SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report (Date of earliest event reported) June 30, 1998
MENDIK REAL ESTATE LIMITED PARTNERSHIP
Exact Name of Registrant as Specified in its Charter
Delaware 0-15463 11-2774249
State or Other Jurisdiction Commission I.R.S. Employer
of Incorporation orOrganization File Number Identification No.
3 World Financial Center, 29th Floor
New York, NY Attn.: Andre Anderson 10285
Address of principal executive offices Zip Code
Registrant's telephone number, including area code (212) 526-3237
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
The Partnership has previously discussed the existence of three
purported class action lawsuits that have been brought in the Supreme
Court of the State of New York for New York County (the "Court")
against the General Partners of the Partnership and certain
affiliates of Mendik RELP Corporation by certain limited partners
of the Partnership (the "Actions"). The parties to the Actions
entered into a settlement of the Actions on June 24, 1998 that
contemplates the sale of the Partnership's interests in Saxon
Woods Corporate Center, Two Park Avenue and 330 West 34th Street
(collectively, the "Properties"; the proposed sale transaction is
referred to herein as the "Proposed Transaction"), the subsequent
liquidation and dissolution of the Partnership and the
distribution of the Partnership's remaining assets after the
payment of the Partnership's liabilities. A copy of the
Settlement Agreement (with exhibits) is annexed as Exhibit A.
The settlement is subject to the approval of the Court.
The Proposed Transaction contemplates that the Partnership
will sell the Properties for approximately $64.5 million, net of
existing mortgage debt on the Properties. The Partnership's
interest in Two Park Avenue is to be purchased by an affiliate of
Vornado Realty Trust for approximately $34.5 million, to be paid
in a combination of cash and common stock of Vornado Realty
Trust. Saxon Woods Corporate Center and 330 West 34th Street are
to be purchased for an aggregate price of $30 million in cash by
Vornado Realty, L.P., or an affiliate thereof. Both Vornado
Realty Trust and Vornado Realty, L.P. are affiliates of Mendik
RELP Corporation. The Proposed Transaction has been agreed to in
principal, but remains subject to final negotiation and execution
of a definitive purchase and sale agreement. The Proposed
Transaction is also conditioned upon Court approval of the
settlement.
There can be no assurance that the settlement will be
approved by the Court or that the Proposed Transaction will close
as anticipated.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
MENDIK REAL ESTATE LIMITED PARTNERSHIP
BY: NY REAL ESTATE SERVICES 1 INC.
A General Partner
Date: July 2, 1998 BY: /s/ Mark Marcucci
Name: Mark Marcucci
Title: President and Director
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
- ----------------------------------------------x
JOSEPH DELEO and NANCY P. DELEO, on :
behalf of themselves and all others
similarly situated, :
Plaintiffs, Index No. 97-600185
v. :
IAS Part ________
NY REAL ESTATE SERVICES 1, INC., a :
Delaware corporation, MENDIK CORPORATION,a
New York corporation, B&B PARK AVENUE, L.P., :
a Delaware limited partnership, and
BERNARD H. MENDIK, an Individual, :
Defendants. :
THE MENDIK REAL ESTATE LIMITED :
PARTNERSHIP,
:
Nominal Defendant.
- ----------------------------------------------x
MICHAEL J. HATEM, on behalf of himself and
all others similarly situated, :
Plaintiff,
v. : Index No. 97-600719
NY REAL ESTATE SERVICES 1, INC., a : IAS Part ______
Delaware Corporation, MENDIK CORPORATION,a
New York corporation, B&B PARK AVENUE, L.P., :
a Delaware limited partnership, and
BERNARD H. MENDIK, an individual, :
Defendants.
:
THE MENDIK REAL ESTATE LIMITED
PARTNERSHIP, :
Nominal Defendant. :
- ----------------------------------------------x
NANCY P. LANDIS, on behalf of herself and all
others similarly situated, :
Plaintiff,
v. : Index No. 97-113872
NY REAL ESTATE SERVICES 1, INC., a : IAS Part __________
Delaware corporation, MENDIK CORPORATION,a
New York corporation, B&B PARK AVENUE, L.P., :
a Delaware limited partnership, and
BERNARD H. MENDIK, an Individual, :
Defendants.
:
THE MENDIK REAL ESTATE LIMITED
PARTNERSHIP, :
Nominal Defendant. :
- ----------------------------------------------x
STIPULATION AND AGREEMENT OF
COMPROMISE, SETTLEMENT AND RELEASE
The parties to the above-captioned actions (the"Actions"),
by and through their respective attorneys, propose the following
Stipulation and Agreement of Compromise, Settlement and Release
(the "Stipulation" or the "Settlement") for the approval of the Court.
BACKGROUND1
The Partnership
A. The Actions concern The Mendik Real Estate
Limited Partnership, a limited partnership organized under
the laws of the state of New York (the "Partnership")
pursuant to a Certificate and Agreement of Limited
Partnership (as restated and amended to date, the
"Partnership Agreement"). The Partnership was organized in
1986 to invest in, acquire, maintain, operate and dispose of
interests in commercial real estate located in New York City
and the Greater New York City Metropolitan Area. Between
April 1986 and September 18, 1987, the Partnership sold
395,169 units of limited partnership interests to the
public. The general partners of the Partnership (the
"General Partners") are (1) NY Real Estate Services 1, Inc.
("NYRES"), a Delaware corporation (formerly known as Hutton
Real Estate Services XV, Inc.), an indirect wholly owned
subsidiary of Lehman Brothers Inc. ("Lehman Brothers"), and
(2) Mendik RELP Corporation ("Mendik RELP"), a New York
corporation (formerly known as Mendik Corporation) wholly
owned by Bernard H. Mendik ("Mendik").
The Partnership Properties
B. At all times relevant hereto, the Partnership
held interests in three properties (such interests are
referred to herein collectively as the "Partnership
Properties"):
(a) Two Park Avenue: M/H Two Park Associates, a
New York limited partnership ("M/H Two Park Associates"),
owns a sixty percent general partnership interest (the "M/H
Park Interest") in Two Park Company, a general partnership
that owns Two Park Avenue, an office building located in
Manhattan, New York City ("Two Park Avenue"). The
Partnership owns a 99.5 percent interest in M/H Two Park
Associates (the "Two Park Partnership Interest"); the
remaining .5 percent interest in M/H Two Park Associates
(the ".5% Interest") is held by NYRES, which owns a .25
percent interest in M/H Two Park Associates, and Mendik RELP
and its affiliates, which together own the other .25 percent
interest. B&B Park Avenue, L.P., a Delaware limited
partnership ("B&B"), is the other partner of Two Park
Company, owning the remaining forty percent interest in Two
Park Avenue. The sole asset owned by B&B is its partnership
interest in Two Park Company. The Two Park Company
partnership agreement provides that if either partner of Two
Park Company receives a bona fide offer to purchase its
partnership interest in Two Park Company, which the other
such partner is willing to accept, such partner must give
the other partner a right of first refusal to purchase the
partnership interest on the same terms and conditions as the
terms and conditions of the bona fide offer.
(b) Saxon Woods: The Partnership is the lessee
under two ground leases (expiring September 29, 2027 (with
three renewal options through 2106)) and fee holder in the
improvements for Saxon Woods Corporate Center, two office
buildings located at 550-600 Mamaroneck Avenue, Harrison,
New York ("Saxon Woods").
(c) 330 West 34th Street The Partnership is the
lessee under a ground lease (expiring December 31, 2020
(with four renewal options through 2149)) for an office
building located at 330 West 34th Street, Manhattan, New
York City. ("330 West 34th Street").
The Two Park Avenue Transaction
C. Before April 15, 1997, Mendik RELP was a
general partner of B&B. Beginning in 1996, Mendik RELP
entered into negotiations with the other general partner and
the limited partners of B&B to purchase their general and
limited partnership interests in B&B, which partnership
interests constituted a 99.5% ownership interest in B&B (the
"B&B Partnership Interests"). (Mendik RELP owned the
remaining .5% of B&B.) This purchase was consummated by an
affiliate of Mendik RELP (the "Mendik RELP Affiliate") on
April 15, 1997, for a price of $14,775,000. The B&B
Partnership Interests were immediately thereafter
transferred by the affiliate (together with the .5% interest
held by Mendik RELP in B&B) to affiliates of Vornado Realty
Trust, a real estate investment trust organized under the
laws of Maryland. Taking into account the outstanding $65
million mortgage on Two Park Avenue and B&B's 40 percent
ownership interest in Two Park Company, this purchase price
reflected a valuation of Two Park Avenue of approximately
$102 million.
The Vornado REIT Transaction
D. On April 15, 1997, Mendik and certain of his
affiliates entered into a transaction with Vornado Realty
Trust, pursuant to which an affiliate of Vornado Realty
Trust acquired certain real estate holdings and management
and leasing assets owned by Mendik and the affiliates (the
"Vornado REIT Transaction"). In connection with the Vornado
Transaction, Mendik was elected to the position of Vice-
Chairman of Vornado. As part of the Vornado REIT
Transaction, an affiliate of Vornado Realty Trust purchased
the B&B Partnership Interest from the Mendik RELP Affiliate
for the same price the affiliate had paid for those
interests. At the same time, the affiliate of Vornado
Realty Trust purchased the .5% interest in B&B held by
Mendik RELP for 423 units of Vornado Realty L.P. This price
again reflected a $102 million valuation for Two Park
Avenue.
The Actions
E. On January 14, 1997, Joseph and Nancy DeLeo,
holders of limited partnership Units in the Partnership,
commenced an action encaptioned DeLeo v. NY Real Estate
Services 1, Inc. et al. (Index No. 97-600185) in this Court
(the "DeLeo Action"). The DeLeo Action was brought as a
putative class action, under NYCPLR Article 9, on behalf of
all persons who hold limited partnership interests in the
Partnership (the "Limited Partners") (excluding defendants
and their affiliates) against NYRES 1, Mendik Corp. (now
known as Mendik RELP), B&B Park Avenue, L.P. and Mendik (the
"Defendants"). On February 10, 1997, Michael J. Hatem
commenced an action encaptioned Hatem v. NY Real Estate
Services 1, Inc. et al., (Index No. 97-600719)(the "Hatem
Action"). The Hatem Action was brought as a class action,
under NYCPLR Article 9, on behalf of all persons who hold
limited partnership interests in the Partnership (excluding
defendants and their affiliates) against the Defendants. On
February 25, 1997, the plaintiffs in the Hatem and DeLeo
Actions served amended complaints that were in all
substantive respects identical.
F. On July 31, 1997, a third action was commenced by
Nancy P. Landis encaptioned Landis v. NY Real Estate
Services 1, Inc. et al., (Index No. 97-113872) (the "Landis
Action"). The Landis Action was also brought as a putative
class action, under NYCPLR Article 9, on behalf of all
persons who hold limited partnership interests in the
Partnership (excluding defendants and their affiliates),
against the Defendants. Its allegations were in all
substantive respects identical to the allegations in the
amended complaints in the DeLeo and Hatem Actions. The
DeLeo, Hatem and Landis Actions are collectively referred to
herein as the "Actions."
G. The parties will seek to have the Actions
consolidated and the plaintiffs in the Actions have informed
the Defendants that they will file a consolidated amended
complaint (the "Consolidated Complaint"). The Consolidated
Complaint asserts claims on behalf of the Class (as defined
in Paragraph 1.3 below) and also asserts claims brought
derivatively on behalf of the Partnership. The Consolidated
Complaint alleges that the Defendants have breached and will
continue to breach their fiduciary duties owed to the Class
under New York law, and their contractual obligations under
the Partnership Agreement by, inter alia, the following
acts: (1) the General Partners' alleged failure to timely
sell or liquidate the Partnership Properties despite alleged
recent improvements in the real estate market and despite
statements in the 1987 Partnership offering prospectus that
the Partnership expected to dispose of its properties within
seven to ten years after their acquisition; (2) the Mendik
RELP affiliates' purchase of the B&B Partnership Interests
and the subsequent transfer of those interests to an
affiliate of Vornado Realty Trust, which transfers the
complaint alleges violated the Partnership Agreement and the
Defendants' fiduciary duties to the Partnership and the
Class because (i) the transfers allegedly make it more
difficult for the Partnership to sell the M/H Park Interest
or the Two Park Partnership Interest at an appropriate time
and at an appropriate price; (ii) the transfers allegedly
violate the Partnership Agreement provision that provides
that the Partnership may enter into a joint venture with a
third party only if the Partnership and such third party
have substantially identical investment objectives;
(iii) the transfers allegedly hinder M/H Two Park Associates
from negotiating the sale of a 100 percent interest in Two
Park Avenue at a price higher than separate 60% and 40%
interests can achieve; (iv) the transfer allegedly injured
the Partnership because the Partnership was not afforded the
opportunity to purchase the B&B Partnership Interest in Two
Park Company pursuant to the right of first refusal referred
to in Paragraph B(a) above, which right of first refusal
plaintiffs allege was applicable to the transactions;
(v) the transfers allegedly deprived the Partnership and the
Class of the same opportunity to liquidate their indirect
investment in Two Park Avenue that the Vornado REIT
Transaction afforded to Mendik and his affiliates; and
(vi) the General Partners failed to adequately disclose the
Vornado REIT Transaction to the Class. As relief, the
plaintiffs seek to (1) enjoin the Vornado REIT Transaction,
(2) compel the Defendants to provide an accounting and
(3) compel the General Partners to liquidate the Partnership
and appoint a receiver to supervise the liquidation, or, in
the alternative, to conduct an auction for Two Park Avenue
and the other Partnership Properties.
The Negotiations and the Vornado Purchase
H. Since the filing of the Actions, Class
Counsel (as defined in Paragraph 1.6 of this Agreement) have
engaged in extensive investigation, discovery and have,
through Lead Class Counsel (as defined in 1.17 of this
Agreement), conducted arms-length negotiations with
Defendants and with representatives of Vornado concerning
the settlement of the Actions. Class Counsel has reviewed
extensive documents relating to the claims asserted in the
Consolidated Complaint and to the value of the properties
and have retained real estate experts and consultants to
advise them.
I. The Parties have agreed to settle the Actions by
selling the Two Park Partnership Interest and the .5%
Interest to Vornado Realty Trust and 330 West 34th and
Saxons Woods to Vornado Realty, L.P. or an affiliate
thereof, (Vornado Realty Trust and Vornado Realty L.P. and
their affiliates which are to be involved in the Vornado
Purchase are referred to collectively herein as "Vornado"),
making certain payments from the sale proceeds to Former
Unitholders (as defined in 1.12 of this Agreement), and
thereafter liquidating and dissolving the Partnership in
accordance with the terms of this Agreement. The principal
terms of the transaction with Vornado (the "Vornado
Purchase") are as follows:
(a) (i) The Two Park Partnership Interest
and the .5% Interest will be acquired by Vornado subject to
the existing mortgage held by Union Bank of Switzerland (New
York Branch), Baycrische Landesbank (Cayman Island Branch),
L-Bank Landeskreditbank Baden-Wurtternberg and
Sudwestdeutsche Landesbank Girozentrale. Vornado will pay
$34,800,000 in the aggregate with respect to the Two Park
Partnership Interest and the .5% Interest. Vornado will pay
$34,626,000 with respect to the Two Park Partnership
Interest (the "Two Park Partnership Interest Purchase
Price"), payable in any combination of common shares of
beneficial ownership of Vornado Realty Trust ("Vornado
Stock") and/or cash (to the extent the number of shares of
Vornado Stock are limited by the next succeeding sentence,
or more if Vornado otherwise elects, subject to Paragraph
(a)(ii) below), and Vornado will pay $174,000 cash with
respect to the .5% Interest. The number of shares of
Vornado Stock to be paid with respect to the Two Park
Partnership Interest will be determined by dividing the
average of the closing price of such shares on the New York
Stock Exchange for the last ten trading days ending on the
last trading day before the closing of the Vornado Purchase
(the "Closing Price") into the Two Park Partnership Interest
Purchase Price; provided that the number of shares of
Vornado Stock will not exceed one percent of the shares of
Vornado Stock outstanding as shown by Vornado Realty Trust's
then most recent Form 10-Q or 10-K. (the "1% Limit").
(ii) Vornado may elect to pay all cash for
the Two Park Partnership Interest. If, however, Vornado
elects to pay any portion of the Two Park Partnership
Interest Purchase Price in stock, Vornado must pay
sufficient shares of stock, subject to the 1% Limit, so that
every Class Member Limited Partner who has elected to
receive Vornado Stock pursuant to Paragraph 9(b) below will
receive its full allocable share of the Two Park Partnership
Interest in stock. A portion of the Vornado Stock will be
deposited by Vornado at the closing into a liquidating trust
(the "Liquidating Trust"), for the benefit of the Settlement
Class Members and a portion will be issued to the
Partnership. The Vornado Stock, or proceeds therefrom, will
be distributed in accordance with Paragraph 9(b) hereof.
(b) Vornado will purchase Saxon Woods and
330 West 34th Street from the Partnership for an aggregate
price of $30 million, payable in cash (the "Cash Proceeds")
(subject to customary post-closing adjustments). The sales
of the Two Park Partnership Interest, the .5% Interest,
Saxon Woods and 330 West 34th Street to Vornado will close
simultaneously. Vornado will not be obligated to purchase
any of the Partnership Properties unless the Partnership can
deliver all of the Partnership Properties at the closing.
