Exhibit 10.6
Execution
Version
SEVERANCE
AGREEMENT
This SEVERANCE AGREEMENT
(“Agreement”) is made as of the 27th day of October,
2008, between Roger Cozzi (“Executive”) and Gramercy
Capital Corp., a Maryland corporation (“Gramercy”), to
be effective as of October 28, 2008 (the “Effective
Date”). This Agreement is being entered into in
connection with the Employment and Noncompetition Agreement, dated
as of the date hereof, by and between GKK Manager LLC (the
“Manager”) and Executive (as amended or superseded from
time to time, the “Employment Agreement”).
1.
Term . The term of this
Agreement shall commence on the Effective Date and shall continue
through, and terminate on, December 31, 2011 (the
“Original Term”) unless earlier terminated as provided
in Section 6 below. The Original Term shall
automatically be extended for successive one (1) year periods
(each a “Renewal Term”), unless either party gives the
other party at least three (3) months written notice of desire
to negotiate terms and/or non-renewal prior to the expiration of
the then current term; provided that a notice of desire to
negotiate terms and/or non-renewal given by Executive or Gramercy
under the Employment Agreement shall be deemed to constitute a
notice of desire to negotiate terms and/or non-renewal under this
Agreement. The period of Executive’s employment hereunder
consisting of the Original Term and all Renewal Terms, if any, is
herein referred to as the “Term.”
2.
Employment
. As of the
Effective Date, Gramercy has appointed Executive to serve as its
Chief Executive Officer and the Manager has entered into the
Employment Agreement with Executive whereby, among other things,
the Manager has agreed to employ Executive to serve as the Chief
Executive Officer of Gramercy. The Board of Directors of
Gramercy (the “Board”) shall nominate Executive for
election to the Board at the next annual meeting of stockholders of
Gramercy at which a class of directors with a current vacancy is to
be elected, subject to Executive’s continued employment. In
consideration of Executive’s service as an officer of
Gramercy, Gramercy shall compensate Executive as provided in this
Agreement.
3.
Equity
Awards . As determined by the
Board or the Compensation Committee of the Board (the
“Compensation Committee”) and as provided in this
Agreement, Executive shall be eligible to participate in
Gramercy’s then current equity incentive plan (the
“Plan”) during the Term. On the Effective Date,
Executive will be granted 260,000 shares of restricted common stock
of Gramercy (“Common Stock”), “incentive stock
options,” as defined under Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”), to
purchase 100,000 shares of Common Stock, non-qualified stock
options to purchase 200,000 shares of Common Stock and 500,000 LTIP
Units in GKK Capital LP, a Delaware limited partnership, in
accordance with and subject to definitive documentation which is
consistent with the terms summarized on Exhibit A
hereto and which is otherwise consistent with Gramercy’s
general practices for documentation.
4.
Indemnification and Liability
Insurance . Gramercy agrees to
indemnify Executive to the full extent permitted by applicable law,
as the same exists and may hereafter be amended, from and against
any and all losses, damages, claims, liabilities and expenses
asserted against, or incurred or suffered by, Executive (including
the costs and expenses of legal counsel retained by Gramercy to
defend Executive and judgments, fines and amounts paid in
settlement actually and reasonably incurred by or imposed on such
indemnified party) with respect to any action, suit or proceeding,
whether civil, criminal administrative or investigative (a
“Proceeding”) in which Executive is made a party or
threatened to be made a party or is otherwise involved, either with
regard to his entering into this Agreement with Gramercy or in his
capacity as an officer or director, or former officer or director,
of Gramercy or any affiliate thereof for which he may serve in such
capacity. Gramercy also agrees to secure promptly and
maintain officers and directors liability insurance providing
coverage for Executive, with such terms and
limits as are deemed
appropriate by Gramercy, to the extent that coverage can be
obtained on reasonable efforts at a comparable rate; provided that
Executive shall be covered in such a manner as to provide Executive
the same rights and benefits as are accorded to the most favorably
insured of Gramercy’s officers. The provisions of this
Section 4 shall remain in effect after this Agreement is
terminated irrespective of the reasons for termination.
5.
Gramercy’s
Policies . Executive agrees to
observe and comply with the reasonable written rules and
regulations of Gramercy regarding the performance of his duties and
to carry out and perform orders, directions and policies
communicated to him from time to time by Gramercy, so long as same
are otherwise consistent with this Agreement.
6.
Compensation
Upon Termination .
(a)
Termination By
the Manager Without Cause or By Executive With Good
Reason . If
(i) Executive’s employment with the Manager is
terminated by the Manager without Cause (pursuant to, and as
defined in, the Employment Agreement) or (ii) Executive shall
terminate his employment with Manager with Good Reason (pursuant
to, and as defined in, the Employment Agreement), then Executive
shall resign all positions with Gramercy and its subsidiaries and
affiliates. In addition, subject to Executive’s
execution of a release agreement in form and substance satisfactory
to Gramercy, whereby, in general, Executive releases Gramercy from
all claims Executive may have against Gramercy (other than claims
to provide the severance payments and benefits provided for in this
Agreement and certain other specified agreements) (the
“Release Agreement”), and the effectiveness thereof on
or within 30 days after the date on which Executive’s
employment with the Manager terminates (the “Termination
Date,” and the date of such effectiveness being referred to
herein as the “Release Effectiveness Date”), Executive
shall be credited with twelve (12) months after termination under
any provisions governing restricted stock, options or other
equity-based awards granted to Executive by Gramercy relating to
the vesting or initial exercisability thereof; provided that any
unvested or unexercisable restricted stock, options or other equity
based awards that were granted as payment of a cash bonus, as
determined at the time of grant by Gramercy, in its sole
discretion, shall become fully vested and exercisable on the date
of Executive’s termination. For purposes of determining
the effect of such twelve (12) months of credit with respect to any
performance-based vesting criteria, (A) if such termination
occurs less than six months after the beginning of a performance
period, then performance-based vesting shall be based on
performance during the prior performance period and (B) if
such termination occurs more than six months after the beginning of
a performance period, then performance-based vesting shall be based
on performance during such interim period through the most recently
completed fiscal quarter. Furthermore, upon such termination,
any then vested unexercised stock options granted to Executive by
Gramercy shall remain exercisable until the second January 1
to follow the Termination Date or, if earlier, the expiration of
the initial applicable term stated at the time of the grant.
Notwithstanding the foregoing, the provisions of this
Section 6(a) shall not apply to LTIP Units granted
pursuant to Section 3 hereof, which shall be governed by the
terms of the LTIP Unit Award Agreement entered into by Executive,
Gramercy and GKK Capital LP as of the date hereof.
Other than as may be provided under
Section 4 or as expressly provided in this Section 6(a),
Gramercy shall have no further obligations hereunder following such
termination.
(b)
Termination By
the Manager For Cause or By Executive Without Good
Reason . If
(i) Executive’s employment with the Manager is
terminated by the Manager for Cause (pursuant to, and as defined
in, the Employment Agreement), or (ii) Executive
voluntarily
2
terminates his
employment
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