the Operating
Partnership. Each of the Company and the Operating Partnership, jointly and
severally, agrees to indemnify and hold harmless ML&Co and each person, if
any, who controls ML&Co within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act as follows:

(i)  against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising in whole or in part out of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or in any supplement thereto or
amendment thereof, or arising out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading;

(ii)  against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any of (i) above; 

 25
 

 

provided that
(subject to Section 9(d) below) any such settlement is effected with
the written consent of the Company; and

(iii)  against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the Company), reasonably
incurred in investigating, preparing or defending against any litigation, or
any investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any of (i) above, to the
extent that any such expense is not paid under (i) or (ii) above,

provided,
however, that this indemnity agreement shall not apply to any loss, liability,
claim, damage or expense to the extent arising out of any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by ML&Co
expressly for use in the Registration Statement (or any amendment thereto), or
in any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), which information is set forth in Section 7(a)(2) hereof.
The indemnity agreement set forth in this Section 9(a) shall
be in addition to any liabilities that the Company may otherwise have.

(b) Indemnification by ML&Co. ML&Co severally agrees
to indemnify and hold harmless the Company, its directors, each of its officers
who signed the Registration Statement and the Operating Partnership and each
person, if any, who controls the Company and the Operating Partnership within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section 10,
as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendment thereto), or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by ML&Co expressly for use in the Registration Statement (or
any amendment thereto) or the Prospectus (or any amendment or supplement
thereto), which information is described in Section 7(a)(2) hereof.
The indemnity agreement set forth in this Section 10(b) shall
be in addition to any liabilities that ML&Co may otherwise have.

(c) Actions against Parties; Notification. Promptly after receipt by an indemnified party
under subsection (a) or (b) above of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to
be made against an indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify such indemnifying party shall not relieve the indemnifying party from
any liability which it may have to any indemnified party under such subsection
except to the extent it has been materially prejudiced by such failure. In case
any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party
(who

 26
 

 

shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal or other expenses, in each case subsequently incurred
by such indemnified party, in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party
from all liability arising out of such action or claim and (ii) does not
include any statement as to, or an admission of, fault, culpability or a
failure to act, by or on behalf of any indemnified party.

(d) Settlement Without Consent if Failure to
Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 9(a)(ii) effected without its written consent if (i) such
settlement is entered into more than 45 days after delivery to such
indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 30 days
prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.

(e) Contribution. If the indemnification provided for in
this Section 9 is for any reason unavailable to or insufficient to
hold harmless an indemnified party in respect of any losses, liabilities,
claims, damages or expenses referred to therein, then each indemnifying party
shall contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Operating Partnership on the one hand and ML&Co on the
other hand from the offering of the Shares pursuant to this Agreement or (ii) if
the allocation provided by clause (i) is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
and the Operating Partnership on the one hand and of ML&Co on the other
hand in connection with the inaccuracies, statements or omissions which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Operating Partnership on the one hand and ML&Co on the
other hand in connection with the offering of the Shares pursuant to this
Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Shares pursuant to this Agreement (before
deducting expenses) received by the Company and the Operating Partnership and
the total underwriting discount received by ML&Co, in each case as set
forth on the cover of the Prospectus, bear to the aggregate public offering
price of the Shares as set forth on such cover. The relative fault of the
Company and the 

 27
 

 

Operating
Partnership on the one hand and ML&Co on the other hand shall be determined
by reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company, the Operating
Partnership, or by ML&Co and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Operating Partnership and ML&Co agree that it
would not be just and equitable if contribution pursuant to this Section 9(e) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 9(e). The aggregate amount of losses, liabilities, claims,
damages and expenses incurred by an indemnified party and referred to above in
this Section 9(e) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 9(e),
ML&Co shall not be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which ML&Co has otherwise been required to pay by reason of any
such untrue or alleged untrue statement or omission or alleged omission.

No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

For purposes of this Section 10(e), each person, if any, who
controls ML&Co within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act shall have the same rights to
contribution as ML&Co, and each director of the Company, each officer of
the Company who signed the Registration Statement, the Operating Partnership,
and each person, if any, who controls the Company and the Operating Partnership
within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act shall have the same rights to contribution as the Company
and the Operating Partnership.