In that circumstance, Vornado may still, however, elect to
purchase all of the Partnership Properties which the
Partnership can deliver at the closing.
(c) All New York City and New York State
transfer taxes payable (without regard to the special rates
applicable to REITs) in connection with the sale of the
Partnership Properties will be paid by the Partnership.
Vornado will be responsible for the payment of New York City
and New York State transfer taxes, if any, attributable to
the sale of the interest of B&B which are required to be
paid as a result of the Vornado Purchase.
(d) The sale of the Two Park Partnership
Interest will be effectuated pursuant to a Section 3(a)(10)
exemption under the Securities Act of 1933, such that
(i) all stock issued by Vornado as part of the Vornado
Purchase and deposited into the Liquidating Trust would be
freely transferable to the Class Member Limited Partners and
by them upon receipt from the Liquidating Trust without any
restrictions (other than such restrictions that apply to an
"affiliate" of Vornado within the meaning of Rule 144
promulgated under the Securities Act of 1933) and (ii) all
stock issued by Vornado as part of the Vornado Purchase to
the Partnership would be freely transferrable by the
Partnership without restriction (other than such
restrictions that apply to an "affiliate" of Vornado within
the meaning of Rule 144 promulgated under the Securities Act
of 1933). Such shares will be fully paid, non-assessable
and free from all liens and encumbrances of Vornado.
(e) M/H Two Park Associates will be entitled
to sixty percent (60%) of any refund of real property taxes
paid with respect to any period prior to the closing of the
Vornado Purchase received by Two Park Company as a result of
tax certiorari proceedings, net of any costs and expenses
incurred in connection with obtaining such refund and net of
any portion thereof refunded to tenants at 2 Park Avenue.
(f) The Partnership will be entitled to a
refund of real property taxes paid with respect to any
period prior to the closing of the Vornado Purchase received
by Vornado as a result of tax certiorari proceedings
concerning 330 West 34th Street or Saxon Woods, net of any
costs and expenses incurred in connection with obtaining
such refund and net of any portion thereof refunded to
tenants at 330 West 34th Street or Saxon Woods.
(g) The closing of the Vornado Purchase will
occur no later than 30 days after the Final Date (as defined
in Paragraph 1.11 below). If the Final Date does not occur
by July 30, 1999, Vornado may terminate its obligation to
purchase the Partnership Properties by giving 15 days
written notice of such election to the Partnership, which
will promptly give written notice to Lead Class Counsel;
such election shall be effective at the end of the 15 day
notice period.
J. Class Counsel have made a thorough investigation
of the facts and a study of legal principles applicable to
plaintiffs' claims and have conducted extensive discussions
and arms-length negotiations with representatives of
Defendants and Vornado with a view toward settling the
Actions and achieving the best possible relief consistent
with the interests of the Class and the Partnership.
Plaintiffs and Class Counsel have agreed to settle the
Actions according to the terms of this Stipulation after
considering: (i) the substantial benefits that the
Partnership and members of the Settlement Class will receive
therefrom; (ii) the attendant risks of litigation; (iii) the
probability of success on the merits of the allegations
asserted in the Actions; (iv) the fact that the Settlement
results in the prompt liquidation of the Partnership,
resulting in an immediate distribution to the Limited
Partners; (v) the risk that continuing the litigation might
substantially delay or interfere with the sale of
Partnership Properties and (vi) the possibility that a sale
of one or more of the Partnership Properties to a person
other than Vornado could only be achieved at a lower price,
with greater expense, or after much delay.
K. Defendants deny any wrongdoing or liability with
respect to all claims, events and transactions complained of
in the Actions. Defendants vigorously deny such liability,
but consider it desirable that the Actions be settled and
dismissed because (i) the terms of the Settlement, including
the Vornado Purchase, are in the best interest of the Class
and the Partnership and (ii) the Settlement will halt the
expense, inconvenience and burden of litigation and permit
the final liquidation and dissolution of the Partnership.
L. NYRES and Lead Class Counsel have engaged in
lengthy arms-length negotiations with Vornado concerning the
Vornado Purchase and have extensively analyzed the Vornado
Purchase. As a result of the conflict of interest resulting
from Mendik's position as co-chairman of Vornado Realty
Trust and his substantial interest in Vornado Realty Trust
and Vornado Realty, L.P., the Vornado Purchase was
negotiated on behalf of the Partnership by Class Counsel and
NYRES. NYRES and Class Counsel believe that the Vornado
Purchase is in the best interest of the Class, the Limited
Partners, and the Partnership in light of the following
factors, among others: (1) the price to be paid for the Two
Park Partnership Interest reflects a value for the building
equal to its most recent independent appraised value of $123
million (without the Partnership's need to pay costs of sale
including brokerage fees) and substantially exceeds the
valuation of the building reflected in the Vornado REIT
transaction (approximately $102 million); (2) the possible
effect of B&B's right of first refusal of any offer made by
a third party for Two Park Avenue on the market value of the
Two Park Partnership Interest; (3) the fact that the
aggregate purchase price to be paid for Saxon Woods and 330
West 34th Street in the Vornado Purchase ($30 million)
exceeds the sum of (i) the most recent appraised value for
Saxon Woods ($20.5 million) and (ii) the mean of recent
appraisals of West 34th Street obtained by the Partnership
and Class Counsel (which estimated values range from
$6.4 million to $11 million); and (4) the fact that the
acquisition of all the Partnership Properties by Vornado
permits the prompt dissolution and liquidation of the
Partnership without the delays and with a substantial
reduction of the costs associated with large real estate
sales (e.g. brokerage commissions or fees).
M. Before making any distribution of the proceeds of
the Vornado Purchase, the Partnership will make the payments
to be made pursuant to Paragraph 9(a) hereof. After such
payments are made, the remainder of the Settlement Fund will
be distributed pursuant to Paragraph 9(c) below.
N. Subject to restrictions contained in this
agreement, the Settlement grants Vornado the option to pay
for the Two Park Partnership Interest, in any combination of
cash and/or Vornado Stock. NYRES and Class Counsel believe
that providing Vornado the option of paying in cash or in
Vornado Stock is beneficial in light of the following
factors: (1) NYRES's and Class Counsel's belief that
providing Vornado with the option to pay in stock rather
than cash increased the consideration Vornado was willing to
pay with respect to the Two Park Partnership Interest; and
(2) the immediate and unrestricted transferability of the
Vornado Stock upon its distribution to the Class Member
Limited Partners who affirmatively elect to receive Vornado
Stock (other than Class Member Limited Partners that are
affiliates of Vornado).
In re Lehman Brothers Limited Partnership
Litigation and the Sword Action
O. In re Lehman Brothers Limited Partnership
Litigation, Consolidated Civil Action No. 14886, is an
action pending in the Court of Chancery of the State of
Delaware for New Castle County (the "In Re Lehman Bros.
Action"). Plaintiffs' counsel of record in the Hatem and
DeLeo Actions, Chimicles Jacobsen & Tikellis, Goodkind
Labaton Rudoff & Sucharow, LLP., Wolf Haldenstein Adler
Freeman & Herz, LLP and Finkelstein, Thompson & Loughran,
are also counsel of record for plaintiffs in the In Re
Lehman Bros. Action. The In re Lehman Bros. Action is
brought as a putative class action on behalf of a proposed
class of persons who purchased units in certain public
limited partnerships organized by Lehman Brothers'
predecessors E.F. Hutton, Inc. and/or Shearson Lehman
Brothers Inc. (and its predecessors) or their affiliates,
between 1981 and the present, including persons who
purchased Units in the Partnership. The defendants in the
In re Lehman Bros. Action include Lehman Brothers and all
affiliates of Lehman Brothers or its predecessors who served
as general partners of such public partnerships, including
NYRES. Lehman Brothers and NYRES are defendants in the In
re Lehman Bros Action with respect to the Partnership. The
first consolidated and amended class action complaint
alleges, among other things, that Lehman and NYRES violated
the common law and breached their fiduciary duties to the
investors in the Partnership by concealing allegedly
material facts about the condition and value of the
properties in which the Partnership invested and concerning
the risk of investing in the Partnership, resulting in
damage to the investors. None of Mendik, Mendik RELP, B&B
or any of their affiliates is named as a defendant in the In
Re Lehman Bros. Action.
P. Nancy Sword and James S. Mossberg v. Lehman Bros.
Holdings Inc., et al., Civ. Act. No. WMN966-871, is an
action brought in the Circuit Court for Baltimore County of
the State of Maryland and removed to the United States
District Court for the District of Maryland ( the "Sword
Action"). The Sword Action is brought as a putative class
action against Lehman Brothers Holdings, Inc., the
Partnership, certain affiliates of Lehman Brothers Holdings
Inc. and certain as yet unidentified defendants on behalf of
a proposed class of persons who purchased units in the
Partnership or in another limited partnership sold by Lehman
Brothers' predecessors and their affiliates. The complaint
in the Sword Action alleges that the class members were
fraudulently induced to invest in the two partnerships and
asserts claims of fraud and deceit, negligent
misrepresentation, breach of fiduciary duty, unjust
enrichment, conversion and for an accounting. All
proceedings in the Sword Action have been stayed and the
complaint has been "administratively dismissed."
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED
by and among the Representative Plaintiffs (for themselves,
the Class Members and the Partnership) and the Defendants,
by and through their respective counsel, that the Actions
and all claims asserted therein be and the same are hereby
settled and compromised as among the Parties, and the same
be dismissed in their entirety with prejudice, on the merits
and without costs (except as set forth herein), subject to
the approval of the Court, on the following terms and
conditions:
1. Definitions
In addition to the terms defined above, the
following terms are used in this Stipulation:
1.1 "Claims" means any and all claims or causes of
action, demands, rights, liabilities, and causes of action
of every nature and description whatsoever, whether in law
or in equity, known or unknown, asserted or that could have
been asserted by a person, including, without limitation,
claims for negligence, gross negligence, breach of duty of care
and/or breach of duty of loyalty, fraud, breach of fiduciary
duty or violations of any state or federal statutes, rules or
regulations.
1.2 "Claims Administrator" means Rudolph
Palitz, LLP, Plymouth Meeting, Pa.
1.3 "Class" means all persons who owned
Units in the Partnership at any time during the Class
Period.
1.4 "Class A Unit" means a Unit initially
acquired from the Partnership by an Investor Limited Partner
not known by the General Partners to be a tax-exempt person.
1.5 "Class B Unit" means a Unit initially
acquired from the Partnership by an Investor Limited Partner
that was known to the Partnership to be a tax-exempt person.
1.6 "Class Counsel" means the following
counsel for Representative Plaintiffs in the litigation:
Nicholas E. Chimicles, Chimicles Jacobsen & Tikellis;
Lawrence A. Sucharow, Goodkind Labaton Rudoff & Sucharow
LLP; Lawrence P. Kolker, Wolf Haldenstein Adler Freeman &
Herz; Burton H. Finkelstein, Finkelstein, Thompson &
Loughran; and Jules Brody, Stull, Stull & Brody.
1.7 "Class Member" means each member of the
Class.
1.8 "Class Member Limited Partner" means
each Class Member who is a Limited Partner.
1.9 "Class Period" means the period from
January 1, 1996 through the date of the Preliminary Order.
1.10 "Effective Date" means the date upon
which all of the events and conditions specified in
paragraph 19 of this Stipulation have been met and have
occurred.
1.11 "Final Date" means: (i) the date of
final affirmance on an appeal from the Judgment, the
expiration of the time for a petition for a writ of
certiorari to review the Judgment or for all motions for
leave to appeal the Judgment, or, if certiorari or leave be
granted, the date of final affirmance of the Judgment
following review pursuant to that grant; or (ii) the date of
final dismissal of any appeal from the Judgment or the final
dismissal or denial of any proceeding on certiorari or for
leave to appeal to review the Judgment; or (iii) if no
appeal is filed, the expiration date of the time for the
filing or noticing of any appeal from the Court's judgment
approving the Stipulation substantially in the form of
Exhibit B hereto, i.e., thirty (30) days after entry of the
Judgment or such longer time as may be allowed by Court
order extending the time for appeal. Any proceeding or
order, or any appeal or petition for a writ of certiorari or
leave to appeal pertaining solely to any application for
attorneys' fees, costs or expenses, will not in any way
delay or preclude the Judgment from becoming final.
1.12 "Former Unitholders" means persons who
disposed of Units in the period on or after January 1, 1996
and on or before the date of the Preliminary Order.
1.13 "Formerly Held A Unit" means a Class A
Unit disposed of by a member of the Class in the period on
or after January 1, 1996 and on or before the date of the
Preliminary Order.
1.14 "Formerly Held B Unit" means a Class B
Unit disposed of by a member of the Class in the period on
or after January 1, 1996 and on or before the date of the
Preliminary Order.
1.15 "Judgment" means the order and final
judgment to be rendered by the Court as provided for in
Paragraph 17 hereof, substantially in the form attached
hereto as Exhibit B.
1.16 "Judgment Reduction" means the judgment
reduction to be afforded the NYRES Releasees pursuant to
Paragraph 5 of this Stipulation.
1.17 "Lead Class Counsel" means the following
counsel for Representative Plaintiffs in the litigation:
Nicholas E. Chimicles, Chimicles Jacobsen & Tikellis;
Lawrence A. Sucharow, Goodkind Labaton Rudoff & Sucharow
LLP.
1.18 "Limited Partners" means all persons who
hold Units as of the Record Date.
1.19 "Liquidation" means the payments and
distribution contemplated by Paragraph 9 of this
Stipulation, including the allocations provided for therein.
1.20 "Mendik Claims" means the Claims
released pursuant to Paragraph 3 of this Stipulation.
1.21 The "Mendik Releasees" means Bernard H.
Mendik, Mendik RELP Corporation, Mendik Realty Company,
Inc., Mendik Management Company Inc., B&B Park Avenue, L.P.,
Vornado Realty Trust, Vornado Realty L.P. and their Related
Parties.
1.22 "Notice" means the Notice of Pendency of
Class and Derivative Actions, Class Action Determination,
Proposed Settlement of Class and Derivative Actions,
Settlement Hearing and Right to Appear substantially in the
form attached as Exhibit 1 to the Preliminary Order.
1.23 "NYRES Claims" means the Claims released
pursuant to Paragraph 4 of this Stipulation.
1.24 "NYRES Releasees" mean Lehman Brothers,
NYRES and their Related Parties.
1.25 "Parties" means, collectively, each of
the Defendants, and the Representative Plaintiffs on behalf
of themselves and the members of the Settlement Class and
derivatively on behalf of the Partnership.
1.26 "Person" means an individual,
corporation, partnership, limited partnership, limited
liability company, association, joint stock company, estate,
legal representative, trust, unincorporated association,
government or any political subdivision or agency thereof,
and any business or legal entity and their spouses, heirs,
predecessors, successors, representatives, or assignees.
1.27 "Plaintiff Releasors" means the
Representative Plaintiffs, each of the Settlement Class
Members and the Partnership, on behalf of themselves and
each of their successors, heirs, executors and assigns,
except that the Plaintiff Releasors will not include Mendik
or his Related Parties.
1.28 "Preliminary Order" means the Order to
be issued pursuant to Paragraph 16 hereof, substantially in
the form of Exhibit A hereto.
1.29 "Qualifying Former Unitholder" means a
Former Unitholder who submitted a timely Proof of Claim that
has been allowed by the Claims Administrator pursuant to the
terms of this Stipulation.
1.30 "Record Date" means the date the
Judgment is entered.
1.31 "Related Parties" means each of a
Released Person's past or present directors, officers,
employees, partners, principals, agents, controlling
shareholders, any entity in which the Released Person and/or
any member(s) of the Released Person's immediate family has
or have a controlling interest, attorneys, advisors,
personal or legal representatives, insurers, co-insurers and
reinsurers, predecessors, successors, parents, subsidiaries,
divisions, joint ventures, assigns, spouses, heirs,
associates, related or affiliated entities, any members of
their immediate families, or any trust of which any Released
Person is the settlor or which is for the benefit of any
Released Person and/or member(s) of his family, except that
no Person will be deemed a Related Party of a Released
Person solely by reason of such Person's affiliation with
the Partnership.
1.32 "Released Claims" means the Claims
settled and released pursuant to Paragraphs 3 through 5 of
the Stipulation.
1.33 "Released Persons" means the Mendik
Releasees and the NYRES Releasees.
1.34 "Releasor Judgment" means any judgment
obtained by any Plaintiff Releasor against any NYRES
Releasee on a claim relating to the purchase of Units by
such Plaintiff Releasor or his, her or its affiliates,
predecessors or family members.
1.35 "Representative Plaintiffs" means Joseph
and Nancy P. DeLeo, Michael Hatem, and Nancy P. Landis.
1.36 "Settlement Class" means all Settlement
Class Members.
1.37 "Settlement Class Member" or "Member of
the Settlement Class" means a Person who falls within the
definition of the Class as set
forth in Paragraph 1.3 of the Stipulation and does not
request to be excluded from the Class pursuant to Paragraph
13 hereof.
1.38 "Settlement Fund" means (1) all assets
(other than the Partnership Properties) presently owned by
the Partnership; (2) the Cash Proceeds; (3) the Vornado
Stock to be paid by Vornado in the Vornado Purchase; and
(4) the contributions to be made by the General Partners
pursuant to Paragraph 8 hereof.
1.39 "Settlement Hearing" means the Hearing
to be held pursuant to the Preliminary Order.
1.40 "Share" means one share of Vornado Stock
(as Vornado Stock is defined in Paragraph I above).
1.41 "Unit" means the interest of a limited
partner of the Partnership attributable to a Capital
Contribution (as defined in the Partnership Agreement) of
$500 and includes both Class A and Class B Units.
1.42 "Unknown Claims" means any Claims
released herein which any person giving such release does
not know or suspect to exist in his, her or its favor at the
time of the release of the Released Persons which, if known
by him, her or it, might have affected his, her or its
settlement with and release of the Released Persons, or
might have affected his, her or its decision not to object
to this settlement. With respect to any and all Released
Claims, the Parties stipulate and agree that, upon the
Effective Date, the Representative Plaintiffs and the
Settlement Class Members will be deemed to have, and by
operation of the Judgment will have, expressly waived and
relinquished, to the fullest extent permitted by law, the
provisions, rights and benefits of 1542 of the California
Civil Code, which provides:
A general release does not extend
to claims which the creditor does not
know or suspect to exist in his favor at
the time of executing the release, which
if known by him must have materially
affected his settlement with the debtor.
and all similar provisions of the laws of any other states.
Each of the Representative Plaintiffs and the Settlement
Class Members may hereafter discover facts in addition to or
different from those which he, she or it now knows or
believes to be true with respect to the subject matter of
the Released Claims, but hereby stipulate and agree that
each Representative Plaintiff does and each Settlement Class
Member will be deemed to have, and upon the Effective Date
and by operation of the Judgment -- will have, fully,
finally, and forever settled and released any and all
Released Claims, -- known or unknown, suspected or
unsuspected, contingent or non-contingent, whether or not
concealed or hidden, which now exist, or heretofore have
existed upon any theory of law or equity now existing or
coming into existence in the future, including, but not
limited to, conduct which is negligent, intentional, with or
without malice, or a breach of any duty, law or rule,
without regard to the subsequent discovery or existence of
such different or additional facts. The Plaintiff Releasors
acknowledge that the foregoing waiver was bargained for and
a key element of the Settlement of which this release is a
part.
The Vornado Purchase
2. The Partnership and Vornado will
consummate the Vornado Purchase in accordance with the terms
of an agreement which contains the terms set forth in
Paragraph I above.
Releases
3. Upon the Effective Date, the Plaintiff
Releasors will be deemed to have, and by operation of the
Judgment will have, fully, finally and forever released,
relinquished and discharged any and all Claims, including
Unknown Claims, that the Plaintiff Releasors may have
against each and all of the Mendik Releasees relating in any
way to (x) the subject matter of the Actions; (y) Two Park
Company, the Partnership, and the assets owned by it and its
affiliates and M/H Two Park Associates and the management of
all of the foregoing and (z) the purchase and sale by any
Plaintiff Releasor or their affiliates, predecessors or
family members of Units.
4. Upon the Effective Date, the
Plaintiff Releasors will be deemed to have, and by operation
of the Judgment will have, fully, finally and forever
released, relinquished and discharged all Claims, including
Unknown Claims, that the Plaintiff Releasors may have
against each and all of the NYRES Releasees relating in any
way to (x) the subject matter of the Actions; (y) Two Park
Company, the Partnership and the assets owned by it and its
affiliates and M/H Two Park Associates and the management of
all of the foregoing and (z) the sale by any Plaintiff
Releasor (except the Partnership) or their affiliates,
predecessors or family members of Units, except that nothing
in this Stipulation or in the Judgment will release any
Claims relating to Plaintiff Releasors' purchase of Units in
the Partnership.
5. Upon the Effective Date, each of the
Plaintiff Releasors will be deemed to have, and by operation
of the Judgment will have, agreed to reduce any Releasor
Judgment that any of them may obtain against any of the
NYRES Releasees by the amount of the Mendik Equitable Share.
The "Mendik Equitable Share" will be equal to the portion of
the Releasor Judgment, as found by the court or jury
rendering the Releasor Judgment, for which the Mendik
Releasees would be liable to the NYRES Releasees, whether by
reason of contribution, indemnity or otherwise, in the
absence of the releases granted both herein and in the
Judgment to the Mendik Releasees by the Plaintiffs and by
the NYRES Releasees. In determining the Mendik Equitable
Share, the court and/or jury may take into account, if
requested to do so by any NYRES Releasee or Plaintiff
Releasor, the terms of any agreements between any Mendik
Releasee and any NYRES Releasee that relate to indemnity or
contribution or that otherwise may affect the amount of
Judgment Reduction, including without limitation (1) the
Sales Agency Agreement among the Partnership, Hutton Real
Estate Services XV Limited Partnership, Mendik Corp. and
Hutton Real Estate Services XV, Inc., dated April 7, 1986,
and (2) the Indemnity and Contribution Agreement between
Hutton Real Estate Services XV, Inc. and Mendik Corp. dated
April 7, 1986.
6. Upon the Effective Date, the NYRES Releasees
will release the Mendik Releasees from any and all Claims,
including Unknown Claims, which they now or hereafter may
have, whether for contribution, indemnity or otherwise,
against the Mendik Releasees arising out of or relating to
(x) the subject matter of the Actions, (y) Two Park Company,
the Partnership and the assets owned by it and its
affiliates, M/H Two Park Associates, and the management of
all of the foregoing and (z) the purchase and sale of Units
of the Partnership by any Plaintiff Releasors or their
affiliates, predecessors or family members, except nothing
herein shall release any claims that are made under the
contract of sale for the Vornado Purchase and which under
such contract expressly survive the closing of the Vornado
Purchase. The portion of this release that releases claims
by the NYRES Releasees against the Mendik Releasees relating
to or arising out of the purchase of Units of the
Partnership by any Plaintiff Releasor, or his, her or its
affiliates, predecessors or family members (the "NYRES
Purchase Release Portion"), is conditioned upon the validity
and enforceability, in accordance with its terms, of the
Judgment Reduction to be granted pursuant to Paragraph 5 of
this Stipulation and pursuant to the Judgment. If the
Judgment Reduction is subsequently found by any court to be
void or unenforceable for any reason, in whole or in part,
then to such extent, and to such extent only, the NYRES
Purchase Release Portion will be void nunc pro tunc and be
of no further force or effect.
7. Upon the Effective Date, the Mendik
Releasees will release the NYRES Releasees from any and all
Claims, including Unknown Claims, which they now or
hereafter may have, whether for contribution, indemnity or
otherwise, against the NYRES Releasees arising out of or
relating to (x) the subject matter of the Actions, (y) Two
Park Company, the Partnership and the assets owned by it and
its affiliates, M/H Two Park Associates, and the management
of all of the foregoing and (z) the purchase and sale of
Units of the Partnership by any Plaintiff Releasors or their
affiliates, predecessors or family members, except nothing
herein shall release any claims that are made under the
contract of sale for the Vornado Purchase and which under
such contract expressly survive the closing of the Vornado
Purchase. The portion of this release that releases claims
by the Mendik Releasees against the NYRES Releasees relating
to or arising out of the purchase of Units of the
Partnership by any Plaintiff Releasor, or his, her or its
affiliates, predecessors or family members (the "Mendik
Purchase Release Portion"), is conditioned upon the validity
and enforceability, in accordance with its terms, of the
NYRES Purchase Release Portion. To the extent that the
NYRES Purchase Release Portion is rendered void or
unenforceable, in whole or in part, pursuant to Paragraph 6
hereof, then to such extent, and to such extent only, the
Mendik Purchase Release Portion will be void nunc pro tunc
and of no further force and effect.
Contributions by General Partners
8. On or before the Effective Date, NYRES
and Mendik RELP will each contribute to the Partnership, in
accordance with Partnership Agreement 17(b), their
Partnership capital account deficits.
Liquidation and Dissolution of the
Partnership and Distribution of the
Settlement Fund
9. As soon as practicable after the
Effective Date, the Partnership will be liquidated and
dissolved by the General Partners in accordance with the
terms of the Partnership Agreement, except to the extent
such terms are modified herein and in the Judgment (the
"Liquidation"). The Liquidation will consist of the
following payments and distributions:
(a) The Cash Proceeds will be used to make
the following payments:
(1) First, to creditors of the
Partnership, in the order of priority provided by law.
These payments will include, without limitation,
payments of all amounts presently owed by the
Partnership to Mendik Realty Company, Inc., Mendik
Management Company Inc., Mendik RELP and DAG Lending
Corp. (an affiliate of NYRES).
(2) Second, to establish a reasonable
reserve for contingencies to cover final expenses and
obligations of the Partnership, including the expenses
and obligations incurred in connection with the
Liquidation and the expenses relating to the Vornado
Purchase. This reserve will be administered by the
General Partners. If as of the date of the Liquidation
there is a pending appeal or dispute concerning the
amount of a Fee and Expense Award (as defined in
Paragraph 14(a) below), the reserve will include the
amount in controversy on such appeal, which amount will
not be disbursed until such appeal has been resolved
and is subject to no further appeal or review. Any
funds remaining in the reserve after payment of all
final expenses will be distributed to the Limited
Partners in accordance with Paragraph 9(c).
(3) Third, to pay the costs of giving
notice pursuant to the Preliminary Order and the costs
and fees of the Claims Administrator incurred pursuant
to this Stipulation.
(4) Fourth, to pay Defendants'
reasonable attorney's fees, expert fees and costs
incurred in connection with the Action, pursuant to
Partnership Agreement 13(h).
(5) Fifth, to pay the costs and
attorney's fees awarded to Class Counsel by the Court.
(6) Sixth, up to $500,000 in cash will
be paid to Qualifying Former Unitholders, who validly
make claim therefor pursuant to Paragraph 10 hereof,
allocated on the basis of the number and type of Units
formerly held by each Qualifying Former Unitholder, as
set forth in Paragraph 10(c) hereof.
(7) Seventh, to make the cash
distributions contemplated by Paragraph 9(c) below.
(b) (i) During the first five business days
following the Effective Date, the Partnership and the
Liquidating Trust will solicit bids from Merrill Lynch,
Goldman Sachs & Co., Lehman Brothers Inc. and Smith Barney
Inc. to purchase, in a block trade, all of the Vornado Stock
and will, on the business day a bid is accepted, sell the
Vornado Stock to the highest bidder. The net sales proceeds
from such sale of the Vornado Stock will be allocated among
and distributed to the Limited Partners by applying the
distribution formula in Partnership Agreement 17(c).
Notwithstanding the foregoing, any Class Member Limited
Partner may elect to receive its allocable share of the
Vornado Stock rather than its allocable share of the net
sale proceeds from the Vornado Stock in which case such
shares of Vornado Stock will be distributed to such Class
Member Limited Partner by the Liquidating Trust and not sold
as described above. Any Class Member Limited Partner who
elects to receive Vornado Stock must do so by mailing a
Stock Election Certificate in the form annexed as Exhibit 3
to the Preliminary Order to the Claims Administrator,
postmarked ten days before the Settlement Hearing, stating
(x) the name of the Class Member Limited Partner, and
(y) that the Class Member Limited Partner (an "Electing
Limited Partner") elects to receive Vornado Stock rather
than cash. In the event that the 1% Limit prevents Vornado
from paying sufficient shares of Vornado Stock to permit
each such Electing Limited Partner to receive its full
allocable share in Vornado Stock, then the Vornado Stock
will be distributed on a pro rata per Unit basis among the
Electing Limited Partners, and such partners will receive
their remaining allocable portion of the Two Park
Partnership Interest Purchase Price in cash.
(ii) No Class Member Limited Partner
will be permitted to elect to receive its allocable share of
the distribution to be made with respect to the Two Park
Partnership Interest part in cash and part in Vornado Stock.
(iii) No fractional shares of Vornado
Stock will be distributed. Any calculation that would yield
a fractional share will be rounded up or down to the next
closest share and the cash portion of the distribution
described in subdivision 9(c) below will, to the extent
possible, be adjusted accordingly. If this rounding process
results in a calculation that provides for distribution of
fewer shares than the total number of Shares (a "Negative
Residual Amount"), or a distribution of more Shares than the
total number of Shares (a "Positive Residual Amount"), then
the Liquidating Trustee will select by a random process a
number of Class Member Limited Partners who have elected to
receive Vornado Stock (the "Selected Class Members") equal
to the number of Shares in the Positive Residual Amount or
the Negative Residual Amount, as the case may be. In the
event that there is a Positive Residual Amount, each such
Selected Class Member will receive one more Share than such
Selected Class Member would have otherwise received, and
there will be deducted from the cash distribution that would
otherwise be made to such Selected Class Member pursuant to
paragraph 9(c) below an amount equal to the Closing Price
(as defined in Paragraph I above). In the case of a
Negative Residual Amount, each such Selected Class Member
will receive one less share than such Selected Class Member
would have otherwise received, and will receive in addition
to the cash distribution that would otherwise be made to
such Selected Class Member pursuant to paragraph 9(c) below
a payment of cash equal to the Closing Price.
(c) After the payments and distribution
contemplated by Paragraphs 9(a) and (b) above are made, the
remainder of the Cash Proceeds and the other assets of the
Partnership will be distributed to all of the Limited
Partners in accordance with the distribution formula
provided in Partnership Agreement 17(c), (subject to the
adjustments described in Paragraph (b) above.)
Former Unitholders' Proofs of Claim and Allocation
10. (a) Within 45 days after the mailing of
the Notice, which period may be extended once by Lead Class
Counsel for an additional 30 day period, or such other time
as may be set by the Court, each Person claiming to be a
Former Unitholder will be required to submit to the Claims
Administrator a separate completed Proof of Claim as
included with the Notice and substantially in the form of
Exhibit 2 to the Preliminary Order, signed under penalty of
perjury and supported by such documents as specified in the
Proof of Claim and as are reasonably available to the Former
Unitholder.
(b) Except as otherwise ordered by the
Court, all Former Unitholders who fail to timely submit a
valid Proof of Claim within such period, or such other
period as may be ordered by the Court, will be forever
barred from receiving any payments pursuant to the
Stipulation and the settlement set forth herein, but will in
all other respects be subject to and bound by the provisions
of the Stipulation, the settlement and releases contained
herein, and the Judgment.
(c) The $500,000 available to Qualifying
Former Unitholders will be allocated as follows:
(i) Each Formerly Held A Unit for which
claim is validly made shall be weighted by a factor of one,
and each Formerly Held B Unit for which claim is validly
made will be weighted by a factor of two. The total number
of such weighted units will be divided into $500,000 to
determine a per unit distributable share. Subject to the
limitations in Paragraph (ii) below, each Formerly Held A
Unit will receive the per unit distributable share; each
Formerly Held B Unit will receive the per unit factor
multiplied by two.
(ii) In no event shall the Former
Unitholders receive a distribution that exceeds, on a per
Class A or B Unit basis, 50 percent of the amount per Class
A or B Unit distributed to Limited Partners in the
Liquidating Distribution (the "Limit Amount"). In the event
that the calculation set forth in paragraph c(i) above would
result in a per unit distribution to Former Limited Partners
in excess of the Limit Amount, the amount of the Per Unit
Distributable share will be reduced so that the distribution
to Former Unitholders pursuant to paragraph (i) will be
equal, on a per unit basis, to the Limit Amount. Any
residual amount of the $500,000 remaining after a
distribution is made based on this calculation will be added
to the Cash Proceeds to be distributed pursuant to Paragraph
9(c) hereof.
(d) Within two (2) business days after the
completion of processing, the Claims Administrator will
provide the General Partners and Lead Class Counsel with a
list of Qualifying Former Unitholders and the amount to be
paid from the Cash Proceeds to each such person as part of
the Liquidating Distribution.
Administration and Calculation of the Liquidation
11. (a) The General Partners will calculate
and administer the cash portion of the Liquidation
(including, without limitation, the net sales proceeds of
the Vornado Stock issued to the Partnership), except that
the Claims Administrator will calculate the distribution to
the Former Unitholders and the trustee of the Liquidating
Trust will calculate and administer the distribution of the
Vornado Stock issued to it and/or the net sales proceeds
therefrom.
(b) Subject to the terms of the Liquidating
Trust, the General Partners will maintain and administer the
Settlement Fund and will not disburse the Settlement Fund
except (1) to pay ordinary expenses incurred by the
Partnership in the ordinary course of its business in a
manner consistent with the Partnership Agreement; (2) as
provided in this Stipulation or by an Order of the Court, or
(3) with the written agreement of Lead Class Counsel and
counsel for Defendants. The Settlement Fund will be deemed
and considered to be in custodia legis of the Court, and
will remain subject to the jurisdiction of the Court until
such time as such funds will be distributed pursuant to the
Stipulation and/or further Order of the Court.
(c) The General Partners will invest the
cash portion of the Settlement Fund in funds that invest
exclusively in short term instruments backed by the full
faith and credit of the United States Government or fully
insured by the United States Government or an agency thereof
and will reinvest any interest earned thereon in the same
manner.
Amendment of Partnership Agreement
12. Provided that over 50 percent in
interest of the Limited Partners do not elect to be excluded
from the Settlement pursuant to Paragraph 13 hereof
upon the Effective Date, the Partnership Agreement will be
deemed amended to the extent necessary to implement the
terms of the Settlement, including without limitation to
authorize the Vornado Purchase, the Liquidation and the
distribution of Vornado Stock and/or the net sale proceeds
therefrom by the Liquidating Trust, irrespective of any
provisions of the Partnership Agreement that may be
inconsistent with such transactions.