10. Representations
and Agreements to Survive Delivery. The indemnity and contribution
agreements contained in Section 9 of this Agreement and all
representations and warranties of the Company herein or in certificates
delivered pursuant hereto shall survive, as of their respective dates,
regardless of (i) any investigation made by or on behalf of ML&Co, any
controlling persons, or the Company (or any of their respective officers,
directors or controlling persons), (ii) delivery and acceptance of the
Placement Shares and payment therefor or (iii) any termination of this
Agreement.

 28
 

 

11. Termination.

(a) ML&Co
shall have the right by giving notice as hereinafter specified at any time to
terminate this Agreement if (i) any Material Adverse Effect, or any
development that has actually occurred and that is reasonably expected to cause
a Material Adverse Effect has occurred that, in the reasonable judgment of
ML&Co, may materially impair the ability of ML&Co to sell the Placement
Shares hereunder, (ii) the Company shall have failed, refused or been
unable at or prior to any Settlement Date to perform any agreement on its part
to be performed hereunder; provided,
however, in the case of any failure of the Company to deliver (or
cause another person to deliver) any certification, opinion, or letter required
under Sections  7(m), 7(n), or 7(o), ML&Co’s
right to terminate shall not arise unless such failure to deliver (or cause to
be delivered) continues for more than thirty (30) days from the date such
delivery was required; or (iii) any other condition of ML&Co’s
obligations hereunder is not fulfilled, or (iv), any suspension or material
limitation of trading in the Placement Shares or in securities generally on the
Exchange shall have occurred. Any such termination shall be without liability
of any party to any other party except that the provisions of Section 7(g) (Expenses),
Section 9 (Indemnification), Section 10 (Survival of
Representations), Section 15 (Applicable Law; Consent to
Jurisdiction) and Section 16 (Waiver of Jury Trial) hereof shall
remain in full force and effect notwithstanding such termination. If ML&Co
elects to terminate this Agreement as provided in this Section 11(a),
ML&Co shall provide the required notice as specified in Section 11
(Notices).

(b) The
Company shall have the right, by giving ten (10) days notice as
hereinafter specified to terminate this Agreement in its sole discretion at any time after the date of this Agreement.
Any such termination shall be without liability of any party to any other party
except that the provisions of Section 7(g), Section 9, Section 10,
Section 15 and Section 16 hereof shall remain in full
force and effect notwithstanding such termination.

(c) ML&Co
shall have the right, by giving ten (10) days notice as hereinafter
specified to terminate this Agreement in its sole discretion at any time after the date of this Agreement.
Any such termination shall be without liability of any party to any other party
except that the provisions of Section 7(g), Section 9, Section 10,
Section 15 and Section 16 hereof shall remain in full
force and effect notwithstanding such termination.

(d) Unless
earlier terminated pursuant to this Section 11, this Agreement shall
automatically terminate upon the issuance and sale of all of the Placement
Shares through ML&Co on the terms and subject to the conditions set forth
herein; provided that
the provisions of Section 7(g), 
Section 10, Section 10, Section 16
and Section 17 hereof shall remain in full force and effect
notwithstanding such termination.

(e) This
Agreement shall remain in full force and effect unless terminated pursuant to Sections
10(a), (b), (c), or (d) above or otherwise by mutual
agreement of the parties; provided, however,
that any such termination by mutual agreement

 29
 

 

shall in all cases be deemed to provide that Section 7(g),
Section 9, Section 10, Section 15 and Section 16
shall remain in full force and effect.

(f) Any
termination of this Agreement shall be effective on the date specified in such
notice of termination; provided, however,
that such termination shall not be effective until the close of business on the
date of receipt of such notice by ML&Co or the Company, as the case may be.
If such termination shall occur prior to the Settlement Date for any sale of
Placement Shares, such Placement Shares shall settle in accordance with the
provisions of this Agreement.