Requests for Exclusion
13. (a) Any Class Member who wishes to be
excluded from the Class must so notify Lead Class Counsel in
writing by mail received at least twenty (20) days prior to
the Settlement Hearing, or as the Court may otherwise
direct, at the offices of the Claims Administrator. Such
request will contain a statement identifying the number of
Units ever held by the Class Member and (1) the date(s) of
purchase of such Units and (2) the dates, if any, of any
sale or other disposition of any Units. Originals of all
written requests for exclusion will be retained by Lead
Class Counsel and promptly made available on request to
counsel for any other party unless and until such originals
are filed with the Court.
(b) Any Class Member who does not
timely file a request for exclusion as set forth above will
conclusively be deemed to have become a Settlement Class
Member and to be bound by all subsequent proceedings, orders
and judgments herein.
Fee Application
14. (a) The Representative Plaintiffs or
their counsel may submit an application or applications (the
"Fee and Expense Application") for distributions to them
from the Settlement Fund for: (i) an award of attorneys'
fees and expenses, including the fees of any experts or
consultants incurred in connection with prosecuting the
Actions, in the amount of up to $2.5 million, plus interest
on such attorneys' fees, costs and expenses at the same rate
as earned by the Cash Proceeds from the Vornado Purchase for
the period between the closing of the Vornado Purchase and
the payment of such award (a "Fee and Expense Award").
(b) Lead Class Counsel will allocate the Fee
and Expense Award amongst Class Counsel in a manner in which
Lead Class Counsel in good faith believe reflects the
contributions of such counsel to the prosecution and
settlement of the Actions.
(c) Defendants and their respective Related
Parties (other than the Partnership) will have no
responsibility for, and no liability whatsoever with respect
to, any payment of fees and expenses to Class Counsel or any
other person, or with respect to any allocation made by Lead
Class Counsel pursuant to Paragraph 14(b) hereof.
(d) Defendants and their respective Related
Parties will have no responsibility for, and no liability
whatsoever with respect to, the allocation of any Fee and
Expense Awards among Class Counsel and any other Person who
may assert some claim thereto, or for any Fee and Expense
Awards that the Court may make in the Actions.
(e) The procedure for and the allowance
or disallowance by the Court of any Fee and Expense
Applications by any of the counsel to the Representative
Plaintiffs for attorneys' fees, costs and expenses,
including the fees of experts and consultants, to be paid
out of the Settlement Fund, are not part of the settlement
set forth in the Stipulation, and are to be considered by
the Court separately from the Court's consideration of the
fairness, reasonableness and adequacy of the settlement set
forth in the Stipulation, and any order or proceedings
relating to the Fee and Expense Application, or any appeal
from any order relating thereto, will not operate to
terminate or cancel the Stipulation, or affect or delay the
finality of the Judgment approving the Stipulation and the
settlement of the Actions set forth herein.
Objection to Settlement
15. (a) Any Settlement Class Member who
wishes to appear in person or through separate counsel to
object to the fairness, reasonableness or adequacy of this
Settlement Agreement, including any Fee and Expense
Application, will serve on Lead Class Counsel and counsel
for the Defendants, and file with the Court, at least twenty
(20) days prior to the Settlement Hearing, or as the Court
may otherwise direct, a notice of intention to appear or
object, together with copies of any papers said Settlement
Class Member intends to present to the Court in connection
with the Settlement Agreement.
(b) Any Settlement Class Member who fails to
appear or challenge the fairness and adequacy of this
Settlement Agreement pursuant to Paragraph 15(a) hereof will
have waived and forfeited any and all rights that such
Settlement Class Member may have to appear or object, and
will be bound by all the terms and provisions of this
Settlement Agreement and by all proceedings, orders and
judgments herein.
Joint Application for Preliminary Order
16. As soon as practicable after the
execution of this Stipulation, the parties will jointly
apply to the Court for an order (in the form attached as
Exhibit A) with respect to notice, the Settlement Hearing,
and settlement administration,
(a) Consolidating the Actions pursuant to
CPLR 602;
(b) Conditionally certifying the Class
solely for the purpose of consummating and effectuating the
Settlement, pursuant to CPLR 902 and 906;
(c) Directing that a Settlement Hearing be
held by the Court to determine, among other things:
(1) whether the Court should approve
the Settlement and enter the Judgment dismissing the
Actions pursuant to CPLR 908 with prejudice and on the
merits, each party to bear its own costs (except as
expressly provided herein) and extinguishing and
releasing any and all Settled Claims and approving the
Judgment Reduction;
(2) in the event the Court approves the
Settlement, to pass upon the Fee and Expense
Application.
(d) Directing (i) that a copy of the Notice
of Pendency of Class and Derivative Actions, Class Action
Determination, Proposed Settlement of Class and Derivative
Actions, Settlement Hearing and Right to Appear (the
"Notice") substantially in the form attached as Exhibit 1 to
the Preliminary Order be mailed by first-class mail within
ten (10) days of the date of the Preliminary Order, in the
name of the Clerk of the Court or by the direction of the
Clerk of the Court to Class Members at their last known
addresses appearing in the Partnership's transfer records;
(ii) that a Summary Notice of Pendency of Class and
Derivative Actions and Proposed Settlement substantially in
the form attached as Exhibit 4 to the Preliminary Order be
published within ten days of the date of the Preliminary
Order in the national edition of the Wall Street Journal and
(iii) that the Partnership will bear the costs of providing
such notice;
(e) Pending final approval of this
Stipulation, enjoining plaintiffs and all Class members from
asserting, commencing, prosecuting or continuing, either
directly, representatively, derivatively or in any other
capacity, any of the Released Claims.
(f) Declaring that any transfer of any
Unit made on or after the date of the Order and on or before
the Record Date will be deemed to include, and will include,
a transfer of any and all Claims held by the transferor
relating to or arising from such Unit, which Claims are to
be released as part of this Settlement and that any
transferee who does not submit a valid request for exclusion
within the time period set forth in Paragraph 13 will be
bound by the releases given pursuant to this Agreement.
Judgment
17. If the Settlement (including any
modification thereto made with the consent of the parties as
provided for herein) is approved by the Court following the
Settlement Hearing, the parties will jointly request the
Court to enter an order and final judgment in the form of
Exhibit B hereto (the "Judgment") in accordance with the
provisions of the Stipulation, which Judgment will bind the
Settlement Class Members and the Partnership and will
(a) find that the notice given pursuant to
the Preliminary Order is reasonable and the best practicable
notice under the circumstances and in full compliance with
CPLR 904 and the requirements of due process;
(b) approve the terms of this Settlement as
reasonable, adequate and in the best interest of the
Settlement Class and the Partnership and directing
consummation of the Settlement in accordance with its terms
and provisions;
(c) approve and authorize the payment to
defendants of their attorney's fees, expert fees and costs,
pursuant to Partnership Agreement 13(b);
(d) declare that the Partnership Agreement
is deemed amended to the extent necessary to implement the
terms of the Settlement, including without limitation to
authorize the Vornado Purchase, the Liquidation and the
distribution of Vornado Stock and/or the net sales proceeds
therefrom by the Liquidating Trust, irrespective of any
provisions of the Partnership Agreement that may be
inconsistent with such transactions;
(e) dismiss the Actions on the merits with
prejudice as to all Defendants as against the Partnership
and against all the Plaintiffs and all other Settlement
Class Members, without costs except as provided herein, such
dismissal to be subject only to compliance by the parties
with the terms and conditions of this Stipulation;
(f) forever release and discharge the Mendik
Releasees from the Mendik Claims;
(g) forever release and discharge the NYRES
Releasees from the NYRES Claims;
(h) grant the NYRES Releasees Judgment
Reduction in accordance with Paragraph 5 hereof;
(i) permanently bar and enjoin the Named
Plaintiffs, the Partnership, any and all other Settlement
Class Members, and the Settlement Class, either directly or
indirectly, and their predecessors, successors, agents,
representatives, attorneys and affiliates and the heirs,
executors, administrators, successors and assigns of any or
all of them, from the assertion, institution, maintenance,
prosecution or enforcement against the Mendik Releasees, or
any of them, either now or hereafter, on their own behalf or
on behalf of any other person, of any and all Mendik Claims;
(j) permanently bar and enjoin the Named
Plaintiffs, the Partnership, any and all other Settlement
Class Members, and the Settlement Class, either directly or
indirectly, and their predecessors, successors, agents,
representatives, attorneys and affiliates and the heirs,
executors, administrators, successors and assigns of any or
all of them, from the assertion, institution, maintenance,
prosecution or enforcement against the NYRES Releasees, or
any of them, either now or hereafter, on their own behalf or
on behalf of any other person, of any and all NYRES Claims;
and
(k) retain jurisdiction over the
administration and effectuation of the Settlement provided
for herein.
Conditions to Effectiveness
18. If prior to the Settlement Hearing, any
Persons who otherwise would be members of the Settlement
Class have timely requested exclusion ("Requests for
Exclusion") from the Settlement Class in accordance with the
provisions of the Preliminary Order and the notice given
pursuant thereto, or if the Court otherwise permits Persons
who would be members of the Class to be excluded from the
Class for any other reason, and such Persons in the
aggregate own a number of Units in an amount greater than
the sum specified in a separate supplemental agreement
between the Parties, the Defendants will have, in their sole
and absolute discretion, the option to terminate this
Stipulation in accordance with the procedures set forth in
such supplemental agreement. A summary of all Requests For
Exclusion received, setting forth (a) the identity of the
Persons making the request and (b) to the extent known, the
Units presently or formerly held by such Persons and copies
of any written revocations of Requests For Exclusion will be
delivered to counsel for Defendants ten (10) business days
before the Settlement Hearing.
19. The Effective Date of the Stipulation is
conditioned on the occurrence of all of the following
events:
(1) The Court has entered the Preliminary
Order;
(2) The Court has entered the Judgment and
the Final Date has occurred;
(3) Counsel for the Defendants have not
given notice of intent to withdraw from the Settlement
pursuant to Paragraph 18; and
(4) The Vornado Purchase has been
consummated.
20. No order of the Court concerning the amount
of attorneys' fees, costs, expenses and interest awarded by
the Court to Class Counsel will constitute grounds for
cancellation and termination of the Stipulation, nor will
any modification or reversal on appeal of any such order.
21. If all of the conditions specified in
Paragraph 19 are not met, then the Stipulation will be
canceled and terminated unless Lead Class Counsel and
counsel for Defendants mutually agree in writing to proceed
with the Stipulation. If the Stipulation is terminated or
fails to become effective in accordance with its terms, the
Parties will be restored to their respective positions in
the Actions as of June 1, 1998. In such event, the terms
and provisions of the Stipulation will have no further force
and effect with respect to the Parties or the Class and will
not be used in the Actions or in any other proceeding for
any purpose, and any Judgment or Order entered by the Court
in accordance with the terms of the Stipulation will be
treated as vacated, nunc pro tunc.
Miscellaneous Provisions
22. The Parties (a) acknowledge that it is
their intent to consummate this Stipulation; and (b) agree
to cooperate to the extent necessary to effectuate and
implement all terms and conditions of the Stipulation and to
exercise their best efforts to accomplish the foregoing
terms and conditions of the Stipulation, including without
limitation to exercise their best efforts to ensure the
enforceability and validity of the Judgment Reduction.
23. The Parties agree that the transactions
contemplated hereunder, as well as the other terms of the
Settlement, reflect a good faith settlement of the claims of
the Partnership and Representative Plaintiffs' and the
Settlement Class, reached voluntarily after consultation
with experienced legal counsel. Neither the Stipulation nor
the settlement contained therein, nor any act performed or
document executed pursuant to or in furtherance of the
Stipulation or the Settlement: (i) is or may be deemed to
be or may be used as an admission of, or evidence of, the
validity of any Released Claim, or of any wrongdoing or
liability of the Released Persons, or (ii) is or may be
deemed to be or may be used as an admission of, or evidence
of, any fault or omission of any of the Released Persons in
any civil, criminal or administrative proceeding in any
court, administrative agency or other tribunal. Released
Persons may, without limitation, file the Stipulation and/or
the Judgment from this action in any other action that may
be brought against them in order to support a defense or
counterclaim based on principles of res judicata, collateral
estoppel, release, good faith settlement, judgment bar or
reduction or any theory of claim preclusion or issue
preclusion or similar defense of counterclaim. The Released
Persons have denied and continue to deny each and all of the
claims alleged in the Actions.
24. The Stipulation may be amended or modified
only by a written instrument signed by or on behalf of all
Parties or their successors-in-interest.
25. Class Counsel, on behalf of the Class, are
expressly authorized by the Representative Plaintiffs to
take all appropriate action required or permitted to be
taken by the Class pursuant to the Stipulation to effectuate
its terms and also are expressly authorized to enter into
any modifications or amendments to the Stipulation on behalf
of the Class which they deem appropriate.
26. Each counsel or other Person executing the
Stipulation or any of its Exhibits on behalf of any party
hereto hereby warrants that such person has the full
authority to do so.
27. The Stipulation may be executed in one or
more counterparts. All executed counterparts and each of
them will be deemed to be one and the same instrument.
Counsel for the Parties will exchange among themselves
original signed counterparts and a complete set of original
executed counterparts will be filed with the Court.
28. The Stipulation will be binding upon, and
inure to the benefit of, the successors and assigns of the
Parties hereto.
29. The Court will retain jurisdiction with
respect to implementation and enforcement of the terms of
the Stipulation, and all Parties hereto submit to the
jurisdiction of the Court for purposes of implementing and
enforcing the Settlement embodied in the Stipulation.
30. The Stipulation and the Exhibits hereto
will be considered to have been negotiated, executed and
delivered in the State of New York, and the rights and
obligations of the Parties to the Stipulation will be
construed and enforced in accordance with the laws of the
State of New York without giving effect to that State's
choice of law principles.
Dated: New York, New York
June 2, 1998
GOODKIND LABATON RUDOFF
& SUCHAROW LLP
100 Park Avenue
New York, New York 10007
(212) 907-0700
By: /s/ Lawrence A. Sucharow
Lawrence A. Sucharow
CHIMICLES JACOBSEN & TIKELLIS
One Haverford Centre
361 West Lancaster Avenue
Haverford, PA 19041
(610) 642-8500
By: /s/ Nicholas E. Chimicles
Nicholas E. Chimicles
Lead Class Counsel
WOLF HALDENSTEIN ADLER FREEMAN
& HERZ LLP
270 Madison Avenue
New York, New York 10016
(212) 545-4600
By: /s/ Lawrence P. Kolker
Lawrence P. Kolker
FINKELSTEIN, THOMPSON & LOUGHRAN
1055 Thomas Jefferson Street, N.W.
Suite 601
Washington, D.C. 10007
(202) 337-8000
By: /s/ Burton H. Finkelstein
Burton H. Finkelstein
STULL, STULL & BRODY
6 East 45th Street
New York, New York 10017
(212) 687-7230
By: /s/ Mark Levine
Mark Levine
Class Counsel
PROSKAUER ROSE, LLP
1585 Broadway
New York, New York 10036
(212) 969-3000
By: /s/ Richard M. Goldstein
Richard M. Goldstein
Attorneys for Defendants
Mendik RELP Corporation, B&B Park
Avenue, LP and Bernard H. Mendik
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 Avenue of the Americas
New York, New York 10019-6064
(212) 373-3000
By: /s/ Leslie Gordon Fagen
Leslie Gordon Fagen
Attorneys for Defendant
NY Real Estate Services 1, Inc.
MENDIK REAL ESTATE LIMITED PARTNERSHIP
By: New York Real Estate Services 1, Inc.,
a General Partner
By: /s/ Mark Marcucci
Name: Mark Marcucci
Title: President
By: Mendik RELP Corporation,
a General Partner
By: /s/ Bernard Mendik
Name: Bernard Mendik
Title:
Mendik RELP Corporation
By: /s/ Bernard Mendik
Name: Bernard Mendik
Title:
B&B PARK AVENUE, L.P.
By: ___________________________________
Name:
Title:
By:____________________________________
Vornado B&B L.L.C., General Partner
By:_______________________________
Vornado Realty, L.P., Member
By:__________________________
Vornado Realty Trust,
General Partner
New York Real Estate Services 1, Inc.
By: /s/ Mark Marcucci
Name: Mark Marcucci
Title: President
EXHIBIT A
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
- ----------------------------------------------x
JOSEPH DELEO and NANCY P. DELEO, on :
behalf of themselves and all others
similarly situated, :
Plaintiffs, Index No. 97-600185
v. :
IAS Part________
NY REAL ESTATE SERVICES 1, INC., a :
Delaware corporation, MENDIK CORPORATION, a
New York corporation, B&B PARK AVENUE, L.P., :
a Delaware limited partnership, and
BERNARD H. MENDIK, an Individual, :
Defendants. :
THE MENDIK REAL ESTATE LIMITED :
PARTNERSHIP,
:
Nominal Defendant.
- ----------------------------------------------x
MICHAEL J. HATEM, on behalf of himself and all
others similarly situated, :
Plaintiff,
v. : Index No. 97-600719
NY REAL ESTATE SERVICES 1, INC., a : IAS Part ______
Delaware Corporation, MENDIK CORPORATION, a
New York corporation, B&B PARK AVENUE, L.P., :
a Delaware limited partnership, and
BERNARD H. MENDIK, an individual, :
Defendants.