(g) Notices.
All notices or other communications required
or permitted to be given by any party to any other party pursuant to the terms
of this Agreement shall be in writing, unless otherwise specified, and
if sent to ML&Co, shall be delivered to ML&Co at Merrill Lynch, Pierce,
Fenner & Smith Incorporated, 4 World Financial Center, New York, New
York 10080, fax no. (212) 738-1069, Attention: Brian Lehman, with copies
to each of Charles Plohn and Terrence O’Brien, at the same address, fax no.
(212) 449-0355, and Fried, Frank, Harris, Shriver & Jacobson
LLP, One New York Plaza, New York, NY 
10004, fax no. (212) 859-4000, Attention: Valerie Ford Jacob, Esq.;
or if sent to the Company, shall be delivered to Gramercy Capital Corp., Marc
Holliday, President and Chief Executive Officer, 420 Lexington Avenue, New
York, New York 10170, (212) 297-1000, with a copy to  Clifford Chance US LLP, 31 West 52nd Street,
New York, New York 10019, (212) 878-8000,
 attention: Larry P. Medvinsky, Esq., Esq.
Each party to this Agreement may change such address for notices by sending to
the parties to this Agreement written notice of a new address for such purpose.
Each such notice or other communication
shall be deemed given (i) when delivered personally or by verifiable
facsimile transmission (with an original to follow) on or before 4:30 p.m.,
New York City time, on a Business Day or, if such day is not a Business Day, on
the next succeeding Business Day, (ii) on the next Business Day after
timely delivery to a nationally-recognized overnight courier and (iii) on
the Business Day actually received
if deposited in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid). For purposes of this Agreement, “Business Day” shall mean any day on
which the Exchange and commercial banks in the City of New York are open for
business.

12. Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the Company and ML&Co and their respective successors and the affiliates,
controlling persons, officers and directors referred to in Section 9
hereof. References to any of the parties contained in this Agreement shall be
deemed to include the successors and permitted assigns of such party. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and permitted assigns any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement. Neither party may assign its rights or obligations
under this Agreement without the prior written consent of the other party.

 30
 

 

13.  Adjustments for Stock Splits. The parties
acknowledge and agree that all share-related numbers contained in this
Agreement shall be adjusted to take into account any stock split, stock
dividend or similar event effected with respect to the Shares.

14. Entire Agreement;
Amendment; Severability. This Agreement (including all schedules and
exhibits attached hereto and Placement Notices issued pursuant hereto)
constitutes the entire agreement and supersedes all other prior and
contemporaneous agreements and undertakings, both written and oral, among the
parties hereto with regard to the subject matter hereof. Neither this Agreement nor any term hereof may be amended except
pursuant to a written instrument executed by the Company and ML&Co. In the
event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable as written by a court of competent jurisdiction, then such provision shall be given full
force and effect to the fullest possible extent that it is valid, legal and enforceable, and the
remainder of the terms and provisions herein shall be construed as if such invalid, illegal or unenforceable term or
provision was not contained herein, but only to the extent that giving effect
to such provision and the remainder of the terms and provisions hereof shall be
in accordance with the intent of the parties as reflected in this Agreement.

15. Applicable Law;
Consent to Jurisdiction. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York without regard
to the principles of conflicts of laws. Each
party hereby irrevocably submits to the non-exclusive jurisdiction of the state
and federal courts sitting in the City of New York, borough of Manhattan, for
the adjudication of any dispute hereunder or in connection with any transaction
contemplated hereby, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof (certified or registered mail, return
receipt requested) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law.

16. Waiver of Jury Trial. The Company and ML&Co each hereby
irrevocably waives any right it may have to a trial by jury in respect of any
claim based upon or arising out of this agreement or any transaction
contemplated hereby.

17. Absence of
Fiduciary Relationship. The Company, the Operating Partnership and the Manager
acknowledge and agree that:

(a) the ML & Co. has been
retained solely to act as ML & Co. in connection with the sale of the
Shares that no fiduciary, advisory or agency relationship between the Company,
the Operating Partnership or the Manager and the ML & Co. has been
created in respect of any of the transactions contemplated by this Agreement,
irrespective of whether the ML & Co. has advised or is advising the
Company, the Operating Partnership or the Manager on other matters;

 31
 

 

(b) the price of the Shares set forth in
this Agreement was established by the Company and the ML & Co.
following discussions and arms-length negotiations with the ML & Co.
and the Company, and the Company, the Operating Partnership and the Manager are
capable of evaluating and understanding and understand and accept the terms,
risks and conditions of the transactions contemplated by this Agreement;