:
THE MENDIK REAL ESTATE LIMITED
PARTNERSHIP, :
Nominal Defendant. :
- ----------------------------------------------x
NANCY P. LANDIS, on behalf of herself and all
others similarly situated, :
Plaintiff,
v. : Index No. 97-113872
NY REAL ESTATE SERVICES 1, INC., a : IAS Part_______
Delaware corporation, MENDIK CORPORATION, a
New York corporation, B&B PARK AVENUE, L.P., :
a Delaware limited partnership, and
BERNARD H. MENDIK, an Individual, :
Defendants.
:
THE MENDIK REAL ESTATE LIMITED
PARTNERSHIP, :
Nominal Defendant. :
- ----------------------------------------------x
[PROPOSED] ORDER PURSUANT TO CPLR ARTICLE 9
The parties to the above-captioned consolidated
actions (the "Actions") having applied pursuant to CPLR 908
for an order to approve the proposed settlement of the
Actions in accordance with the terms and conditions of the
Stipulation and Agreement of Compromise Settlement and
Release entered into by the parties, dated June 2, 1998 (the
"Stipulation"), and for the dismissal of the Actions with
prejudice upon the terms and conditions set forth in the
Stipulation; and the Stipulation contemplating approval by
this Court of a class in the Actions for purposes of
settlement; and the Court having read and considered the
Stipulation and its attached exhibits, and good cause
appearing,
IT IS HEREBY ORDERED as follows:
1. The Court, for purposes of this preliminary
order, adopts all defined terms set forth in the
Stipulation.
2. Whereas, it appears that the Actions involve
similar subject matters and that the interests of justice
would be best served by consolidating the Actions, the Court
hereby orders the Actions consolidated for all purposes,
pursuant to CPLR 602(a). All future filings shall be made
only under the Index No. 97-600185. The caption of the
consolidated action shall henceforth be as follows:
- -----------------------------------------x
Index No. 97-600185
IN RE THE MENDIK REAL ESTATE :
LIMITED PARTNERSHIP IAS Part___________
:
- -----------------------------------------x Consol. Case. No. _____
(a) The Court hereby certifies the Class as
defined in the Stipulation, for purposes of settlement only,
pursuant to CPLR 902 and 906 as follows: All persons who
owned Units in The Mendik Real Estate Limited Partnership at
any time during the period January 1, 1996, through the date
of this Order.
(b) The Court hereby appoints the named
plaintiffs, Joseph and Nancy DeLeo, Michael J. Hatem, and
Nancy P. Landis, as representatives of the Class.
(c) The Court hereby appoints Lawrence A.
Sucharow of Goodkind Labaton Rudoff & Sucharow LLP and
Nicholas E. Chimicles of Chimicles Jacobsen & Tikellis to
serve as Lead Class Counsel.
4. The Court preliminarily approves the
settlement of the Actions set forth in the Stipulation (the
"Settlement") as being fair, just, reasonable and adequate
as to the Limited Partners, the Partnership, the Class and
its members, subject to further consideration at the
Settlement Hearing described below.
5. (a) The Court approves as to form and
content, and for distribution to Class Members by first
class mail, postage prepaid, to their respective last known
addresses as reflected on the books and records of the
Partnership, (1) a Notice of Pendency and Settlement of
Class and Derivative Action and Settlement Hearing
("Notice") substantially in the form of Exhibit 1 hereto,
and, (2) for distribution to Former Unitholders, by first
class mail, postage prepaid, a Proof of Claim ("Proof of
Claim") substantially in the form of Exhibit 2 hereto; and
(3) for distribution to current Limited Partners by first
class mail, postage prepaid, a Stock Election Certificate in
the form of Exhibit 3 hereto (the "Stock Election
Certificate")
(b) The notice and proof of claim shall be
mailed no later than sixty (60) days prior to the Settlement
Hearing.
(c) The Court approves as to form and
content the Summary Notice, substantially in the form of
Exhibit 4 hereto, which shall be published in the national
edition of the Wall Street Journal no later than fifty (50)
days prior to the Settlement Hearing.
6. Proofs of Claim by Former Unitholders will be
filed with the Claims Administrator no later than 45 days
from the date of the Notice. Any Former Unitholders who do
not file a timely Proof of Claim will not be permitted to
participate in the distribution to Former Unitholders, but
will in all other respects be bound by the terms of the
Settlement. Lead Class Counsel will have the right to
extend the deadline for filing Proofs of Claim once, for a
period of no more than thirty (30) days.
7. Counsel for the Named Defendants shall file
with the Court and serve upon Lead Class Counsel no later
than seven (7) days prior to the Settlement Hearing an
affidavit or declaration stating that Notice has been mailed
to Class Members and that the Summary Notice has been
published in accordance with the terms of this Order.
8. The Court finds that dissemination of the
Notice and Proof of Claim and the Summary Notice in the
manner required by Paragraph 5 hereof constitutes the best
notice practicable under the circumstances to the Class and
meets the requirements of Article 9 of the CPLR, due process
under the United States Constitution, and any other
applicable law and shall constitute due and sufficient
notice to all persons entitled thereto.
9. Any Class Member may, upon request, be
excluded from the Settlement. Any such person must submit
to the Claims Administrator a request for exclusion
("Request for Exclusion"), postmarked no later than twenty
days before the Settlement Hearing. A Request for Exclusion
must identify the Class Member's name, address, social
security number, the number of Units ever held by the Class
Member and (1) the date(s) of purchase of such Units and
(2) the dates, if any, of any sale or other disposition of
Units.
10. Any transfer of any Unit made on or after the
date of this Order and on or before the Record Date shall be
deemed to include a transfer of those Claims held by the
transferor relating to or arising from such Unit, which
Claims are to be released as part of the Settlement. Any
transferee of such Unit who does not submit a valid Request
for Exclusion within the time period set forth in Paragraph
9 above will be bound by the releases given as part of the
Settlement.
11. Any Class Member (who has not validly and
timely requested to be excluded from the Class) who objects
to any aspect of the Settlement, or the applications of
counsel for attorneys' fees, costs, and expenses, shall have
a right to appear and be heard at the Settlement Hearing,
provided that such person files with the Court and delivers
to Lead Class Counsel and Defendants' Counsel a timely
written notice of objection that conforms with paragraph 12
hereof ("Notice of Objection").
12. The Notice of Objection shall include:
(a) documents or a statement evidencing the objecting
person's status as a member of the Class (who has not
validly and timely requested to be excluded from the Class);
(b) a notice of intention to appear; (c) a detailed
statement of such persons' specific objections to any matter
before the Court; and (d) the grounds for such objections
and any reasons why such person desires to appear and to be
heard. All Notices of Objection shall be served in a manner
to be received by the following counsel no later than twenty
(20) days before the hearing:
Lawrence A. Sucharow
Goodkind Labaton Rudoff & Sucharow LLP
100 Park Avenue
New York, New York 10007
(212) 907-0700
Nicholas E. Chimicles
Chimicles Jacobsen & Tikellis
One Haverford Centre
361 West Lancaster Avenue
Haverford, PA 19041
(610) 642-8500
Leslie Gordon Fagen
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
(212) 373-3000
Richard M. Goldstein
Proskauer Rose, LLP
1585 Broadway
New York, New York 10036
(212) 969-3000
The Notice of Objection shall also be filed with the Court
at the Courthouse, 60 Centre Street, New York, NY at least
ten (10) days before the Settlement Hearing.
13. Any person who fails to object in the manner
prescribed in Paragraphs 11 and 12 above shall be deemed to
have waived his, her or its objections and shall forever be
barred from making any such objections in these Actions or
in any other action or proceeding, unless the Court orders
otherwise.
14. Any Class Member Limited Partner may elect to
receive its allocable share of the Vornado Stock rather than
its allocable share of the net sale proceeds from the
Vornado Stock, in which case such shares of Vornado Stock
will be distributed to such Class Member Limited Partner by
the Liquidating Trust and not sold as described in Paragraph
9(b) of the Settlement. Any Class Member Limited Partner
who elects to receive Vornado Stock must do so by mailing a
Stock Election Certificate, postmarked no later than ten
(10) days before of the Settlement Hearing, to the Claims
Administrator, stating (x) the name of the Class Member
Limited Partner and (y) that the Class Member Limited
Partner elects to receive Vornado Stock rather than cash.
15. Only Settlement Class Members who have filed
and delivered valid and timely written notices of objection
will be entitled to be heard at the Settlement Hearing
unless the Court orders otherwise.
16. Lead Class Counsel are hereby authorized to
retain the firm of Rudolph Palitz, LLP, as Claims
Administrator to administer the claims of Former
Unitholders.
17. The Settlement Hearing will be held on
_______________, 1998, at _______ a.m. before this Court at
the Courthouse, IAS Part ______, Room __, 60 Centre Street,
New York, New York, to determine whether the proposed
Settlement of the Actions as set forth in the Stipulation,
should be finally approved as fair, just, reasonable and
adequate to the Class and the Partnership, whether the Final
Judgment approving the Settlement should be entered, and in
what amount any applications for attorneys' fees, costs and
expenses should be granted.
18. The Court may adjourn or continue the
Settlement Hearing, or any adjournment thereof, without
further notice to members of the Class other than by
announcement at the Settlement Hearing or any adjournment
thereof.
19. The Court reserves the right to approve the
Settlement with modifications approved by the Parties or
without modification and with or without further notice to
the members of the Class. The Court further reserves the
right to enter its final judgment dismissing the Actions on
the merits as to all defendants and with prejudice as
against the named plaintiffs, all members of the Class, and
each of them, and their respective representatives,
trustees, and successors and assigns, to order the payment
of attorneys' fees and to make such further orders as are
necessary and appropriate all without further notice.
20. No later than seven (7) days before the
Settlement Hearing, all briefs supporting the Settlement and
the Fee and Expense Application shall be served and filed.
21. Neither the Stipulation, nor any of its terms
or provisions, nor any of the negotiations or proceedings
connected with it, shall be construed as an admission or
concession by Defendants of the truth of any of the
allegations in the Action, or of any liability, fault, or
wrongdoing of any kind.
22. All discovery and other proceedings in the
Actions are stayed until further order of the Court, except
as may be necessary to implement the Settlement or comply
with the terms of the Stipulation. The Representative
Plaintiffs and Class Members are barred from commencing or
prosecuting any direct or representative action, or any
action in any other capacity, asserting any of the Mendik
Claims or NYRES Claims unless and until the Stipulation is
terminated according to its terms.
23. The Court may, for good cause, extend any of
the deadlines set forth in this order without further notice
to the Class.
DONE AND ORDERED at the Courthouse, 60 Centre
Street, County of New York, New York this _____ day of
_________________, 1998.
_______________________________________
Justice, Supreme Court,
New York County
EXHIBIT 1
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
- -----------------------------------------x Index Nos. 97-600185
97-600719, 97-113872
IN RE THE MENDIK REAL ESTATE :
LIMITED PARTNERSHIP IAS Part_____________
:
- -----------------------------------------x Consol. Case No.
NOTICE OF PENDENCY OF CLASS AND DERIVATIVE
ACTIONS, CLASS ACTION DETERMINATION, PROPOSED
SETTLEMENT AND SETTLEMENT FAIRNESS HEARING.
TO: All Owners Of Units In The Mendik Real Estate Limited
Partnership (the "Partnership") At Any Time During The
Period January 1, 1996 through June __, 1998 (the
"Class" and "Class Period").
-If the proposed Settlement described below is approved
by the Court, among other benefits, the Partnership's
properties will be sold at their current appraised
values, certain former partners will share in a
$500,000 fund, the Partnership will be liquidated, and
a liquidating distribution will be made to current
partners.
-Please Read This Important Notice Carefully -- It
Affects Your Rights. This Notice is being sent to
advise you of the pendency of this consolidated class
and derivative action, the certification of the Class
by the Court for purposes of settlement, the terms and
conditions of the proposed Settlement (the
"Settlement"), the release of claims against the
Defendants, Class Counsel's fee application, the
scheduling of a Settlement Fairness Hearing, and your
rights with respect to these matters. This Notice is
not an expression of opinion by the Court as to the
merits of any of the claims or defenses asserted in the
actions.
-If you are a Current Unitholder, that is, a person who
held a unit on or after June __, 1998, you do not have
to do anything in response to this Notice if you do not
have any objection to the Settlement and do not wish to
exclude yourself from the Class, except that if you
desire to receive a portion of the Settlement and
liquidation proceeds in shares of beneficial interest
in Vornado Realty Trust ("Vornado Trust"), should
Vornado Trust elect to pay a portion of the purchase
price in stock, you must file the enclosed Stock
Election Certificate by __________________, 1998. (See
36(b) below).
-If you are a Class member who owned units of the
Partnership but sold them on or after January 1, 1996
and on or before June __, 1998, you must complete and
file the enclosed Proof of Claim by __________ to
obtain a share of the Settlement proceeds available to
Former Unitholders.
-You have the right to request exclusion from
membership in the Class by timely following the
procedures described in this Notice. If you request
exclusion, you will not participate in or be bound by
the Action or the Settlement. Only Class members who
do not request exclusion have the right to participate
in the Settlement Fairness Hearing. In deciding
whether to request exclusion, you should consider that
if Class Members owning a certain minimum amount of
Units elect to be excluded from the Class, the
Defendants have the right to terminate the Settlement
in its entirety and the Vornado Purchase will not
occur. In the event of such termination, there is no
assurance that the Properties can be sold at the
proposed price or on the proposed schedule.
-If after having read this Notice you have questions
concerning the Settlement you should call or write:
Nicholas E. Chimicles, Esq. Lawrence A.Sucharow, Esq.
Chimicles, Jacobsen & Tikellis Goodkind Labaton Rudoff &
One Haverford Centre Sucharow LLP
361 West Lancaster Avenue 100 Park Avenue
Haverford, PA 19401 New York, New York 10017
(610) 642-8500 (212) 907-0700
LEAD CLASS COUNSEL
-Do not telephone or write to the Court.
SETTLEMENT FAIRNESS HEARING
1. The Court will conduct a Settlement Fairness
Hearing pursuant to Rule 908 of the New York Civil Practice
Law and Rules ("CPLR") on ______________, 1998 commencing at
_____:___ a.m. at the Courthouse, 60 Centre Street, New
York, New York 10007, in Courtroom ____, Part ____ to:
(a) determine whether the Settlement is fair,
reasonable and adequate and should be approved;
(b) determine whether an Order and Final Judgment
should be entered, dismissing the Consolidated Complaint
against the Defendants, on the merits and with prejudice;
(c) determine whether the releases by the Class
members and the Partnership, as provided for in the
Stipulation of Settlement, should be provided to the Mendik
Releasees and NYRES Releasees (as defined below);
(d) determine whether and in what amount to award
Class Counsel fees and reimburse their expenses for the
services performed and benefits obtained by them for the
Class; and
(e) rule upon such other matters as the Court may
deem appropriate.
2. The Court has reserved the right to adjourn the
Settlement Fairness Hearing without further notice.
THE CLASS
3. The Court has certified the following Class for
purposes of the Settlement:
All persons or entities, who owned units
in The Mendik Real Estate Limited
Partnership at any time during the
period January 1, 1996 through June __,
1998.
BACKGROUND AND LEGAL PROCEEDINGS
4. This action results from the consolidation of
three class action lawsuits commenced in January and July
1997 concerning The Mendik Real Estate Limited Partnership
(the "Partnership"). By Order dated June __, 1998, the
Court ordered the three lawsuits consolidated (the "Action")
and pursuant thereto the plaintiffs filed a Consolidated
Amended Complaint (the "Complaint").
5. The four named plaintiffs are owners of Units in
the Partnership and the Complaint alleges direct claims on
behalf of the Plaintiffs and the Class, as well as claims
brought by them derivatively on behalf of the Partnership.
6. The Partnership was organized in 1986, under the
laws of the State of New York, to invest in, acquire,
maintain, operate and dispose of interests in commercial
real estate located in the Greater New York City
Metropolitan Area. Between April 1986 and September 18,
1987, the Partnership sold 395,169 units of limited
partnership interest ("Units") to the public. The Units
have a face amount of $500 per Unit and were issued in two
types: A Units acquired by an investor not known by the
General Partners to be a tax-exempt person; and B Units
acquired by an investor known to the General partners to be
a tax-exempt person.
7. The General Partners of the Partnership are:
(a) NY Real Estate Services 1, Inc. ("NYRES"), an
indirect wholly-owned subsidiary of Lehman Brothers Inc.
("Lehman Brothers"); and
(b) Mendik RELP Corporation ("Mendik RELP")
(formerly known as Mendik Corporation), a corporation wholly-
owned by Bernard H. Mendik ("Mendik").
8. The Partnership's real estate assets presently
consist of interests in three properties (collectively the
"Partnership Properties"):
(a) An approximately sixty percent (60%) indirect
ownership interest in Two Park Avenue, an office building
located in Manhattan, New York City ("Two Park Avenue"),
held through the Partnership's 99.5% interest in M/H Two
Park Associates (the "Two Park Partnership Interest"), which
is a general partner in Two Park Company, the entity which
owns Two Park Avenue. (The remaining forty percent (40%)
ownership in Two Park Avenue is held by B&B Park Avenue,
L.P. ("B&B"), a limited partnership which is indirectly
owned by Vornado Realty L.P.);
(b) Two office buildings known as Saxon Woods
Corporate Center located at 550-600 Mamaroneck Avenue,
Harrison, New York ("Saxon Woods"); and
(c) An office building located at 330 West 34th
Street, Manhattan, New York City ("West 34th Street").
9. In November 1996 pursuant to a plan devised in
early 1996, the Mendik Company announced its intention to
transfer substantially all of the real estate assets owned
or controlled by it, to a newly-created public real estate
investment trust to be managed by its affiliates. The
stated objective of this entity was to acquire and hold real
estate assets. In connection with that transaction, the
trust would also acquire B&B's interest in Two Park Avenue.
10. Following the commencement of the first two
actions, the Mendik Company abandoned the concept of forming
a new publicly traded real estate investment trust to
acquire Mendik affiliated and other properties and entered
into a different transaction pursuant to which an affiliate
of Vornado Realty Trust ("Vornado") acquired certain real
estate holdings and management and leasing assets owned by
Mendik and his affiliates (the "Vornado Purchase"). As part
of the Vornado Purchase, an affiliate of Vornado purchased
the limited and general partner interests in B&B which
indirectly owned a forty percent interest in Two Park
Avenue. The price paid by Vornado for this interest in Two
Park Avenue reflected a valuation of $102 million for all of
Two Park Avenue. In connection with the Vornado Purchase,
Mendik was elected to the position of Vice-Chairman of
Vornado and Mendik received a substantial interest in
Vornado Realty, L.P. and Vornado.
11. The Defendants in the Action are:
(a) The general partners of the Partnership:
NYRES; and Mendik RELP;
(b) B&B, a limited partnership in which a Mendik
controlled entity served as a general partner, which owns a
forty percent interest in Two Park Avenue; and
(c) Mendik.
12. Vornado is a fully-integrated real estate
investment trust. Shares of Vornado trade on the New York
Stock Exchange under the symbol VNO.
13. The Complaint alleges that the Defendants have
breached and will continue to breach their fiduciary duties
owed to the limited partners of the Partnership under New
York law and their contractual obligations under the
Partnership Agreement to fulfill such fiduciary duties, by:
(1) the General Partners' alleged failure to timely sell or
liquidate the Partnership Properties despite alleged recent
improvement in the real estate market and despite statements
in the 1987 Partnership offering prospectus that the
Partnership expected to dispose of its properties within
seven to ten years after their acquisition; (2) the sale of
the general and limited partnership interests in B&B to
Vornado, which is alleged to violate the Partnership
Agreement and the Defendants' fiduciary duties to the
Partnership and the limited partners because: the transfer
allegedly makes it more difficult for the Partnership to
sell its interest in Two Park Avenue at an appropriate time
and at an appropriate price; the transfer allegedly
violates the Partnership Agreement provision that provides
the Partnership may enter into a joint venture with a third
party only if the Partnership and such third party have
substantially identical investment objectives, and thereby
allegedly hinders the Partnership from negotiating the sale
of a 100 percent interest in Two Park Avenue; the transfer
allegedly deprives the Partnership and the limited partners
of the same opportunity to liquidate their investment in Two
Park Avenue that the Vornado Purchase offered to Mendik and
his affiliates; and the General Partners failed to
adequately disclose the Vornado Purchase to the limited
partners; and (3) the General Partners continue to operate
the Partnership for their personal financial gain and not in
the interests of the limited partners.
14. As relief, the plaintiffs seek: to enjoin or
rescind the Vornado Purchase; compel the Defendants to
provide an accounting; and compel the General Partners to
liquidate the Partnership.
SUMMARY OF SETTLEMENT TERMS
15. Following discovery, consultation with experts,
and extensive arms-length negotiations between Class Counsel
and counsel for the Defendants, the Settlement was reached.
On June 2, 1998 the parties entered into a Stipulation and
Agreement of Compromise, Settlement and Release (the
"Stipulation of Settlement"), which embodies the terms of
the Settlement. On June ___, 1998, in its Preliminary
Approval Order, the Court granted preliminary approval to
the Settlement, certified a Class pursuant to CPLR 902 for
settlement purposes, appointed the named plaintiffs as Class
representatives, and designated certain counsel for the
plaintiffs as lead counsel of record for plaintiffs and the
Class ("Lead Class Counsel").
16. The Settlement, if approved, will, among other
things, result in the sale of the Partnership Properties,
the establishment of a $500,000 fund for the benefit of
certain Former Unitholders who sold their units on or after
January 1, 1996, and on or before June __, 1998, and the
subsequent final liquidation of the Partnership and
distribution to current limited partners. The principal
sales and other terms of the Settlement are:
(a) Vornado will purchase the Partnership's
interest in Two Park Avenue based upon the building's most
recent independent appraised value of $123 million. The
Partnership's interest, net of the principal balance of
existing mortgages, is valued at approximately $34.6
million. The net purchase price will be paid in cash, or at
Vornado's election, in any combination of cash and/or shares
of Vornado stock (which will be freely tradeable pursuant to
a Section 3(a)(10) exemption under the Securities Act of
1933).
(b) An affiliate of Vornado Realty L.P. will
purchase the Partnership's Saxon Woods and West 34th Street
properties for an aggregate price of $30 million in cash,
which amount exceeds the sum of the most recent appraised
value for Saxon Woods ($20.5 million) and the mean of recent
appraisals of West 34th Street (obtained by the Partnership
and Class Counsel) which estimated values range from $6.4
million to $11 million.
(c) Prior to the liquidating distribution to be
made to the limited partners, the General Partners, NYRES
and Mendik RELP, will each contribute to the Partnership
their respective Partnership capital account deficits in
accordance with Section 17(b) of the Partnership Agreement.
(d) The Partnership will receive its share of any
tax refunds received on the Partnership Properties which are
applicable to its years of ownership.
17. (a) Vornado's purchases of the Partnership
Properties (the "Vornado Purchase") will occur
simultaneously. If the Court approves the Settlement, the
Vornado Purchase will occur within 30 days after the
Judgment entered by the Court approving the Settlement
becomes final and no longer subject to appeal. In the event
that the closing of the Vornado Purchase does not occur on
or before June 30, 1999, Vornado has the right, but not the
obligation, to terminate the Vornado Purchase.
(b) Vornado is not obligated to purchase any of
the Partnership Properties unless the Partnership can
deliver all of the Partnership Properties at the closing.
However, if all of the Partnership Properties cannot be
delivered, Vornado may purchase those Partnership Properties
which the Partnership can deliver at the closing, provided
it purchases all of them.
18. (a) If Vornado elects to pay part of the purchase
price in shares of Vornado stock, the terms of the
Stipulation will provide for the sale of the Vornado Stock
in a block trade, other than Vornado stock distributable to
Class members who affirmatively elect to receive Vornado
shares (See 36(b)). The net proceeds of the sale will be
distributed to those Current Unitholders who do not elect to
receive Vornado Stock, in accordance with the distribution
formula provided in Partnership Agreement 17(c).
(b) The terms of the Liquidating Trust will
provide for the distribution of the Vornado Stock only to
Class members who are Current Unitholders and who make an
election to receive Vornado Stock instead of the cash
proceeds realized from the sale of Vornado Stock (see
36(b) below). No fractional shares of Vornado stock will
be distributed and any calculation that would result in a
fractional share will be rounded up or down to the next
closest share. To the extent that, as a result of this
rounding process, a Class member who is a Current Unitholder
and elects to receive Vornado Stock receives a share more or
less than that to which he or she is otherwise entitled, an
adjustment to the cash proceeds of the liquidation to be
paid to such Class member will be made to take account for
that increase or decrease in the number of shares received.
The shares of Vornado Stock will be distributed to those
Current Unitholders who elect to receive Vornado Stock in
accordance with the distribution formula provided in
Partnership Agreement 17(c).
19. The cash paid by Vornado in the Vornado Purchase
(the "Cash Proceeds") will be utilized and distributed
according to the following priorities:
(a) To pay creditors of the Partnership
(including fees and loans the General Partners and their
affiliates pursuant to the terms of the Partnership
Agreement).
(b) To establish a reasonable reserve for
contingencies to cover final expenses and the winding up of
the Partnership. Any funds remaining in the reserve after
payment of all expenses shall be distributed to the limited
partners in accordance with the Partnership Agreement.
(c) To pay the costs of the claims administration
process and of providing notice to Class members pursuant to
the Preliminary Approval Order.
(d) To pay Defendants' attorney's fees, expert
fees and costs incurred in connection with the Action, as
authorized by Partnership Agreement 13(h).
(e) To pay Class Counsel's fees and expenses as
awarded by the Court.
(f) To pay up to $500,000 in the aggregate to
Former Unitholders (i.e., those Class members who sold their
units on or after January 1, 1996 and on or before June __,
1998) who submit timely and valid proofs of claim in
accordance with the provisions of 30 below.
20. The remainder of the Cash Proceeds, and the other
assets of the Partnership will be distributed to Current
Unitholders (the limited partners), in accordance with the
distribution formula provided in Partnership Agreement
17(c). The distributions described in Paragraphs 18, 19
and 20 shall be described collectively as the "Liquidating
Distribution."
21. If the Settlement is approved by the Court, the
Judgment will provide, among other things:
(a) that the Partnership Agreement is deemed to
be amended, irrespective of any provision of the Partnership
Agreement which may be inconsistent, to the extent necessary
to implement the terms of the Settlement, including without
limitation, to authorize the Vornado Purchase, the
establishment of the Liquidating Trust, the Liquidating
Distribution, and the Liquidation of the Partnership all as
contemplated by the Settlement, including the distributions
to Former Unitholders;
(b) for the dismissal of the Complaint and the
Action, on the merits, and with prejudice;
(c) for the grant of the releases from
plaintiffs, the Class, and the Partnership to the Defendants
and their affiliates (as more fully described below in 23
and 24);
(d) for the approval of the plaintiffs' and the
Class's agreement to reduce any judgment obtained by them
against any of the NYRES Releases by the amount of the
Mendik Equitable Share (as more fully described in 25
through 28, below);
(e) for a bar and injunction against the
plaintiffs', the Class's, and the Partnership's commencement
or prosecution of the Released Claims against the NYRES
Releasees and Mendik Releasees.
(f) for the Court's continuing jurisdiction over
the effectuation and administration of the Settlement.
22. Defendants have the right, but not the obligation,
to terminate the Settlement in its entirety if Class Members
owning a certain minimum number of Units elect to exclude
themselves from the Class or if certain other conditions to
the Settlement are not met. If the Settlement is terminated
or does not receive final Court approval then it shall be
void and each party shall be restored to his, her, or its
respective position as it existed prior to the execution of
the Stipulation of Settlement. If the Settlement or the
Vornado Purchase is terminated or does not receive final
Court approval, then in the event of such termination, there
is no assurance that the Properties can be sold at the
proposed price or on the proposed schedule.
THE RELEASES
23. (a) The Mendik Releasees means: Bernard H.
Mendik, Mendik RELP Corporation, B&B Park Avenue, L.P.,
Mendik Realty Company, Inc., Mendik Management Company Inc.,
Vornado Realty Trust, Vornado Realty L.P., and their Related
Parties.
(b) The NYRES Releasees means: Lehman Brothers
Inc., NY Real Estate Services 1, Inc., and their Related
Parties.
(c) The Mendik Releasees and NYRES Releasees are
collectively referred to as the "Released Persons."
(d) Related Parties means each of a Released
Person's past or present directors, officers, employees,
partners, principals, agents, controlling shareholders, any
entity in which the Released Person and/or any member(s) of
the Released Person's immediate family has or have a
controlling interest, attorneys, advisors, personal or legal
representatives, insurers, co-insurers and reinsurers,
predecessors, successors, parents, subsidiaries, divisions,
joint ventures, assigns, spouses, heirs, associates, related
or affiliated entities, any members of their immediate
families, or any trust of which any Released Person is the
settlor or which is for the benefit of any Released Person
and/or member(s) of his family, except that no person will
be deemed a Related Party of a Released Person solely by
reason of such person's affiliation with the Partnership.
(e) Plaintiff Releasors means: the Plaintiffs,
the members of the Class, and the Partnership.
(f) Released Claims means: any and all claims,
including unknown claims, that relate in any way to: the
subject matter of the Action; Two Park Company, the
Partnership, and the assets owned by it and its affiliates
M/H Two Park Associates and the management of all of the
foregoing; and the sale of Units by Plaintiffs and the
members of the Class.
24. The Releases to be given to the Mendik Releasees
and NYRES Releasees are broad. If the Settlement is
approved, the Plaintiff Releasors will release and charge
the Released Claims against the Mendik Releasees and NYRES
Releasees. In addition to the Released Claims, the
Plaintiff Releasors will release and discharge, as to the
Mendik Releasees only, claims also arising from the purchase
of Units by Class Members in the Partnership.
JUDGMENT REDUCTION
25. Certain of Class Counsel are counsel for
plaintiffs and the purported class in another action pending
in the State of Delaware, Chancery Division, New Castle
County, entitled In re Lehman Brothers Limited Partnerships
Litigation (the "Delaware Action"). The Delaware Action
asserts various claims against Lehman Brothers and its
affiliates arising from the sale and marketing of interests
in more than seventy limited partnerships, including the
Partnership. The Delaware Action does not name any of the
Mendik Releasees as a defendant.
26. The Complaint in the Delaware Action alleges,
among other things, that Lehman and NYRES violated the
common law and breached their fiduciary duties to the
investors in the partnerships (including the Partnership) by
concealing allegedly material facts about the condition and
value of the properties in which the partnerships invested
and concerning the risk of investing in the partnerships.
27. The Settlement will not affect the claims asserted
by Class members against the Lehman affiliated defendants in
the Delaware Action relating to the purchase of Units by
Class Members. However, in addition to the Releases
described above, if the Settlement is approved, the Class
members will reduce any judgment they may obtain against any
of the NYRES Releasees in the Delaware Action by the amount,
percentage, or share, if any, that the finder of fact
determines to be attributable to the conduct of the Mendik
Releasees solely with respect to the claims made against
Lehman Brothers in connection with the sale of Units in the
Partnership (the "Mendik Equitable Share").
28. Quantifying the Judgment Reduction provision to be
provided the NYRES Releasees under the Settlement is not
possible since it depends upon the ability of the plaintiffs
in the Delaware Action to secure a monetary judgment against
Lehman and Lehman's ability to convince the trier of facts
that one or more of the Mendik Releasees shares liability
with Lehman for the wrongs complained of in connection with
the sale and marketing of Partnership Units. Plaintiffs in
the Delaware Action have not named any of the Mendik
Releasees as defendants. Nevertheless, Lehman has the
right, if a judgment be rendered against it in the Delaware
Action, to seek to shift certain of its liability to the
Mendik Releasees. If the trier of facts determines that the
Mendik Releasees should bear a portion of that liability,
the Judgment Reduction's provision may result in the
plaintiff class in the Delaware Action, which includes
members of the Class, recovering less than they otherwise
would absent the Judgment Reduction provision.
PROOF OF CLAIM AND ALLOCATION PROCESS FOR FORMER UNITHOLDERS
29. Class members who sold their Units from or
after January 1, 1996, to on or before June __, 1998
(formerly held Units) are entitled to receive a portion of
the $500,000 cash settlement pool provided that they timely
file the Proof of Claim enclosed with this Notice, setting
forth the information requested and affixing the
documentation necessary to establish the validity of their
claim.
30. Former Unitholders must file their Proof of
Claim, postmarked on or before _______, 1998, with the
Claims Administrator, Rudolph Palitz LLP, Claims
Administrator, Post Office Box 3026, Blue Bell, Pennsylvania
19422. (Class members who continue to hold their Units
should not file a claim and will automatically participate
in the benefits of the Settlement.)
31. (a) Class A Units were initially acquired
from the Partnership by an investor not known by the
Partnership to be a tax-exempt person; Class B Units were
initially acquired from the Partnership by an investor known
to the Partnership to be a tax-exempt person. The
Partnership was structured so that certain tax advantages
could be realized by Class A Unitholders in connection with
the allocation of cost, recovery, and depreciation
deductions. As a result, differences in capital account
balances exist between Class A Units and Class B Units.
(b) The Partnership Agreement provides that
distribution upon liquidation will be made in proportion to
the positive capital account balances of Unitholders. The
$500,000 available to Former Unitholders will therefore be
allocated among approved claimants based upon the type of
Units they owned. All Formerly Held A Units for which claim
is validly made shall be weighted by a factor of one, each
Formerly Held B Unit for which claim is validly made shall
be weighted by a factor of two. The total number of such
weighted units will be divided into $500,000 to determine a
per unit distributable share. Each Formerly Held A Unit
will receive the per unit distributable share; each Formerly
Held B Unit shall receive the per unit distributable share
multiplied by two. In no event shall the amount to be paid
to a Former Unitholder on account of formerly held Units
exceed fifty percent of the amount which is payable in the
liquidation on the equivalent number and type of Units held
by a Current Unitholder. The portion of the $500,000
remaining, if any, after this distribution to the Former
Unitholders, shall be distributed to Current Unitholders in
accordance with the distribution formula provided in
Partnership Agreement 17(c) (the "Liquidating
Distribution").