(c) they have been advised that the ML &
Co. and its affiliates are engaged in a broad range of transactions which may
involve interests that differ from those of the Company, the Operating
Partnership or the Manager and that the ML & Co. have no obligation to
disclose such interests and transactions to the Company, the Operating
Partnership or the Manager by virtue of any fiduciary, advisory or agency
relationship; and

(d) they waive, to the fullest extent
permitted by law, any claims they may have against the ML & Co., for
breach of fiduciary duty or alleged breach of fiduciary duty and agree that the
ML & Co. shall have no liability (whether direct or indirect) to the
Company, the Operating Partnership or the Manager in respect of such a
fiduciary claim or to any person asserting a fiduciary duty claim on behalf of
or in right of the Company, including stockholders, employees or creditors of
the Company, the Operating Partnership or the Manager.

18. Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. Delivery of an executed Agreement by one party to the other may be
made by facsimile transmission.

19. Definitions. As
used in this Agreement, the following terms have the respective meanings set
forth below:

(a) “Applicable
Time” means the time of each sale of any Shares or any securities pursuant
to this Agreement.

(b) “Company
Documents” means any contracts, indentures, mortgages, deeds of trust, loan
or credit agreements, bonds, notes, debentures, evidences of indebtedness, leases
or other instruments or agreements to which the Company, the Operating
Partnership, the Manager or any of their respective subsidiaries is a party or
by which the Company, the Operating Partnership, the Manager or any of their
respective subsidiaries is bound or to which any of the property or assets of
the Company, the Operating Partnership, the Manager or any of their respective
subsidiaries is subject.

(c) “GAAP”
means United States generally accepted accounting principles.

(d) “Organizational
Documents” means (a) in the case of a corporation, its charter and
by-laws; (b) in the case of a limited or general partnership, its

 32
 

 

partnership certificate, certificate of
formation or similar organizational document and its partnership agreement; (c) in
the case of a limited liability company, its articles of organization,
certificate of formation or similar organizational documents and its operating
agreement, limited liability company agreement, membership agreement or other
similar agreement; (d) in the case of a trust, its certificate of trust,
certificate of formation or similar organizational document and its trust
agreement or other similar agreement; and (e) in the case of any other
entity, the organizational and governing documents of such entity.

 33
 

 

If the foregoing correctly sets forth the
understanding between the Company and ML&Co, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement between the Company and ML&Co. 

	
  

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  GRAMERCY CAPITAL CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GKK CAPITAL LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Gramercy Capital Corp., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GKK MANAGER LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ACCEPTED as of the date

  
	
   

  	
  First-above written:

  
	
   

  	
   

  	
   

  
	
   

  	
  MERRILL LYNCH & CO.

  
	
   

  	
  By:

  	
  MERRILL LYNCH, PIERCE, FENNER & SMITH
  INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  

 

 34

 

SCHEDULE 1

FORM OF
PLACEMENT NOTICE

	
  From:

  	
  [                                         ]

  	
   

  
	
  Cc:

  	
  [                                         ]

  	
   

  
	
  To:

  	
  [                                         ]

  	
   

  
	
  Subject:

  	
  ATM Equity Offering—Placement Notice

  	
   

  

 

Gentlemen:

Pursuant
to the terms and subject to the conditions contained in the ATM Equity OfferingSM Sales Agreement between Gramercy Capital Corp.. (the “Company”),
and Merrill Lynch & Co. (“ML&Co”) dated [May  ], 2006
(the “Agreement”), I hereby request on behalf of the Company that
ML&Co sell up to              
shares of the Company’s common stock, par value $0.001 per share, at a minimum
market price of $          
per share.

[ADDITIONAL SALES PARAMETERS
MAY BE ADDED, SUCH AS THE TIME PERIOD IN WHICH SALES ARE REQUESTED TO BE
MADE, SPECIFIC DATES THE SHARES MAY NOT BE SOLD ON, THE MANNER IN WHICH
SALES ARE TO BE MADE BY ML&CO, AND/OR THE CAPACITY IN WHICH ML&CO MAY ACT
IN SELLING SHARES (AS PRINCIPAL, AGENT, OR BOTH)]

 

 

SCHEDULE 2

Compensation

ML&Co shall be paid
compensation equal to two and one-half percent (2.5%) of the gross proceeds
from the sale of the Shares pursuant to the terms of this Agreement.

 

 

SCHEDULE 3

MERRILL LYNCH & CO.

Brian
Lehman

Charles
Plohn

Terrence
O’Brien

Kevin
Tyler

GRAMERCY CAPITAL CORP.

Robert Foley

Gregory Hughes

Marc Holliday

 

 

EXHIBIT A

SUBSIDIARIES OF THE COMPANY

	
  Name

  	
   

  	
  Jurisdiction of Organization

  	
   

  	
  Type Of Entity

  
	
  GKK Trading Corp.

  	
   

  	
  Delaware

  	
   

  	
  Corporation

  
	
  Gramercy 110 LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  
	
  Gramercy Warehouse Funding I LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  
	
  Gramercy Warehouse Funding II LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  
	
  Gramercy Capital Trust I

  	
   

  	
  Delaware

  	
   

  	
  Statutory Trust

  
	
  Gramercy Capital Trust II

  	
   

  	
  Delaware

  	
   

  	
  Statutory Trust

  
	
  Gramercy Capital Trust III

  	
   

  	
  Delaware

  	
   

  	
  Statutory Trust

  
	
  Gramercy Real Estate CDO 2005-1 Ltd

  	
   

  	
  Cayman Islands

  	
   

  	
  Exempted Limited Liability Company

  
	
  Gramercy Real Estate CDO 2005-1 LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  
	
  GKK Madison Investment LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  
	
  Gramercy Investment QRS Corp.

  	
   

  	
  Delaware

  	
   

  	
  Corporation

  
	
  Gramercy Investment Trading Corp.

  	
   

  	
  Delaware

  	
   

  	
  Corporation

  
	
  Gramercy Investment Trust

  	
   

  	
  Maryland

  	
   

  	
  Trust

  
	
  GKK Trading Warehouse I LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  
	
  GKK Trading Warehouse II LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  
	
  Gramercy Rockaway 80 PE LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  
	
  GKK Liquidity LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  
	
  GKK 55 Corporate LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  
	
  GKK 84 William Street LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  
	
  GKK Pasadena Investment LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  
	
  GKK Pasadena Owner LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  
	
  GKK Pasadena Tenant LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  
	
  Gramercy 200 Franklin LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  

 

 2
 

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SIGNIFICANT SUBSIDIARIES

  	
   

  	
   

  	
   

  	
   

  
	
  GKK Capital LP

  	
   

  	
  Delaware

  	
   

  	
  Limited
  Partnership (general partner is Gramercy Capital Corp.)

  
	
  GKK Trading Corp.

  	
   

  	
  Delaware

  	
   

  	
  Corporation

  

 

 3
 

 

 

EXHIBIT B

JOINT VENTURES OF THE COMPANY

	
  Name

  	
   

  	
  Jurisdiction of

  Organization

  	
   

  	
  Type Of Entity

  	
   

  	
  Percentage

  Ownership

  
	
  1 Madison Office
  Fee LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  	
   

  	
  45%

  
	
  200 Franklin
  Trust

  	
   

  	
  Delaware

  	
   

  	
  Statutory Trust

  	
   

  	
  70.3%

  
	
  GKK Pasadena Fee
  Holdings LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  	
   

  	
  50%

  
	
  GKK Pasadena
  Tenant Holdings LLC

  	
   

  	
  Delaware

  	
   

  	
  Limited Liability Company

  	
   

  	
  63.57%

  

 

 

 4

Exhibit 7(n)

MATTERS
TO BE COVERED BY INITIAL OPINION OF

FORM OF OPINION OF CLIFFORD
CHANCE US LLP

1.             The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Maryland. The Company has the
corporate power and authority to conduct its business and own its properties as
described in the Prospectus and to enter into and perform its obligations under
this Agreement. The Operating Partnership has been duly organized and is
validly existing as a limited partnership in good standing under the laws of
the State of Delaware. The Operating Partnership has the partnership power and
authority to own its properties as described in the Prospectus and to enter
into and perform its obligations under this Agreement. The Manager has been
duly formed and is validly existing in good standing under the laws of the
State of Delaware, and the Manager has the power and authority to own its
properties and to conduct its business as described in the Prospectus and to
enter into and perform its obligations under this Agreement.