DECISION TO SETTLE AND RECOMMENDATION
32. Class Counsel have made a thorough investigation
of the facts and a study of the legal principles applicable
to Plaintiffs' claims, have consulted with real estate
experts, and have conducted extensive discussions and arms-
length negotiations with representatives of Defendants and
Vornado with a view toward resolving the Action and
achieving the best possible relief consistent with the
interests of the Class and the Partnership. Class Counsel
believe the Settlement, the Vornado Purchase and the
Partnership's liquidation are in the best interests of the
Class and the Partnership and have agreed to settle the
Action according to the terms of the Settlement Agreement
after considering: the substantial benefits that the
Partnership and members of the Class will receive; the fact
that the Settlement results in the prompt sale of the
Partnership's Properties and the liquidation of the
Partnership, resulting in a timely substantial distribution
to the limited partners; the attendant risks of continuing
litigation; the probability of success on the merits of the
allegations asserted in the Actions; the risk that
continuing the Action might delay or interfere with the sale
of Partnership Properties; and the possibility that a sale
of one or more of the Partnership's Properties to an entity
other than Vornado could only be achieved at a lower price,
at higher expense, or after much delay.
33. The General Partners have engaged in arms-length
negotiations with Class Counsel, and NYRES has engaged in
arms-length negotiations with Vornado, concerning the
Settlement and the Vornado Purchase. As a result of the
conflict of interest resulting from Mendik's position as co-
chairman of Vornado Realty Trust and his substantial
interest in Vornado Realty Trust and Vornado Realty, L.P.,
the Vornado Purchase was negotiated on behalf of the
Partnership by Class Counsel and NYRES. NYRES and Class
Counsel believe that the Settlement and the Vornado Purchase
are in the best interest of the Partnership in light of the
following factors, among others: the price to be paid for
the Two Park Partnership Interest reflects a value for the
building that is equal to the most recent independent
appraised value of the building and substantially exceeds
the valuation of the building reflected in the Vornado REIT
Transaction (approximately $102 million); the possible
effect on B&B's right of first refusal of any offer made by
a third party for Two Park Avenue on the Two Park
Partnership Interest; the fact that the aggregate payment
of $30 million for Saxon Woods and West 34th Street exceeds
the sum of the most recent appraised value for Saxon Woods
($20.5 million), and the mean of recent appraisals of West
34th Street obtained by the Partnership and Class Counsel
(which estimated values range from $6.4 million to $11
million); and the fact that the sale of all the Partnership
Properties to Vornado permits the prompt dissolution and
liquidation of the Partnership without delays and with a
substantial reduction of the costs associated with large
real estate sales (e.g., brokerage commissions or fees).
34. The Settlement grants Vornado the option to pay
for the Two Park Partnership Interest in cash, or in any
combination of cash and/or Vornado Stock. NYRES and Class
Counsel believe that providing Vornado the option of paying
in cash or in Vornado Stock is beneficial in light of the
following factors: (1) NYRES's and Class Counsel's belief
that providingVornado with the option to pay in stock rather
than cash increased the consideration Vornado was
willing to pay for the Two Park Partnership Interest; and
(2) the immediate and unrestricted transferability of the
Vornado Stock upon its distribution to the Current
Unitholders who affirmatively elect to receive Vornado Stock
(other than Current Unitholders that are affiliates of
Vornado).
DEFENDANTS' DENIAL OF LIABILITY
35. Defendants deny any wrongdoing or liability
with respect to all claims, events and transactions
complained of in the Action. Defendants vigorously deny
such liability, but consider it desirable that the Action be
settled and dismissed because: the terms of the Settlement,
including the Vornado Purchase, are in the best interest of
the limited partners and the Partnership; and the
Settlement will halt the expense, inconvenience and burden
of litigation and permit the final liquidation and
dissolution of the Partnership.
RIGHTS AND OPTIONS OF CLASS MEMBERS
36. As a Class member you have certain
rights and options that you may take under this Settlement:
(a) YOU DO NOT NEED TO DO ANYTHING IF YOU
HAVE NO OBJECTION TO THE SETTLEMENT, WISH TO REMAIN A MEMBER
OF THE CLASS, AND DESIRE TO RECEIVE THE BENEFITS OF THE
SETTLEMENT. If you are a Former Unitholder you must file a
Proof of Claim by _________, 1998.
(b) CURRENT UNITHOLDERS NEED NOT TAKE ANY
ACTION TO RECEIVE THE BENEFITS OF THE SETTLEMENT. However,
a portion of the Settlement proceeds may be available to be
paid to current Unitholders in shares of Vornado stock
rather than cash if Vornado elects to make partial payment
in shares of Vornado stock. Those current Unitholders who
desire to receive their allocable share of Vornado stock
instead of cash must make an affirmative election by
returning the accompanying Stock Election Certificate by
___________, 1998.
(c) (1) IF YOU DO NOT WANT TO BE A CLASS
MEMBER AND WANT TO BE EXCLUDED FROM THE CLASS THE COURT WILL
EXCLUDE YOU FROM THE CLASS AND THE PROPOSED SETTLEMENT ONLY
IF YOU SUBMIT A TIMELY WRITTEN REQUEST FOR EXCLUSION. Your
written exclusion request must be postmarked no later than
________, 1998 addressed to the attention of the Claims
Administrator:
Rudolph Palitz LLP
PO Box 3026
Blue Bell, PA 19422
Attn.: Exclusion Request
Such request must contain a statement "requesting
exclusion," and include your name, address, telephone
number, social security number, the number and type of Units
ever owned by you and (i) the date(s) of purchase of such
Units, and (ii) the dates, if any, of any sale or other
disposition of any Units.
(2) If you request exclusion, you will
not be entitled to receive any of the Settlement benefits,
but you will retain your rights, if any, to pursue other
available remedies. In addition, if the Settlement is
approved, you will not have the opportunity to elect to
receive shares of Vornado Stock from the Liquidating Trust
but, if you are a Current Unitholder, you will receive net
proceeds realized by the Partnership from the sale of the
Vornado Stock you would have received if you had not
requested exclusion. (See, 18 above). In deciding whether
to request exclusion, you should consider that if Class
Members owning a certain minimum amount of Units elect to be
excluded from the Class, the Defendants have the right to
terminate the Settlement in its entirety and the Vornado
Purchase will not occur. In the event of such termination,
there is no assurance that the Properties can be sold at the
proposed price or on the proposed schedule.
(3) If you are a Class member and you
do not request exclusion in the manner and within the time
described above, you will automatically be included as a
Class member, and the proposed Settlement (if and when
approved by the Court), all orders or judgment issued by the
Court in this Action and any release given in connection
with the Settlement will be binding upon you.
(d) If you remain a Class member, you may appear
personally or by counsel and be heard at the Settlement
Fairness Hearing and/or may object to the Settlement and/or
any applications for attorneys' fees, expenses and costs,
but only if such objections are filed in writing with the
Clerk of the Court and copies of such objections and all
materials supplied to the Court in support thereof are
served upon and received by Lawrence Sucharow, Esq. at
GOODKIND LABATON RUDOFF & SUCHAROW, LLP, 100 Park Avenue,
New York, New York 10017; Nicholas Chimicles, Esq. at
CHIMICLES JACOBSEN & TIKELLIS, One Haverford Centre, 361
West Lancaster Avenue, Haverford, Pennsylvania 19041;
Richard Goldstein, Esq. at PROSKAUER ROSE, LLP, 1585
Broadway, New York, New York 10036; and Leslie Fagen, Esq.
at PAUL, WEISS, RIFKIND, WHARTON & GARRISON, 1285 Avenue of
the Americas, New York, New York 10019, on or before
_____________, 1998. Attendance at the Settlement Fairness
Hearing by Class members is not necessary, however, persons
who wish to comment orally on the proposed Settlement must
serve upon the above counsel and file with the Court, on or
before _______, 1998, a writing stating their intention to
appear at the Settlement Fairness Hearing, the nature of
their proposed comment and the identities of witnesses, if
any, who may be called to testify and exhibits, if any,
which will be introduced into evidence. Class members who
do not enter a formal appearance by individual counsel will
be represented by Lead Class Counsel.
ATTORNEYS FEES AND COSTS
37. Class Counsel will apply to the Court for an award
of attorneys' fees and reimbursement of expenses, including
the fees of experts or consultants retained by them in
connection with prosecuting the Actions, in the aggregate
amount of $2.5 million (plus interest on such attorneys'
fees, costs and expenses at the same rate as earned by the
Cash Proceeds from Vornado Purchase for the period between
the closing of the Vornado Purchase and the payment of such
award) (the "Fee and Expense Application") to be paid from
the Settlement Fund.
POST CLASS PERIOD SALES OR TRANSFER OF UNITS
38. Any sales or transfers of Units occurring on or
after June __, 1998 shall be deemed to transfer to the buyer
or transferee the right, title and interest of the seller or
transferor in the Action, the claims asserted therein, and
the Settlement.
39. Pending final determination of whether the
Settlement should be approved, the Court has enjoined
Plaintiffs in the consolidated Action and all Class members
from instituting, commencing or proceeding with any action
which asserts Released Claims against any Released Party.
SCOPE OF NOTICE AND FURTHER INFORMATION
THIS NOTICE CONTAINS ONLY A SUMMARY OF THE ACTION AND
OF THE PROPOSED SETTLEMENT FOR MORE COMPLETE INFORMATION
CONCERNING THE ACTION AND THE PROPOSED SETTLEMENT, YOU MAY
INSPECT THE PLEADINGS, SETTLEMENT AGREEMENT AND OTHER PAPERS
ON FILE IN THIS ACTION DURING NORMAL BUSINESS HOURS AT THE
OFFICE OF THE CLERK OF THE SUPREME COURT OF THE STATE OF NEW
YORK, COUNTY OF NEW YORK, 60 CENTRE STREET, NEW YORK, NEW
YORK 10007.
Dated: New York, New York
, 1998
BY ORDER OF THE COURT
[Court clerk or Judge]
EXHIBIT 3
STOCK ELECTION CERTIFICATE
I, ,
am the current owner of Units of The Mendik Real Estate
Partnership (the "Partnership"), I have read the Notice of
Pendency of Class and Derivative Actions ("Notice") and
hereby elect to receive, to the extent possible, my
allowable share of the Settlement and liquidation in shares
of beneficial ownership of Vornado Realty Trust.
[signature]
Name: Mail no later than
, 1998 to:
Address:
Tel. No.:
Soc. Security Number:
EXHIBIT 2
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
In re The MENDIK REAL ESTATE LIMITED Consolidated Action
PARTNERSHIP LITIGATION Index #97-600185
PROOF OF CLAIM
When completed, this Claim with the appropriate
documentation must be received by the Claims Administrator:
Rudolph Palitz, LLP
Post Office Box 3026
Blue Bell, PA 19422
Attn.: Mendik Litigation
no later than _______________________, 1998.
If you owned Units in The Mendik Real Estate Limited
Partnership (the "Partnership") at any time during the
period January 1, 1996 through June ___, 1998 (the "Class
Period") and sold any such Units during the Class Period you
must complete, sign, affix supporting documentation and send
this Proof of Claim form to the Claims Administrator to be
received by it by __________, 1998 in order to participate
in the distribution to Former Unitholders.
This Proof of Claim is part of the Notice of Proposed
Settlement (the "Notice") which accompanied it and should
only be executed and submitted after a Former Unitholder has
read the Notice. If you did not receive the Notice, you may
obtain a copy from the Claims Administrator.
Current Unitholders who did not sell any of their
Units during the Class Period should not submit a Proof of
Claim. Distributions to current Unitholders will be
automatic.
INVESTMENT INFORMATION FOR PURCHASE AND SALE OF UNITS
IN THE MENDIK REAL ESTATE LIMITED PARTNERSHIP
Purchase Information
Units Purchased
Date of Purchases
Number of Units Type A or B
Sale Information
Units Sold
Date of Sales
Number of Units Type A or B
Please attach documentation (e.g., brokerage confirmations,
brokerage monthly statements or a letter from your broker)
to prove the listed purchase(s) and sale(s).
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT HE OR
SHE HAS NOT FILED A REQUEST FOR EXCLUSION (OPT-OUT).
The undersigned consents to the jurisdiction of the
Court with respect to this claims and all matters pertaining
thereto.
Please print:
NAME:
ADDRESS:
SOCIAL SECURITY # OR TIN:
TELEPHONE NUMBER:
[RS W-9 TYPE CERTIFICATION TO BE INSERTED HERE BY
PRINTER]
I certify under penalties of perjury that the above
information is true and correct to the best of my knowledge.
(signature)
(date)
If any of the Units for which you have provided
information was owned jointly with another person or entity,
each person who owned any such Unit must sign this document.
Additional signatures:
(signature of joint owner)
(date)
EXHIBIT 3
STOCK ELECTION CERTIFICATE
I, ,
am the current owner of Units of The Mendik Real Estate
Partnership (the "Partnership"), I have read the Notice of
Pendency of Class and Derivative Actions ("Notice") and
hereby elect to receive, to the extent possible, my
allowable share of the Settlement and liquidation in shares
of beneficial ownership of Vornado Realty Trust.
[signature]
_______________________________
1Any capitalized terms used in this Background section and
not defined herein are defined in Paragraph 1 of this
Stipulation.
Doc#:DS4:411203.1
Name: Mail no later than
, 1998 to:
Address:
Tel. No.:
Soc. Security Number:
EXHIBIT 4
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
- ----------------------------------------------x Index Nos. 97-600185
IN RE THE MENDIK REAL ESTATE :
LIMITED PARTNERSHIP IAS Part ___________
:
- ----------------------------------------------x Consol. Case. No.
_________________________________________________
SUMMARY NOTICE OF PENDENCY OF CLASS
AND DERIVATIVE ACTIONS, CLASS
ACTION DETERMINATION, PROPOSED
SETTLEMENT AND SETTLEMENT FAIRNESS HEARING
___________________________________________________
TO: ALL OWNERS OF UNITS IN THE MENDIK REAL ESTATE LIMITED
PARTNERSHIP ("PARTNERSHIP") AT ANY TIME DURING THE PERIOD
JANUARY 1, 1996 THROUGH JUNE 19, 1998 ("CLASS" AND "CLASS
PERIOD")
This summary notice is given pursuant to Rule 908 of
the New York Civil Practice Law and Rules and pursuant to an
Order of the Supreme Court of the State of New York, County of
New York entered in the above-captioned actions ("Action") to
notify you of the pendency of the Action, the Court's
certification of the Class for purposes of settlement, the
proposed Settlement of the Action, and to give you notice of a
hearing (described more fully below).
The proposed Settlement, if finally approved, will
result, among other things: in the prompt sale of the
Partnership's remaining real estate assets, comprising its
interests in three commercial properties, for an aggregate
consideration of $64.6 million, net of mortgages; the
establishment of a $500,000 fund for the benefit of Class Members
who sold their Units during the period January 1, 1996 through
19, 1998 ("Former Unitholders") and who file a valid Proof of
Claim with the Claims Administrator on or before ___________,
1998; and the liquidation of the Partnership, with the
liquidation proceeds being distributed to the Limited Partners
after payment of certain fees and expenses owed by the
Partnership to third parties.
A hearing will be held before the Supreme Court of the
State of New York, County of New York, at the Courthouse, 60
Centre Street, New York, New York 10007, in Courtroom __, Part
__ on _________, 1998, at __ _.m. ("Hearing"), to determine
finally whether (a) the Stipulation and Agreement of Compromise,
Settlement and Release ("Stipulation of Settlement") dated
June 2, 1998, is fair, just, reasonable and adequate; (b) final
judgment should be entered dismissing the Action as to all
defendants with prejudice as against plaintiffs and all members
of the Class; (c) the releases by the Class members and the
Partnership, as provided in the Stipulation of Settlement, should
be provided to the defendants; and (d) whether and in what amount
to award Class Counsel fees and reimburse their expenses for the
service performed and benefits obtained by them for the Class.
The Court has reserved the right to adjourn the Hearing by oral
announcement at the Hearing or any adjournment thereof, and
without further notice of any kind.
The Court has appointed as Lead Class Counsel the
following:
Nicholas E. Chimicles Lawrence A. Sucharow
CHIMICLES, JACOBSEN & GOODKIND LABATON
TIKELLIS RUDOFF & SUCHAROW
One Haverford Centre 100 Park Avenue
361 West Lancaster Avenue New York, NY 10017-5563
Haverford, PA 19041-0100
This is only a brief summary of the information
contained in the full printed Notice which you should read.
[Your rights and options with respect to the settlement and the
deadlines by which you must act are more fully described in the
printed Notice, including your right to request exclusion,
object, appear at the Hearing, file a proof of claim, and elect
to receive shares of beneficial interest in Vornado Realty Trust
in lieu of cash]. If you are a Class Member and have not
received the full printed Notice that has been mailed to Class
Members, please contact the Claims Administrator at
1-800-222-2760 to obtain a copy.
Rudolph, Palitz LLP
P.O. Box 3026
Blue Bell, PA 19422
PLEASE DO NOT CONTACT THE COURT.
Clerk of the Supreme Court of
the State of New York, County
of New York.
Dated: ____________________
EXHIBIT B
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
- -----------------------------------------x Index Nos. 97-600185
IN RE THE MENDIK REAL ESTATE :
LIMITED PARTNERSHIP IAS Part ___________
:
- -----------------------------------------x Consol. Case. No.