2.             As
of [           ], the
authorized, issued and outstanding stock of the Company is as set forth in the
most recent Form 10-K or Form 10-Q and such shares of the
Company’s issued and outstanding stock (the “Outstanding Shares”) have been
duly authorized and validly issued and are fully paid and nonassessable and
none of the Outstanding Shares was issued in violation of preemptive rights
arising under the laws of the State of Maryland or the Organizational Documents
of the Company. All of the issued and outstanding OP Units have been issued in
accordance with the requirements of the Partnership Agreement; none of the OP
Units has been issued or is owned or held in violation of any preemptive right
arising by operation of law or under this Agreement; to such counsel’s
knowledge, the outstanding OP Units have been offered, sold and issued by the
Operating Partnership in compliance with all federal and state securities laws.

3.             The
execution, delivery and performance by the Company of this Agreement, including
the Company’s issuance of the Shares and sale of such Shares to the
Underwriter, has been duly authorized by all necessary corporate action on the
part of the Company. The execution, delivery and performance by the Operating
Partnership of this Agreement has been duly authorized by all necessary
partnership action on the part of the Operating Partnership. The execution,
delivery and performance by the Manager of this Agreement has been duly authorized
by all necessary limited liability company action on the part of the Manager. This
Agreement has been duly executed and delivered by each of the Company, the
Operating Partnership and the Manager.

4.             The
Shares have been duly authorized and, when issued and delivered by the Company
pursuant to this Agreement, the Shares will be validly issued, fully paid and
nonassessable.

5.             The
issuance of the Shares is not subject to preemptive rights arising under the
General Corporation Law of the State of Maryland or the Organizational
Documents of the Company.

 

6.             The
execution, delivery and performance of this Agreement by the Company, the
Operating Partnership and the Manager and the consummation of the transactions
contemplated herein will not (i) result in any violation of the provisions
of the Organizational Documents of the Company, the Operating Partnership or
the Manager, (ii) constitute a violation of or a breach or default under
the terms of any Company Documents or (iii) violate or conflict with, or
result in any contravention of, any law, administrative regulation or
administrative or court decree applicable to the Company, the Operating
Partnership or the Manager or any of their subsidiaries except in the case of (ii) and
(iii), such violations as would not have a Material Adverse Effect.

7.             The
form of certificate representing the Common Stock complies (i) with the
applicable statutory requirements of the laws of the State of Maryland, (ii) the
requirements of the Organizational Documents of the Company and (iii) the
requirements of the NYSE.

8.             We
have reviewed the information (i) in the Prospectus under the captions “Risk
Factors — Risks Related to Our Organization and Structure,” “Risk Factors —
Risks Related to Our Taxation As a REIT,” “Description of Common Stock,” “Description
of Preferred Stock,” “Description of Depositary Shares,” “Description of
Warrants,” “Description of “Certain Provisions of Maryland Law and of Our
Charter and Bylaws,” “The Operating Partnership Agreement” and “Material U.S.
Federal Income Tax Considerations,” and (ii) in Part II of the
Registration Statement in Item 15 and, in each case, to the extent that such
information constitutes matters of law, summaries of legal matters or
documents, summaries of certain provisions of the Organizational Documents of
the Company, the Operating Partnership or the Manager or legal conclusions,
such information is correct in all material respects. The authorized stock of
the Company conforms in all material respects to the description thereof in the
Prospectus under the captions “Description of Common Stock” and “Description of
Preferred Stock.”

9.             Each
of the Company, the Operating Partnership and their subsidiaries are duly
qualified as a foreign corporation, limited partnership or limited liability
company, as the case may be, to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except for
such jurisdictions where the failure to so qualify or to be in good standing
would not, individually or in the aggregate, result in a Material Adverse
Change.

10.           To
the knowledge of such counsel, none of the Company, the Operating Partnership,
the Manager nor any subsidiary is in default under any of its Organizational
Documents.

11.           Other
than SL Green as described in the Prospectus, to the knowledge of such counsel,
no shareholder of the Company or unitholder of the Operating Partnership or any
other person has any preemptive right, right of first refusal or other similar
right to subscribe for or purchase securities of the Company, the Operating
Partnership or any subsidiary.

12.           To
the knowledge of such counsel, there are no legal or governmental proceedings
pending or threatened to which the Company, the Operating Partnership, the
Manager or any of their subsidiaries is a party or to which any property of the
Company or any of its subsidiaries is subject that are required to be disclosed
in the Prospectus that are not so disclosed.

 2
 

 

13.           No
consent, approval, authorization or other order of, or registration or filing
with, any United States federal, Maryland, Delaware or New York state court or
other governmental or regulatory authority or agency, is required for the
Company’s, the Operating Partnership’s or the Manager’s execution, delivery and
performance of this Agreement and consummation of the transactions contemplated
thereby and by the Prospectus, except such as have already been obtained under
the Securities Act and applicable state securities or blue sky laws and from
the NASD.

14.           Commencing
with its taxable year ended December 31, 2004, the Company has been
organized and operated in conformity with the requirements for qualification
and taxation as a REIT under the Code, and the Company’s current and proposed
method of operation, as described in the Prospectus and as set forth in a
certificate of representations from the Company, will enable it to continue to
meet the requirements for qualification and taxation as a REIT under the Code.

15.           The
Registration Statement has been declared effective by the Commission under the
Securities Act. To the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued under the 1933 Act
and no proceedings for such purpose have been instituted or are pending or are
contemplated or threatened by the Commission. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) under
the 1933 Act has been made in the manner and within the time period required by
such Rule 424(b).

In addition, such opinion shall also contain a
statement that such counsel has participated in conferences with officers and
other representatives of the Company, representatives of the independent
accountants at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and although it does not pass
upon, or assume any responsibility for, the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the Prospectus and
have made no independent check or verification thereof (except to the extent
referred to in paragraph eight of its opinion to the ML&Co dated the date
hereof), on the basis of the foregoing, (i) the Registration Statement
(including the Incorporated Documents), at each deemed effective date with
respect to ML&Co pursuant to Rule 430B(f)(2), and the Prospectus, as
of its date and as of the date hereof, complied and complies as to form in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations (except that in each case such counsel may state that it does not
express any view as to the financial statements, schedules and other financial
or statistical information derived from such financial statements and schedules
included or incorporated by reference therein) and (ii) no facts have come
to such counsel’s attention that have caused it to believe that the
Registration Statement, at each deemed effective date with respect to ML&Co
pursuant to Rule 430B(f)(2), contained an untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the Prospectus,
as of its date and as of the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (except that in each
case such counsel may state that it does not express any view as to the
financial statements, schedules and other financial or statistical information
derived from such financial statements or schedules included or incorporated by
reference therein).

 3
 

 

FORM OF OPINION OF WILKIE
FARR & GALLAGHER

1.             The Company is not, and after giving effect to the
offering and sale of the Shares and the application of the proceeds thereof as
described under the caption “Use of Proceeds” in the Prospectus will not be, an
“investment company,” as such term is defined in the Investment Company Act of
1940, as amended.

2.             We have reviewed the information in the Prospectus under
the caption “Risk Factors — Risks Related to Our Business — We have a limited
operating history and may not operate successfully,” “Risk Factors — Risks
Related to Our Business — Maintenance of our Investment Company Act exemption
imposes limits on our operations” and “Risk Factors — Risks Related to Our
Business — Rapid changes in the values of our MBS and other real estate related
investments may make it more difficult for us to maintain our qualification as
a REIT or exemption from the Investment Company Act” and, in each case, to the
extent that such information constitutes matters of law, summaries of legal
matters or documents, summaries of certain provisions of the Organizational
Documents of the Company, the Operating Partnership or the Manager or legal
conclusions, such information is correct in all material respects.