[PROPOSED] ORDER AND FINAL
JUDGMENT OF DISMISSAL
On this _____ day of __________________, 1998, a
hearing having been held before this Court to determine whether
the terms of the Stipulation and Agreement of Compromise,
Settlement and Release dated June 2, 1998 (the "Stipulation"),
and the terms and conditions of the settlement proposed in the
Stipulation (the "Settlement"), and all transactions referred to
therein or preparatory or incident thereto, are fair, reasonable
and adequate for the settlement of all claims asserted herein;
and whether judgment should be entered in these consolidated
class and derivative actions (the "Actions") dismissing the
Actions with prejudice as against all of the plaintiffs and The
Mendik Real Estate Limited Partnership, a limited partnership
organized under the laws of the State of New York ("the
Partnership"), all members of the class certified in this Court's
Order dated ___________, 1998 and the Court having considered all
matters presented to it at the hearing and all papers filed
herein relating thereto, including [list filings], and the
Parties to the Actions having provided to the Court any and all
information that the Court has requested concerning the
Settlement, the Vornado Purchase (as defined herein) and the
Actions.
IT IS HEREBY ORDERED, ADJUDGED AND DECREED, as follows:
1. The Court, for purposes of this Order and Final
Judgment, adopts the following definitions:
(a) "Cash Proceeds" means the $30 million in cash
(subject to adjustment pursuant to the terms of the Vornado
Purchase) to be paid by Vornado to the Partnership as part of the
Vornado Purchase.
(b) "Claims" means any and all claims or causes
of action, demands, rights, liabilities, and causes of action of
every nature and description whatsoever, whether in law or in
equity, known or unknown, asserted or that could have been
asserted by a person, including, without limitation, claims for
negligence, gross negligence, breach of duty of care and/or
breach of duty of loyalty, fraud, breach of fiduciary duty or
violations of any state or federal statutes, rules or
regulations.
(c) "Class" means all persons who owned Units in
the Partnership at any time during the Class Period.
(d) "Class A Unit" means a Unit initially
acquired from the Partnership by an Investor Limited Partner (as
defined in the Partnership Agreement) not known by the General
Partners to be a tax-exempt person.
(e) "Class B Unit" means a Unit initially
acquired from the Partnership by an Investor Limited Partner (as
defined in the Partnership Agreement) that was known to the
Partnership to be a tax-exempt person.
(f) "Class Member" means each member of the
Class.
(g) "Class Period" means the period from
January 1, 1996 through [date of the Preliminary Order].
(h) "Defendants" means the defendants named in
the Actions.
(i) "Effective Date" means the date that all of
the events and conditions specified in paragraph 19 of the
Stipulation have been met and have occurred.
(j) "General Partners" means (1) NY Real Estate
Services 1, Inc. ("NYRES"), a Delaware corporation (formerly
known as Hutton Real Estate Services XV, Inc.), an indirect
wholly owned subsidiary of Lehman Brothers Inc. ("Lehman
Brothers"), and (2) Mendik RELP Corporation ("Mendik RELP"), a
New York corporation (formerly known as Mendik Corporation)
wholly owned by Bernard H. Mendik ("Mendik").
(k) "Judgment Reduction" means the judgment
reduction to be afforded the NYRES Releasees pursuant to
Paragraph 5 of the Stipulation and Paragraph 9 of this Judgment.
(l) "Limited Partners" means all persons who hold
Units as of the Record Date.
(m) "Liquidating Trust" means the trust to be
established to receive and distribute a portion of the Vornado
Stock and/or the net proceeds therefrom as part of the Vornado
Purchase.
(n) "Liquidation" means the payments and
distribution contemplated by Paragraph 9 of the Stipulation,
including the allocations provided for therein.
(o) "Mendik Claims" means the Claims released
pursuant to Paragraph 3 of the Stipulation and Paragraph 8 of
this Judgment.
(p) "Mendik Defendants" means Bernard H. Mendik,
Mendik RELP Corporation and B&B Park Avenue, L.P.
(q) The "Mendik Releasees" means Bernard H.
Mendik, Mendik RELP Corporation, Mendik Realty Company, Inc.,
Mendik Management Company Inc., Vornado Realty Trust, B&B Park
Avenue, L.P., Vornado Realty L.P. and their Related Parties.
(r) "Notice" means the Notice of Pendency and
Settlement of Class and Derivative Actions, Class Action
Determination, Proposed Settlement of Class and Derivative
Actions, Settlement Hearing and Right to Appear annexed as
Exhibit 1 to this Court's order dated ________ in the Actions.
(s) "NYRES" means New York Real Estate Services
I, Inc.
(t) "NYRES Claims" means the Claims released
pursuant to Paragraph 4 of the Stipulation and Paragraph 7 of
this Judgment.
(u) "NYRES Releasees" mean Lehman Brothers Inc.,
NYRES and their Related Parties.
(v) "Parties" means, collectively, each of the
Defendants, and the Representative Plaintiffs on behalf of
themselves and the members of the Settlement Class and
derivatively on behalf of the Partnership.
(w) "Partnership Agreement" means the Certificate
and Agreement of Limited Partnership of the Partnership, as
restated and amended to date.
(x) "Person" means an individual, corporation,
partnership, limited partnership, limited liability company,
association, joint stock company, estate, legal representative,
trust, unincorporated association, government or any political
subdivision or agency thereof, and any business or legal entity
and their spouses, heirs, predecessors, successors,
representatives, or assignees.
(y) "Plaintiff Releasors" means the
Representative Plaintiffs, each of the Settlement Class Members
and the Partnership, on behalf of themselves and each of their
successors, heirs, executors and assigns, except that the
Plaintiff Releasors do not include Bernard H. Mendik or his
Related Parties.
(z) "Record Date" means the date of entry of this
Judgment.
(aa) "Related Parties" means each of a Released
Person's past or present directors, officers, employees,
partners, principals, agents, controlling shareholders, any
entity in which the Released Person and/or any member(s) of the
Released Person's immediate family has or have a controlling
interest, attorneys, advisors, personal or legal representatives,
insurers, co-insurers and reinsurers, predecessors, successors,
parents, subsidiaries, divisions, joint ventures, assigns,
spouses, heirs, associates, related or affiliated entities, any
members of their immediate families, or any trust of which any
Released Person is the settlor or which is for the benefit of any
Released Person and/or member(s) of his family, except that no
Person will be deemed a Related Party of a Released Person solely
by reason of such Person's affiliation with the Partnership.
(bb) "Released Claims" means the Claims settled
and released pursuant to Paragraphs 3 through 5 of the
Stipulation.
(cc) "Released Persons" means the Mendik Releasees
and the NYRES Releasees.
(dd) "Releasor Judgment" means any judgment
obtained by any Plaintiff Releasor against any NYRES Releasee on
a claim relating to the purchase of Units, by such Plaintiff
Releasor or his, her or its affiliates, predecessors or family
members.
(ee) "Representative Plaintiffs" means Joseph and
Nancy P. DeLeo, Michael Hatem, and Nancy P. Landis.
(ff) "Settlement Class" means all Settlement Class
Members.
(gg) "Settlement Class Member" or "Member of the
Settlement Class" means a Person who falls within the definition
of the Class as set
forth in Paragraph 1.3 of the Stipulation and who has not
requested to be excluded from the Class pursuant to Paragraph 13
of the Stipulation.
(hh) "Summary Notice" means the Summary Notice of
Pendency and Proposed Settlement of Class and Derivative Actions
annexed as Exhibit 2 to this Court's Order dated ______________
in the Actions.
(ii) "Two Park Avenue" is an office building and
land known by the street address Two Park Avenue located in
Manhattan, New York City.
(jj) "Two Park Company" is a New York general
partnership that owns Two Park Avenue.
(kk) "Two Park Partnership Interest" means the
99.5 percent interest of the Partnership in M/H Two Park
Associates, a New York limited partnership that owns a 60 percent
general partnership interest in Two Park Company.
(ll) "Unit" means the interest of a limited
partner of the Partnership attributable to a Capital Contribution
(as defined in the Partnership Agreement) of $500 and includes
both Class A and Class B Units.
(mm) "Unknown Claims" means any Claims released
pursuant to the Stipulation and this Judgment which any person
giving such release does not know or suspect to exist in his, her
or its favor at the time of the release of the Released Persons
which, if known by him, her or it, might have affected his, her
or its settlement with and release of the Released Persons, or
might have affected his, her or its decision not to object to the
Settlement. With respect to any and all Released Claims, upon
the Effective Date, the Representative Plaintiffs and the
Settlement Class Members will be deemed to have, and by operation
of this Judgment will have, expressly waived and relinquished, to
the fullest extent permitted by law, the provisions, rights and
benefits of 1542 of the California Civil Code, which provides:
A general release does not extend to
claims which the creditor does not know or
suspect to exist in his favor at the time of
executing the release, which if known by him
must have materially affected his settlement
with the debtor.
and all similar provisions of the laws of any other states. Each
of the Representative Plaintiffs and the Settlement Class Members
may hereafter discover facts in addition to or different from
those which he, she or it now knows or believes to be true with
respect to the subject matter of the Released Claims, but
pursuant to the Stipulation have agreed that each Representative
Plaintiff does and each Settlement Class Member will be deemed to
have, and upon the Effective Date and by operation of the
Judgment will have, fully, finally, and forever settled and
released any and all Released Claims, known or unknown, suspected
or unsuspected, contingent or non-contingent, whether or not
concealed or hidden, which now exist, or heretofore have existed
upon any theory of law or equity now existing or coming into
existence in the future, including, but not limited to, conduct
which is negligent, intentional, with or without malice, or a
breach of any duty, law or rule, without regard to the subsequent
discovery or existence of such different or additional facts.
(nn) "Vornado Stock" means the common shares of
beneficial ownership of Vornado Realty Trust, a real estate
investment trust organized under the laws of Maryland, __% of
which are to be deposited by Vornado Realty Trust into the
Liquidating Trust and __% of which are to be issued to the
Partnership by Vornado Realty Trust, as part of the Vornado
Purchase.
(oo) "Vornado Purchase" means the transaction
among the Settlement Class Members, the Partnership, the partners
of M/H Two Park Associates and Vornado Realty, L.P., Vornado
Realty Trust or an affiliate thereof, the principal terms of
which are described in Paragraph I of the Stipulation.
2. The Court approves the settlement of the
Actions set forth in the Stipulation as being fair, just,
reasonable and adequate and in the best interests of the Limited
Partners, the Partnership and the Settlement Class and its
members, and the Parties are directed to consummate the
Settlement in accordance with the terms and provisions of the
Stipulation.
3. With respect, in particular, to the exchange of
the Vornado Stock allocable to the Settlement Class (by delivery
to the Liquidating Trust) for the Claims being released by the
Settlement Class Members as part of the Settlement, the Court (a)
has been informed that Vornado Realty Trust intends to rely on
the exemption provided by Section 3(a)(10) of the Securities Act
of 1933 in connection with such issuance of the Vornado Stock and
(b) approves the exchange of the Vornado Stock allocable to the
Settlement Class for the Claims being released by the Settlement
Class and its members, and finds that the terms and conditions of
such exchange are fair, just, reasonable and adequate and in the
best interests of the Settlement Class and its members.
4. With respect, in particular, to the exchange of
the remaining shares of Vornado Stock allocable to the
Partnership (by delivery to the Partnership) for a corresponding
portion of the Two Park Partnership Interest as part of the
Settlement, the Court (a) has been informed that Vornado Realty
Trust intends to rely on the exemption provided by Section
3(a)(10) of the Securities Act of 1933 in connection with the
issuance of the Vornado Stock, and (b) approves the exchange of
such shares of the Vornado Stock for such portion of the Two Park
Partnership Interest, and finds that the terms and conditions of
such exchange are fair, just, reasonable and adequate and in the
best interests of the Limited Partners, the Partnership and the
Settlement Class and its members.
5. The Court finds that dissemination of the Notice
and the Summary Notice in the manner required by Paragraph 5 of
this Court's prior Order Pursuant to CPLR Article 9 in these
Actions dated _________ constitutes the best notice practicable
under the circumstances to the Class and meets the requirements
of Article 9 of the CPLR, due process under the United States
Constitution, and any other applicable law and constitutes due
and sufficient notice to all persons entitled thereto.
6. Less than 50 percent in interest of the Limited
Partners having objected or requested to be excluded from the
Settlement, and the Settlement having been approved, the
Partnership Agreement is hereby amended to the extent necessary
to implement the terms of the Settlement, including without
limitation to authorize the Vornado Purchase, the Liquidation and
the distribution of Vornado Stock and/or the net sale proceeds
therefrom by the Liquidating Trust, irrespective of any
provisions of the Partnership Agreement inconsistent with such
transactions.
7. As of the Effective Date, the Actions and all
claims asserted therein are dismissed with prejudice and on the
merits as to the Partnership, the Representative Plaintiffs and
the Settlement Class, each party to bear its own costs and
attorneys fees except as expressly set forth herein, and all
Mendik Claims and NYRES Claims are hereby waived, released and
extinguished, subject only to compliance by the Parties with the
terms and conditions of the Stipulation and any order of this
Court with reference to the Stipulation.
8. Upon the Effective Date, the Plaintiff Releasors
will be deemed to have, and by operation of this Judgment will
have, fully, finally and forever released, relinquished and
discharged any and all Claims, including Unknown Claims, that the
Plaintiff Releasors may have against each and all of the Mendik
Releasees relating in any way to (x) the subject matter of the
Actions; (y) Two Park Company, the Partnership, and the assets
owned by it and its affiliates and M/H Two Park Associates and
the management of all of the foregoing and (z) the purchase and
sale by any Plaintiff Releasor or their affiliates, predecessors
or family members of Units.
9. Upon the Effective Date, the Plaintiff Releasors
will be deemed to have, and by operation of this Judgment will
have, fully, finally and forever released, relinquished and
discharged all Claims, including Unknown Claims, that the
Plaintiff Releasors may have against each and all of the NYRES
Releasees relating in any way to (x) the subject matter of the
Actions; (y) Two Park Company, the Partnership and the assets
owned by it and its affiliates and M/H Two Park Associates and
the management of all of the foregoing and (z) the sale by any
Plaintiff Releasor (except the Partnership) or their affiliates,
predecessors or family members of Units, except that nothing in
the Stipulation or in this Judgment will release any Claims
relating to Plaintiff Releasors' purchase of Units in the
Partnership.
10. Upon the Effective Date, each of the Plaintiff
Releasors will be deemed to have, and by operation of this
Judgment will have, agreed to reduce any Releasor Judgment that
any of them may obtain against any of the NYRES Releasees by the
amount of the Mendik Equitable Share. The "Mendik Equitable
Share" will be equal to the portion of the Releasor Judgment, as
found by the court or jury rendering the Releasor Judgment, for
which the Mendik Releasees would be liable to the NYRES
Releasees, whether by reason of contribution, indemnity or
otherwise, in the absence of the releases granted both in the
Stipulation and in this Judgment to the Mendik Releasees by the
Plaintiffs and by the NYRES Releasees. In determining the Mendik
Equitable Share, the court and/or jury may take into account, if
requested to do so by any NYRES Releasee or Plaintiff Releasor,
the terms of any agreements between any Mendik Releasee and any
NYRES Releasee that relate to indemnity or contribution or that
otherwise may affect the amount of Judgment Reduction, including
without limitation (1) the Sales Agency Agreement among the
Partnership, Hutton Real Estate Services XV Limited Partnership,
Mendik Corp. and Hutton Real Estate Services XV, Inc., dated
April 7, 1986 and (2) the Indemnity and Contribution Agreement
between Hutton Real Estate Services XV, Inc. and Mendik Corp.
dated April 7, 1986.
11. The Named Plaintiffs, the Partnership, any and all
other Settlement Class Members, and the Settlement Class, either
directly or indirectly, and their predecessors, successors,
agents, representatives, attorneys and affiliates and the heirs,
executors, administrators, successors and assigns of any or all
of them, are hereby permanently barred and enjoined from the
assertion, institution, maintenance, prosecution or enforcement
against the Mendik Releasees, or any of them, either now or
thereafter, on their own behalf or behalf of any other person, of
any and all Mendik Claims in any Court of this or any other
Jurisdiction.
12. The Named Plaintiffs, the Partnership, any and all
other Settlement Class Members, and the Settlement Class, either
directly or indirectly, and their predecessors, successors,
agents, representatives, attorneys and affiliates and the heirs,
executors, administrators, successors and assigns of any or all
of them, are hereby permanently barred and enjoined from the
assertion, institution, maintenance, prosecution or enforcement
against the NYRES Releasees, or any of them, either now or
hereafter, on their own behalf or on behalf of any other person,
of any and all NYRES Claims in any Court of this or any other
jurisdiction.
13. The Court will retain jurisdiction with respect to
implementation and enforcement of the terms of the Stipulation,
and all Parties hereto submit to the jurisdiction of the Court
for purposes of implementing and enforcing the Settlement
embodied in the Stipulation.
14. The Court authorizes the reimbursement to
Defendants by the Partnership, under Partnership Agreement
13(b), of their reasonable costs and attorneys and expert fees
incurred in the defense of the Actions. Such reimbursement may
be paid from the Cash Proceeds of the Vornado Purchase.
15. Neither the Stipulation nor the settlement
contained therein, nor any act performed or document executed
pursuant to or in furtherance of the Stipulation or the
settlement: (i) is or may be deemed to be or may be used as an
admission of, or evidence of, the validity of any Released
Claims, or of any wrongdoing or liability of the Defendants or
their Related Parties, or (ii) is or may be deemed to be or may
be used as an admission of, or evidence of, any fault or omission
of any of the Released Persons in any civil, criminal or
administrative proceeding in any court, administrative agency or
other proceeding.
DONE AND ORDERED at the Courthouse, 60 Centre Street,
County of New York, New York this _____ day of _________________,
1998.
_______________________________________
Justice, Supreme Court,
New York County