 

 4

Exhibit 7(n)(2)

Matters
to be covered by subsequent Company Counsel Opinions

(i)            The Registration Statement has
become effective under the Securities Act and, to the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose is pending or threatened by
the Commission.

(ii)           The Registration Statement, at each
deemed effective date with respect to ML&Co and/or the Shares pursuant to Rule 430B(f)(2) and
the Prospectus, as of the date of the Prospectus Supplement (in each case,
other than (i) the financial statements, including the notes and schedules
thereto, (ii) any other financial data and (iii) statistical data
that is found in or derived from the internal accounting records of the
Company, the Operating Partnership or their respective subsidiaries, in each
case as set forth or incorporated by reference therein, as to which no opinion
need be rendered), complied as to form in all material respects with the
requirements of the Securities Act and the Exchange Act.

 (c)          Commencing with its taxable year ended
December 31, 2004, the Company has been organized and operated in
conformity with the requirements for qualification and taxation as a REIT under
the Code, and the Company’s current and proposed method of operation, as
described in the Prospectus and as set forth in a certificate of
representations from the Company, will enable it to continue to meet the
requirements for qualification and taxation as a REIT under the Code.

In addition, such opinion shall also contain a
statement that such counsel has participated in conferences with officers and
other representatives of the Company, representatives of the independent
accountants at which the contents of the Registration Statement* and the
Prospectus and related matters were discussed, and although it does not pass
upon, or assume any responsibility for, the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the Prospectus and
have made no independent check or verification thereof (except to the extent
referred to in paragraph eight of its opinion to the ML&Co dated the date
hereof), on the basis of the foregoing, (i) the Registration Statement
(including the Incorporated Documents), at each deemed effective date with
respect to ML&Co pursuant to Rule 430B(f)(2), and the Prospectus, as
of its date, as of each Applicable Time and as of the date hereof, complied and
complies as to form in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations (except that in each case such counsel may
state that it does not express any view as to the financial statements,
schedules and other financial or statistical information derived from such
financial statements and schedules included or incorporated by reference
therein) and (ii) no facts have come to such counsel’s attention that have
caused it to believe that the Registration Statement, at each deemed effective
date with respect to ML&Co pursuant to Rule 430B(f)(2), contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as of its date, as of each Applicable 

 

 

 1
 

 

Time and as of the date hereof, contained or contains
an untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (except that in each
case such counsel may state that it does not express any view as to the
financial statements, schedules and other financial or statistical information
derived from such financial statements or schedules included or incorporated by
reference therein).

*  Note: “Registration
Statement” and “Prospectus” will be defined to include documents incorporated
by reference therein (“Incorporated Documents”).

 

 2

 

Exhibit 8(m) 

OFFICER
CERTIFICATE

The undersigned, the duly
qualified and elected _______________________, of GRAMERCY
CAPITAL CORP. (“Company”),
a Maryland
corporation, does hereby certify in such capacity and on behalf of the Company,
pursuant to Section 7(m) of the Sales Agreement dated May [   ], 2006 (the “Sales
Agreement”) between the Company and Merrill Lynch &
Co., that to the best of the knowledge of the undersigned.

(i)            The
representations and warranties of the Company, the Operating Partnership, and
the Manager in Section 6 of the Sales Agreement (A) to the
extent such representations and warranties are subject to qualifications and
exceptions contained therein relating to materiality or Material Adverse
Effect, are true and correct on and as of the date hereof, except for those
representations and warranties that speak solely as of a specific date and
which were true and correct as of such date, with the same force and effect as
if expressly made on and as of the date hereof and (B) to the extent such
representations and warranties are not subject to any qualifications or
exceptions, are true and correct in all material respects as of the date hereof
as if made on and as of the date hereof except for those representations and
warranties that speak solely as of a specific date and which were true and
correct as of such date, with the same force and effect as if expressly made on
and as of the date hereof; and

(ii)           The
Company, the Operating Partnership, and the Manager has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied pursuant to the Sales Agreement at or prior to the date hereof.

	
  

  	
   

  	
   

  
	
   

  	
   

  	
  GRAMERCY CAPITAL CORP.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GKK CAPITAL LP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  Gramercy Capital Corp., its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

 

	
  

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GKK MANAGER LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}]]